WELLS FARGO & CO/MN (Form: 10-K, Received: 02/28/2012 13:54:45)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the fiscal year ended December 31, 2011		Commission File Number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)

Delaware

(State of incorporation)

No. 41-0449260

(I.R.S. Employer Identification No.)

420 Montgomery Street, San Francisco, California 94163

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: 1-866-878-5865

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, par value $1-2/3		New York Stock Exchange (“NYSE”)
Depositary Shares, each representing a 1/40 ^th interest in a share of 8.00% Non-Cumulative Perpetual Class A Preferred Stock, Series J		NYSE
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L Warrants to purchase shares of Common Stock (expiring October 28, 2018)		NYSE NYSE

See list of additional securities listed on the NYSE on the page directly following this cover page.

Securities registered pursuant to Section 12(g) of the Act:

Dividend Equalization Preferred Shares, no par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ü No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No ü

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past

90 days. Yes ü No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller reporting company)

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Act). Yes No ü

At June 30, 2011, the aggregate market value of common stock held by non-affiliates was approximately $147.1 billion, based on a closing price of $28.06. At January 31, 2012, 5,273,240,691 shares of common stock were outstanding.

Documents Incorporated by Reference in Form 10-K


Incorporated Documents		Where incorporated in Form 10-K

1. Portions of the Company’s Annual Report to Stockholders for the year ended December 31, 2011 (“2011 Annual Report to Stockholders”)		Part I – Items 1, 1A, 2 and 3; Part II –Items 5, 6, 7, 7A, 8 and 9A; and Part IV– Item 15.

2. Portions of the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held April 24, 2012 (“2012 Proxy Statement”)		Part III – Items 10, 11, 12, 13 and 14

Additional securities registered pursuant to Section 12(b) of the Exchange Act:


Title of Each Class		Name of Each Exchange on Which Registered

Guarantee of 5.85% Trust Preferred Securities (TRUPS ^® ) of Wells Fargo Capital VII		NYSE

Guarantee of 5.625% Trust Preferred Securities of Wells Fargo Capital VIII		NYSE

Guarantee of 5.625% Trust Originated Preferred Securities (TOPrS ^SM ) of Wells Fargo Capital IX		NYSE

Guarantee of 6.25% Enhanced Trust Preferred Securities (Enhanced TruPS ^® ) of Wells Fargo Capital XI		NYSE

Guarantee of 7.875% Enhanced Trust Preferred Securities (Enhanced TruPS ^® ) of Wells Fargo Capital XII		NYSE

Guarantee of 5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust Securities of Wachovia Capital Trust III		NYSE

Guarantee of 6.375% Trust Preferred Securities of Wachovia Capital Trust IV		NYSE

Guarantee of 6.375% Trust Preferred Securities of Wachovia Capital Trust IX		NYSE

PART I.

ITEM 1.

BUSINESS

Wells Fargo & Company is a corporation organized under the laws of Delaware and a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended (BHC Act). Its principal business is to act as a holding company for its subsidiaries. References in this report to “the Parent” mean the holding company. References to “we,” “our,” “us” or “the Company” mean the holding company and its subsidiaries that are consolidated for financial reporting purposes.

At December 31, 2011, we had assets of $1.3 trillion, loans of $770 billion, deposits of $920 billion and stockholders’ equity of $140 billion. Based on assets, we were the fourth largest bank holding company in the United States. At December 31, 2011, Wells Fargo Bank, N.A. was the Company’s principal subsidiary with assets of $1.2 trillion, or 88% of the Company’s assets.

At December 31, 2011, we had 264,200 active, full-time equivalent team members.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available free at www.wellsfargo.com/invest_relations/filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC). They are also available free on the SEC’s website at www.sec.gov .

DESCRIPTION OF BUSINESS

General

We are a diversified financial services company. We provide retail, commercial and corporate banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia and in other countries. We provide other financial services through subsidiaries engaged in various businesses, principally: wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing and venture capital investment.

We have three operating segments for management reporting purposes: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. The 2011 Annual Report to Stockholders includes financial information and descriptions of these operating segments.

Competition

The financial services industry is highly competitive. Our subsidiaries compete with financial services providers such as banks, savings and loan associations, credit unions, finance companies, mortgage banking companies, insurance companies, investment banks and mutual fund companies. They also face increased competition from nonbank institutions such as brokerage houses, as well as from financial services subsidiaries of commercial and manufacturing companies. Many of these competitors enjoy fewer regulatory constraints and some may have lower cost structures.

Securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. Combinations of this type could significantly change the competitive environment in which we conduct business. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.

REGULATION AND SUPERVISION

We describe below, and in Notes 3 (Cash, Loan and Dividend Restrictions) and 26 (Regulatory and Agency Capital Requirements) to Financial Statements included in the 2011 Annual Report to Stockholders, the material elements of the regulatory framework applicable to us. Banking statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies, and a change in them, including changes in how they are interpreted or implemented, could have a material effect on our business. The regulatory framework applicable to bank holding companies is intended to protect depositors, federal deposit insurance funds, consumers and the banking system as a whole, and not necessarily investors in bank holding companies such as the Company.

Statutes, regulations and policies could restrict our ability to diversify into other areas of financial services, acquire depository institutions, and pay dividends on our capital stock. They may also require us to provide financial support to one or more of our subsidiary banks, maintain capital balances in excess of amounts desired by management, and pay higher deposit insurance premiums as a result of a general deterioration in the financial condition of depository institutions. See the “Risk Factors” section in the 2011 Annual Report to Stockholders for additional information.

General

Parent Bank Holding Company. As a bank holding company, the Parent is subject to regulation under the BHC Act and to inspection, examination and supervision by its primary regulator, the Board of Governors of the Federal Reserve System (Federal Reserve Board or FRB). The Parent is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both as administered by the SEC. As a company with securities listed on the New York Stock Exchange (NYSE), the Parent is subject to the rules of the NYSE for listed companies.

Subsidiary Banks. Our subsidiary national banks, and their subsidiaries, are subject to regulation and examination primarily by the Office of the Comptroller of the Currency (OCC) and also by the Federal Deposit Insurance Corporation (FDIC) and the FRB. The foreign branches and representative offices of our subsidiary national banks are subject to regulation and examination by their respective foreign financial regulators as well as by the OCC and the FRB. Foreign subsidiaries of our national bank subsidiaries may be subject to the laws and regulations of the foreign countries in which they conduct business. Our state-chartered banks are subject to primary federal regulation and examination by the FDIC and, in addition, are regulated and examined by their respective state banking departments.

Nonbank Subsidiaries. Many of our nonbank subsidiaries are also subject to regulation by the FRB and other applicable federal and state agencies. Our insurance subsidiaries are subject

to regulation by applicable state insurance regulatory agencies, as well as the FRB. Our brokerage subsidiaries are regulated by the SEC, the Financial Industry Regulatory Authority (FINRA) and, in some cases, the Municipal Securities Rulemaking Board, and state securities regulators. Our other nonbank subsidiaries may be subject to the laws and regulations of the federal government and/or the various states as well as foreign countries in which they conduct business.

Parent Bank Holding Company Activities

“Financial in Nature” Requirement. We became a financial holding company effective March 13, 2000. We continue to maintain our status as a bank holding company for purposes of other FRB regulations. As a bank holding company that has elected to become a financial holding company pursuant to the BHC Act, we may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. “Financial in nature” activities include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the FRB, in consultation with the Secretary of the U.S. Treasury, determines to be financial in nature or incidental to such financial activity. “Complementary activities” are activities that the FRB determines upon application to be complementary to a financial activity and do not pose a safety and soundness risk.

FRB approval is not generally required for us to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. Prior notice to the FRB may be required, however, if the company to be acquired has total consolidated assets of $10 billion or more. Prior FRB approval is required before we may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) also prohibits our ability to merge, acquire all or substantially all of the assets of, or acquire control of another company if our total resulting consolidated liabilities would exceed 10% of the aggregate consolidated liabilities of all financial companies.

Because we are a financial holding company, if any of our subsidiary banks receives a rating under the Community Reinvestment Act of 1977, as amended (CRA), of less than satisfactory, we will be prohibited, until the rating is raised to satisfactory or better, from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations, except that we could engage in new activities, or acquire companies engaged in activities, that are closely related to banking under the BHC Act. In addition, if the FRB finds that any one of our subsidiary banks is not well capitalized or well managed, we would be required to enter into an agreement with the FRB to comply with all applicable capital and management requirements and which may contain additional limitations or conditions. Until corrected, we could be

prohibited from engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking under the BHC Act without prior FRB approval. If we fail to correct any such condition within a prescribed period, the FRB could order us to divest our banking subsidiaries or, in the alternative, to cease engaging in activities other than those closely related to banking under the BHC Act.

Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching Act (Riegle-Neal Act), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state).

The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate branches. Banks are also permitted to acquire and to establish new branches in other states where authorized under the laws of those states.

Regulatory Approval. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, financial condition, and future prospects including current and projected capital ratios and levels, the competence, experience, and integrity of management and record of compliance with laws and regulations, the convenience and needs of the communities to be served, including the acquiring institution’s record of compliance under the CRA, the effectiveness of the acquiring institution in combating money laundering activities and the risk to the stability of the United States banking system.

Dividend Restrictions

The Parent is a legal entity separate and distinct from its subsidiary banks and other subsidiaries. A significant source of funds to pay dividends on our common and preferred stock and principal and interest on our debt is dividends from the Parent’s subsidiaries. Various federal and state statutory provisions and regulations limit the amount of dividends the Parent’s subsidiary banks and certain other subsidiaries may pay without regulatory approval. Federal bank regulatory agencies have the authority to prohibit the Parent’s subsidiary banks from engaging in unsafe or unsound practices in conducting their businesses. The payment of dividends, depending on the financial condition of the bank in question, could be deemed an unsafe or unsound practice. The ability of the Parent’s subsidiary banks to pay dividends in the future is currently, and could be further, influenced by bank regulatory policies and capital guidelines. For information about the restrictions applicable to the Parent’s subsidiary banks, see Note 3 (Cash, Loan and Dividend Restrictions) to Financial Statements included in the 2011 Annual Report to Stockholders.

In addition to these restrictions on the ability of our subsidiary banks to pay dividends to us, the FRB finalized rules in late December 2011 that require large bank holding companies (BHCs), including Wells Fargo, to submit annual capital plans and to obtain regulatory approval before making capital distributions, such as the payment of dividends. In late 2011 the FRB also proposed additional regulations that would restrict or prohibit our ability to pay dividends upon the occurrence of capital, stress test, risk management, or liquidity risk management triggers.

Holding Company Structure

Transfer of Funds from Subsidiary Banks. The Parent’s subsidiary banks are subject to restrictions under federal law that limit the transfer of funds or other items of value from such subsidiaries to the Parent and its nonbank subsidiaries (including affiliates) in so-called “covered transactions.” In general, covered transactions include loans and other extensions of credit, investments and asset purchases, as well as certain other transactions involving the transfer of value from a subsidiary bank to an affiliate or for the benefit of an affiliate. Unless an exemption applies, covered transactions by a subsidiary bank with a single affiliate are limited to 10% of the subsidiary bank’s capital and surplus and, with respect to all covered transactions with affiliates in the aggregate, to 20% of the subsidiary bank’s capital and surplus. Also, loans and extensions of credit to affiliates generally are required to be secured by qualifying collateral. A bank’s transactions with its nonbank affiliates are also generally required to be on arm’s length terms.

Source of Strength. The FRB has a policy that a BHC is expected to act as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required at times when the BHC may not have the resources to provide the support.

The OCC may order an assessment of the Parent if the capital of one of its national bank subsidiaries were to become impaired. If the Parent failed to pay the assessment within three months, the OCC could order the sale of the Parent’s stock in the national bank to cover the deficiency.

Capital loans by the Parent to any of its subsidiary banks are subordinate in right of payment to deposits and certain other indebtedness of the subsidiary bank. In addition, in the event of the Parent’s bankruptcy, any commitment by the Parent to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

Depositor Preference. The Federal Deposit Insurance Act (FDI Act) provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have

priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including the Parent, with respect to any extensions of credit they have made to such insured depository institution.

Liability of Commonly Controlled Institutions. All of the Company’s subsidiary banks are insured by the FDIC. FDIC-insured depository institutions can be held liable for any loss incurred, or reasonably expected to be incurred, by the FDIC due to the default of an FDIC-insured depository institution controlled by the same bank holding company, and for any assistance provided by the FDIC to an FDIC-insured depository institution that is in danger of default and that is controlled by the same bank holding company. “Default” means generally the appointment of a conservator or receiver. “In danger of default” means generally the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance.

Dodd-Frank Act

The Dodd-Frank Act, enacted on July 21, 2010, will result in broad changes to the U.S. financial system and is the most significant financial reform legislation since the 1930s. Although a number of its provisions are effective, many of these provisions require the issuance of rules or other agency guidance which remain open to public comment and are not final. As a result, much of the impact of the Dodd-Frank Act is not yet known, but we anticipate the Dodd-Frank Act will affect most of our businesses in some way, either directly through regulation of specific activities or indirectly through regulation of concentration risks, capital or liquidity. At the enterprise level, the FRB recently proposed rules to implement the provisions of the Dodd-Frank Act regarding enhanced supervision and regulation of large BHCs like Wells Fargo and other systemically significant firms. The proposed rules include new risk-based capital requirements and leverage limits, liquidity requirements, counterparty credit exposure limits, risk management requirements, stress testing requirements, debt-to-equity requirements, and early remediation requirements. The FRB published the proposed rules in December 2011. Until the proposed rules are final, we are unable to accurately estimate their impact on the Company, but we expect the final rules will significantly increase our compliance and regulatory requirements.

In addition to proposing rules in 2011 for the enhanced supervision and regulation of large BHCs and other systemically significant firms, federal financial regulators also implemented rules to facilitate the resolution of financial companies. At the end of 2011, the FDIC and FRB finalized regulations requiring large BHCs like Wells Fargo to prepare and periodically revise resolution plans in the event of material distress or failure. The FDIC also finalized rules implementing provisions of the Dodd-Frank Act authorizing it to resolve some financial companies and, under its authority as the agency responsible for insuring deposits with banks, the FDIC implemented rules requiring large

banks to prepare resolution plans. The FDIC also implemented rules shifting the basis for calculating FDIC assessments from deposits to assets and imposing a separate risk-based assessment on large banks.

During 2011, the FRB finalized rules implementing other provisions of the Dodd-Frank Act, including for the regulation of interchange fees (the Durbin Amendment) and for the repeal of the prohibition on the payment of interest on business checking accounts. The final rules implementing the Durbin Amendment establish a maximum fee that we may generally receive for electronic debit transactions, and the repeal of the prohibition on payment of interest on business checking accounts required changes to our affected products.

Federal regulatory agencies issued numerous other rulemakings in 2011 to implement various other requirements of the Dodd-Frank Act, but many of these other proposed rules remain open for comment. Agencies have proposed rules establishing a comprehensive framework for the regulation of derivatives, prohibiting banking entities from engaging in proprietary trading or owning interests in or sponsoring hedge funds or private equity funds (the Volcker Rule), and requiring sponsors of asset-backed securities (ABS) to retain an ownership stake in the ABS. Although we have analyzed these and other proposed rules, the absence of final rules and the complexity of some of the proposed rules make it difficult for the Company to estimate the financial, compliance or operational impacts.

The Dodd-Frank Act also established the Consumer Financial Protection Bureau (CFPB) to ensure consumers receive clear and accurate disclosures regarding financial products and to protect consumers from hidden fees and unfair or abusive practices. The CFPB has begun exercising supervisory review of banks under its jurisdiction and is expected to focus its rulemaking efforts on a variety of mortgage-related topics, such as the steering of consumers toward certain products, abusive or unfair lending practices, disclosure requirements, mortgage underwriting standards and mortgage servicing standards. Proposed regulations have been issued on several topics, including minimum mortgage underwriting standards; however, the content of final rules and impacts to our businesses are uncertain at this time.

Capital Requirements

We are subject to regulatory capital requirements and guidelines imposed by the FRB, which are substantially similar to those imposed by the OCC and the FDIC on depository institutions within their jurisdictions. Under these guidelines, a depository institution’s or a holding company’s assets and certain specified off-balance sheet commitments and obligations are assigned to various risk categories. Tier 1 capital is considered core capital and generally includes common stockholders’ equity, qualifying preferred stock, and trust preferred securities, and noncontrolling interests in consolidated subsidiaries, reduced by goodwill, net of related taxes, certain intangible and other assets in excess of prescribed limitations, and adjusted for the aggregate impact of certain items included in other comprehensive income. Total capital includes Tier 1 capital, subordinated debt and other components that do not qualify for

Tier 1 capital, and the aggregate allowance for credit losses up to a specified percentage of risk-weighted assets. In addition to measures of Tier 1 and Total capital, a further measure of capital, Tier 1 common capital, reflects common equity and retained earnings, less goodwill and certain other deductions.

During 2011, we redeemed $9.2 billion of our trust preferred securities as a result of a provision of the Dodd-Frank Act known as the Collins Amendment that phases out trust preferred securities from the calculation of Tier 1 capital. We will be required to phase existing trust preferred securities out of Tier 1 capital over three years beginning January 1, 2013. We expect proposed rules implementing the Collins Amendment to provide additional clarity regarding the timing of the phase out.

National banks and bank holding companies currently are required to maintain Tier 1 and Total capital equal to at least 4% and 8%, respectively, of their total risk-weighted assets (including certain off-balance sheet items, such as standby letters of credit). The risk-based capital rules state that the capital requirements are minimum standards based primarily on broad credit-risk considerations and do not take into account the other types of risk a banking organization may be exposed to (e.g., interest rate, market, liquidity and operational risks). The FRB may, therefore, set higher capital requirements for categories of banks (e.g. systematically important firms), or for an individual bank as situations warrant. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. For these reasons, we are expected to operate with a capital position well above the minimum ratios, with the amount of capital held to be determined by us through an internal capital assessment that corresponds to our broad risk exposure.

The regulatory capital rules state that voting common stockholders’ equity should be the dominant element within Tier 1 capital and that banking organizations should avoid overreliance on non-common equity elements. During 2009, in conjunction with the FRB’s SCAP stress test process, the ratio of Tier 1 common equity to risk-weighted assets became significant as a measurement of the predominance of common equity in Tier 1 capital. There is currently no mandated minimum ratio.

In June 2004, the Basel Committee on Bank Supervision (BCBS) published new international guidelines for determining regulatory capital that are designed to be more risk sensitive than the existing framework and to promote enhanced risk management practices among large, internationally active banking organizations. The United States federal bank regulatory agencies each approved a final rule similar to the international guidelines in November 2007. This advanced capital adequacy framework is known as “Basel II,” and is intended to more closely align regulatory capital requirements with actual risks. Basel II incorporates three pillars that address (a) capital adequacy, (b) supervisory review, which relates to the computation of capital and internal assessment processes, and (c) market discipline, through increased disclosure requirements. Embodied within these pillars are aspects of risk strategy, measurement and management that relate to credit risk, market risk, and operational risk. Banking organizations

are required to enhance the measurement and management of those risks through the use of advanced approaches for calculating risk-based capital requirements. Basel II includes safeguards that include a requirement that banking organizations conduct a parallel run over a period of four consecutive calendar quarters for measuring regulatory capital under the new regulatory capital rules and the existing general risk-based capital rules before solely operating under the Basel II framework; a requirement that an institution satisfactorily complete a series of transitional periods before operating under Basel II without floors; and a commitment by the federal bank regulatory agencies to conduct ongoing analysis of the framework to ensure Basel II is working as intended. However, the federal bank regulators adopted a final rule in 2011 to replace the transitional floors in the advanced approaches with a permanent capital floor equal to the risk-based capital requirements under the Basel I capital adequacy guidelines. Wells Fargo is implementing the advanced approach under Basel II, and has established a project management infrastructure to implement the regulations and enter the parallel run in 2012 with regulatory approval. Our delayed entry into the parallel run phase was approved by the FRB in 2010 as a result of our acquisition of Wachovia.

In addition, the federal bank regulatory agencies have established minimum leverage (Tier 1 capital to adjusted average total assets) guidelines for banks within their regulatory jurisdiction. These guidelines provide for a minimum leverage ratio of 3% for banks that meet certain specified criteria, including excellent asset quality, high liquidity, low interest rate exposure and the highest regulatory rating. Institutions not meeting these criteria are required to maintain a leverage ratio of 4%. Our Tier 1 and total risk-based capital ratios and leverage ratio as of December 31, 2011, are included in Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements included in the 2011 Annual Report to Stockholders. At December 31, 2011, the Company and each of its subsidiary banks were “well capitalized” under the applicable regulatory capital adequacy guidelines.

In December 2010, the BCBS finalized a set of international guidelines for determining regulatory capital known as “Basel III.” These guidelines were developed in response to the financial crisis of 2008 and 2009 and address many of the weaknesses identified in the banking sector as contributing to the crisis including excessive leverage, inadequate and low quality capital and insufficient liquidity buffers. Basel III fundamentals:

•

raise the quality of capital for banks to be better able to absorb losses on both a going concern and gone concern basis;

•

increase the risk coverage of the capital framework, specifically for trading activities, securitizations, exposures to off-balance sheet vehicles, and counterparty credit exposures arising from derivatives;

•

raise the level of minimum capital requirements;

•

establish an international leverage ratio;

•

develop capital buffers; and

•

raise standards for the supervisory review process (Pillar 2) and public disclosures (Pillar 3).

The U.S. regulatory bodies are reviewing the final international standards and final U.S. rulemaking is expected to be completed in 2012.

The BCBS proposed additional Tier 1 common equity surcharge requirements for global systemically important banks (G-SIBs). The surcharge ranges from 1.0% to 3.5% depending on the bank’s systemic importance to be determined under an indicator-based approach that would consider five broad categories: cross-jurisdictional activity, size, inter-connectedness, substitutability/financial institution infrastructure and complexity. These additional capital requirements, which would be phased in beginning in January 2016 and become fully effective on January 1, 2019, would be in addition to the minimum Basel III 7.0% Tier 1 common equity requirement finalized in December 2010. The Financial Stability Board has determined that the Company is one of the initial 29 G-SIBs that would be subject to the surcharge, but has not yet determined the surcharge amount for us and the other banks.

In December 2011, the FRB issued proposed rules requiring large BHCs like Wells Fargo to submit annual capital plans demonstrating their ability to maintain capital above existing minimum regulatory capital ratios and above a Tier 1 common ratio of 5% under both expected and stressed conditions over at least a nine-quarter period. The proposed rule did not include Basel III capital requirements or a surcharge for G-SIBs. The FRB, however, did indicate it is continuing to implement Basel III capital reforms and expects to adopt rules in 2014 that will implement a G-SIB surcharge consistent with the BCBS approach.

Although uncertainty exists regarding final capital rules, including the FRB’s approach to capital requirements, we evaluate the impact of Basel III on our capital ratios based on our interpretation of the proposed capital requirements and we estimate that our Tier 1 common equity ratio under the Basel III proposal exceeded the fully phased-in minimum of 7.0% by 50 basis points at the end of 2011. This estimate is subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities.

From time to time, the FRB and the Federal Financial Institutions Examination Council (FFIEC) propose changes and amendments to, and issue interpretations of, risk-based capital guidelines and related reporting instructions. In addition, the FRB has closely monitored capital levels of the institutions it supervises during the ongoing financial disruption, and may require such institutions to modify capital levels based on FRB determinations. Such determinations, proposals or interpretations could, if implemented in the future, affect our reported capital ratios and net risk-adjusted assets.

As an additional means to identify problems in the financial management of depository institutions, the FDI Act requires federal bank regulatory agencies to establish certain non-capital

safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality, interest rate exposure, executive compensation and risk management. The agencies are authorized to take action against institutions that fail to meet such standards.

The FDI Act requires federal bank regulatory agencies to take “prompt corrective action” with respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A depository institution’s treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other factors, as established by regulation.

Capital Planning

In connection with its increased focus on the adequacy of regulatory capital and risk management for large financial firms, the FRB required large banks to submit a capital plan in early 2011 as part of its Comprehensive Capital Analysis and Review (CCAR). Following submission of our capital plan on January 7, 2011, the FRB notified us on March 18, 2011, that it did not object to our 2011 capital plan. Since that notification, the Company took several capital actions in 2011, including increasing the quarterly common stock dividend to $0.12 a share, repurchasing $2.4 billion of our common stock, and redeeming $9.2 billion of trust preferred securities that will no longer count as Tier 1 capital under the Dodd-Frank Act and the proposed Basel III capital standards.

In late 2011, the FRB finalized rules to require large BHCs to submit capital plans annually and to obtain regulatory approval before making capital distributions. The rule requires updates to capital plans in the event of material changes in a BHC’s risk profile, including as a result of any significant acquisitions.

Under the FRB’s new capital plan rule, 2012 CCAR will include a BHC’s comprehensive capital plan supported by an assessment of expected uses and sources of capital over a given planning horizon under a range of expected and stress scenarios, similar to the process the FRB relied upon to conduct the 2011 CCAR. As part of the 2012 CCAR, the FRB will also generate a supervisory stress test driven by a sharp decline in the economy and significant decline in asset pricing using the information provided by the BHC to estimate performance. The FRB has indicated it will publish its estimates of performance under this scenario on a BHC-specific basis. We submitted our board-approved 2012 capital plan to the FRB on January 6, 2012. We expect the FRB’s response to our submission in March 2012.

Deposit Insurance Assessments

Our bank subsidiaries, including Wells Fargo Bank, N.A., are members of the Deposit Insurance Fund (DIF) maintained by the FDIC. Through the DIF, the FDIC insures the deposits of our banks up to prescribed limits for each depositor. The DIF was formed March 31, 2006, upon the merger of the Bank Insurance Fund and the Savings Insurance Fund in accordance with the Federal Deposit Insurance Reform Act of 2005 (the FDIR Act). The FDIR Act established a range of 1.15% to 1.50% within which

the FDIC board of directors may set the Designated Reserve Ratio (reserve ratio or DRR). The FDIR Act also granted the FDIC Board the discretion to price deposit insurance according to risk for all insured institutions regardless of the level of the reserve ratio.

The Dodd-Frank Act gave the FDIC greater discretion to manage the DIF, raised the minimum DRR to 1.35% and removed the upper limit of the range. In October 2010, the FDIC Board adopted a Restoration Plan to ensure that the DIF reserve ratio reaches 1.35% by September 30, 2020, as required by the Dodd-Frank Act. At the same time, the FDIC Board proposed a comprehensive, long-range plan for DIF management. In December 2010, as part of the comprehensive plan, the FDIC Board adopted a final rule to set the DRR at 2%, and in February 2011, the FDIC Board approved the remainder of the comprehensive plan. The Restoration Plan eliminated a 3 basis point increase in the annual assessment rates that was to take effect January 1, 2011.

In 2009, the FDIC undertook several measures in an effort to replenish the DIF. On February 27, 2009, the FDIC adopted a final rule modifying the risk-based assessment system and set new initial base assessment rates beginning April 1, 2009. Rates ranged from a minimum of 12 cents per $100 of domestic deposits for well-managed, well-capitalized institutions with the highest credit ratings, to 45 cents per $100 for those institutions posing the most risk to the DIF. Risk-based adjustments to the initial assessment rate could have lowered the rate to 7 cents per $100 of domestic deposits for well-managed, well-capitalized banks with the highest credit ratings or raised the rate to 77.5 cents per $100 for depository institutions posing the most risk to the DIF. On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each insured depository institution’s assets minus Tier 1 capital as of June 30, 2009. The amount of the special assessment for any institution was limited to 10 basis points times the institution’s assessment base for the second quarter 2009. On November 17, 2009, the FDIC amended its regulations to require insured institutions to prepay their estimated quarterly risk-based assessments for fourth quarter 2009, and all of 2010, 2011, and 2012. For purposes of determining the prepayment, the FDIC used the institution’s assessment rate in effect on September 30, 2009. The combined prepayment amount for our banking subsidiaries was $3.9 billion, of which $1.4 billion remains available to offset future assessments.

On February 7, 2011, the FDIC Board approved a final rule on assessments, dividends, assessment base and large bank pricing that took effect on April 1, 2011. To maintain the DIF, member institutions are assessed an insurance premium based on an assessment base and an assessment rate. Generally, the assessment base is an institution’s average consolidated total assets minus average tangible equity. For large and highly complex institutions (those that are very large and are structurally and operationally complex or that pose unique challenges and risks in the case of failure), the assessment rate is determined by combining supervisory ratings and certain financial measures into scorecards. The score received by an institution will be converted into an assessment rate for the institution. The FDIC retains the ability to adjust the total score

of large and highly complex institutions based upon quantitative or qualitative measures not adequately captured in the scorecards.

All FDIC-insured depository institutions must also pay a quarterly assessment towards interest payments on bonds issued by the Financing Corporation, a federal corporation chartered under the authority of the Federal Housing Finance Board. The bonds (commonly referred to as FICO bonds) were issued to capitalize the Federal Savings and Loan Insurance Corporation. FDIC-insured depository institutions paid approximately 1.00 to 1.02 cents per $100 of assessable deposits during the first nine months of 2011. To coincide with Dodd-Frank Act mandated changes to the insurance assessment base, the FDIC established lower FICO assessment rates, .68 cents per $100 of assessment base for the fourth quarter of 2011 and .66 cents per $100 of assessment base for first quarter 2012. For the year ended December 31, 2011, the Company’s FDIC deposit insurance assessments, including FICO assessments, totaled $1.3 billion.

The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution’s regulatory agency. The termination of deposit insurance for one or more of our bank subsidiaries could have a material adverse effect on our earnings, depending on the collective size of the particular banks involved.

Fiscal and Monetary Policies

Our business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. We are particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the FRB are (a) conducting open market operations in United States government securities, (b) changing the discount rates of borrowings of depository institutions, (c) imposing or changing reserve requirements against depository institutions’ deposits, and (d) imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB may have a material effect on our business, results of operations and financial condition.

Privacy Provisions of the Gramm-Leach-Bliley Act and Restrictions on Cross-Selling

Federal banking regulators, as required under the Gramm-Leach-Bliley Act (the GLB Act), have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information

is transmitted through diversified financial services companies and conveyed to outside vendors. Federal financial regulators have issued regulations under the Fair and Accurate Credit Transactions Act that have the effect of increasing the length of the waiting period, after privacy disclosures are provided to new customers, before information can be shared among different affiliated companies for the purpose of cross-selling products and services between those affiliated companies.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) implemented a broad range of corporate governance and accounting measures to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of disclosures under federal securities laws. We are subject to Sarbanes-Oxley because we are required to file periodic reports with the SEC under the Securities Exchange Act of 1934. Among other things, Sarbanes-Oxley and/or its implementing regulations established membership requirements and additional responsibilities for our audit committee, imposed restrictions on the relationship between us and our outside auditors (including restrictions on the types of non-audit services our auditors may provide to us), imposed additional responsibilities for our external financial statements on our chief executive officer and chief financial officer, expanded the disclosure requirements for our corporate insiders, required our management to evaluate our disclosure controls and procedures and our internal control over financial reporting, and required our auditors to issue a report on our internal control over financial reporting.

Patriot Act

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Patriot Act) is intended to strengthen the ability of U.S. law enforcement agencies and intelligence communities to work together to combat terrorism on a variety of fronts. The Patriot Act has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money. The Patriot Act required us to implement new or revised policies and procedures relating to anti-money laundering, compliance, suspicious activities, and currency transaction reporting and due diligence on customers. The Patriot Act also requires federal bank regulators to evaluate the effectiveness of an applicant in combating money laundering in determining whether to approve a proposed bank acquisition.

Future Legislation or Regulation

In light of recent conditions in the U.S. and global financial markets and the U.S. and global economy, legislators, the presidential administration and regulators have continued their increased focus on regulation of the financial services industry. Proposals that further increase regulation of the financial services industry have been and are expected to continue to be

introduced in the U.S. Congress in state legislatures and abroad. Only a small percentage of the regulations authorized or required under the Dodd-Frank Act have been proposed or finalized by federal regulators. Further legislative changes and additional regulations may change our operating environment in substantial and unpredictable ways. Such legislation and regulations could increase our cost of doing business, affect our compensation structure, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We cannot predict whether future legislative proposals will be enacted and, if enacted, the effect that they, or any implementing regulations, would have on our business, results of operations or financial condition. The same uncertainty exists with respect to regulations authorized or required under the Dodd-Frank Act but that have not yet been proposed or finalized.

ADDITIONAL INFORMATION

Additional information in response to this Item 1 can be found in the 2011 Annual Report to Stockholders under “Financial Review” and under “Financial Statements.” That information is incorporated into this item by reference.

ITEM 1A.

RISK FACTORS

Information in response to this Item 1A can be found in this report on pages 2-8 and in the 2011 Annual Report to Stockholders under “Financial Review – Risk Factors.” That information is incorporated into this item by reference.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES


	City	State
We own our corporate headquarters building in:	San Francisco	California

We own administrative facilities in:	Anchorage	Alaska
	Chandler	Arizona
	Phoenix	Arizona
	Tempe	Arizona
	El Monte	California
	Fremont	California
	Irvine	California
	San Francisco	California
	Walnut Creek	California
	Boise	Idaho
	Clive	Iowa
	Des Moines	Iowa
	Minneapolis	Minnesota
	Shoreview	Minnesota
	St. Louis	Missouri
	Billings	Montana
	Omaha	Nebraska
	Albuquerque	New Mexico
	Summit	New Jersey
	Charlotte	North Carolina
	Raleigh	North Carolina
	Portland	Oregon
	Sioux Falls	South Dakota
	Salt Lake City	Utah
	Glen Allen	Virginia

We own operations/servicing centers in:	Birmingham	Alabama
	Homewood	Alabama
	San Leandro	California
	Springfield	Illinois
	West Des Moines	Iowa
	Minneapolis	Minnesota
	St. Louis	Missouri
	Charlotte	North Carolina
	Winston-Salem	North Carolina
	Sioux Falls	South Dakota
	San Antonio	Texas


	State
We lease office space for various administrative departments in major locations in:	Arizona	New Jersey
	California	New York
	Colorado	North Carolina
	Delaware	North Dakota
	Florida	Oregon
	Georgia	Pennsylvania
	Illinois	South Carolina
	Iowa	South Dakota
	Kansas	Texas
	Maryland	Virginia
	Massachusetts	Washington
	Minnesota	Wisconsin
	Missouri	Ontario, Canada
	Nevada	Puerto Rico

We lease office space for various operations/ servicing centers in:	California	Oregon
	Florida	Pennsylvania
	Georgia	Virginia
	North Carolina

	City	State
We are a joint venture partner in an office building in:	Minneapolis	Minnesota

	Country
We lease office space for international operations in:	Argentina	Italy
	Australia	Japan
	Bangladesh	Malaysia
	Brazil	Mexico
	Cayman Islands	Philippines
	Chile	Russia
	China	Singapore
	Colombia	South Africa
	Dominican Republic	South Korea
	Ecuador	Spain
	Egypt	Taiwan
	France	Thailand
	Germany	Turkey
	India	United Arab Emirates
	Indonesia	United Kingdom
	Ireland	Vietnam

As of December 31, 2011, we provided banking, insurance, investments, mortgage and consumer and commercial finance from more than 9,000 domestic stores under ownership and lease agreements.

ADDITIONAL INFORMATION

Additional information in response to this Item 2 can be found in the 2011 Annual Report to Stockholders under “Financial Statements – Notes to Financial Statements – Note 7 (Premises, Equipment, Lease Commitments and Other Assets).” That information is incorporated into this item by reference.

ITEM 3.

LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2011 Annual Report to Stockholders under “Financial Statements – Notes to Financial Statements – Note 15 (Legal Actions).” That information is incorporated into this item by reference.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to the Company’s executive officers is included in Item 10 of this report.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

The Company’s common stock is listed on the NYSE (symbol “WFC”). The Quarterly Financial Data table of the 2011 Annual Report to Stockholders provides the quarterly prices of, and quarterly dividends paid on, the Company’s common stock for the two-year period ended December 31, 2011, and is incorporated herein by reference. Prices shown represent the daily high and low, and the quarter-end sale prices of the Company’s common stock as reported on the NYSE Composite Transaction Reporting System for the periods indicated. At January 31, 2012, there were 200,518 holders of record of the Company’s common stock.

DIVIDENDS

The dividend restrictions discussions on page 3 of this report and in the 2011 Annual Report to Stockholders under “Financial Statements – Notes to Financial Statements – Note 3 (Cash, Loan and Dividend Restrictions)” are incorporated into this item by reference.

REPURCHASES OF EQUITY SECURITIES

In September 2008, our Board of Directors authorized the repurchase of 25 million shares of our common stock and in March 2011, our Board of Directors authorized the repurchase of an additional 200 million shares of our common stock. The authorization covered shares repurchased to meet team member benefit plan requirements. The Company maintains a variety of retirement plans for its team members and typically is a net issuer of shares of common stock to these plans. From time to time, it also purchases shares of common stock from these plans to accommodate team member preferences. Share repurchases are subtracted from the Company’s repurchase authority without offset for share issuances. Shares may be repurchased as part of employee stock option exercises, from the different benefit plans or in the open market, subject to regulatory approval.

The amount and timing of stock repurchases will be based on various factors, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations. In June 2010, our Board of Directors also authorized the repurchase of up to $1 billion of warrants to purchase our common stock. The warrants are listed on the NYSE under the symbol “WFCWS.” The amount and timing of warrant repurchases will be based on various factors including market conditions. See the “Capital Management” section in the 2011 Annual Report to Stockholders for additional information about our common stock and warrant repurchases.

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended December 31, 2011.


Calendar month	Total number of shares repurchased (1)		Weighted-average price paid per share		Maximum number of shares that may yet be purchased under the authorizations
October		2,098,981	$	24.92		141,771,511
November (2)		21,981,056		24.41		119,790,455
December		2,497,232		26.45		117,293,223

Total		26,577,269

(1)	All shares were repurchased under an authorization covering up to 200 million shares of common stock approved by the Board of Directors and publicly announced by the Company on March 18, 2011. Unless modified or revoked by the Board, this authorization does not expire.

(2)	Includes 6,252,840 shares at a weighted-average price paid per share of $23.99 repurchased in a private transaction.

The following table shows Company repurchases of the warrants for each calendar month in the quarter ended December 31, 2011.


Calendar month	Total number of warrants repurchased (1)		Average price paid per warrant		Maximum dollar value of warrants that may yet be purchased
October		13,900	$	8.24		453,225,607
November		83,900		8.08		452,547,853
December		–		–		452,547,853

Total		97,800

(1)	Warrants are purchased under the authorization covering up to $1 billion in warrants approved by the Board of Directors (ratified and approved on June 22, 2010). Unless modified or revoked by the Board, this authorization does not expire.

ITEM 6.

SELECTED FINANCIAL DATA

Information in response to this Item 6 can be found in the 2011 Annual Report to Stockholders under “Financial Review” in Table 1. That information is incorporated into this item by reference.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information in response to this Item 7 can be found in the 2011 Annual Report to Stockholders under “Financial Review.” That information is incorporated into this item by reference.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information in response to this Item 7A can be found in the 2011 Annual Report to Stockholders under “Financial Review – Risk Management – Asset/Liability Management.” That information is incorporated into this item by reference.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information in response to this Item 8 can be found in the 2011 Annual Report to Stockholders under “Financial Statements” and under “Quarterly Financial Data.” That information is incorporated into this item by reference.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.

CONTROLS AND PROCEDURES

Information in response to this Item 9A can be found in the 2011 Annual Report to Stockholders under “Controls and Procedures.” That information is incorporated into this item by reference.

ITEM 9B.

OTHER INFORMATION

Not applicable.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

EXECUTIVE OFFICERS OF THE REGISTRANT

Patricia R. Callahan (age 58)

Senior Executive Vice President and Chief Administrative Officer since February 2011;

Executive Vice President (Office of Transition) from January 2009 to February 2011;

Executive Vice President (Social Responsibility Group) from June 2008 to December 2008;

Executive Vice President (Compliance and Risk) from June 2005 to September 2007.

Ms. Callahan has served with the Company or its predecessors for 34 years.

David M. Carroll (age 54)

Senior Executive Vice President (Wealth, Brokerage and Retirement Services) since January 2009;

Senior Executive Vice President of Wachovia Corporation from September 2001 to January 2009.

Mr. Carroll has served with the Company or its predecessors for 30 years.

Michael J. Heid (age 54)

Executive Vice President (and President of Wells Fargo Home Mortgage, a division of Wells Fargo Bank, N.A.) since July 2011;

Co-President of Wells Fargo Home Mortgage from May 2004 to July 2011.

Mr. Heid has served with the Company or its predecessors for 24 years.

David A. Hoyt (age 56)

Senior Executive Vice President (Wholesale Banking) since August 2005.

Mr. Hoyt has served with the Company or its predecessors for 30 years.

Richard D. Levy (age 54)

Executive Vice President and Controller since February 2007;

Senior Vice President and Controller from September 2002 to February 2007.

Mr. Levy has served with the Company for 9 years.

Michael J. Loughlin (age 56)

Senior Executive Vice President and Chief Risk Officer since July 2011;

Executive Vice President and Chief Risk Officer from November 2010 to July 2011;

Executive Vice President and Chief Credit and Risk Officer from April 2006 to November 2010.

Mr. Loughlin has served with the Company or its predecessors for 30 years.

Avid Modjtabai (age 50)

Senior Executive Vice President (Consumer Lending) since July 2011;

Executive Vice President and Chief Information Officer from April 2007 to July 2011;

Executive Vice President (Human Resources) from June 2005 to April 2007.

Ms. Modjtabai has served with the Company or its predecessors for 18 years.

Kevin A. Rhein (age 58)

Senior Executive Vice President and Chief Information Officer since July 2011;

Executive Vice President (Card Services and Consumer Lending) from January 2009 to July 2011;

Executive Vice President (Card Services) of Wells Fargo Bank, N.A. from February 2004 to January 2009.

Mr. Rhein has served with the Company or its predecessors for 33 years.

Timothy J. Sloan (age 51)

Senior Executive Vice President and Chief Financial Officer since February 2011;

Senior Executive Vice President and Chief Administrative Officer from September 2010 to February 2011;

Executive Vice President (Commercial Banking, Real Estate and Specialized Financial Services) of Wells Fargo Bank, N.A. from June 2006 to September 2010.

Mr. Sloan has served with the Company or its predecessors for 24 years.

James M. Strother (age 60)

Senior Executive Vice President and General Counsel since July 2011;

Executive Vice President and General Counsel from January 2004 to July 2011.

Mr. Strother has served with the Company or its predecessors for 25 years.

John G. Stumpf (age 58)

Chairman, President and Chief Executive Officer since January 2010;

President and Chief Executive Officer from June 2007 to January 2010;

President and Chief Operating Officer from August 2005 to June 2007.

Mr. Stumpf has served with the Company or its predecessors for 30 years.

Carrie L. Tolstedt (age 52)

Senior Executive Vice President (Community Banking) since June 2007;

Group Executive Vice President (Regional Banking) from July 2002 to June 2007.

Ms. Tolstedt has served with the Company or its predecessors for 22 years.

There is no family relationship between any of the Company’s executive officers or directors. All executive officers serve at the pleasure of the Board of Directors.

AUDIT COMMITTEE INFORMATION

The Audit and Examination Committee is a standing audit committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Committee has six members: John D. Baker II, Enrique Hernandez, Jr., Nicholas G. Moore (Chair), Federico F. Peña, Philip J. Quigley and Susan G. Swenson. Each member is independent, as independence for audit committee members is defined by NYSE rules. The Board of Directors has determined, in its business judgment, that each member of the Audit and Examination Committee is financially literate, as required by NYSE rules, and that each qualifies as an “audit committee financial expert” as defined by SEC regulations.

CODE OF ETHICS AND BUSINESS CONDUCT

The Company’s Code of Ethics and Business Conduct for team members (including executive officers), Director Code of Ethics, the Company’s corporate governance guidelines, and the charters for the Audit and Examination, Governance and Nominating, Human Resources, Corporate Responsibility, Credit, Finance, and Risk Committees are available at www.wellsfargo.com/about/corporate/corporate_governance . This information is also available in print to any stockholder upon written request to the Office of the Secretary, Wells Fargo & Company, MAC N9305-173, Wells Fargo Center, Sixth and Marquette, Minneapolis, Minnesota 55479.

ADDITIONAL INFORMATION

Additional information in response to this Item 10 can be found in the Company’s 2012 Proxy Statement under “Ownership of Our Common Stock – Section 16(a) Beneficial Ownership Reporting Compliance” and “Item 1 – Election of Directors – Director Nominees for Election” and “–Other Matters Relating to Directors.” That information is incorporated into this item by reference.

ITEM 11.

EXECUTIVE COMPENSATION

Information in response to this Item 11 can be found in the Company’s 2012 Proxy Statement under “Item 1 – Election of Directors – Compensation Committee Interlocks and Insider Participation” and “–Director Compensation,” under “Corporate Governance – Risk Management and Compensation Practices,” under “Information About Related Persons – Related Person Transactions,” and under “Item 2 – Executive Compensation and Advisory Resolution (Say-on-Pay)” excluding “–Advisory Resolution Regarding Named Executives’ Compensation.” That information is incorporated into this item by reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information about our equity compensation plans in effect on December 31, 2011, separately aggregated for plans approved by stockholders and for plans not approved by stockholders. A description of the material features of each equity compensation plan not approved by stockholders follows the table. All outstanding awards relate to shares of our common stock. Information is as of December 31, 2011, unless otherwise indicated.

Equity Compensation Plan Information (1)


	(a)			(b)		(c)
Plan category	# of shares to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights (2)		# of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		292,558,671	(3)	$	27.68		157,624,092	(4)
Equity compensation plans not approved by security holders		39,586,149	(5)		94.78		3,655,193	(6)

Total		332,144,820			35.74		161,279,285

(1)

The table above does not include information about equity compensation plans assumed in mergers that we froze at the time of the merger. Under these assumed plans a total of 6,646,893 shares of common stock were issuable upon exercise of options and 23,438 shares upon distribution of vested but deferred share-based awards. The weighted average exercise price per share of our common stock of the outstanding options was $121.58. We assumed the amended and restated Wachovia Corporation 2003 Stock Incentive Plan (2003 SIP) in the Wachovia merger and in February 2009 used substantially all remaining available shares for stock option grants to legacy Wachovia team members. Information for the 2003 SIP is included in the table above under the plan category for equity compensation plans not approved by security holders. No awards have been granted since February 2009, and no future awards will be granted under the 2003 SIP.

(2)	Does not reflect restricted share rights (RSRs), restricted share units (RSUs), or restricted share awards (RSAs) or deferred compensation benefits because they have no exercise price.

(3)

For the Long-Term Incentive Compensation Plan (LTICP), consists of 239,355,639 shares subject to options, 3,678 shares subject to RSAs, 38,680,011 shares subject to unvested RSRs, 84,356 shares issuable upon distribution of vested but deferred RSRs, and a maximum of 9,095,943 performance shares. For the Supplemental 401(k) Plan, consists of 4,051,318 shares issuable upon distribution of benefits. For the Directors Stock Compensation and Deferral Plan (Directors Plan), consists of 721,432 shares subject to options, 208,062 shares issuable upon distribution of vested but deferred stock awards, and 358,232 shares issuable upon distribution of deferred compensation benefits.

(4)

We could have issued the number of shares of our common stock indicated in the following table pursuant to any of the award types listed for the plan or, if indicated for the plan, pursuant to distributions of deferred compensation benefits. Each share of common stock issued under the LTICP pursuant to awards other than options or SARs counts as two shares. Effective January 24, 2012, the Board authorized an additional 500,000 shares of common stock for issuance under the Directors Plan for compensation deferrals only.


Plan	# of shares		Award types
LTICP		157,072,090	Stock options, stock, SARs, restricted stock, RSRs, performance shares, performance units
Supplemental 401(k) Plan		351,752	Deferral distribution
Directors Plan		200,250	Stock options, deferral distribution

(5)

For the 2003 SIP, consists of 25,296,071 shares subject to options and 596,440 shares subject to RSAs. For the PartnerShares Stock Option Plan (PartnerShares), consists of 7,477,472 shares subject to options. For the other plans, consists of 6,216,166 shares of common stock issuable upon distribution of deferred compensation benefits.

(6)

We could have issued the number of shares of our common stock indicated in the following table pursuant to any of the award types listed for the plan or, if indicated for the plan, pursuant to distributions of deferred compensation benefits. No information is provided for the 2003 SIP, PartnerShares Plan, the Norwest Corporation Directors’ Formula Stock Award Plan and the Norwest Corporation Directors’ Stock Deferral Plan because no future awards or deferrals will be made under these plans and because column (a) reflects all shares issuable under those plans upon exercise or distribution of outstanding awards or deferred compensation benefits.


Plan	# of shares		Award types
Deferred Compensation Plan		3,314,646	Deferral distribution
Non-Qualified Deferred Compensation Plan for Independent Contractors		340,547	Deferral distribution

Material Features of Equity Compensation Plans Not Approved by Stockholders

The 2003 SIP . The amended and restated Wachovia Corporation 2003 Stock Incentive Plan (2003 SIP) was originally approved by Wachovia’s shareholders in 2003 and prior to the merger had been used for equity awards to Wachovia’s executive officers and other key employees. We assumed the 2003 SIP in the merger and in February 2009 used substantially all remaining available shares for stock option grants to legacy Wachovia team members. No awards have been granted since then, and no future awards will be granted under the 2003 SIP.

At December 31, 2011, only options and stock awards in the form of RSAs were outstanding under the 2003 SIP. The options generally expire on the tenth anniversary of the grant date and vest ratably over a three-year period from the grant date. The option price is payable to us in full by methods the Board’s Human Resources Committee (HRC) designates, including, but not limited to, in cash or its equivalent, by tendering or withholding shares of our common stock having a fair market value at the time of exercise equal to the total option price, or by a combination of the foregoing. Unless the HRC determines otherwise or except as prohibited by applicable law, options may also be exercised by a “cashless exercise” where the participant gives irrevocable instructions to a broker to promptly deliver to us the amount of sale proceeds from the shares covered by the option exercised, together with any withholding taxes due to the Company. The proceeds from any cash payments upon option exercise are added to our general funds and used for general corporate purposes. The outstanding RSAs vest upon the achievement of the specified performance criteria. Prior to vesting, the holders of RSAs may exercise full voting rights with respect to those shares and are entitled to receive all dividends and other distributions paid with respect to those shares. Each participant’s award agreement will state the extent, if any, to which the participant may receive unvested stock awards following termination of employment.

PartnerShares Plan . We used the PartnerShares Stock Option Plan (PartnerShares) from 1996-2002 primarily for equity awards to team members not eligible for grants under the LTICP. The plan was in effect at December 31, 2011, only as to the issuance of common stock upon exercise of outstanding options. No future awards may be granted under the PartnerShares Plan.

Options under the PartnerShares Plan are exercisable at the closing share price of our common stock as of the trading day immediately before the grant date. All options granted under the plan were vested at December 31, 2011. Options are exercisable for ten years from the grant date or one year from the participant’s death, whichever occurs first. If a participant leaves the Company other than because of death, permanent disability or discharge for cause, the option terminates immediately or three months after termination, as specified in

the grant terms. If a participant is discharged for cause, the option terminates immediately. Participants can pay the exercise price in cash or by cashless exercise through a broker.

Deferred Compensation Plan . Under the Deferred Compensation Plan eligible team members may defer receipt of salary, bonuses and certain other compensation subject to the terms of the plan. Deferral elections are irrevocable once made except for limited re-deferral opportunities. We treat amounts deferred by a participant as if invested in the earnings options selected by the participant, and determine the deferred compensation benefit payable to the participant based on the performance of those earnings options. The plan offers a number of earnings options, including one based on our common stock with dividends reinvested. We generally distribute amounts allocated to the common stock option in shares of common stock. Participants have no direct interest in any of the earnings options and are general unsecured creditors of the Company with respect to their deferred compensation benefits under the plan.

Non-Qualified Deferred Compensation Plan for Independent Contractors . Under the Non-Qualified Deferred Compensation Plan for Independent Contractors participants who perform qualifying investment or other financial services for participating affiliates as independent contractors may defer all or part of their eligible compensation payable to them by the affiliate subject to the terms of the plan. Deferral elections are irrevocable once made. Amounts deferred by a participant are treated as if invested in the earnings options selected by the participant, which determine the deferred compensation benefit payable to the participant. The plan offers a number of earnings options, including one based on our common stock with dividends reinvested. We generally distribute amounts allocated to the common stock option in shares of common stock. The plan is sponsored by a wholly owned subsidiary, WF Deferred Compensation Holdings, Inc. We have guaranteed its obligations under the plan. Participants have no direct interest in any of the earnings options and are general unsecured creditors of the plan sponsor and the Company with respect to their deferred compensation benefits under the plan.

Norwest Corporation Directors’ Formula Stock Award Plan . Under the Norwest Corporation Directors’ Formula Stock Award Plan we awarded shares of common stock to non-employee directors. The plan allowed participants to defer receipt of all or a portion of their awards, with dividends reinvested, until a future year or years as selected by the participants subject to the terms of the plan. Participants can elect one time to defer commencement of distribution of their deferral accounts if the election is made sufficiently in advance of the original distribution commencement date and the new distribution commencement date is sufficiently beyond the original distribution commencement date. Participants have no direct interest in the shares deferred under the plan and are general unsecured creditors of the Company with respect to payment of their deferred stock awards under the plan. No future stock awards or deferrals may be made under this plan.

Norwest Corporation Directors’ Stock Deferral Plan . Under the Norwest Corporation Directors’ Stock Deferral Plan a participating director could defer receipt of all or part of the annual cash retainer and meeting fees payable to the director until a future year or years as selected by the director subject to the terms of the plan. A participating director could elect distribution of his or her deferral account in a lump sum in either cash or whole shares of common stock, or a combination of both. Alternatively, the director could elect to receive the distribution in up to ten annual installments of cash. A participant can elect one time to defer commencement of distribution of his or her deferral account if the election is made sufficiently in advance of the original distribution commencement date and the new distribution commencement date is sufficiently beyond the original distribution commencement date. No future deferrals may be made under this plan.

ADDITIONAL INFORMATION

Additional information in response to this Item 12 can be found in the Company’s 2012 Proxy Statement under “Ownership of Our Common Stock – Directors and Executive Officers” and “–Principal Stockholders.” That information is incorporated into this item by reference.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information in response to this Item 13 can be found in the Company’s 2012 Proxy Statement under “Corporate Governance – Director Independence” and under “Information About Related Persons.” That information is incorporated into this item by reference.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information in response to this Item 14 can be found in the Company’s 2012 Proxy Statement under “Item 3 – Appointment of Independent Auditors – KPMG Fees” and “–Audit and Examination Committee Pre-Approval Policies and Procedures.” That information is incorporated into this item by reference.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. FINANCIAL STATEMENTS

The Company’s consolidated financial statements, including the notes thereto, and the report of the independent registered public accounting firm thereon, are set forth in the 2011 Annual Report to Stockholders, and are incorporated into this item by reference.

2. FINANCIAL STATEMENT SCHEDULES

All financial statement schedules for the Company have been included in the consolidated financial statements or the related footnotes, or are either inapplicable or not required.

3. EXHIBITS

A list of exhibits to this Form 10-K is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated into this item by reference.

Stockholders may obtain a copy of any of the following exhibits, upon payment of a reasonable fee, by writing to Wells Fargo & Company, Office of the Secretary, Wells Fargo Center, N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479.

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214. The former Wachovia Corporation filed documents under SEC file number 001-10000.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 28, 2012.


WELLS FARGO & COMPANY

By:		/s/ JOHN G. STUMPF
		John G. Stumpf Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By:		/s/ JOHN G. STUMPF
		John G. Stumpf Chairman, President and Chief Executive Officer (Principal Executive Officer) February 28, 2012

By:		/s/ TIMOTHY J. SLOAN
		Timothy J. Sloan Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) February 28, 2012

By:		/s/ RICHARD D. LEVY
		Richard D. Levy Executive Vice President and Controller (Principal Accounting Officer) February 28, 2012

The Directors of Wells Fargo & Company listed below have duly executed powers of attorney empowering Nicholas G. Moore to sign this document on their behalf.

John D. Baker II

Elaine L. Chao

John S. Chen

Lloyd H. Dean

Susan E. Engel

Enrique Hernandez, Jr.

Mackey J. McDonald

Cynthia H. Milligan

Nicholas G. Moore

Federico F. Peña

Philip J. Quigley

Judith M. Runstad

Stephen W. Sanger

John G. Stumpf

Susan G. Swenson



By:		/s/ NICHOLAS G. MOORE
		Nicholas G. Moore Director and Attorney-in-fact February 28, 2012

EXHIBIT INDEX


Exhibit Number	Description	Location

3(a)	Restated Certificate of Incorporation, as amended and in effect on the date hereof.	Filed herewith.

3(b)	By-Laws.	Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 28, 2011.

4(a)	See Exhibits 3(a) and 3(b).

4(b)	The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

10(a) *	Long-Term Incentive Compensation Plan.	Incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.

	Forms of Performance Share Award Agreement:

	For grants on or after February 28, 2012;	Filed herewith.

	For grants on February 22, 2011; and	Incorporated by reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

	For grants to John G. Stumpf, Howard I. Atkins, David M. Carroll, David A. Hoyt, Mark C. Oman and Carrie L. Tolstedt on June 22, 2010.	Incorporated by reference to Exhibit 10(a) to the Company’s Current Report on Form 8-K filed June 25, 2010.

	Form of Retention Performance Share Award Agreement for grants to John G. Stumpf, Howard I. Atkins, David A. Hoyt, Mark C. Oman and Carrie L. Tolstedt on December 24, 2009.	Incorporated by reference to Exhibit 10(a) to the Company’s Current Report on Form 8-K filed December 31, 2009.

	Forms of Award Agreement for grants of stock awards to John G. Stumpf, Howard I. Atkins, David A. Hoyt and Mark C. Oman.	Incorporated by reference to Exhibits 10(a), 10(b), 10(c) and 10(d) to the Company’s Current Report on Form 8-K filed August 6, 2009.

	Forms of Restricted Share Rights Award Agreement.

	For grants on or after February 28, 2012, including grants to John G. Stumpf, Timothy J. Sloan, David M. Carroll, David A. Hoyt, and Carrie L. Tolstedt;	Filed herewith.

	For grants on February 22, 2011, including grants to John G. Stumpf, Howard I. Atkins, David M. Carroll, David A. Hoyt, Mark C. Oman, Timothy J. Sloan and Carrie L. Tolstedt;	Incorporated by reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

	For grants prior to February 22, 2011, including grants to John G. Stumpf, Howard I. Atkins, David M. Carroll, David A. Hoyt, Mark C. Oman, Timothy J. Sloan and Carrie L. Tolstedt;	Incorporated by reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

	For grant to David M. Carroll on December 24, 2009;	Incorporated by reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

	For grant to John G. Stumpf on August 3, 2009; and	Incorporated by reference to Exhibit 10(e) to the Company’s Current Report on Form 8-K filed August 6, 2009.

	For grants to Howard I. Atkins, David A. Hoyt, Mark C. Oman and Carrie L. Tolstedt on February 24, 2009, as amended on November 16, 2010.	Incorporated by reference to Exhibit 10(a) to the Company’s Current Report on Form 8-K filed February 27, 2009, and Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

^*	Management contract or compensatory plan or arrangement.


Exhibit Number	Description	Location

	Form of Non-Qualified Stock Option Agreement, including grants to John G. Stumpf, Howard I. Atkins, David M. Carroll, David A. Hoyt, Mark C. Oman, Timothy J. Sloan and Carrie L. Tolstedt.	Incorporated by reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

10(b)*	Long-Term Incentive Plan.	Incorporated by reference to Exhibit A to the former Wells Fargo’s Proxy Statement filed March 14, 1994.

10(c)*	Wells Fargo Bonus Plan, as amended effective January 1, 2011.	Incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

10(d)*	Performance-Based Compensation Policy.	Incorporated by reference to Exhibit 10(b) to the Company’s Current Report on Form 8-K filed May 5, 2008.

10(e)*	Deferred Compensation Plan, as amended effective January 1, 2008.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

	Amendment to Deferred Compensation Plan, effective January 1, 2011.	Incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.

	Amendment to Deferred Compensation Plan, effective December 1, 2009.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

10(f)*	Directors Stock Compensation and Deferral Plan.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

	Amendment to Directors Stock Compensation and Deferral Plan, effective January 24, 2012.	Filed herewith.

	Amendment to Directors Stock Compensation and Deferral Plan, effective January 25, 2011.	Incorporated by reference to Exhibit 10(d) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

	Amendment to Directors Stock Compensation and Deferral Plan, effective February 24, 2009.	Incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

	Amendments to Directors Stock Compensation and Deferral Plan, effective September 23, 2008.	Incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

	Amendment to Directors Stock Compensation and Deferral Plan, effective January 22, 2008.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

	Action of Governance and Nominating Committee Increasing Amount of Formula Stock and Option Awards Under Directors Stock Compensation and Deferral Plan, effective January 1, 2007.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

10(g)*	Deferred Compensation Plan for Non-Employee Directors of the former Norwest.	Incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

	Amendment to Deferred Compensation Plan for Non-Employee Directors, effective November 1, 2000.	Filed as paragraph (4) of Exhibit 10(ff) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

	Amendment to Deferred Compensation Plan for Non-Employee Directors, effective January 1, 2004.	Incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.


Exhibit Number	Description	Location

10(h)*	Directors’ Stock Deferral Plan for directors of the former Norwest.	Incorporated by reference to Exhibit 10(d) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

	Amendment to Directors’ Stock Deferral Plan, effective November 1, 2000.	Filed as paragraph (5) of Exhibit 10(ff) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

	Amendment to Directors’ Stock Deferral Plan, effective January 1, 2004.	Incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.

10(i)*	Directors’ Formula Stock Award Plan for directors of the former Norwest.	Incorporated by reference to Exhibit 10(e) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.

	Amendment to Directors’ Formula Stock Award Plan, effective November 1, 2000.	Filed as paragraph (6) of Exhibit 10(ff) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

	Amendment to Directors’ Formula Stock Award Plan, effective January 1, 2004.	Incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.

10(j)*	Deferral Plan for Directors of the former Wells Fargo.	Incorporated by reference to Exhibit 10(b) to the former Wells Fargo’s Annual Report on Form 10-K for the year ended December 31, 1997.

	Amendment to Deferral Plan, effective January 1, 2004.	Incorporated by reference to Exhibit 10(d) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.

10(k)*	Supplemental 401(k) Plan.	Incorporated by reference to Exhibit 10(c) to the Company’s Current Report on Form 8-K filed May 4, 2009.

10(l)*	Supplemental Cash Balance Plan.	Incorporated by reference to Exhibit 10(b) to the Company’s Current Report on Form 8-K filed May 4, 2009.

10(m)*	Supplemental Long-Term Disability Plan.	Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1990.

	Amendment to Supplemental Long-Term Disability Plan.	Incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1992.

10(n)*	Agreement, dated July 11, 2001, between the Company and Howard I. Atkins.	Incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

10(o)*	Agreement between the Company and Mark C. Oman, dated May 7, 1999.	Incorporated by reference to Exhibit 10(y) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999.

	Amendment No. 1 to Agreement between the Company and Mark C. Oman, effective December 29, 2008.	Incorporated by reference to Exhibit 10(q) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

10(p)*	Description of Relocation Program.	Incorporated by reference to Exhibit 10(y) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

10(q)	PartnerShares Stock Option Plan.	Incorporated by reference to Exhibit 10(x) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

	Amendment to PartnerShares Stock Option Plan, effective August 1, 2005.	Incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.


Exhibit Number	Description	Location

	Amendment to PartnerShares Stock Option Plan, effective August 4, 2006.	Incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

	Amendment to PartnerShares Stock Option Plan, effective January 1, 2007.	Incorporated by reference to Exhibit 10(g) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.

	Amendment to PartnerShares Stock Option Plan, effective January 22, 2008.	Incorporated by reference to Exhibit 10(v) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

10(r)	Non-Qualified Deferred Compensation Plan for Independent Contractors.	Incorporated by reference to Exhibit 10(x) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

	Amendment to Non-Qualified Deferred Compensation Plan for Independent Contractors, effective January 1, 2009.	Incorporated by reference to Exhibit 10(w) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

10(s)*	Description of Chairman/CEO Post-Retirement Policy.	Incorporated by reference to Exhibit 10(w) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

10(t)*	Description of Non-Employee Director Equity Compensation Program.	Filed herewith.

10(u)*	Employment Agreement, dated December 30, 2008, between the Company and David M. Carroll.	Incorporated by reference to Exhibit 10(y) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

10(v)*	Amended and Restated Wachovia Corporation Deferred Compensation Plan for Non-Employee Directors.	Incorporated by reference to Exhibit (10)(f) to Wachovia Corporation’s Current Report on Form 8-K filed December 29, 2008.

	Amendment to Amended and Restated Wachovia Corporation Deferred Compensation Plan for Non-Employee Directors, effective June 1, 2009.	Incorporated by reference to Exhibit 10(aa) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

10(w)*	Wachovia Corporation Executive Deferred Compensation Plan.	Incorporated by reference to Exhibit (10)(d) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 1997.

10(x)*	Wachovia Corporation Supplemental Executive Long-Term Disability Plan, as amended and restated.	Incorporated by reference to Exhibit (99) to Wachovia Corporation’s Current Report on Form 8-K filed January 5, 2005.

10(y)*	Amended and Restated Wachovia Corporation Elective Deferral Plan (as amended and restated effective January 1, 2009).	Incorporated by reference to Exhibit (10)(a) to Wachovia Corporation’s Current Report on Form 8-K filed December 29, 2008.

10(z)*	Wachovia Corporation 1998 Stock Incentive Plan, as amended.	Incorporated by reference to Exhibit (10)(j) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001.

10(aa)*	Employment Agreement between Wachovia Corporation and David M. Carroll.	Incorporated by reference to Exhibit (10)(m) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004.

	Amendment No. 1 to Employment Agreement between Wachovia Corporation and David M. Carroll.	Incorporated by reference to Exhibit (10)(a) to Wachovia Corporation’s Current Report on Form 8-K filed December 22, 2005.

	Amendment No. 2 to Employment Agreement between Wachovia Corporation and David M. Carroll.	Incorporated by reference to Exhibit (10)(h) to Wachovia Corporation’s Current Report on Form 8-K filed December 29, 2008.

10(bb)*	Wachovia Corporation 2001 Stock Incentive Plan.	Incorporated by reference to Exhibit (10)(v) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001.


Exhibit Number	Description	Location

10(cc)*	Wachovia Corporation Savings Restoration Plan.	Incorporated by reference to Exhibit (10)(gg) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002.

10(dd)*	Amendment 2007-1 to Wachovia Corporation Savings Restoration Plan.	Incorporated by reference to Exhibit (10)(b) to Wachovia Corporation’s Current Report on Form 8-K filed December 20, 2007.

	Amendment 2008-1 to Wachovia Corporation Savings Restoration Plan.	Incorporated by reference to Exhibit (10)(c) to Wachovia Corporation’s Current Report on Form 8-K filed December 29, 2008.

10(ee)*	Amended and Restated Wachovia Corporation Savings Restoration Plan.	Incorporated by reference to Exhibit (10)(b) to Wachovia Corporation’s Current Report on Form 8-K filed December 29, 2008.

10(ff)*	Form of stock award agreement for Executive Officers of Wachovia Corporation, including David M. Carroll.	Incorporated by reference to Exhibit (10)(ss) to Wachovia Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004.

10(gg)*	Amended and Restated Wachovia Corporation 2003 Stock Incentive Plan.	Incorporated by reference to Appendix E to Wachovia Corporation’s Registration Statement on Form S-4 (Reg. No. 333-134656) filed on July 24, 2006.

	Amendment to Amended and Restated Wachovia Corporation 2003 Stock Incentive Plan, effective February 24, 2009.	Incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

12(a)	Computation of Ratios of Earnings to Fixed Charges:	Filed herewith.


	Year ended December 31,
	2011		2010		2009		2008		2007

Including interest on deposits		4.32		3.21		2.68		1.33		1.81
Excluding interest on deposits		5.92		4.32		3.64		1.60		2.85



12(b)	Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends:	Filed herewith.


	Year ended December 31,
	2011		2010		2009		2008		2007

Including interest on deposits		3.67		2.84		1.69		1.28		1.81
Excluding interest on deposits		4.69		3.61		1.90		1.50		2.85


Exhibit Number	Description	Location

13	2011 Annual Report to Stockholders.	Filed herewith.

21	Subsidiaries of the Company.	Filed herewith.

23	Consent of Independent Registered Public Accounting Firm.	Filed herewith.

24	Powers of Attorney.	Filed herewith.

31(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

31(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

32(a)	Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.	Furnished herewith.

32(b)	Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.	Furnished herewith.

99	Description of Replacement Capital Covenants of Wells Fargo and Wachovia.	Filed herewith.

101.Ins	XBRL Instance Document	Filed herewith.

101.Sch	XBRL Taxonomy Extension Schema Document	Filed herewith.

101.Cal	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.

101.Def	XBRL Taxonomy Extension Definitions Linkbase Document	Filed herewith.

101.Lab	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.

101.Pre	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.

Exhibit 3(a)

RESTATED CERTIFICATE OF INCORPORATION

WELLS FARGO & COMPANY

Pursuant to Section 245 of the

General Corporation Law of the State of Delaware

Wells Fargo & Company, a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:

The present name of the corporation is Wells Fargo & Company.

The corporation was originally incorporated under the name Northwest Bancorporation, and its original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on January 24, 1929. On April 26, 1983 the corporation filed an amendment to its Certificate of Incorporation to change its name from Northwest Bancorporation to Norwest Corporation effective April 29, 1983, and on November 2, 1998 the corporation filed an amendment to its Certificate of Incorporation to change its name from Norwest Corporation to Wells Fargo & Company.

The corporation’s Board of Directors has duly adopted this Restated Certificate of Incorporation in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the corporation’s Certificate of Incorporation, as theretofore amended or supplemented or restated, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.

The text of the corporation’s Certificate of Incorporation, as heretofore amended or supplemented or restated, is hereby restated to read in its entirety as follows:

FIRST: The name of this corporation is Wells Fargo & Company.

SECOND: Its registered office in the State of Delaware is located in the City of Wilmington, County of New Castle. The name and address of its registered agent is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808.

THIRD: The nature of the business, or objects or purposes to be transacted, promoted or carried on, are:

To acquire by purchase, subscription or otherwise, and to own and hold, for investment purposes, the capital stock, scrip or any voting trust certificates in respect of the shares of capital stock issued or created by any moneyed, financial or investment corporation or association created and organized, or to be created and organized, under the laws of the United States of America or of any State or territory thereof; and to issue in exchange therefor shares of the capital stock of this corporation; and while the holder or owner of any such shares of capital stock, scrip or voting trust certificates, to possess and exercise in respect thereof any and all rights, powers and privileges of ownership, including the right to vote thereon;

To loan money to any aforesaid corporation or association, any of whose shares of capital stock, scrip or voting trust certificates aforesaid shall be owned at the time of such loan by this corporation, and to do any and all lawful things designed to protect, preserve, improve or enhance the value of any such shares, scrip or voting trust certificates;

In addition to and not in limitation of any of the aforesaid powers, to invest temporarily any of its capital or surplus funds in bonds, mortgages or evidences of indebtedness and any other securities issued or created by any individual, copartnership or other corporation, joint stock company or association, public or private, or of the Government of the United States of America, or of any Foreign Government, or of any State, territory, municipality or other political subdivision or of any governmental agency;

To acquire, hold, sell, reissue or cancel any shares of its own capital stock; provided, however, that this corporation may not use any of its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of the capital of this corporation, and provided further that the shares of its own capital stock belonging to this corporation shall not be voted, directly or indirectly;

To organize, incorporate and reorganize subsidiary corporations for all lawful purposes;

To conduct all or any part of its operations and business without restriction or limit as to amount in the State of Delaware or in any or all other States, territories, districts, colonies and dependencies of the United States of America;

To have and to exercise any and all powers and privileges now or hereafter conferred by the laws of the State of Delaware upon corporations formed under the Acts hereinafter referred to, or under any Act amendatory thereof or supplemental thereto or substituted therefor;

The foregoing clauses shall be construed both as objects and powers; and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this corporation.

FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is Six Billion Twenty-Four Million (6,024,000,000), consisting of Twenty Million (20,000,000) shares of Preferred Stock without par value, Four Million (4,000,000) shares of Preference Stock without par value, and Six Billion (6,000,000,000) shares of Common Stock of the par value of $1-2/3 per share.

The designations and the voting powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the Preferred Stock, the Preference Stock and the Common Stock which are fixed by the Certificate of Incorporation and the express grant of authority to the Board of Directors of the corporation (hereinafter referred to as the “Board of Directors”) to fix by resolution or resolutions the designations and the voting powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of the Preferred Stock and the Preference Stock which are not fixed by the Certificate of Incorporation are as follows:

1. The Preferred Stock may be issued at any time or from time to time in any amount, provided not more than 20,000,000 shares thereof shall be outstanding at any one time, as Preferred Stock

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of one or more series, as hereinafter provided. Each share of any one series of Preferred Stock shall be identical in all respects except as to the date from which dividends thereon may be cumulative, each series of Preferred Stock shall be distinctly designated by letter or descriptive words, and all series of Preferred Stock shall rank equally and be identical in all respects except as permitted by the provisions of Section 2 of this Article FOURTH. Shares of Preferred Stock shall be issued only as fully paid and non-assessable shares.

The Preference Stock may be issued at any time or from time to time in any amount, provided not more than 4,000,000 shares thereof shall be outstanding at any one time, as Preference Stock of one or more series, as hereinafter provided. Each share of any one series of Preference Stock shall be identical in all respects except as to the date from which dividends thereon may be cumulative, each series of Preference Stock shall be distinctly designated by letter or descriptive words, and all series of Preference Stock shall rank equally and be identical in all respects except as permitted by the provisions of Section 2 of this Article FOURTH. Shares of Preference Stock shall be issued only as fully paid and non-assessable shares.

2. Authority is hereby expressly granted to and vested in the Board of Directors at any time or from time to time to issue the Preferred Stock as Preferred Stock of any series and the Preference Stock as Preference Stock of any series and, in connection with the creation of each such series, to fix by resolution or resolutions providing for the issue of shares thereof the designations and the voting powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such series so far as not inconsistent with the provisions of this Article FOURTH applicable to all series of Preferred Stock or Preference Stock, respectively, and to the full extent now or hereafter permitted by the laws of the State of Delaware, including the following:

(a) The distinctive designation of such series and the number of shares which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors in creating such series) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors;

(b) The annual rate or rates of dividends payable on shares of such series, whether dividends shall be cumulative and, if so, the date or dates from which dividends shall be cumulative on the shares of such series, the preferences, restrictions, limitations and conditions upon the payment of dividends, and the dates on which dividends, if declared, shall be payable;

(c) Whether shares of such series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(d) The rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of such series;

(e) Whether shares of such series shall have a purchase, retirement or sinking fund for the purchase, retirement, or redemption of shares of such series and, if so, the terms and provisions thereof;

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(f) Whether shares of such series shall have conversion privileges and, if so, the terms and provisions thereof, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

(g) Whether shares of such series shall have voting rights, in addition to voting rights provided by law, and, if so, the terms and provisions thereof; and

(h) Any other preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof.

3. The holders of the Preferred Stock of each series and the holders of the Preference Stock of each series, respectively, shall be entitled to receive such dividends, when and as declared by the Board of Directors, out of funds legally available therefor, as they may be entitled to in accordance with the resolution or resolutions adopted by the Board of Directors providing for the issue of such series, payable on such dates as may be fixed in such resolution or resolutions. So long as there shall be outstanding any shares of Preferred Stock of any series or any shares of Preference Stock of any series entitled to cumulative dividends pursuant to the resolution or resolutions providing for the issue of such series, no dividend, whether in cash or property, shall be paid or declared, nor shall any distribution be made, on the Common Stock, nor shall any shares of Common Stock be purchased, redeemed or otherwise acquired for value by the corporation, if at the time of making such payment, declaration, distribution, purchase, redemption or acquisition the corporation shall be in default with respect to any dividend payable on, or obligation to maintain a purchase, retirement or sinking fund with respect to or to redeem, shares of Preferred Stock of any series or shares of Preference Stock of any series. The foregoing provisions of this Section 3 shall not, however, apply to a dividend payable in Common Stock or to the acquisition of shares of Common Stock in exchange for, or through application of the proceeds of the sale of, shares of Common Stock.

Subject to the foregoing and to any further limitations prescribed in accordance with the provisions of Section 2 of this Article FOURTH, the Board of Directors may declare, out of any funds legally available therefor, dividends upon the then outstanding shares of Common Stock, and shares of Preferred Stock of any series and shares of Preference Stock of any series shall not be entitled to participate therein.

4. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation, the holders of the Preferred Stock of each series and the holders of the Preference Stock of each series shall be entitled to receive, out of the assets of the corporation available for distribution to its stockholders, before any distribution of assets shall be made to the holders of the Common Stock, the amount per share fixed by the Board of Directors pursuant to Section 2 of this Article FOURTH, plus in each such case an amount equal to any cumulative dividends thereon to the date of final distribution to the holders of the Preferred Stock or to the holders of the Preference Stock, respectively; and the holders of the Common Stock shall be entitled, to the exclusion of the holders of the Preferred Stock of any and all series and the holders of the Preference Stock of any and all series, respectively, to participate ratably in all the assets of the corporation then remaining in accordance with their respective rights and preferences. If upon any liquidation, dissolution or winding up of the corporation the assets available for distribution shall be insufficient to pay the holders of all outstanding shares of Preferred Stock or the holders of all outstanding shares of Preference Stock the full amounts to which they respectively shall be entitled, the holders of shares of Preferred Stock of all series and the holders of shares of Preference Stock of all series, respectively, shall participate ratably in any distribution of assets according to the respective amounts which would be payable in respect of the shares of Preferred Stock or shares of Preference Stock held by them upon such distribution if all amounts payable in respect of the Preferred Stock of all series or the Preference Stock of all series, respectively, were paid in full. Neither the statutory merger nor consolidation of the corporation into or with any other corporation, nor the statutory merger or consolidation of any other

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corporation into or with the corporation, nor a sale, transfer or lease of all or any part of the assets of the corporation, shall be deemed to be a liquidation, dissolution or winding up of the corporation within the meaning of this Section 4.

5. The corporation, at the option of the Board of Directors, may redeem the whole or any part of the Preferred Stock of any series or of the Preference Stock of any series at the price or prices and on the terms and conditions provided in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series.

6. Anything herein or in any resolution or resolutions adopted by the Board of Directors providing for the issue of any series of Preferred Stock or any series of Preference Stock contained to the contrary notwithstanding, the rights of the holders of all classes of stock of the corporation in respect of dividends and purchase, retirement or sinking funds, if any, shall at all times be subject to the power of the Board of Directors from time to time to set aside such reserves and to make such other provisions, if any, as the Board of Directors shall deem to be necessary or advisable for working capital, for expansion of the corporation’s business (including the acquisition of real and personal property for that purpose) and for any other purpose of the corporation.

7. Except as otherwise provided by the statutes of the State of Delaware or by the Certificate of Incorporation or by the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of Preferred Stock or any series of Preference Stock, the holders of the Preferred Stock and the holders of the Preference Stock shall have no right to vote. The holders of the Preferred Stock and the holders of the Preference Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote or consent. The holders of shares of Preference Stock shall not be entitled to more than one vote per share.

8. Except as otherwise provided by the statutes of the State of Delaware or by the Certificate of Incorporation or by the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of Preferred Stock or any series of Preference Stock, the vote of the holders of all or any portion of any class of stock, as a class, shall not be required for any action whatsoever to be taken or authorized by the stockholders of the corporation, including any amendment of the Certificate of Incorporation.

9. No holder of shares of the corporation of any class or of any security or obligation convertible into, or of any warrant, option or right to subscribe for, purchase or otherwise acquire, shares of the corporation of any class, whether now or hereafter authorized, shall, as such holder, have any preemptive right whatsoever to subscribe for, purchase or otherwise acquire shares of the corporation of any class or any security or obligation convertible into, or any warrant, option or right to subscribe for, purchase or otherwise acquire, shares of the corporation of any class, whether now or hereafter authorized.

10. If it deems it desirable so to do, the Board of Directors may from time to time issue scrip for fractional shares of stock. Such scrip shall not confer upon the holder any voting or other rights of a stockholder of the corporation, but the corporation shall from time to time, within such time as the Board of Directors may determine, issue one whole share of stock upon the surrender of scrip for fractional shares aggregating one whole share, properly endorsed if in registered form.

Pursuant to the authority conferred by this Article FOURTH, the following series of Preferred Stock have been designated, each such series consisting of such number of shares, with such voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications,

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limitations or restrictions thereof as are stated and expressed in the exhibit with respect to such series attached hereto as specified below and incorporated herein by reference:


~~Exhibit A~~		~~1997 ESOP Cumulative Convertible Preferred Stock~~ *
~~Exhibit B~~		~~1998 ESOP Cumulative Convertible Preferred Stock~~ *
~~Exhibit C~~		~~1999 ESOP Cumulative Convertible Preferred Stock~~ *
~~Exhibit D~~		~~2000 ESOP Cumulative Convertible Preferred Stock~~ *
~~Exhibit E~~		~~2001 ESOP Cumulative Convertible Preferred Stock~~ *
~~Exhibit F~~		~~2002 ESOP Cumulative Convertible Preferred Stock~~ *
Exhibit G		2003 ESOP Cumulative Convertible Preferred Stock
Exhibit H		2004 ESOP Cumulative Convertible Preferred Stock
Exhibit I		2005 ESOP Cumulative Convertible Preferred Stock
Exhibit J		2006 ESOP Cumulative Convertible Preferred Stock

*	Wells Fargo & Company has filed Certificates Eliminating the Certificates of Designations for each of Wells Fargo’s 1997, 1998, 1999, 2000, 2001, and 2002 ESOP Cumulative Convertible Preferred Stock (Exhibits A through F above)

FIFTH: The amount of capital with which this corporation will commence business is One Thousand Dollars ($1,000.00), being twenty (20) shares of the par value of Fifty Dollars ($50.00) each.

SIXTH: The names and places of residence of the subscribers to the capital stock and the number of shares subscribed for by each are as follows:


Name	Residence	No. of Shares
A. V. Lane	Wilmington, Delaware	18
C. S. Peabbles	Wilmington, Delaware	1
L. E. Gray	Wilmington, Delaware	1

SEVENTH: This corporation is to have perpetual existence.

EIGHTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever.

NINTH: The number of Directors of the corporation shall be as specified in the By-Laws, and such number may from time to time be increased or decreased in such manner as may be prescribed in the By-Laws, provided the number of Directors of the corporation shall not be less than three (3). In case of any increase in the number of Directors, the additional Directors may be elected by the Board of Directors to hold office until the next annual meeting of the stockholders and until their successors are elected and qualified. In case of a vacancy in the Board of Directors, a majority of the remaining members of the Board may elect Directors to fill such vacancy.

Directors shall be stockholders.

TENTH: In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized:

To make, alter, amend or repeal the By-Laws of the corporation, except as otherwise provided in said By-Laws;

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To determine from time to time whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account or book or document of the corporation except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors, or of the stockholders.

To set apart out of any funds of the corporation available for dividends a reserve or reserves for working capital or for any other lawful purpose, and also to abolish any such reserve in the same manner in which it was created;

If the By-Laws so provide, to designate two or more of its number to constitute an Executive Committee, which Committee shall for the time being, as provided in said resolution or in the By-Laws of this corporation, have and exercise any or all of the powers of the Board of Directors in the management of the business and affairs of this corporation and have power to authorize the seal of this corporation to be affixed to all papers which may require it.

This corporation may in its By-Laws confer powers upon its Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon them by the Statute.

Both stockholders and Directors shall have power, if the By-Laws so provide, to hold their meetings and to have one or more offices within or without the State of Delaware and to keep the books of this corporation (subject to the provisions of the Statutes) outside of the State of Delaware at such places as may be from time to time designated by the Board of Directors.

ELEVENTH: In the absence of fraud, no contract or transaction between this corporation and any other association or corporation shall be affected by the fact that any of the Directors or officers of this corporation are interested in or are Directors or officers of such other association or corporation, and any Director or officer of this corporation individually may be a party to or may be interested in any such contract or transaction of this corporation; and no such contract or transaction of this corporation with any person or persons, firm, association or corporation shall be affected by the fact that any Director or officer of this corporation is a party to or interested in such contract or transaction in any way connected with such person or persons, firm, association or corporation; provided that such contract or other transaction shall be authorized or ratified by the vote of a majority of the Directors of this corporation not so interested; and each and every person who may become a Director or officer of this corporation is hereby relieved from any liability that might otherwise exist from thus contracting with this corporation for the benefit of himself or any person, firm, association or corporation in which he may be in anywise interested.

TWELFTH: This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by Statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

THIRTEENTH: The Board of Directors is expressly authorized:

(i) to adopt, and from time to time to amend, one or more pension, profit sharing, retirement, and benefit plans benefiting any or all officers and employees and former officers and employees of this corporation and affiliated banks and companies;

(ii) to adopt, and from time to time to amend, one or more stock option, stock purchase, stock bonus, incentive, and compensation plans benefiting any or all officers and employees of this corporation and affiliated banks and corporations; and

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(iii) to authorize affiliated banks and companies, on behalf of this corporation as a stockholder therein, to adopt, and from time to time to amend, any of said types of plans enumerated in clause (i) of this Article THIRTEENTH benefiting any or all officers and employees and former officers and employees thereof and any of said types of plans enumerated in clause (ii) of this Article THIRTEENTH benefiting any or all officers and employees thereof.

No action shall be taken under this Article except by the affirmative vote of a majority of the directors in office at the time such action is taken, and such majority shall not include any director who is a salaried officer of the corporation or of any affiliated bank or company.

FOURTEENTH: (a) Elimination of Certain Liability of Directors . A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

(b)(1) Right to Indemnification . Each person who was or is made a party or is threatened to be a made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in subparagraph (b)(2), the corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this paragraph (b) shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this paragraph (b) or otherwise. The corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

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(2) Right of Claimant to Bring Suit . If a claim under subparagraph (b)(1) is not paid in full by the corporation within 30 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(3) Non-Exclusivity of Rights . The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this paragraph (b) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

(4) Insurance . The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

IN WITNESS WHEREOF, this Restated Certificate of Incorporation is executed on behalf of the corporation by its Chairman and attested by its Secretary this 28 ^th day of September, 2006.

/s/ Richard M. Kovacevich

Richard M. Kovacevich, Chairman


Attest:		/s/ Laurel A. Holschuh
		Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on September 28, 2006.]

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EXHIBIT G

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2003 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at a meeting of the Board duly held on January 25, 2000, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 12, 2003, in accordance with Section 141(f) of the General Corporation Law:

1. On January 25, 2000, the Board adopted the following resolutions (the “ESOP Board Resolutions”) appointing the ESOP Committee and delegating to the ESOP Committee the full powers of the Board, subject to the ESOP Board Resolutions, in all matters relating to issuance of one or more series of Preferred Stock (“ESOP Preferred Stock”) to the trustee on behalf of the Company’s 401(k) Plan hereinafter referred to:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee I (the “First Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1-2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the First Committee in its discretion shall approve, and to take any and all actions as the First Committee shall deem necessary or appropriate.

RESOLVED that Richard M. Kovacevich is designated to serve as the sole member of the First Committee until his successor is duly elected and qualified.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the First Committee . . . shall have the voting rights set forth in Appendix A to these resolutions.

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APPENDIX A - VOTING RIGHTS

No series of the Preferred Stock, except as hereinafter set forth in this resolution or as otherwise from time to time required by law, shall have voting rights. Whenever, at any time or times, dividends payable on any shares of a designated series of the Preferred Stock (such shares of such designated series of Preferred Stock being hereinafter referred to as the “Shares of such series”) shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding Shares of such series shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the Shares of such series, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the Shares of such series shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding Shares of such series (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such Shares of such series (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such Shares of such series shall have been paid in full, at which time such right with respect to such Shares of such series shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

Upon any termination of the right of the holders of all shares of Preferred Stock entitled to vote for directors as herein provided, the term of office of all directors then in office elected by such holders voting as a class shall terminate immediately. If the office of any director elected by such holders voting as a class becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the remaining director elected by such holders may choose a successor to fill such vacancy, which such successor shall hold office for the unexpired term in respect of which such vacancy occurred. Whenever the term of office of the directors elected by such holders voting as a class shall end and the special voting powers vested in such holders as provided in this resolution shall have expired, the number of directors shall be such number as may be provided for in the By-Laws of the Company irrespective of any increase made pursuant to the provisions of this resolution.

So long as any Shares of such series remain outstanding, the consent of the holders of the outstanding Shares of such series and outstanding shares of all other series of Preferred Stock ranking on a parity with such Shares of such series either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding Shares of such series and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(a) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to the Shares of such series with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

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(b) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designation for the Shares of such series designating the Shares of such series and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the Shares of such series or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the Shares of such series with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Shares of such series shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

2. On March 12, 2003, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that the issuance of a series of Preferred Stock, without par value, of the Company is hereby authorized and the designation, voting powers, preferences, and relative, participating, optional, and other special rights, and qualifications, limitations and restrictions thereof, in addition to those set forth in the Restated Certificate of Incorporation of the Company, as amended, are hereby fixed as follows:

2003 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue.

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2003 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2003 ESOP Preferred Stock”) and the number of authorized shares constituting the 2003 ESOP Preferred Stock is 260,200, based on an offering price for the 2003 ESOP Preferred Stock of $1,071.40 per share. Each share of 2003 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2003 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2003 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2003 ESOP Preferred Stock shall not be increased. All shares of the 2003 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2003 ESOP Preferred Stock.

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(b) Shares of 2003 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2003 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2003 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2003 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2003 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2003 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2003 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2003 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2003 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2003 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2003 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2003 ESOP Preferred Stock, the transfer agent for the 2003 ESOP Preferred Stock shall note the foregoing provisions on each 2003 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2003 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2003 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2003 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2003 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2003 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2003 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2003 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2003 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2003 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2003 ESOP Preferred Stock (voting together as a class with the holders of

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shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2003 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2003 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(b) Upon any termination of the right of the holders of all shares of Preferred Stock entitled to vote for directors as herein provided, the term of office of all directors then in office elected by such holders voting as a class shall terminate immediately. If the office of any director elected by such holders voting as a class becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the remaining director elected by such holders may choose a successor to fill such vacancy, which such successor shall hold office for the unexpired term in respect of which such vacancy occurred. Whenever the term of office of the directors elected by such holders voting as a class shall end and the special voting powers vested in such holders as provided in this resolution shall have expired, the number of directors shall be such number as may be provided for in the By-Laws of the Company irrespective of any increase made pursuant to the provisions of this resolution.

(c) So long as any shares of 2003 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2003 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2003 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2003 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2003 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2003 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2003 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2003 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2003 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

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3. Dividends . (a)(i) Holders of shares of 2003 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $85.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2004 and on each December 1 thereafter until December 1, 2012, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2003 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $90.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2003 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $95.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2003 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2004		51.914		57.922
2005		56.275		66.842
2006		61.002		77.136
2007		66.126		89.015
2008		71.681		102.723
2009		77.702		118.542
2010		84.229		136.798
2011		91.304		157.865
2012		98.974		182.176

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2006, the Current Market Price of one share of Common Stock is $70.00, then the cash dividend payable for the immediately following twelve month period per share of 2003 ESOP Preferred Stock would equal $90.00, with the first quarterly payment of such $90.00 dividend to be made on March 1, 2007. If on November 30, 2007, the Current Market Price of one share of Common Stock is $100.00, then the cash dividend payable for the immediately following twelve month period per share of 2003 ESOP Preferred Stock

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would equal $95.00, with the first quarterly payment of such $95.00 dividend to be made on March 1, 2008. If on November 30, 2008, the Current Market Price of one share of Common Stock is $70.00, then the cash dividend payable for the immediately following twelve month period per share of 2003 ESOP Preferred Stock would equal $85.00, with the first quarterly payment of such $85.00 dividend to be made on March 1, 2009.

(5) For purposes of this Section 3, the terms “First Adjusted Dividend” and “Second Adjusted Dividend” are sometimes referred to as an “Adjusted Dividend;” the term “Current Market Price” shall have the meaning given to it in Section 4(c)(iv); and the term “Trading Day” shall have the meaning given to it in Section 4(c)(vi).

(iii) If one share of Common Stock in any year listed in the Dividend Adjustment Table shall be changed into a different number of shares or a different class of shares by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or if a stock dividend thereon shall be declared with a record date within such period, then the First Target Price and the Second Target Price listed in such table for that year and each subsequent year will be appropriately and proportionately adjusted.

(iv) Dividends payable on shares of the 2003 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2003. Dividends on shares of the 2003 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2003 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2003 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2003 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2003 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2003 ESOP Preferred Stock, all dividends declared upon shares of 2003 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2003 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2003 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2003 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2003 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2003 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2003 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2003 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to

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subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2003 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2003 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2003 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2003 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2003 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2003 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2003 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2003 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2003 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2003 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2003 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2003 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(i) The “Average Current Market Price” per share of Common Stock on any date shall be deemed to be the average of the Current Market Price for one share of Common Stock for the twenty (20) consecutive Trading Days ending on the Trading Day occurring prior to the date the “Purchase Offer” is made (as that term is defined in Section 6(d) hereof).

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2003 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2003 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

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(B) For purposes of an optional conversion of shares of 2003 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2003 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2003 ESOP Preferred Stock or by any agent for conversion of the 2003 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2003 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2003 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2003 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2003 ESOP Preferred Stock will be converted.

(iv) The “Current Market Price” of publicly traded shares of Common Stock or any other class of capital stock or other security of the Company or any other issuer for any day shall mean the reported last sale price, regular way, or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange only or, if the Common Stock is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or, if the Common Stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(vi) “Trading Day” with respect to Common Stock means (x) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business or (y) if the Common Stock is quoted on the National Market System of NASDAQ, a day on which trades may be made on such National Market System or (z) otherwise, any Business Day.

(d) In connection with any conversion of 2003 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2003 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2003 ESOP Preferred Stock by the Company or the transfer agent for the 2003 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case

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of certificated 2003 ESOP Preferred Stock, the certificate or certificates representing the shares of 2003 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2003 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2003 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2003 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2003 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2003 ESOP Preferred Stock, for any shares of 2003 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2003 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2003 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2003 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2003 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2003 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2003 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2003 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2003 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2003 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2003 ESOP Preferred

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Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2003 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2003 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2003 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2003 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2003 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2003 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2003 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2003 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2003 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2003 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2003 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2003 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2003 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2003 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2003 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the

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redemption price set forth in this Section 5, provided that, in the case of certificated 2003 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2003 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2003 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2003 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2003 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2003 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2003 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2003 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2003 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2003 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2003 ESOP Convertible Preferred Stock Note Agreement dated on or about March 17, 2003 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, Etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2003 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2003 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and

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shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2003 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2003 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2003 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2003 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2003 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2003 ESOP Preferred Stock could have been converted at such time so that each share of 2003 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2003 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2003 ESOP Preferred Stock, then the shares of 2003 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2003 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2003 ESOP Preferred Stock, a cash payment per share of 2003 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2003 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2003 ESOP Preferred Stock shall have the right to convert shares of 2003 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

(i) “Beneficial Ownership” shall have the meaning ascribed to it in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”) and “person” shall have the meanings specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.

(ii) A “Purchase Offer” shall have been made when any person (other than the Company or any affiliate of the Company) shall have “commenced” (as such term is defined in Rule 14d-2 under the Exchange Act) a tender offer or exchange offer to purchase shares of Common Stock, such that, upon consummation of such offer, such person would have Beneficial Ownership (as defined herein) or the right to acquire Beneficial Ownership, of twenty percent (20%) or more of the voting power of the Company.

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2003 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2003 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

(b) Neither the sale of all or substantially all the property and assets of the Company, nor the merger or consolidation of the Company into or with any other corporation, nor the merger or consolidation of any other corporation into or with the Company shall be deemed to be a dissolution, liquidation, or winding up, voluntary or involuntary, for the purposes of this Section 7.

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(c) After the payment to the holders of the shares of 2003 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2003 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2003 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2003 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2003 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2003 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2003 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2003 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2003 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2003 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2003 ESOP Preferred Stock;

(b) on a parity with shares of 2003 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2003 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2003 ESOP Preferred Stock; and

(c) junior to shares of 2003 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2003 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2003 ESOP Preferred Stock . The shares of 2003 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1995 ESOP Cumulative Convertible Preferred Stock, its 1996 ESOP Cumulative Convertible Preferred Stock, its 1997 ESOP Cumulative Convertible Preferred Stock, its 1998 ESOP Cumulative

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Convertible Preferred Stock, its 1999 ESOP Cumulative Convertible Preferred Stock, its 2000 ESOP Cumulative Convertible Preferred Stock, its 2001 ESOP Cumulative Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, and its Adjustable Cumulative Preferred Stock, Series B.

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EXHIBIT H

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2004 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at a meeting of the Board duly held on January 25, 2000, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 9, 2004, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that Richard M. Kovacevich is designated to serve as the sole member of the First Committee until his successor is duly elected and qualified.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the First Committee . . . shall have the voting rights set forth in Appendix A to these resolutions.

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APPENDIX A - VOTING RIGHTS

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2. On March 9, 2004, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2004 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2004 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2004 ESOP Preferred Stock”) and the number of authorized shares constituting the 2004 ESOP Preferred Stock is 321,000, based on an offering price for the 2004 ESOP Preferred Stock of $1,071.40 per share. Each share of 2004 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2004 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2004 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2004 ESOP Preferred Stock shall not be increased. All shares of the 2004 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2004 ESOP Preferred Stock.

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(b) Shares of 2004 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2004 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2004 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2004 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2004 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2004 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2004 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2004 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2004 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2004 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2004 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2004 ESOP Preferred Stock, the transfer agent for the 2004 ESOP Preferred Stock shall note the foregoing provisions on each 2004 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2004 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2004 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2004 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2004 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2004 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2004 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2004 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2004 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2004 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2004 ESOP Preferred Stock (voting together as a class with the holders of

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shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2004 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2004 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2004 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2004 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2004 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2004 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2004 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2004 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2004 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2004 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2004 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

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3. Dividends . (a)(i) Holders of shares of 2004 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $85.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2005 and on each December 1 thereafter until December 1, 2013, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2004 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $90.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2004 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $95.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2004 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2005		65.823		73.447
2006		71.286		84.685
2007		77.203		97.642
2008		83.610		112.581
2009		90.550		129.806
2010		98.066		149.666
2011		106.205		172.565
2012		115.020		198.967
2013		124.567		229.409

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2007, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2004 ESOP Preferred Stock would equal $90.00, with the first quarterly payment of such $90.00 dividend to be made on March 1, 2008. If on November 30, 2008, the Current Market Price of one share of Common Stock is $115.00, then the cash dividend payable for the immediately following twelve month period per share of 2004 ESOP Preferred Stock

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would equal $95.00, with the first quarterly payment of such $95.00 dividend to be made on March 1, 2009. If on November 30, 2009, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2004 ESOP Preferred Stock would equal $85.00, with the first quarterly payment of such $85.00 dividend to be made on March 1, 2010.

(iv) Dividends payable on shares of the 2004 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2004. Dividends on shares of the 2004 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2004 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2004 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2004 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2004 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2004 ESOP Preferred Stock, all dividends declared upon shares of 2004 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2004 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2004 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2004 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2004 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2004 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2004 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2004 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to

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subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2004 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2004 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2004 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2004 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2004 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2004 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2004 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2004 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2004 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2004 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2004 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2004 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2004 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2004 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

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(B) For purposes of an optional conversion of shares of 2004 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2004 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2004 ESOP Preferred Stock or by any agent for conversion of the 2004 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2004 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2004 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2004 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2004 ESOP Preferred Stock will be converted.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2004 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2004 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2004 ESOP Preferred Stock by the Company or the transfer agent for the 2004 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case

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of certificated 2004 ESOP Preferred Stock, the certificate or certificates representing the shares of 2004 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2004 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2004 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2004 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2004 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2004 ESOP Preferred Stock, for any shares of 2004 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2004 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2004 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2004 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2004 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2004 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2004 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2004 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2004 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2004 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2004 ESOP Preferred

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Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2004 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2004 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2004 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2004 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2004 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2004 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2004 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2004 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2004 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2004 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2004 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2004 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2004 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2004 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2004 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the

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redemption price set forth in this Section 5, provided that, in the case of certificated 2004 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2004 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2004 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2004 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2004 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2004 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2004 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2004 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2004 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2004 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2004 ESOP Convertible Preferred Stock Note Agreement dated on or about March 12, 2004 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, Etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2004 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2004 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and

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shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2004 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2004 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2004 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2004 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2004 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2004 ESOP Preferred Stock could have been converted at such time so that each share of 2004 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2004 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2004 ESOP Preferred Stock, then the shares of 2004 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2004 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2004 ESOP Preferred Stock, a cash payment per share of 2004 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2004 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2004 ESOP Preferred Stock shall have the right to convert shares of 2004 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2004 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2004 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

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(c) After the payment to the holders of the shares of 2004 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2004 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2004 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2004 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2004 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2004 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2004 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2004 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2004 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2004 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2004 ESOP Preferred Stock;

(b) on a parity with shares of 2004 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2004 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2004 ESOP Preferred Stock; and

(c) junior to shares of 2004 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2004 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2004 ESOP Preferred Stock . The shares of 2004 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1995 ESOP Cumulative Convertible Preferred Stock, its 1996 ESOP Cumulative Convertible Preferred Stock, its 1997 ESOP Cumulative Convertible Preferred Stock, its 1998 ESOP Cumulative

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EXHIBIT I

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2005 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at a meeting of the Board duly held on January 25, 2000, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 11, 2005, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that Richard M. Kovacevich is designated to serve as the sole member of the First Committee until his successor is duly elected and qualified.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the First Committee . . . shall have the voting rights set forth in Appendix A to these resolutions.

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APPENDIX A - VOTING RIGHTS

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2. On March 11, 2005, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2005 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2005 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2005 ESOP Preferred Stock”) and the number of authorized shares constituting the 2005 ESOP Preferred Stock is 363,000, based on an offering price for the 2005 ESOP Preferred Stock of $1,067.10 per share. Each share of 2005 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2005 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2005 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2005 ESOP Preferred Stock shall not be increased. All shares of the 2005 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2005 ESOP Preferred Stock.

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(b) Shares of 2005 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2005 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2005 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2005 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2005 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2005 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2005 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2005 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2005 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2005 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2005 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2005 ESOP Preferred Stock, the transfer agent for the 2005 ESOP Preferred Stock shall note the foregoing provisions on each 2005 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2005 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2005 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2005 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2005 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2005 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2005 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2005 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2005 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2005 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2005 ESOP Preferred Stock (voting together as a class with the holders of

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shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2005 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2005 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2005 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2005 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2005 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2005 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2005 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2005 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2005 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2005 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2005 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

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3. Dividends . (a)(i) Holders of shares of 2005 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $97.50 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2006 and on each December 1 thereafter until December 1, 2014, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2005 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $102.50 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2005 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $107.50 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2005 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2006	$	66.659	$	74.447
2007		71.591		85.167
2008		76.889		97.431
2009		82.579		111.461
2010		88.690		127.511
2011		95.253		145.873
2012		102.302		166.879
2013		109.872		190.909
2014		118.002		218.400

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2008, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2005 ESOP Preferred Stock would equal $102.50, with the first quarterly payment of such $102.50 dividend to be made on March 1, 2009. If on November 30, 2009, the Current Market Price of one share of Common Stock is $115.00, then the cash dividend payable for the immediately following twelve month period per share of 2005 ESOP Preferred Stock

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would equal $107.50, with the first quarterly payment of such $107.50 dividend to be made on March 1, 2010. If on November 30, 2010, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2005 ESOP Preferred Stock would equal $97.50, with the first quarterly payment of such $97.50 dividend to be made on March 1, 2011.

(iv) Dividends payable on shares of the 2005 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2005. Dividends on shares of the 2005 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2005 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2005 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2005 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2005 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2005 ESOP Preferred Stock, all dividends declared upon shares of 2005 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2005 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2005 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2005 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2005 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2005 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2005 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2005 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to

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subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2005 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2005 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2005 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2005 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2005 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2005 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2005 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2005 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2005 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2005 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2005 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2005 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2005 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2005 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

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(B) For purposes of an optional conversion of shares of 2005 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2005 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2005 ESOP Preferred Stock or by any agent for conversion of the 2005 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2005 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2005 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2005 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2005 ESOP Preferred Stock will be converted.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2005 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2005 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2005 ESOP Preferred Stock by the Company or the transfer agent for the 2005 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case

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of certificated 2005 ESOP Preferred Stock, the certificate or certificates representing the shares of 2005 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2005 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2005 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2005 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2005 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2005 ESOP Preferred Stock, for any shares of 2005 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2005 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2005 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2005 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2005 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2005 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2005 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2005 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2005 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2005 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2005 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2005 ESOP Preferred Stock then outstanding.

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(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2005 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2005 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2005 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2005 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2005 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2005 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2005 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2005 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2005 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2005 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2005 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2005 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2005 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2005 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the

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redemption price set forth in this Section 5, provided that, in the case of certificated 2005 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2005 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2005 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2005 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2005 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2005 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2005 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2005 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2005 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2005 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2005 ESOP Convertible Preferred Stock Note Agreement dated on or about March 17, 2005 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, Etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2005 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2005 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and

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shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2005 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2005 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2005 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2005 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2005 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2005 ESOP Preferred Stock could have been converted at such time so that each share of 2005 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2005 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2005 ESOP Preferred Stock, then the shares of 2005 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2005 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2005 ESOP Preferred Stock, a cash payment per share of 2005 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2005 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2005 ESOP Preferred Stock shall have the right to convert shares of 2005 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2005 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2005 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

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(c) After the payment to the holders of the shares of 2005 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2005 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2005 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2005 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2005 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2005 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2005 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2005 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2005 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2005 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2005 ESOP Preferred Stock;

(b) on a parity with shares of 2005 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2005 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2005 ESOP Preferred Stock; and

(c) junior to shares of 2005 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2005 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2005 ESOP Preferred Stock . The shares of 2005 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1996 ESOP Cumulative Convertible Preferred Stock, its 1997 ESOP Cumulative Convertible Preferred Stock, its 1998 ESOP Cumulative Convertible Preferred Stock, its 1999 ESOP Cumulative

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Convertible Preferred Stock, its 2000 ESOP Cumulative Convertible Preferred Stock, its 2001 ESOP Cumulative Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, and its 2004 ESOP Cumulative Convertible Preferred Stock.

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EXHIBIT J

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2006 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at a meeting of the Board duly held on January 25, 2000, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 17, 2006, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that Richard M. Kovacevich is designated to serve as the sole member of the First Committee until his successor is duly elected and qualified.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the First Committee . . . shall have the voting rights set forth in Appendix A to these resolutions.

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APPENDIX A - VOTING RIGHTS

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2. On March 17, 2006, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2006 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2006 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2006 ESOP Preferred Stock”) and the number of authorized shares constituting the 2006 ESOP Preferred Stock is 414,000, based on an offering price for the 2006 ESOP Preferred Stock of $1,070.40 per share. Each share of 2006 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2006 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2006 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2006 ESOP Preferred Stock shall not be increased. All shares of the 2006 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2006 ESOP Preferred Stock.

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(b) Shares of 2006 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2006 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2006 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2006 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2006 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2006 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2006 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2006 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2006 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2006 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2006 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2006 ESOP Preferred Stock, the transfer agent for the 2006 ESOP Preferred Stock shall note the foregoing provisions on each 2006 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2006 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2006 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2006 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2006 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2006 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2006 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2006 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2006 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2006 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2006 ESOP Preferred Stock (voting together as a class with the holders of

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shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2006 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2006 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2006 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2006 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2006 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2006 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2006 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2006 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2006 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2006 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2006 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

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3. Dividends . (a)(i) Holders of shares of 2006 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $107.50 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2007 and on each December 1 thereafter until December 1, 2015, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2006 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $112.50 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2006 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $117.50 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2006 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2007	$	72.625	$	81.118
2008		77.926		92.718
2009		83.615		105.976
2010		89.719		121.131
2011		96.268		138.453
2012		103.296		158.251
2013		110.837		180.881
2014		118.928		206.747
2015		127.609		236.312

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2009, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2006 ESOP Preferred Stock would equal $112.50, with the first quarterly payment of such $112.50 dividend to be made on March 1, 2010. If on November 30, 2010, the Current Market Price of one share of Common Stock is $125.00, then the cash dividend payable for the immediately following twelve month period per share of 2006 ESOP Preferred Stock

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would equal $117.50, with the first quarterly payment of such $117.50 dividend to be made on March 1, 2011. If on November 30, 2011, the Current Market Price of one share of Common Stock is $85.00, then the cash dividend payable for the immediately following twelve month period per share of 2006 ESOP Preferred Stock would equal $107.50, with the first quarterly payment of such $107.50 dividend to be made on March 1, 2012.

(iv) Dividends payable on shares of the 2006 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2006. Dividends on shares of the 2006 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2006 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2006 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2006 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2006 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2006 ESOP Preferred Stock, all dividends declared upon shares of 2006 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2006 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2006 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2006 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2006 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2006 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2006 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2006 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to

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subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2006 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2006 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2006 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2006 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2006 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2006 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2006 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2006 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2006 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2006 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2006 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2006 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2006 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2006 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

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(B) For purposes of an optional conversion of shares of 2006 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2006 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2006 ESOP Preferred Stock or by any agent for conversion of the 2006 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2006 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2006 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2006 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2006 ESOP Preferred Stock will be converted.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2006 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2006 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2006 ESOP Preferred Stock by the Company or the transfer agent for the 2006 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case

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of certificated 2006 ESOP Preferred Stock, the certificate or certificates representing the shares of 2006 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2006 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2006 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2006 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2006 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2006 ESOP Preferred Stock, for any shares of 2006 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2006 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2006 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2006 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2006 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2006 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2006 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2006 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2006 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2006 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2006 ESOP Preferred

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Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2006 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2006 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2006 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2006 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2006 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2006 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2006 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2006 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2006 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2006 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2006 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2006 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2006 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2006 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2006 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the

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redemption price set forth in this Section 5, provided that, in the case of certificated 2006 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2006 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2006 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2006 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2006 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2006 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2006 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2006 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2006 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2006 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2006 ESOP Convertible Preferred Stock Note Agreement dated on or about March 21, 2006 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, Etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2006 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2006 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and

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shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2006 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2006 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2006 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2006 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2006 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2006 ESOP Preferred Stock could have been converted at such time so that each share of 2006 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2006 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2006 ESOP Preferred Stock, then the shares of 2006 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2006 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2006 ESOP Preferred Stock, a cash payment per share of 2006 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2006 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2006 ESOP Preferred Stock shall have the right to convert shares of 2006 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2006 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2006 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

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(c) After the payment to the holders of the shares of 2006 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2006 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2006 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2006 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2006 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2006 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2006 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2006 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2006 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2006 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2006 ESOP Preferred Stock;

(b) on a parity with shares of 2006 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2006 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2006 ESOP Preferred Stock; and

(c) junior to shares of 2006 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2006 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2006 ESOP Preferred Stock . The shares of 2006 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1997 ESOP Cumulative Convertible Preferred Stock, its 1998 ESOP Cumulative Convertible Preferred Stock, its 1999 ESOP Cumulative Convertible Preferred Stock, its 2000 ESOP Cumulative

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Convertible Preferred Stock, its 2001 ESOP Cumulative Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, and its 2005 ESOP Cumulative Convertible Preferred Stock.

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2007 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at a meeting of the Board duly held on January 25, 2000, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 13, 2007, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee I (the “First Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1 2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the First Committee in its discretion shall approve, and to take any and all actions as the First Committee shall deem necessary or appropriate.

RESOLVED that Richard M. Kovacevich is designated to serve as the sole member of the First Committee until his successor is duly elected and qualified.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the First Committee . . . shall have the voting rights set forth in Appendix A to these resolutions.

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APPENDIX A - VOTING RIGHTS

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2. On March 13, 2007, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2007 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2007 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2007 ESOP Preferred Stock”) and the number of authorized shares constituting the 2007 ESOP Preferred Stock is 484,000, based on an offering price for the 2007 ESOP Preferred Stock of $1,070.00 per share. Each share of 2007 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2007 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2007 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2007 ESOP Preferred Stock shall not be increased. All shares of the 2007 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2007 ESOP Preferred Stock.

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(b) Shares of 2007 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2007 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2007 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2007 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2007 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2007 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2007 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2007 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2007 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2007 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2007 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2007 ESOP Preferred Stock, the transfer agent for the 2007 ESOP Preferred Stock shall note the foregoing provisions on each 2007 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2007 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2007 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2007 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2007 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2007 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2007 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2007 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2007 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2007 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2007 ESOP Preferred Stock (voting together as a class with the holders of

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shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2007 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2007 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2007 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2007 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2007 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2007 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2007 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2007 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2007 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2007 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2007 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

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3. Dividends . (a)(i) Holders of shares of 2007 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $107.50 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2008 and on each December 1 thereafter until December 1, 2016, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2007 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $112.50 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2007 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $117.50 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2007 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2008	$	38.649	$	43.120
2009		41.316		49.071
2010		44.167		55.843
2011		47.215		63.549
2012		50.472		72.319
2013		53.955		82.299
2014		57.678		93.656
2015		61.658		106.580
2016		65.912		121.288

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2010, the Current Market Price of one share of Common Stock is $50, then the cash dividend payable for the immediately following twelve month period per share of 2007 ESOP Preferred Stock would equal $112.50, with the first quarterly payment of such $112.50 dividend to be made on March 1, 2011. If on November 30, 2011, the Current Market Price of one share of Common Stock is $65, then the cash dividend payable for the

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immediately following twelve month period per share of 2007 ESOP Preferred Stock would equal $117.50, with the first quarterly payment of such $117.50 dividend to be made on March 1, 2012. If on November 30, 2012, the Current Market Price of one share of Common Stock is $45, then the cash dividend payable for the immediately following twelve month period per share of 2007 ESOP Preferred Stock would equal $107.50, with the first quarterly payment of such $107.50 dividend to be made on March 1, 2013.

(iv) Dividends payable on shares of the 2007 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2007. Dividends on shares of the 2007 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2007 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2007 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2007 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2007 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2007 ESOP Preferred Stock, all dividends declared upon shares of 2007 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2007 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2007 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2007 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2007 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2007 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2007 ESOP Preferred Stock which may be in arrears.

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(ii) So long as any shares of 2007 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2007 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2007 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2007 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2007 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2007 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2007 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2007 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2007 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2007 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2007 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2007 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2007 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2007 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2007 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

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(B) For purposes of an optional conversion of shares of 2007 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2007 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2007 ESOP Preferred Stock or by any agent for conversion of the 2007 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2007 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2007 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2007 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2007 ESOP Preferred Stock will be converted.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2007 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2007 ESOP Preferred Stock or

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such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2007 ESOP Preferred Stock by the Company or the transfer agent for the 2007 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case of certificated 2007 ESOP Preferred Stock, the certificate or certificates representing the shares of 2007 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2007 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2007 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2007 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2007 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2007 ESOP Preferred Stock, for any shares of 2007 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2007 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2007 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2007 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2007 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2007 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2007 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2007 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2007 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2007 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

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(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2007 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2007 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2007 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2007 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2007 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2007 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2007 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2007 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2007 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2007 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2007 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2007 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2007 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2007 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2007 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a

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share of 2007 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the redemption price set forth in this Section 5, provided that, in the case of certificated 2007 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2007 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2007 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2007 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2007 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2007 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2007 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2007 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2007 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2007 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2007 ESOP Convertible Preferred Stock Note Agreement dated on or about March 20, 2007 between the Company and the Plan (including any amendments or modifications thereto).

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shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2007 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2007 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2007 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2007 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2007 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2007 ESOP Preferred Stock could have been converted at such time so that each share of 2007 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2007 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2007 ESOP Preferred Stock, then the shares of 2007 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2007 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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have the right to elect, by written notice to the Company, to receive, upon consummation of such transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2007 ESOP Preferred Stock, a cash payment per share of 2007 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2007 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2007 ESOP Preferred Stock shall have the right to convert shares of 2007 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2007 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2007 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

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(c) After the payment to the holders of the shares of 2007 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2007 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2007 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2007 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2007 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2007 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2007 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2007 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2007 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2007 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2007 ESOP Preferred Stock;

(b) on a parity with shares of 2007 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2007 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2007 ESOP Preferred Stock; and

(c) junior to shares of 2007 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2007 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2007 ESOP Preferred Stock . The shares of 2007 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1998 ESOP Cumulative Convertible Preferred Stock, its 1999 ESOP Cumulative Convertible Preferred Stock, its 2000 ESOP Cumulative Convertible Preferred Stock, its 2001 ESOP Cumulative

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Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, its 2005 ESOP Cumulative Convertible Preferred Stock and its 2006 ESOP Cumulative Convertible Preferred Stock.

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be signed by Richard M. Kovacevich, its Chairman and Chief Executive Officer, and attested by Rachelle M. Graham, its Assistant Secretary, whereby such Chairman and Chief Executive Officer affirms, under penalties of perjury, that this Certificate of Designations is the act and deed of the Company and that the facts stated herein are true, this 13 ^th day of March, 2007.


WELLS FARGO & COMPANY

By		/s/ Richard M. Kovacevich
		Richard M. Kovacevich
		Chairman and
		Chief Executive Officer

Attest:

/s/ Rachelle M. Graham

Rachelle M. Graham

Assistant Secretary

[As filed with the Delaware Secretary of State on March 15, 2007.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2008 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee II of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at meetings of the Board duly held on January 25, 2000 and February 27, 2007, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 11, 2008, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee II (the “Second Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1 2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the Second Committee in its discretion shall approve, and to take any and all actions as the Second Committee shall deem necessary or appropriate.

* * * *

RESOLVED that any series of ESOP Preferred Stock authorized for issuance by the . . . Second Committee shall have the voting rights set forth in Appendix A to these resolutions.

APPENDIX A - VOTING RIGHTS

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payable on any shares of a designated series of the Preferred Stock (such shares of such designated series of Preferred Stock being hereinafter referred to as the “Shares of such series”) shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding Shares of such series shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the Shares of such series, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the Shares of such series shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding Shares of such series (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such Shares of such series (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such Shares of such series shall have been paid in full, at which time such right with respect to such Shares of such series shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(b) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the

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resolutions set forth in a Certificate of Designation for the Shares of such series designating the Shares of such series and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the Shares of such series or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the Shares of such series with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

2. Pursuant to resolutions adopted on February 27, 2007, the Board designated John G. Stumpf as the sole member of the ESOP Committee, effective April 25, 2007.

3. On March 11, 2008, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2008 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2008 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2008 ESOP Preferred Stock”) and the number of authorized shares constituting the 2008 ESOP Preferred Stock is 520,500, based on an offering price for the 2008 ESOP Preferred Stock of $1,058.00 per share. Each share of 2008 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2008 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2008 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2008 ESOP Preferred Stock shall not be increased. All shares of the 2008 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2008 ESOP Preferred Stock.

(b) Shares of 2008 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan

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(the “Plan”). All references to the holder of shares of 2008 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2008 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2008 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2008 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2008 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2008 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2008 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2008 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2008 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2008 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2008 ESOP Preferred Stock, the transfer agent for the 2008 ESOP Preferred Stock shall note the foregoing provisions on each 2008 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2008 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2008 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2008 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2008 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2008 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2008 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2008 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2008 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2008 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2008 ESOP Preferred Stock (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall

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continue until such time as all dividends accumulated on such shares of 2008 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2008 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2008 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2008 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2008 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2008 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2008 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2008 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2008 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2008 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2008 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

3. Dividends . (a)(i) Holders of shares of 2008 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $105.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

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(ii) The Base Dividend shall be adjusted, effective on December 1, 2009 and on each December 1 thereafter until December 1, 2017, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2008 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $110.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2008 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $115.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2008 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2009		33.444		37.899
2010		36.120		43.963
2011		39.009		50.997
2012		42.130		59.157
2013		45.500		68.622
2014		49.140		79.601
2015		53.072		92.338
2016		57.317		107.112
2017		61.903		124.249

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2011, the Current Market Price of one share of Common Stock is $50.00, then the cash dividend payable for the immediately following twelve month period per share of 2008 ESOP Preferred Stock would equal $110.00, with the first quarterly payment of such $110.00 dividend to be made on March 1, 2012. If on November 30, 2012, the Current Market Price of one share of Common Stock is $60.00, then the cash dividend payable for the immediately following twelve month period per share of 2008 ESOP Preferred Stock would equal $115.00, with the first quarterly payment of such $115.00 dividend to be made on March 1, 2013. If on November 30, 2013, the Current Market Price of one share of Common

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Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2008 ESOP Preferred Stock would equal $105.00, with the first quarterly payment of such $105.00 dividend to be made on March 1, 2014.

(iv) Dividends payable on shares of the 2008 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2008. Dividends on shares of the 2008 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2008 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2008 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2008 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2008 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2008 ESOP Preferred Stock, all dividends declared upon shares of 2008 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2008 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2008 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2008 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2008 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2008 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2008 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2008 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2008 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this

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Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2008 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2008 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2008 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2008 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2008 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2008 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2008 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2008 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2008 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2008 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2008 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2008 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2008 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

(B) For purposes of an optional conversion of shares of 2008 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4,

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the “Conversion Price” for such shares of 2008 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2008 ESOP Preferred Stock or by any agent for conversion of the 2008 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2008 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2008 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2008 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2008 ESOP Preferred Stock will be converted.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2008 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2008 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2008 ESOP Preferred Stock by the Company or the transfer agent for the 2008 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case of certificated 2008 ESOP Preferred Stock, the certificate or certificates representing the shares of 2008 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer

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to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2008 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2008 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2008 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2008 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2008 ESOP Preferred Stock, for any shares of 2008 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2008 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2008 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2008 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2008 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2008 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2008 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2008 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2008 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2008 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2008 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2008 ESOP Preferred Stock then outstanding.

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(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2008 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2008 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2008 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2008 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2008 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2008 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2008 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2008 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2008 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2008 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2008 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2008 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2008 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2008 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the redemption price set forth in this Section 5, provided that, in the case of certificated 2008 ESOP Preferred Stock, the

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Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2008 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2008 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2008 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2008 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2008 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2008 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2008 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2008 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2008 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2008 ESOP Convertible Preferred Stock Note Agreement dated on or about March 13, 2008 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2008 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2008 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or

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other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2008 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2008 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2008 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2008 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2008 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2008 ESOP Preferred Stock could have been converted at such time so that each share of 2008 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2008 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2008 ESOP Preferred Stock, then the shares of 2008 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2008 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

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2008 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2008 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2008 ESOP Preferred Stock shall have the right to convert shares of 2008 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2008 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2008 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

(c) After the payment to the holders of the shares of 2008 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2008 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

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(d) In the event the assets of the Company available for distribution to the holders of shares of 2008 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2008 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2008 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2008 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2008 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2008 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2008 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2008 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2008 ESOP Preferred Stock;

(b) on a parity with shares of 2008 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2008 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2008 ESOP Preferred Stock; and

(c) junior to shares of 2008 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2008 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2008 ESOP Preferred Stock . The shares of 2008 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 1999 ESOP Cumulative Convertible Preferred Stock, its 2000 ESOP Cumulative Convertible Preferred Stock, its 2001 ESOP Cumulative Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, its 2005 ESOP Cumulative Convertible Preferred Stock, its 2006 ESOP Cumulative Convertible Preferred Stock and its 2007 ESOP Cumulative Convertible Preferred Stock.

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IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be signed by John G. Stumpf, its President and Chief Executive Officer, and attested by Jeannine E. Zahn, its Assistant Secretary, whereby such President and Chief Executive Officer affirms, under penalties of perjury, that this Certificate of Designations is the act and deed of the Company and that the facts stated herein are true, this 12th day of March, 2008.


WELLS FARGO & COMPANY

By		/s/ John G. Stumpf
		John G. Stumpf
		President and
		Chief Executive Officer

Attest:

/s/ Jeannine E. Zahn

Jeannine E. Zahn

Assistant Secretary

[As filed with the Delaware Secretary of State on March 12, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

DIVIDEND EQUALIZATION PREFERRED SHARES

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by the provisions of the Restated Certificate of Incorporation of the Corporation, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value, and pursuant to authority conferred upon the Securities Committee of the Board of Directors (the “Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”), the following resolutions were duly adopted by the Committee pursuant to the written consent of the Committee duly adopted on November 20, 2008, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated October 2, 2008, the provisions of the Restated Certificate of Incorporation, the By-laws of the Corporation and applicable law, a series of Preferred Stock, no par value, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:

1. Designation.

(a) The shares of such series of Preferred Stock shall be designated Dividend Equalization Preferred Shares (“DEPs”), and the number of shares constituting such series shall be 97,000.

(b) DEPs redeemed, purchased or otherwise acquired by the Corporation or any of its subsidiaries (other than in a bona fide fiduciary capacity) shall be cancelled and may not be reissued. DEPs may be issued in fractional shares which are whole number multiples of one one-millionth of a share, which fractional shares shall entitle the holder, in proportion to such holder’s fractional share, to all rights of a holder of a whole share of DEPs.

(c) DEPs shall, with respect to distributions upon the liquidation, winding-up and dissolution of the Corporation, rank (x) senior to the Common Stock for the Liquidation Preference stated and defined in Section 3(a) below and (y) junior to each class or series of preferred stock issued in exchange for preferred stock of Wachovia Corporation established by the board of directors of Wachovia Corporation after September 1, 2001 and each class or series of preferred stock established by the Board of Directors after the date hereof.

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2. Dividends. DEPs shall not entitle the holders thereof to any dividends, whether payable in cash, property, stock or otherwise.

3. Liquidation.

(a) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of full and fractional DEPs shall be entitled, before any distribution or payment is made on any date to the holders of the Common Stock or any other stock of the Corporation ranking junior to the DEPs upon liquidation, to be paid in full an amount per whole share of DEPs equal to $10.00 (the “Liquidation Preference”), together with accrued dividends to such distribution or payment date, whether or not earned or declared. If such payment shall have been made in full to all holders of DEPs, the holders of DEPs as such shall have no right or claim to any of the remaining assets of the Corporation.

(b) In the event the assets of the Corporation available for distribution to the holders of DEPs upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to Section 3(a), no such distribution shall be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the DEPs upon such liquidation, dissolution or winding up unless proportionate distributive amounts shall be paid on account of the DEPs, ratably in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation, dissolution or winding up.

(c) Upon the liquidation, dissolution or winding up of the Corporation, the holders of DEPs then outstanding shall be entitled to be paid out of assets of the Corporation available for distribution to its shareholders all amounts to which such holders are entitled pursuant to the first paragraph of this Section 3 before any payment shall be made to the holders of Common Stock or any other stock of the Corporation ranking junior upon liquidation to the DEPs.

(d) For the purposes of this Section 3, the consolidation or merger of, or binding statutory share exchange by, the Corporation with any other corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

4. Redemption, Conversion, Exchange.

(a) The DEPs shall not be convertible or exchangeable. Other than as described in the next sentence, the DEPs shall not be redeemable. The DEPs shall be redeemable by the Corporation, at the Corporation’s option and in its sole discretion, for an amount in cash equal to the Liquidation Preference per share of DEPs, after December 31, 2021.

(b) In case of redemption of less than all of the DEPs at the time outstanding, the shares to be redeemed shall be selected pro rata or by lot as determined by the Corporation in its sole discretion, provided that the Corporation may redeem all shares held by holders of fewer than 0.100 DEPs (or by holders that would hold fewer than 0.100 DEPs following such redemption) prior to its redemption of other DEPs.

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(c) Notice of any redemption shall be sent by or on behalf of the Corporation no less than 30 nor more than 60 days prior to the date specified for redemption in such notice (the “Redemption Date”), by first class mail, postage prepaid, to all holders of record of the DEPs at their last addresses as they appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any DEPs except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by applicable law or regulation or the rules of any exchange upon which the DEPs may be listed or admitted to trading, such notice shall state (1) that such redemption is being made pursuant to the redemption provisions of this Section 5, (2) the Redemption Date, (3) the redemption price, (4) the total number of DEPs to be redeemed and, if less than all shares held by such holder are to be redeemed, the number of such shares to be redeemed, and (5) the place or places where certificates for such shares are to be surrendered for payment of the redemption price, including any procedures applicable to redemption to be accomplished through book-entry transfers. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem, on the Redemption Date, all shares called for redemption.

5. Voting Rights . Except as otherwise required by applicable law or regulation or the rules of a securities exchange upon which the DEPs may be listed or quoted, holders of the DEPs shall have no voting rights.

IN WITNESS WHEREOF, WELLS FARGO & COMPANY has caused this Certificate of Designations to be signed by Barbara S. Brett, its Senior Vice President and Assistant Treasurer, and Laurel A. Holschuh, its Secretary, this 30 ^th day of December, 2008.


WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

CLASS A PREFERRED STOCK, SERIES G

(Without Par Value)

1. Designation . The shares of such series of Preferred Stock shall be designated Class A Preferred Stock, Series G, with no par value and with a liquidation preference of $15,000.00 per share (hereinafter referred to as the “Series G Preferred Stock”), and the number of shares constituting such series shall be 50,000, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by the Board of Directors of the Corporation. The Series G Preferred Stock shall rank prior to the common stock of the Corporation, $1-2/3 par value per share (the “Common Stock”), and on a parity with each series of the Corporation’s Parity Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation as expressly provided for herein.

2. Defined Terms . As used in this Certificate of Designations, the following terms have the meanings specified below:

“Affiliate” of any specified Person shall mean (i) any other Person which, directly or indirectly, is in Control of, is controlled by or is under common Control with such specified Person, or (ii) any other Person who is a director or executive officer (A) of such specified Person, (B) of any subsidiary of such specified Person, or (C) of any Person described in clause (i) above.

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“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in the City of New York, New York or Charlotte, North Carolina generally are authorized or required by law or regulation to close.

“Common Stock” shall have the meaning set forth in Section 1.

“Conditional Exchange” shall mean the exchange of one Depositary Share for each share of WPFC Series A Preferred Securities following the occurrence of a Supervisory Event.

“Control” means the power, direct or indirect, to direct or cause the direction of the management and policies of any Person whether by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Corporation” means Wells Fargo & Company, a Delaware corporation, together with its successors and assigns.

“Depositary Company” shall have the meaning set forth in Section 5(c).

“Depositary Share” means a depositary share representing a one-six hundredth interest in one share of Series G Preferred Stock.

“Dividend Payment” shall have the meaning set forth in Section 3(a).

“Dividend Payment Date” shall have the meaning set forth in Section 3(a).

“Dividend Period” shall have the meaning set forth in Section 3(a).

“Dividend Record Date” shall have the meaning set forth in Section 3(a).

“Federal Reserve Board” means the United States Board of Governors of the Federal Reserve System.

“Initial Dividend Period” shall have the meaning set forth in Section 3(a).

“Junior Stock” means the Common Stock and all other classes and series of securities of the Corporation that rank below the Series G Preferred Stock as to dividend rights and rights upon liquidation, winding up, or dissolution.

“OCC” means the United States Office of the Comptroller of the Currency.

“Parity Stock” means any outstanding class or series of Preferred Stock of the Corporation ranking, in accordance to its terms, as to dividends and upon voluntary or involuntary liquidation, dissolution or winding-up of affairs of the Corporation on parity with the Series G Preferred Stock.

“Person” means an individual, corporation, partnership, estate, trust (or portion thereof), association, private foundation, joint stock company or other entity or any government or agency or political subdivision thereof and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

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“Preferred Stock” means the Corporation’s preferred stock, no par value, of which 20,000,000 shares are authorized as of the date hereof.

“Redemption Date” shall have the meaning set forth in Section 5(c).

“Redemption Price” shall have the meaning set forth in Section 5(b).

“Regulatory Capital Event” means a determination by the Corporation, based on the receipt by the Corporation of an opinion or letter of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Corporation, which states that there is a significant risk that the Series G Preferred Stock will no longer constitute Tier 1 capital of the Corporation for purposes of the capital adequacy regulations or guidelines or policies of the Federal Reserve Board, or its successor, as the Corporation’s primary Federal banking regulator, as a result of (i) any amendment to, clarification of, or change in applicable laws or related regulations, guidelines, policies or official interpretations thereof, or (ii) any official administrative pronouncement or judicial decision interpreting or applying such laws or related regulations, guidelines, policies or official interpretations thereof.

“Series G Preferred Stock” shall have the meaning set forth in Section 1.

“Supervisory Event” means the occurrence of one of the following: (i) Wachovia Bank becomes “undercapitalized” under the OCC’s prompt corrective action regulations, (ii) Wachovia Bank is placed into conservatorship or receivership, or (iii) the OCC, in its sole discretion, anticipates Wachovia Bank becoming “undercapitalized” in the near term or takes supervisory action that limits the payment of dividends by WPFC and in connection therewith the OCC directs an exchange of the WPFC Series A Preferred Securities for the Series G Preferred Stock.

“Wachovia Bank” means Wachovia Bank, National Association, a national banking association, or its successors and assigns.

“WPFC” means Wachovia Preferred Funding Corp., a Delaware corporation.

“WPFC Series A Preferred Securities” means the 7.25% Non-cumulative Series A Preferred Securities, par value $0.01, liquidation preference $25.00 per share, of WPFC.

3. Dividends . (a) The dividend rate for the Series G Preferred Stock shall be 7.25% per share per annum of the initial liquidation preference of $15,000.00 per share, accruing from the effective date of the Conditional Exchange to and including the last day of March, the last day of June, the last day of September or the last day of December, whichever occurs first, after issuance of the Series G Preferred Stock following the Conditional Exchange (such period being the “Initial Dividend Period”) and then for each quarterly period thereafter, commencing on April 1, July 1, October 1 or January 1, as the case may be, of each year and ending on and including the day next preceding the first day of the next such quarterly period (each such period, including the Initial Dividend Period, being a “Dividend Period”), payable to holders of record of the Series G Preferred Stock on the respective record dates fixed for such purpose by the Board of Directors in advance of payment of such dividend, which shall be the 15th calendar day of the last calendar month of the applicable Dividend Period (each such date, a “Dividend

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Record Date”). If such Dividend Record Date is not a Business Day, then the Dividend Record Date for the applicable Dividend Period shall be the first Business Day immediately following the 15th calendar day of the last calendar month of the applicable Dividend Period, except if such Business Day falls in the calendar month following the last calendar month of the applicable Dividend Period, the Dividend Record Date shall be the last Business Date immediately preceding the 15th calendar day of the last calendar month of the applicable Dividend Period. Until no longer outstanding, the holders of the Series G Preferred Stock shall be entitled to receive such cash dividends, and the Corporation shall be bound to pay the same, but only as, if and when declared by the Board of Directors, out of funds legally available for the payment thereof (each such payment, a “Dividend Payment”), on March 31, June 30, September 30 and December 31 of each year (each a “Dividend Payment Date”) for the respective Dividend Period ending on such date; provided , however , that the Dividend Payment for the Initial Dividend Period shall include any unpaid dividends accrued from the payment date of the last dividend paid prior to such date on the WPFC Series A Preferred Securities. If a Dividend Payment Date is not a Business Day, the Dividend Payment due on such Dividend Payment Date shall be paid on the first Business Day immediately following such Dividend Payment Date, except if such Business Day falls in a different calendar year than such Dividend Payment Date, such Dividend Payment shall be paid on the last Business Date immediately preceding such Dividend Payment Date. The amount of dividends payable for the Initial Dividend Period or any period shorter than a full Dividend Period shall be computed on the basis of a 360-day year having 30-day months and the actual number of days elapsed in the period.

(b) Dividends shall be non-cumulative . If the Board of Directors fails to or chooses not to declare a dividend on the Series G Preferred Stock for a Dividend Period, then holders of the Series G Preferred Stock shall have no right to receive a dividend for that Dividend Period, and the Corporation shall have no obligation to pay a dividend for that Dividend Period, whether or not dividends are declared and paid for any future Dividend Period, with respect to either the Series G Preferred Stock, other series of preferred stock of the Corporation, or the Common Stock.

(c) Holders of Series G Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period, as herein provided, on the Series G Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

(d) Unless full dividend payments on the Series G Preferred Stock have been declared and paid or declared and a sum sufficient for such payment has been set apart for payment for the immediately preceding Dividend Period, no dividends shall be declared or paid or set aside for payment and no other distribution shall be declared or made or set aside for payment upon any shares of Junior Stock, nor shall shares of Junior Stock be redeemed, purchased, or otherwise acquired for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, except by conversion into or exchange for other Junior Stock.

4. Liquidation Preference . (a) The amount payable on the Series G Preferred Stock in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of affairs of the Corporation shall be $15,000.00 per share, plus authorized, declared but unpaid dividends up to the date of such liquidation, dissolution, or winding-up of affairs of the Corporation, and no more before any distribution shall be made to the holders of any shares of Junior Stock. The holders of Series G Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution, or winding-up of affairs of the Corporation other than what is expressly provided for in this Section 4(a).

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(b) If the amounts available for distribution in respect of the Series G Preferred Stock and any Parity Stock are not sufficient to satisfy the full liquidation rights of all of the outstanding Series G Preferred Stock and any Parity Stock, then the holders of the Series G Preferred Stock and any Parity Stock shall share ratably in any such distribution of assets in proportion to the full respective liquidation preference to which they are entitled.

(c) The sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Corporation shall not be deemed a dissolution, liquidation or winding up of the Corporation, nor shall the merger, consolidation or any other business combination transaction of the Corporation into or with any other corporation or Person or the merger, consolidation or any other business combination transaction of any other corporation or Person into or with the Corporation be deemed to be a dissolution, liquidation or winding up of the Corporation.

5. Redemption . (a) The Series G Preferred Stock shall not be redeemable by the Corporation prior to December 31, 2022, except upon the occurrence of a Regulatory Capital Event.

(b) Prior to December 31, 2022, upon the occurrence of a Regulatory Capital Event and with the prior approval of the OCC, the Corporation, at the option of the Board of Directors, may redeem the outstanding Series G Preferred Stock, in whole, but not in part, at a price equal to $15,000.00 per share of Series G Preferred Stock, plus authorized, declared but unpaid dividends to the Redemption Date, without interest, on shares redeemed (collectively, the “Redemption Price”) from funds legally available for such purpose. On or after December 31, 2022, the Corporation may redeem the Series G Preferred Stock for cash, with the prior approval of the OCC, in whole or in part, at any time and from time to time for the Redemption Price from funds legally available for such purpose. In the event the Corporation redeems fewer than all the outstanding Series A Preferred Securities, the shares to be redeemed shall be determined by lot, pro rata , or by such other method as the Board of Directors in its sole discretion determines.

(c) Not more than 60 days and not less than 30 days prior to the date established for such redemption by the Board of Directors (the “Redemption Date”), notice of the proposed redemption shall be mailed to the holders of record of the Series G Preferred Stock to be redeemed, such notice to be addressed to each such stockholder at his last known address shown on the records of the Corporation, and the time of mailing such notice shall be deemed to be the time of the giving thereof. On or after the Redemption Date, the Series G Preferred Stock called for redemption shall automatically, and without further action on the part of the holder thereof, be deemed to have been redeemed and the former holder thereof shall thereupon only be entitled to receive payment of the Redemption Price. If such notice of redemption shall have been given as aforesaid, and if on or before the Redemption Date the funds necessary for the redemption shall have been set aside so as to be available therefore, then the dividends thereon shall cease to accrue after the Redemption Date and all rights with respect to the Series G Preferred Stock so called for redemption shall forthwith after such Redemption Date cease, except the right of the holders to receive the Redemption Price, without interest. If such notice of redemption of all or any part of the Series G Preferred Stock shall have been mailed as aforesaid and the Corporation shall thereafter deposit money for the payment of the Redemption Price pursuant thereto with any bank or trust company (the “Depositary Company”), including any Affiliate of the Corporation, selected by the Board of Directors for that purpose, to be applied to such

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redemption, then from and after the making of such deposit, such Series G Preferred Stock shall not be deemed to be outstanding for any purpose, and the rights of the holders thereof shall be limited to the rights to receive payment of the Redemption Price, without interest but including any declared, authorized, but unpaid, dividends to the Redemption Date, from the Depositary Company, if applicable, upon endorsement, if required, and surrender of the certificates therefore. The Corporation shall be entitled to receive, from time to time, from the Depositary Company, the interest, if any, allowed on such moneys deposited with it, and the holders of any Series G Preferred Stock so redeemed shall have no claim to any such interest. Any moneys so deposited and remaining unclaimed at the end of three years from the Redemption Date shall, if thereafter requested by resolution of the Board of Directors, be repaid to the Corporation, and in the event of such repayment to the Corporation, such holders of record of the Series G Preferred Stock so redeemed which shall not have made claim against such moneys prior to such repayment to the Corporation shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of the Series G Preferred Stock and so repaid to the Corporation, but shall in no event be entitled to any interest.

(d) Subject to the provisions herein, the Board of Directors shall have authority to prescribe from time to time the manner in which the Series G Preferred Stock shall be redeemed.

(e) Nothing contained herein shall limit any legal right of the Corporation to purchase any shares of the Series G Preferred Stock.

6. Conversion . The holders of the Series G Preferred Stock shall not have any rights to convert such Series G Preferred Stock into shares of any other class of capital stock of the Corporation.

7. Rank . Notwithstanding anything set forth in the Restated Certificate of Incorporation of the Corporation or this Certificate of Designations to the contrary, the Board of Directors, without the vote of the holders of the Series G Preferred Stock, may authorize and issue additional shares of Junior Stock, Parity Stock or any class or series of stock ranking senior to Series G Preferred Stock as to dividends and upon voluntary or involuntary liquidation, dissolution or winding-up of affairs of the Corporation.

8. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series G Preferred Stock from time to time to such extent, in such manner, and upon such terms as the Board of Directors may determine; provided , however , that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

9. Voting Rights . The holders of Series G Preferred Stock will have no voting rights except as expressly provided by applicable law.

10. Unissued or Reacquired Shares . Shares of Series G Preferred Stock not issued or which have been issued and converted, redeemed or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

11. No Sinking Fund . Shares of Series G Preferred Stock are not subject to the operation of a sinking fund.

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WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President
		and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

CLASS A PREFERRED STOCK, SERIES H

(Without Par Value)

1. Designation . The shares of such series of Preferred Stock shall be designated Class A Preferred Stock, Series H, with no par value and with a liquidation preference of $20,000.00 per share (hereinafter referred to as the “Series H Preferred Stock”), and the number of shares constituting such series shall be 50,000, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by the Board of Directors of the Corporation. The Series H Preferred Stock shall rank prior to the common stock of the Corporation, $1-2/3 par value per share (the “Common Stock”), and on a parity with each series of the Corporation’s Parity Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation as expressly provided for herein.

2. Defined Terms . As used in this Certificate of Designations, the following terms have the meanings specified below:

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“Applicable Rate” means, with respect to distributions on each Dividend Period, (i) a rate per annum equal to Three-Month LIBOR plus 1.83%, or (ii) upon the occurrence of an initial Fixed Rate Event and thereafter, a fixed rate equal to the Assigned Fixed Rate.

“Assigned Fixed Rate” means the fixed rate equal to the Applicable Rate on the date of the occurrence of the initial Fixed Rate Event.

“Common Stock” shall have the meaning set forth in Section 1.

“Conditional Exchange” shall mean the exchange of one Depositary Share for each share of WPFC Series B Preferred Securities following the occurrence of a Supervisory Event.

“Corporation” means Wells Fargo & Company, a Delaware corporation, together with its successors and assigns.

“Depositary Company” shall have the meaning set forth in Section 5(c).

“Depositary Share” means a depositary share representing a one-eight hundredth interest in one share of Series H Preferred Stock.

“Dividend Payment” shall have the meaning set forth in Section 3(a).

“Dividend Payment Date” shall have the meaning set forth in Section 3(a).

“Dividend Period” shall have the meaning set forth in Section 3(a).

“Dividend Record Date” shall have the meaning set forth in Section 3(a).

“Federal Reserve Board” means the United States Board of Governors of the Federal Reserve System.

“Fixed Rate Event” means any Transfer with respect to all or a portion of the WPFC Series B Preferred Securities, subsequent to the initial issuance of the WPFC Series B Preferred Securities, through an initial public offering, private placement or otherwise, to any Person who is not an Affiliate of the Corporation.

“Initial Dividend Period” shall have the meaning set forth in Section 3(a).

“Junior Stock” means the Common Stock and all other classes and series of securities of the Corporation that rank below the Series H Preferred Stock as to dividend rights and rights upon liquidation, winding up, or dissolution.

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“LIBOR Business Day” means any day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London and New York.

“LIBOR Determination Date” means, as to each Dividend Period, commencing with the Initial Dividend Period, the date that is two LIBOR Business Days prior to the first day of such Dividend Period.

“OCC” means the United States Office of the Comptroller of the Currency.

“Preferred Stock” means the Corporation’s preferred stock, no par value, of which 20,000,000 shares are authorized as of the date hereof.

“Redemption Date” shall have the meaning set forth in Section 5(c).

“Redemption Price” shall have the meaning set forth in Section 5(a).

“Regulatory Capital Event” means a determination by the Corporation, based on the receipt by the Corporation of an opinion or letter of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Corporation, which states that there is a significant risk that the Series H Preferred Stock will no longer constitute Tier 1 capital of the Corporation for purposes of the capital adequacy regulations or guidelines or policies of the Federal Reserve Board, or its successor, as the Corporation’s primary Federal banking regulator, as a result of (i) any amendment to, clarification of, or change in applicable laws or related regulations, guidelines, policies or official interpretations thereof, or (ii) any official administrative pronouncement or judicial decision interpreting or applying such laws or related regulations, guidelines, policies or official interpretations thereof.

“Series H Preferred Stock” shall have the meaning set forth in Section 1.

“Supervisory Event” means the occurrence of one of the following: (i) Wachovia Bank becomes “undercapitalized” under the OCC’s prompt corrective action regulations, (ii) Wachovia Bank is placed into conservatorship or receivership, or (iii) the OCC, in its sole discretion, anticipates Wachovia Bank becoming “undercapitalized” in the near term or takes supervisory action that limits the payment of dividends by WPFC and in connection therewith the OCC directs an exchange of the WPFC Series B Preferred Securities for the Series H Preferred Stock.

“Three-Month LIBOR” means, with respect to any LIBOR Determination Date, a rate determined on the basis of the offered rates for three-month U.S. dollar deposits of not less than a principal amount equal to that which is representative for a single transaction in such market at such time, commencing on the second LIBOR Business Day immediately following such LIBOR Determination Date, which appears on US LIBOR Telerate Page 3750 as of approximately 11:00 a.m., London time, on such LIBOR Determination Date.

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If on any LIBOR Determination Date no rate appears on US LIBOR Telerate Page 3750 as of approximately 11:00 a.m., London time, the Corporation shall on such LIBOR Determination Date require four major reference banks in the London interbank market selected by the Corporation to provide the Corporation with a quotation of the rate at which three-month deposits in U.S. dollars, commencing on the second LIBOR Business Day immediately following such LIBOR Determination Date, are offered by them to prime banks in the London interbank market as of approximately 11:00 a.m., London time, on such LIBOR Determination Date and in a principal amount equal to that which is representative for a single transaction in such market at such time. If at least two such quotations are provided, Three-Month LIBOR for such LIBOR Determination Date will be the arithmetic mean of such quotations as calculated by the Corporation. If fewer than two quotations are provided, Three-Month LIBOR for such LIBOR Determination Date will be the arithmetic mean of the rates quoted as of approximately 11:00 a.m., London time, on such LIBOR Determination Date by three major banks in the London inter-bank market selected by the Corporation for loans in U.S. dollars to leading European banks, having a three-month maturity commencing on the second LIBOR Business Day immediately following such LIBOR Determination Date and in a principal amount equal to that which is representative for a single transaction in such market at such time; provided, however, that, if the banks selected as aforesaid by the Corporation are not quoting as mentioned in this sentence, Three-Month LIBOR for such LIBOR Determination Date will be the Three-Month LIBOR determined with respect to the immediately preceding Dividend Period.

“Transfer” means any sale, transfer, gift, assignment, devise or other disposition of the WPFC Series B Preferred Securities, including, but not limited to, (i) the granting of any option or entering into any agreement for the sale, transfer or other disposition of such securities, or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for WPFC Series B Preferred Securities, whether voluntary or involuntary, whether of record or beneficially and whether by operation of law or otherwise.

“Wachovia Bank” means Wachovia Bank, National Association, a national banking association, or its successors and assigns.

“WPFC” means Wachovia Preferred Funding Corp., a Delaware corporation.

“WPFC Series B Preferred Securities” means the Floating Rate Non-cumulative Series B Preferred Securities, par value $0.01, liquidation preference $25.00 per share, of WPFC.

3. Dividends . (a) The dividend rate for the Series H Preferred Stock shall be the Applicable Rate per share per annum of the initial liquidation preference of $20,000.00 per share, accruing from the effective date of the Conditional Exchange to and including the last day of March, the last day of June, the last day of September or the last day of December, whichever occurs first, after issuance of the Series H Preferred Stock following the Conditional Exchange (such period being the “Initial Dividend Period”) and then for each quarterly period thereafter, commencing on April 1, July 1, October 1 or January 1, as the case may be, of each year and ending on and including the day next preceding the first day of the next such quarterly period (each such period, including the Initial Dividend Period, being a “Dividend Period”), payable to holders of record of the Series H Preferred Stock on the respective record dates fixed for such purpose by the Board of Directors in advance of payment of such dividend, which shall be the 15th calendar day of the last calendar month of the applicable Dividend Period (each such date, a “Dividend Record Date”). If such Dividend Record Date is not a Business Day, then the Dividend

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Record Date for the applicable Dividend Period shall be the first Business Day immediately following the 15th calendar day of the last calendar month of the applicable Dividend Period, except if such Business Day falls in the calendar month following the last calendar month of the applicable Dividend Period, the Dividend Record Date shall be the last Business Date immediately preceding the 15th calendar day of the last calendar month of the applicable Dividend Period. Until no longer outstanding, the holders of the Series H Preferred Stock shall be entitled to receive such cash dividends, and the Corporation shall be bound to pay the same, but only as, if and when declared by the Board of Directors, out of funds legally available for the payment thereof (each such payment, a “Dividend Payment”), on March 31, June 30, September 30 and December 31 of each year (each a “Dividend Payment Date”) for the respective Dividend Period ending on such date; provided, however, that the Dividend Payment for the Initial Dividend Period shall include any unpaid dividends accrued from the payment date of the last dividend paid prior to such date on the WPFC Series B Preferred Securities. If a Dividend Payment Date is not a Business Day, the Dividend Payment due on such Dividend Payment Date shall be paid on the first Business Day immediately following such Dividend Payment Date, except if such Business Day falls in a different calendar year than such Dividend Payment Date, such Dividend Payment shall be paid on the last Business Date immediately preceding such Dividend Payment Date. The amount of dividends payable for the Initial Dividend Period or any period shorter than a full Dividend Period shall be computed on the basis of a 360-day year having 30-day months and the actual number of days elapsed in the period.

(b) Dividends shall be non-cumulative. If the Board of Directors fails to or chooses not to declare a dividend on the Series H Preferred Stock for a Dividend Period, then holders of the Series H Preferred Stock shall have no right to receive a dividend for that Dividend Period, and the Corporation shall have no obligation to pay a dividend for that Dividend Period, whether or not dividends are declared and paid for any future Dividend Period, with respect to either the Series H Preferred Stock, other series of preferred stock of the Corporation, or the Common Stock.

(c) Holders of Series H Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period, as herein provided, on the Series H Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

(d) Unless full dividend payments on the Series H Preferred Stock have been declared and paid or declared and a sum sufficient for such payment has been set apart for payment for the immediately preceding Dividend Period, no dividends shall be declared or paid or set aside for payment and no other distribution shall be declared or made or set aside for payment upon any shares of Junior Stock, nor shall shares of Junior Stock be redeemed, purchased, or otherwise acquired for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, except by conversion into or exchange for other Junior Stock.

4. Liquidation Preference . (a) The amount payable on the Series H Preferred Stock in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of affairs of the Corporation shall be $20,000.00 per share, plus authorized, declared but unpaid dividends up to the date of such liquidation, dissolution, or winding-up of affairs of the Corporation, and no more before any distribution shall be made to the holders of any shares of Junior Stock. The holders of Series H Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution, or winding-up of affairs of the Corporation other than what is expressly provided for in this Section 4(a).

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(b) If the amounts available for distribution in respect of the Series H Preferred Stock and any Parity Stock are not sufficient to satisfy the full liquidation rights of all of the outstanding Series H Preferred Stock and any Parity Stock, then the holders of the Series H Preferred Stock and any Parity Stock shall share ratably in any such distribution of assets in proportion to the full respective liquidation preference to which they are entitled.

5. Redemption . (a) The Series H Preferred Stock shall not be redeemable by the Corporation prior to the fifth anniversary of the initial issuance of the WPFC Series B Preferred Securities, except upon the occurrence of a Regulatory Capital Event. On or after the fifth anniversary of the initial issuance of the WPFC Series B Preferred Securities, the Corporation may, with the prior approval of the OCC, redeem the Series H Preferred Stock for cash, in whole or in part, at a price equal to $20,000.00 per share of Series H Preferred Stock, plus authorized, declared, but unpaid dividends to the Redemption Date, without interest, on shares redeemed (collectively, the “Redemption Price”) from funds legally available for such purpose.

(b) On or after the fifth anniversary of the initial issuance of the WPFC Series B Preferred Securities, the Corporation, at the option of the Board of Directors, may at any time redeem fewer than all the outstanding Series H Preferred Stock. In that event, the shares to be redeemed shall be determined by lot, pro rata, or by such other method as the Board of Directors in its sole discretion determines to be equitable.

(c) Prior to the fifth anniversary of the initial issuance of the WPFC Series B Preferred Securities, but only upon or after the occurrence of a Regulatory Capital Event, the Corporation, at the option of the Board of Directors, may redeem the outstanding Series H Preferred Stock, in whole, but not in part, for the Redemption Price from funds legally available for such purpose.

(d) Not more than 60 days and not less than 30 days prior to the date established for such redemption by the Board of Directors (the “Redemption Date”), notice of the proposed redemption shall be mailed to the holders of record of the Series H Preferred Stock to be redeemed, such notice to be addressed to each such stockholder at his last known address shown on the records of the Corporation, and the time of mailing such notice shall be deemed to be the time of the giving thereof. On or after the Redemption Date, the Series H Preferred Stock called for redemption shall automatically, and without further action on the part of the holder thereof, be deemed to have been redeemed and the former holder thereof shall thereupon only be entitled to receive payment of the Redemption Price. If such notice of redemption shall have been given as aforesaid, and if on or before the Redemption Date the funds necessary for the redemption shall have been set aside so as to be available therefore, then the dividends thereon shall cease to accrue after the Redemption Date and all rights with respect to the Series H Preferred Stock so called for redemption shall forthwith after such Redemption Date cease, except the right of the holders to receive the Redemption Price, without interest. If such notice of redemption of all or any part of the Series H Preferred Stock shall have been mailed as aforesaid and the Corporation shall thereafter deposit money for the payment of the Redemption Price pursuant thereto with any bank or trust company (the “Depositary Company”),

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including any Affiliate of the Corporation, selected by the Board of Directors for that purpose, to be applied to such redemption, then from and after the making of such deposit, such Series H Preferred Stock shall not be deemed to be outstanding for any purpose, and the rights of the holders thereof shall be limited to the rights to receive payment of the Redemption Price, without interest but including any declared, authorized, but unpaid, dividends to the Redemption Date, from the Depositary Company, if applicable, upon endorsement, if required, and surrender of the certificates therefore. The Corporation shall be entitled to receive, from time to time, from the Depositary Company, the interest, if any, allowed on such moneys deposited with it, and the holders of any Series H Preferred Stock so redeemed shall have no claim to any such interest. Any moneys so deposited and remaining unclaimed at the end of three years from the Redemption Date shall, if thereafter requested by resolution of the Board of Directors, be repaid to the Corporation, and in the event of such repayment to the Corporation, such holders of record of the Series H Preferred Stock so redeemed which shall not have made claim against such moneys prior to such repayment to the Corporation shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of the Series H Preferred Stock and so repaid to the Corporation, but shall in no event be entitled to any interest.

(e) Subject to the provisions herein, the Board of Directors shall have authority to prescribe from time to time the manner in which the Series H Preferred Stock shall be redeemed.

(f) Nothing contained herein shall limit any legal right of the Corporation to purchase any shares of the Series H Preferred Stock.

6. Conversion . The holders of the Series H Preferred Stock shall not have any rights to convert such Series H Preferred Stock into shares of any other class of capital stock of the Corporation.

7. Rank . Notwithstanding anything set forth in the Restated Certificate of Incorporation of the Corporation or this Certificate of Designations to the contrary, the Board of Directors, without the vote of the holders of the Series H Preferred Stock, may authorize and issue additional shares of Junior Stock, Parity Stock or any class or series of stock ranking senior to Series H Preferred Stock as to dividends and upon voluntary or involuntary liquidation, dissolution or winding-up of affairs of the Corporation.

8. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series H Preferred Stock from time to time to such extent, in such manner, and upon such terms as the Board of Directors may determine; provided, however, that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

9. Voting Rights . The holders of Series H Preferred Stock will have no voting rights except as expressly provided by applicable law.

10. Unissued or Reacquired Shares . Shares of Series H Preferred Stock not issued or which have been issued and converted, redeemed or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

11. No Sinking Fund . Shares of Series H Preferred Stock are not subject to the operation of a sinking fund.

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WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President
		and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

CLASS A PREFERRED STOCK, SERIES I

(Without Par Value)

Section 1. Designation . The shares of such series of Preferred Stock shall be designated Class A Preferred Stock, Series I, with no par value and a liquidation preference of $100,000 per share (hereinafter referred to as the “Series I Preferred Stock”). Each share of Series I Preferred Stock shall be identical in all respects to every other share of Series I Preferred Stock. Series I Preferred Stock will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

Section 2. Number of Shares . The number of shares of Series I Preferred Stock shall be 25,010. Such number may from time to time be increased (but not in excess of the total number of authorized shares of preferred stock) or decreased (but not below the number of shares of Series I Preferred Stock then outstanding) by the board of directors. Shares of Series I Preferred Stock that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of preferred stock undesignated as to series. The Corporation shall have the authority to issue fractional shares of Series I Preferred Stock.

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Section 3. Definitions . As used herein with respect to Series I Preferred Stock:

“Business Day” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in Charlotte, North Carolina or New York, New York are not authorized or obligated by law, regulation or executive order to close.

“Depositary Company” shall have the meaning set forth in Section 6(d).

“Dividend Payment Date” shall have the meaning set forth in Section 4(a).

“Dividend Period” shall have the meaning set forth in Section 4(a).

“DTC” means The Depositary Trust Company, together with its successors and assigns.

“Junior Stock” means the Corporation’s common stock and any other class or series of stock of the Corporation hereafter authorized over which Series I Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

“London Banking Day” means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London.

“Parity Stock” means any other class or series of stock of the Corporation that ranks on a par with Series I Preferred Stock in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

“Series I Preferred Stock” shall have the meaning set forth in Section 1.

“Telerate Page 3750” means the display page so designated on the Moneyline/Telerate Service (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to London Interbank Offered Rate for U.S. dollar deposits).

“Three-Month LIBOR” means, with respect to any Dividend Period, the rate (expressed as a percentage per annum ) for deposits in U.S. dollars for a three-month period commencing on the first day of that Dividend Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the second London Banking Day preceding the first day of that Dividend Period. If such rate does not appear on Telerate Page 3750, Three-Month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a three-month period commencing on the first day of that Dividend Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Corporation, at approximately 11:00 a.m., London time on the second London Banking Day preceding the first day of that Dividend Period. Wachovia Bank, National Association, as calculation agent for the Preferred Stock, will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, Three-Month LIBOR with respect to that Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest .00001 of 1%) of such quotations. If fewer than two quotations are provided, Three-Month LIBOR with respect to that Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest .00001 of 1%) of the rates quoted by three major banks in New York City selected by the calculation agent, at approximately 11:00 a.m., New York City time, on the first day of that Dividend Period for loans in U.S. dollars to leading European banks for a three-month period commencing on the first day of that Dividend Period and in a principal amount of not less than $1,000,000. However, if the banks selected by the calculation agent to provide quotations are not

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quoting as described above, Three-Month LIBOR for that Dividend Period will be the same as Three-Month LIBOR as determined for the previous Dividend Period, or in the case of the first Dividend Period, the most recent rate that could have been determined in accordance with the first sentence of this paragraph had Series I Preferred Stock been outstanding. The calculation agent’s establishment of Three-Month LIBOR and calculation of the amount of dividends for each Dividend Period will be on file at the principal offices of the Corporation, will be made available to any holder of Series I Preferred Stock upon request and will be final and binding in the absence of manifest error.

Section 4. Dividends .

(a) Rate . Holders of Series I Preferred Stock shall be entitled to receive, when, as and if declared by the board of directors, but only out of funds legally available therefor, non-cumulative cash dividends on the liquidation preference of $100,000 per share of Series I Preferred Stock, and no more, payable: (1) if the Series I Preferred Stock is issued prior to March 15, 2011, semi-annually in arrears on each March 15 and September 15 through March 15, 2011 and (2) from and including the later of March 15, 2011 and the date of issuance, quarterly in arrears on each March 15, June 15, September 15 and December 15. If any date prior to March 15, 2011 specified pursuant to the preceding sentence is not a Business Day, then dividends will be payable on the first Business Day following such date, without accrual to the actual payment date; if any date on or after March 15, 2011 specified pursuant the preceding sentence is not a Business Day, then dividends will be payable on the first Business Day following such date and dividends shall accrue to the actual payment date. The term “Dividend Payment Date” means each of the following dates occurring after the date of issuance of the Series I Preferred Stock: (i) each March 15 and September 15 through September 15, 2010 and (ii) each March 15, June 15, September 15 and December 15, or if any such day in the case of this clause (ii) is not a Business Day, the next Business Day. The term “Dividend Period” means each period from and including a Dividend Payment Date (or the date of issuance of the Series I Preferred Stock for the first Dividend Payment Date) to but excluding the next Dividend Payment Date. For any Dividend Period ending prior to the Dividend Payment Date in March 2011 dividends will accrue at a rate per annum equal to 5.80%, and for any Dividend Period ending after the Dividend Payment Date in March 2011, dividends will accrue at a rate per annum equal to the greater of (x) Three-Month LIBOR for the related Dividend Period plus 0.93% and (y) 5.56975%. The amount of dividends payable for any Dividend Period (1) ending prior to the Dividend Payment Date in March 2011 shall be computed on the basis of a 360-day year consisting of twelve 30-day months and (2) beginning on or after the Dividend Payment Date in March 2011 shall be computed on the basis of a 360-day year and the actual number of days elapsed.

(b) Non-Cumulative Dividends . Dividends on shares of Series I Preferred Stock shall be non-cumulative. To the extent that any dividends payable on the shares of Series I Preferred Stock on any Dividend Payment Date are not declared and paid, in full or otherwise, on such Dividend Payment Date, then such unpaid dividends shall not cumulate and shall cease to accrue and be payable and the Corporation shall have no obligation to pay, and the holders of Series I Preferred Stock shall have no right to receive, dividends accrued for the Dividend Period ending immediately prior to such Dividend Payment Date after such Dividend Payment Date or to pay interest with respect to such dividends, whether or not dividends are declared for any subsequent Dividend Period with respect to Series I Preferred Stock, Parity Stock, Junior Stock or any other class or series of authorized preferred stock of the Corporation. Holders of Series I Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period on the Series I Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

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(c) Priority of Dividends . So long as any share of Series I Preferred Stock remains outstanding, (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on any Junior Stock, other than a dividend payable solely in Junior Stock, (ii) no shares of Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, and (iii) no shares of Parity Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series I Preferred Stock and such Parity Stock except by conversion into or exchange for Junior Stock, unless full dividends on all outstanding shares of Series I Preferred Stock for the then-current Dividend Period have been paid in full or declared and set aside for payment. The foregoing shall not restrict the ability of the Corporation, or any affiliate of the Corporation, to engage in any market-making transactions in the Junior Stock or Parity Stock in the ordinary course of business. When dividends are not paid in full upon the shares of Series I Preferred Stock and any Parity Stock, all dividends declared upon shares of Series I Preferred Stock and any Parity Stock shall be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current Dividend Period per share on Series I Preferred Stock, and accrued dividends, including any accumulations on Parity Stock, bear to each other. No interest will be payable in respect of any dividend payment on such offered stock that may be in arrears. If the board of directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of the Series I Preferred Stock prior to such date. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the board of directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the shares of Series I Preferred Stock shall not be entitled to participate in any such dividend.

Section 5. Liquidation Rights .

(a) Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, holders of Series I Preferred Stock shall be entitled, before any distribution or payment out of the assets of the Corporation may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with Series I Preferred Stock upon liquidation and the rights of the Corporation’s depositors and other creditors, to receive in full a liquidation preference in an amount equal to $100,000 per share, plus an amount equal to all accrued and unpaid dividends for the then-current Dividend Period to the date of liquidation. The holder of Series I Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation other than what is expressly provided for in this Section 5.

(b) Partial Payment . If the assets of the Corporation are not sufficient to pay in full the liquidation preference to all holders of Series I Preferred Stock and the liquidation

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preferences of any Parity Stock to all holders of such Parity Stock, the amounts paid to the holders of Series I Preferred Stock and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences of Series I Preferred Stock and all such Parity Stock.

(c) Residual Distributions . If the liquidation preference has been paid in full to all holders of Series I Preferred Stock and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation . For purposes of this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of the Corporation shall not be deemed a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, nor shall the merger, consolidation or any other business combination transaction of the Corporation into or with any other corporation or person or the merger, consolidation or any other business combination transaction of any other corporation or person into or with the Corporation be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation.

Section 6. Redemption .

(a) Optional Redemption . So long as full dividends for all outstanding shares of Series I Preferred Stock for the then-current Dividend Period have been paid or declared and a sum sufficient for the payment thereof set aside, the Corporation, at the option of the board of directors, may redeem in whole or in part the shares of Series I Preferred Stock at the time outstanding, at any time on or after the later of March 15, 2011 and the date of original issuance of the Series I Preferred Stock, upon notice given as provided in Subsection (b) below, at the redemption price in effect at the redemption date as provided in this Section 6. The redemption price for shares of Series I Preferred Stock shall be $100,000 per share plus dividends that have been declared but not paid plus accrued and unpaid dividends for the then-current Dividend Period to the redemption date.

(b) Notice of Redemption . Notice of every redemption of shares of Series I Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Notwithstanding the foregoing, if the Series I Preferred Stock is held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series I Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series I Preferred Stock. Each notice shall state (i) the redemption date; (ii) the number of shares of Series I Preferred Stock to be redeemed; (iii) the redemption price; (iv) the place or places where the Series I Preferred Stock are to be redeemed; and (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date.

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(c) Partial Redemption . In case of any redemption of only part of the shares of Series I Preferred Stock at the time outstanding, the shares of Series I Preferred Stock to be redeemed shall be selected either pro rata from the holders of record of Series I Preferred Stock in proportion to the number of Series I Preferred Stock held by such holders or by lot or in such other manner as the board of directors may determine to be fair and equitable. Subject to the provisions hereof, the board of directors shall have full power and authority to prescribe the terms and conditions upon which shares of Series I Preferred Stock shall be redeemed from time to time.

(d) Effectiveness of Redemption . If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, or deposited by the Corporation with a bank or trust company selected by the board of directors (the “Depositary Company”) in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date all shares so called for redemption shall cease to be outstanding, all dividends with respect to such shares shall cease to accrue after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company at any time after the redemption date the funds so deposited, without interest. The Corporation shall be entitled to receive, from time to time, from the Depositary Company any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released or repaid to the Corporation, and in the event of such repayment to the Corporation, the holders of record of the shares so called for redemption shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to the Corporation, but shall in no event be entitled to any interest.

Section 7. Voting Rights . The holders of Series I Preferred Stock will have no voting rights and will not be entitled to elect any directors, except as expressly provided by law.

Section 8. Conversion . The holders of Series I Preferred Stock shall not have any rights to convert such Series I Preferred Stock into shares of any other class of capital stock of the Corporation.

Section 9. Rank . Notwithstanding anything set forth in the Restated Certificate of Incorporation of the Corporation or this Certificate of Designations to the contrary, the board of directors, without the vote of the holders of the Series I Preferred Stock, may authorize and issue additional shares of Junior Stock, Parity Stock or any class of securities ranking senior to the Series I Preferred Stock as to dividends and upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

Section 10. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series I Preferred Stock from time to time to such extent, in such manner, and upon such terms as the board of directors may determine; provided, however, that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

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Section 11. Unissued or Reacquired Shares . Shares of Series I Preferred Stock not issued or which have been issued and converted, redeemed or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

Section 12. No Sinking Fund . Shares of Series I Preferred Stock are not subject to the operation of a sinking fund.


WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President
		and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

8.00% NON-CUMULATIVE PERPETUAL CLASS A PREFERRED STOCK, SERIES J

(Without Par Value)

Section 1. Designation . The shares of such series of Preferred Stock shall be designated 8.00% Non-Cumulative Perpetual Class A Preferred Stock, Series J, with no par value and a liquidation preference of $1,000 per share (hereinafter referred to as the “ Series J Preferred Stock ”). Each share of Series J Preferred Stock shall be identical in all respects to every other share of Series J Preferred Stock. Series J Preferred Stock will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

Section 2. Number of Shares . The number of shares of Series J Preferred Stock shall be 2,300,000. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series J Preferred Stock then outstanding) by the board of directors. Shares of Series J Preferred Stock that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. The Corporation shall have the authority to issue fractional shares of Series J Preferred Stock.

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Section 3. Definitions . As used herein with respect to Series J Preferred Stock:

“ Business Day ” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in Charlotte, North Carolina or New York, New York are not authorized or obligated by law, regulation or executive order to close.

“ Depositary Company ” shall have the meaning set forth in Section 6(d).

“ Dividend Payment Date ” shall have the meaning set forth in Section 4(a).

“ Dividend Period ” shall have the meaning set forth in Section 4(a).

“ DTC ” means The Depositary Trust Company, together with its successors and assigns.

“ Junior Stock ” means the Corporation’s common stock and any other class or series of stock of the Corporation hereafter authorized over which Series J Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

“ Parity Stock ” means any other class or series of stock of the Corporation that ranks on a par with Series J Preferred Stock in the payment of dividends (whether such dividends are cumulative or non-cumulative) or in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

“ Series J Preferred Stock ” shall have the meaning set forth in Section 1.

“ Voting Parity Stock ” means any Parity Stock having similar voting rights as the Series J Preferred Stock.

Section 4. Dividends.

(a) Rate . Holders of Series J Preferred Stock shall be entitled to receive, when, as and if declared by the board of directors, but only out of funds legally available therefor, non-cumulative cash dividends on the liquidation preference of $1,000 per share of Series J Preferred Stock, and no more, payable quarterly in arrears on each March 15, June 15, September 15 and December 15. If any date specified pursuant the preceding sentence is not a Business Day, then dividends will be payable on the first Business Day following such date and dividends shall accrue to the actual payment date. The term “ Dividend Payment Date ” means March 15, June 15, September 15 and December 15, or if any such day in the case of this clause is not a Business Day, the next Business Day. The term “ Dividend Period ” means each period from and including a Dividend Payment Date (or the date of issuance of the Series J Preferred Stock for the first Dividend Payment Date) to but excluding the next Dividend Payment Date; provided that the first Dividend Period shall be deemed to have commenced on December 15, 2008. Dividends will accrue at a rate per annum equal to 8.00%. The amount of dividends payable for any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

(b) Non-Cumulative Dividends . Dividends on shares of Series J Preferred Stock shall be non-cumulative. To the extent that any dividends payable on the shares of Series J Preferred Stock on any Dividend Payment Date are not declared and paid, in full or otherwise, on such Dividend Payment Date, then such unpaid dividends shall not cumulate and shall cease to accrue and be payable and the Corporation shall have no obligation to pay, and the holders of Series J Preferred Stock shall

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have no right to receive, dividends accrued for the Dividend Period ending immediately prior to such Dividend Payment Date after such Dividend Payment Date, whether or not dividends are declared for any subsequent Dividend Period with respect to Series J Preferred Stock, Parity Stock, Junior Stock or any other class or series of authorized preferred stock of the Corporation. Holders of Series J Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period on the Series J Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

(c) Priority of Dividends . So long as any share of Series J Preferred Stock remains outstanding, unless full dividends on all outstanding shares of Series J Preferred Stock for the then-current Dividend Period have been paid in full or declared and set aside for payment, (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on any Junior Stock, other than a dividend payable solely in Junior Stock, (ii) no shares of Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, and (iii) no shares of Parity Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Parity Stock for or into Parity Stock or Junior Stock, or the exchange or conversion of one share of Parity Stock for or into another share of Parity Stock or for or into Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Parity Stock or Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series J Preferred Stock and such Parity Stock. The foregoing shall not restrict the ability of the Corporation, or any affiliate of the Corporation, to engage in any market-making transactions in the Junior Stock or Parity Stock in the ordinary course of business. When dividends are not paid in full upon the shares of Series J Preferred Stock and any Parity Stock, all dividends declared upon shares of Series J Preferred Stock and any Parity Stock shall be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current Dividend Period per share on Series J Preferred Stock, and accrued dividends, including any accumulations, on Parity Stock, bear to each other. No interest will be payable in respect of any dividend payment on such Parity Stock that may be in arrears. If the board of directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of the Series J Preferred Stock prior to such date. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the board of directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the shares of Series J Preferred Stock shall not be entitled to participate in any such dividend.

Section 5. Liquidation Rights.

(a) Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, holders of Series J Preferred Stock shall be entitled, before any distribution or payment out of the assets of the Corporation may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with Series J Preferred Stock upon liquidation and the rights of the Corporation’s depositors and other creditors, to receive in full a liquidation preference in an amount

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equal to $1,000 per share, plus an amount equal to all declared and unpaid dividends for the then-current Dividend Period to the date of liquidation. The holder of Series J Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation other than what is expressly provided for in this Section 5.

(b) Partial Payment . If the assets of the Corporation are not sufficient to pay in full the liquidation preference to all holders of Series J Preferred Stock and the liquidation preferences of any Parity Stock to all holders of such Parity Stock, the amounts paid to the holders of Series J Preferred Stock and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences of Series J Preferred Stock and all such Parity Stock.

(c) Residual Distributions . If the liquidation preference has been paid in full to all holders of Series J Preferred Stock and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

Section 6. Redemption.

(a) Optional Redemption . So long as full dividends for all outstanding shares of Series J Preferred Stock for the then-current Dividend Period have been paid or declared and a sum sufficient for the payment thereof set aside, and subject to applicable regulatory approvals, the Corporation, at the option of the board of directors, may redeem in whole or in part the shares of Series J Preferred Stock at the time outstanding, on any Dividend Payment Date on or after December 15, 2017 upon notice given as provided in Subsection (b) below, at the redemption price in effect at the redemption date as provided in this Section 6. The redemption price for shares of Series J Preferred Stock shall be $1,000 per share plus declared and unpaid dividends for the then-current Dividend Period, without interest.

(b) Notice of Redemption . Notice of every redemption of shares of Series J Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Notwithstanding the foregoing, if the Series J Preferred Stock is held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series J Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series J Preferred Stock. Each notice shall state (i) the redemption date; (ii) the number of shares of Series J Preferred Stock to be redeemed; (iii) the redemption price; and (iv) the place or places where the Series J Preferred Stock are to be redeemed.

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(c) Partial Redemption . In case of any redemption of only part of the shares of Series J Preferred Stock at the time outstanding, the shares of Series J Preferred Stock to be redeemed shall be selected either pro rata from the holders of record of Series J Preferred Stock in proportion to the number of Series J Preferred Stock held by such holders or by lot or in such other manner as the board of directors may determine to be fair and equitable. Subject to the provisions hereof, the board of directors shall have full power and authority to prescribe the terms and conditions upon which shares of Series J Preferred Stock shall be redeemed from time to time.

(d) Effectiveness of Redemption . If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, or deposited by the Corporation with a bank or trust company selected by the board of directors (the “ Depositary Company ”) in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date all shares so called for redemption shall cease to be outstanding, all dividends with respect to such shares shall cease to accrue after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company at any time after the redemption date the funds so deposited, without interest. The Corporation shall be entitled to receive, from time to time, from the Depositary Company any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released or repaid to the Corporation, and in the event of such repayment to the Corporation, the holders of record of the shares so called for redemption shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to the Corporation, but shall in no event be entitled to any interest.

Section 7. Voting Rights . The holders of Series J Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by applicable law.

(a) Right To Elect Two Directors Upon Nonpayment Events . If and whenever the dividends on the Series J Preferred Stock or any class or series of Voting Parity Stock have not been declared and paid in an aggregate amount equal to full dividends for at least six Dividend Periods or their equivalent (whether or not consecutive) (a “ Nonpayment Event ”), the number of directors then constituting the board of directors shall automatically be increased by two and the holders of Series J Preferred Stock, voting together as a single and separate class with the holders of any outstanding shares of Voting Parity Stock, shall be entitled to elect the two additional directors (the “ Preferred Stock Directors ”) by a plurality of the votes cast, provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors, and provided further that the board of directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Parity Stock are entitled to elect pursuant to like voting rights).

In the event that the holders of Series J Preferred Stock and such other holders of Voting Parity Stock shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment

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Event, such directors shall be initially elected following such Nonpayment Event at the Corporation’s next annual meeting of shareholders, and, except as provided below, at each subsequent annual meeting of shareholders of the Corporation.

When dividends have been paid in full on the Series J Preferred Stock and any and all Voting Parity Stock for at least four consecutive Dividend Periods or their equivalent after a Nonpayment Event, then the right of the holders of Series J Preferred Stock to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when all rights of holders of Series J Preferred Stock and Voting Parity Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the board of directors shall automatically be reduced accordingly.

Any Preferred Stock Director may be removed at any time without cause by the holders of a majority of the outstanding shares of Series J Preferred Stock and Voting Parity Stock, when they have the voting rights described above (voting together as a single and separate class). In case any vacancy shall occur among the Preferred Stock Directors, a successor shall be elected by a plurality of the votes cast by the holders of Series J Preferred Stock and Voting Parity Stock having the voting rights described above, voting together as a single and separate class. The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the board of directors for a vote.

(b) Other Voting Rights . So long as any shares of Series J Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the certificate of incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series J Preferred Stock at the time outstanding and entitled to vote thereon, voting separately as a single class with all other series of preferred stock ranking equally with the Series J Preferred Stock and entitled to vote thereon, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating any of the following actions, whether or not such approval is required by Delaware law:

(i) Issuance of Senior Stock . The issuance of any class or series of preferred stock of the Corporation ranking senior to the Series J Preferred Stock with respect to either the payment of dividends or the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

(ii) Amendment Affecting Series J Preferred Stock . Any amendment, alteration or repeal of any provision of the certificate of incorporation or bylaws so as to adversely affect the rights, preferences, privileges or voting powers of the Series J Preferred Stock;

(iii) Authorization of Senior Stock . Any amendment or alteration of any provision of the certificate of incorporation or bylaws to authorize, create or increase the authorized amount of, any shares of, or any securities convertible into shares of, any class or series of capital stock of the Corporation ranking senior to the Series J Preferred Stock with respect to either the payment of dividends or the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; or

(iv) Share Exchanges, Reclassifications, Mergers and Consolidations . Any consummation of a binding share exchange or reclassification involving the Series J Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series J Preferred Stock remain outstanding or, in the case of

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any such merger or consolidation with respect to which the Corporation is not the surviving or resulting corporation, are converted into or exchanged for preference securities of the surviving or resulting corporation or a corporation controlling such corporation, and (y) such Series J Preferred Stock shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers of the Series J Preferred Stock, taken as a whole;

provided , however , that any amendment of the certificate of incorporation to authorize or create or to increase the authorized amount of any Junior Stock or any class or series or any securities convertible into shares of any class or series of Parity Stock or Junior Stock will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series J Preferred Stock, and the Series J Preferred Stock shall have no right to vote thereon.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(b) would adversely affect one or more but not all series of voting preferred stock (including the Series J Preferred Stock), then only those series affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of preferred stock).

(c) Changes for Clarification . Without the consent of the holders of Series J Preferred Stock, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series J Preferred Stock, the Corporation may amend, alter, supplement or repeal any terms of the Series J Preferred Stock:

(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or

(ii) to make any provision with respect to matters or questions arising with respect to the Series J Preferred Stock that is not inconsistent with the provisions of this Certificate of Designations.

(d) Changes after Provision for Redemption . No vote or consent of the holders of Series J Preferred Stock shall be required pursuant to this Section 7 if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series J Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6.

(e) Procedures for Voting and Consents . The rules and procedures for calling and conducting any meeting of the holders of Series J Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the board of directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the certificate of incorporation, the bylaws, applicable law and any national securities exchange or other trading facility in which the Series J Preferred Stock is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series J Preferred Stock and any Voting Parity Stock has been cast or given on any matter on which the holders of shares of Series J Preferred Stock are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.

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For purposes of determining the voting rights of the holders of Series J Preferred Stock under this Section 7, each holder will be entitled to one vote for each $1,000 of liquidation preference to which his or her shares are entitled. Holders of shares of Series J Preferred Stock will be entitled to one vote for each such share of Series J Preferred Stock held by them.

Section 8. Conversion. The holders of Series J Preferred Stock shall not have any rights to convert such Series J Preferred Stock into shares of any other class of capital stock of the Corporation.

Section 9. Rank . Notwithstanding anything set forth in the certificate of incorporation or this Certificate of Designations to the contrary, the board of directors, without the vote of the holders of the Series J Preferred Stock, may authorize and issue additional shares of Junior Stock or Parity Stock.

Section 10. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series J Preferred Stock from time to time to such extent, in such manner, and upon such terms as the board of directors may determine; provided , however , that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

Section 11. Unissued or Reacquired Shares . Shares of Series J Preferred Stock not issued or which have been issued and redeemed or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

Section 12. No Sinking Fund . Shares of Series J Preferred Stock are not subject to the operation of a sinking fund.


WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President
		and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

FIXED-TO-FLOATING RATE NON-CUMULATIVE PERPETUAL CLASS A

PREFERRED STOCK, SERIES K

(Without Par Value)

Section 1. Designation . The shares of such series of Preferred Stock shall be designated Fixed-to-Floating Rate non Cumulative Perpetual Class A Preferred Stock, Series K, with no par value and a liquidation preference of $1,000 per share (hereinafter referred to as the “ Series K Preferred Stock ”). Each share of Series K Preferred Stock shall be identical in all respects to every other share of Series K Preferred Stock. Series K Preferred Stock will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

Section 2. Number of Shares . The number of shares of Series K Preferred Stock shall be 3,500,000. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series K Preferred Stock then outstanding) by the board of directors. Shares of Series K Preferred Stock that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. The Corporation shall have the authority to issue fractional shares of Series K Preferred Stock.

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Section 3. Definitions . As used herein with respect to Series K Preferred Stock:

“ Business Day ” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in Charlotte, North Carolina or New York, New York are not authorized or obligated by law, regulation or executive order to close.

“ Depositary Company ” shall have the meaning set forth in Section 6(d).

“ Dividend Payment Date ” shall have the meaning set forth in Section 4(a).

“ Dividend Period ” shall have the meaning set forth in Section 4(a).

“ DTC ” means The Depositary Trust Company, together with its successors and assigns.

“ Fixed Rate Period ” shall have the meaning set forth in Section 4(a).

“ Floating Rate Period ” shall have the meaning set forth in Section 4(a).

“ Junior Stock ” means the Corporation’s common stock and any other class or series of stock of the Corporation hereafter authorized over which Series K Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

“ London Banking Day ” means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London.

“ Nonpayment Event ” shall have the meaning set forth in Section 7(a).

“ Parity Stock ” means any other class or series of stock of the Corporation that ranks on a par with Series K Preferred Stock in the payment of dividends (whether such dividends are cumulative or non-cumulative) or in the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

“ Preferred Stock Directors ” shall have the meaning set forth in Section 7(a).

“ Reuters Screen LIBOR01 page ” means the display page so designated on Reuters (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to London Interbank Offered Rate for U.S. dollar deposits).

“ Series K Preferred Stock ” shall have the meaning set forth in Section 1.

“ Three-Month LIBOR ” means, with respect to any Dividend Period beginning on or after March 15, 2018, the rate for deposits in U.S. dollars for a three-month period that appears on Reuters Screen LIBOR01 page as of 11:00 a.m. (London time) on the second London Banking Day preceding the first day of that Dividend Period. If the rate described above does not appear on Reuters Screen LIBOR01 page, Three-Month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a three-month period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by us, at approximately 11:00 a.m., London time on the second London Banking Day preceding the first day of that Dividend Period. Wachovia Bank, National Association, as calculation agent for the

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Preferred Stock, will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, Three-Month LIBOR with respect to that Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest .00001 of 1%) of such quotations. If fewer than two quotations are provided, Three-Month LIBOR with respect to that Dividend Period will be the arithmetic mean (rounded upward if necessary to the nearest .00001 of 1%) of the rates quoted by three major banks in New York, New York, selected by the calculation agent, at approximately 11:00 a.m., New York City time, on the first day of that Dividend Period for loans in U.S. dollars to leading European banks for a three-month period and in a principal amount of not less than $1,000,000. However, if the banks selected by the calculation agent to provide quotations are not quoting as described above, Three-Month LIBOR for that Dividend Period will be the same as Three-Month LIBOR as determined for the previous Dividend Period, or in the case of the first Dividend Period, the most recent rate that could have been determined in accordance with the first sentence of this paragraph had the Preferred Stock been outstanding. The calculation agent’s establishment of Three-Month LIBOR and calculation of the amount of dividends for each Dividend Period will be on file at our principal offices, will be made available to any holder of Preferred Stock upon request and will be final and binding in the absence of manifest error.

“ Voting Parity Stock ” means any Parity Stock having similar voting rights as the Series K Preferred Stock.

Section 4. Dividends .

(a) Rate . Holders of Series K Preferred Stock shall be entitled to receive, when, as and if declared by the board of directors, but only out of funds legally available therefor, non-cumulative cash dividends on the liquidation preference of $1,000 per share of Series K Preferred Stock, and no more, from the date of issuance to, but excluding March 15, 2018 at a rate of 7.98% per annum (the “ Fixed Rate Period ”) payable semi-annually in arrears on each March 15 and September 15, beginning on September 15, 2008. Thereafter, declared dividends will be at a floating rate equal to Three-Month LIBOR plus 3.77% per annum, payable quarterly in arrears, on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2018 (the “ Floating Rate Period ”). If any date specified pursuant to the preceding sentence is not a Business Day, then dividends will be payable on the first Business Day following such date and dividends shall accrue to the actual payment date. The term “ Dividend Payment Date ” means, with respect to the Fixed Rate Period, March 15 and September 15, and with respect to the Floating Rate Period, March 15, June 15, September 15 and December 15, or if any such day in the case of this clause is not a Business Day, the next Business Day. The term “ Dividend Period ” means each period from and including a Dividend Payment Date (or the date of issuance of the Series K Preferred Stock for the first Dividend Payment Date) to but excluding the next Dividend Payment Date; provided that the first Dividend Period shall be deemed to have commenced on December 15, 2008. The amount of dividends payable for any Dividend Period during the Fixed Rate Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable for any Dividend Period during the Floating Rate Period shall be computed on the basis of actual number of days in a Dividend Period and a 360-day year.

(b) Non-Cumulative Dividends . Dividends on shares of Series K Preferred Stock shall be non-cumulative. To the extent that any dividends payable on the shares of Series K Preferred Stock on any Dividend Payment Date are not declared and paid, in full or otherwise, on such Dividend Payment Date, then such unpaid dividends shall not cumulate and shall cease to accrue and be payable and the Corporation shall have no obligation to pay, and the holders of Series K Preferred Stock shall have no right to receive, dividends accrued for the Dividend Period ending immediately prior to such Dividend Payment Date after such Dividend Payment Date, whether or not dividends are declared for any

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subsequent Dividend Period with respect to Series K Preferred Stock, Parity Stock, Junior Stock or any other class or series of authorized preferred stock of the Corporation. Holders of Series K Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period on the Series K Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

(c) Priority of Dividends . So long as any share of Series K Preferred Stock remains outstanding, unless full dividends on all outstanding shares of Series K Preferred Stock for the then-current Dividend Period have been paid in full or declared and set aside for payment, (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on any Junior Stock, other than a dividend payable solely in Junior Stock, (ii) no shares of Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, and (iii) no shares of Parity Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Parity Stock for or into Parity Stock or Junior Stock, or the exchange or conversion of one share of Parity Stock for or into another share of Parity Stock or for or into Junior Stock, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Parity Stock or Junior Stock), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series K Preferred Stock and such Parity Stock. The foregoing shall not restrict the ability of the Corporation, or any affiliate of the Corporation, to engage in any market-making transactions in the Junior Stock or Parity Stock in the ordinary course of business. When dividends are not paid in full upon the shares of Series K Preferred Stock and any Parity Stock, all dividends declared upon shares of Series K Preferred Stock and any Parity Stock shall be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current Dividend Period per share on Series K Preferred Stock, and accrued dividends, including any accumulations, on Parity Stock, bear to each other. No interest will be payable in respect of any dividend payment on such Parity Stock that may be in arrears. If the board of directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of the Series K Preferred Stock prior to such date. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the board of directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the shares of Series K Preferred Stock shall not be entitled to participate in any such dividend.

Section 5. Liquidation Rights .

(a) Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, holders of Series K Preferred Stock shall be entitled, before any distribution or payment out of the assets of the Corporation may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any class or series of securities ranking senior to or on parity with Series K Preferred Stock upon liquidation and the rights of the Corporation’s depositors and other creditors, to receive in full a liquidation preference in an amount equal to $1,000 per share, plus an amount equal to all declared and unpaid dividends for the then-current Dividend Period to the date of liquidation. The holder of Series K Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation other than what is expressly provided for in this Section 5.

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(b) Partial Payment . If the assets of the Corporation are not sufficient to pay in full the liquidation preference to all holders of Series K Preferred Stock and the liquidation preferences of any Parity Stock to all holders of such Parity Stock, the amounts paid to the holders of Series K Preferred Stock and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences of Series K Preferred Stock and all such Parity Stock.

(c) Residual Distributions . If the liquidation preference has been paid in full to all holders of Series K Preferred Stock and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

Section 6. Redemption .

(a) Optional Redemption . So long as full dividends for all outstanding shares of Series K Preferred Stock and Parity Stock for the then-current Dividend Period have been paid or declared and a sum sufficient for the payment thereof set aside, and subject to applicable regulatory approvals, the Corporation, at the option of the board of directors, may redeem in whole or in part the shares of Series K Preferred Stock at the time outstanding, on any Dividend Payment Date on or after March 15, 2018 upon notice given as provided in Subsection (b) below, at the redemption price in effect at the redemption date as provided in this Section 6. The redemption price for shares of Series K Preferred Stock shall be $1,000 per share plus declared and unpaid dividends for the then-current Dividend Period, without interest.

(b) Notice of Redemption . Notice of every redemption of shares of Series K Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Notwithstanding the foregoing, if the Series K Preferred Stock is held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series K Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series K Preferred Stock. Each notice shall state (i) the redemption date; (ii) the number of shares of Series K Preferred Stock to be redeemed; (iii) the redemption price; and (iv) the place or places where the Series K Preferred Stock are to be redeemed.

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(c) Partial Redemption . In case of any redemption of only part of the shares of Series K Preferred Stock at the time outstanding, the shares of Series K Preferred Stock to be redeemed shall be selected either pro rata from the holders of record of Series K Preferred Stock in proportion to the number of Series K Preferred Stock held by such holders or by lot or in such other manner as the board of directors may determine to be fair and equitable. Subject to the provisions hereof, the board of directors shall have full power and authority to prescribe the terms and conditions upon which shares of Series K Preferred Stock shall be redeemed from time to time.

(d) Effectiveness of Redemption . If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, or deposited by the Corporation with a bank or trust company selected by the board of directors (the “ Depositary Company ”) in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date all shares so called for redemption shall cease to be outstanding, all dividends with respect to such shares shall cease to accrue after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company at any time after the redemption date the funds so deposited, without interest. The Corporation shall be entitled to receive, from time to time, from the Depositary Company any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released or repaid to the Corporation, and in the event of such repayment to the Corporation, the holders of record of the shares so called for redemption shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to the Corporation, but shall in no event be entitled to any interest.

Section 7. Voting Rights . The holders of Series K Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by applicable law.

(a) Right To Elect Two Directors Upon Nonpayment Events . If and whenever the dividends on the Series K Preferred Stock or any class or series of Voting Parity Stock have not been declared and paid in an aggregate amount equal to full dividends for at least six Dividend Periods or their equivalent (whether or not consecutive) (a “ Nonpayment Event ”), the number of directors then constituting the board of directors shall automatically be increased by two and the holders of Series K Preferred Stock, voting together as a single and separate class with the holders of any outstanding shares of Voting Parity Stock, shall be entitled to elect the two additional directors (the “ Preferred Stock Directors ”) by a plurality of the votes cast, provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors, and provided further that the board of directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Parity Stock are entitled to elect pursuant to like voting rights).

In the event that the holders of Series K Preferred Stock and such other holders of Voting Parity Stock shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment

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When dividends have been paid in full on the Series K Preferred Stock and any and all Voting Parity Stock for at least four consecutive Dividend Periods or their equivalent after a Nonpayment Event, then the right of the holders of Series K Preferred Stock to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when all rights of holders of Series K Preferred Stock and Voting Parity Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the board of directors shall automatically be reduced accordingly.

Any Preferred Stock Director may be removed at any time without cause by the holders of a majority of the outstanding shares of Series K Preferred Stock and Voting Parity Stock, when they have the voting rights described above (voting together as a single and separate class). In case any vacancy shall occur among the Preferred Stock Directors, a successor shall be elected by a plurality of the votes cast by the holders of Series K Preferred Stock and Voting Parity Stock having the voting rights described above, voting together as a single and separate class. The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the board of directors for a vote.

(b) Other Voting Rights . So long as any shares of Series K Preferred Stock are outstanding, in addition to any other vote or consent of shareholders required by law or by the certificate of incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series K Preferred Stock at the time outstanding and entitled to vote thereon, voting separately as a single class with all other series of preferred stock ranking equally with the Series K Preferred Stock and entitled to vote thereon, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating any of the following actions, whether or not such approval is required by Delaware law:

(i) Issuance of Senior Stock . The issuance of any class or series of preferred stock of the Corporation ranking senior to the Series K Preferred Stock with respect to either the payment of dividends or the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

(ii) Amendment Affecting Series K Preferred Stock . Any amendment, alteration or repeal of any provision of the certificate of incorporation or bylaws so as to adversely affect the rights, preferences, privileges or voting powers of the Series K Preferred Stock;

(iii) Authorization of Senior Stock . Any amendment or alteration of any provision of the certificate of incorporation or bylaws to authorize, create or increase the authorized amount of, any shares of, or any securities convertible into shares of, any class or series of capital stock of the Corporation ranking senior to the Series K Preferred Stock with respect to either the payment of dividends or the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; or

(iv) Share Exchanges, Reclassifications, Mergers and Consolidations . Any consummation of a binding share exchange or reclassification involving the Series K Preferred Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series K Preferred Stock remain outstanding or, in the

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case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting corporation, are converted into or exchanged for preference securities of the surviving or resulting corporation or a corporation controlling such corporation, and (y) such Series K Preferred Stock shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers of the Series K Preferred Stock, taken as a whole;

provided , however , that any amendment of the certificate of incorporation to authorize or create or to increase the authorized amount of any Junior Stock or any class or series or any securities convertible into shares of any class or series of Parity Stock or Junior Stock will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series K Preferred Stock, and the Series K Preferred Stock shall have no right to vote thereon.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(b) would adversely affect one or more but not all series of voting preferred stock (including the Series K Preferred Stock), then only those series affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of preferred stock).

(c) Changes for Clarification . Without the consent of the holders of Series K Preferred Stock, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series K Preferred Stock, the Corporation may amend, alter, supplement or repeal any terms of the Series K Preferred Stock:

(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or

(ii) to make any provision with respect to matters or questions arising with respect to the Series K Preferred Stock that is not inconsistent with the provisions of this Certificate of Designations.

(d) Changes after Provision for Redemption . No vote or consent of the holders of Series K Preferred Stock shall be required pursuant to this Section 7 if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series K Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6.

(e) Procedures for Voting and Consents . The rules and procedures for calling and conducting any meeting of the holders of Series K Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the board of directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the certificate of incorporation, the bylaws, applicable law and any national securities exchange or other trading facility in which the Series K Preferred Stock is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series K Preferred Stock and any Voting Parity Stock has been cast or given on any matter on which the holders of shares of Series K Preferred Stock are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.

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For purposes of determining the voting rights of the holders of Series K Preferred Stock under this Section 7, each holder will be entitled to one vote for each $1,000 of liquidation preference to which his or her shares are entitled. Holders of shares of Series K Preferred Stock will be entitled to one vote for each such share of Series K Preferred Stock held by them.

Section 8. Conversion . The holders of Series K Preferred Stock shall not have any rights to convert such Series K Preferred Stock into shares of any other class of capital stock of the Corporation.

Section 9. Rank . Notwithstanding anything set forth in the certificate of incorporation or this Certificate of Designations to the contrary, the board of directors, without the vote of the holders of the Series K Preferred Stock, may authorize and issue additional shares of Junior Stock or Parity Stock.

Section 10. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series K Preferred Stock from time to time to such extent, in such manner, and upon such terms as the board of directors may determine; provided , however , that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

Section 11. Unissued or Reacquired Shares . Shares of Series K Preferred Stock not issued or which have been issued and redeemed or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

Section 12. No Sinking Fund . Shares of Series K Preferred Stock are not subject to the operation of a sinking fund.


WELLS FARGO & COMPANY

By:		/s/ Barbara S. Brett
		Barbara S. Brett, Senior Vice President
		and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151(g) of the

General Corporation Law

of the State of Delaware

7.50% NON-CUMULATIVE PERPETUAL CONVERTIBLE

CLASS A PREFERRED STOCK, SERIES L

(Without Par Value)

Section 1. Designation . The shares of such series of Preferred Stock shall be designated 7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L, with no par value and a liquidation preference of $1,000 per share (hereinafter referred to as the “ Series L Preferred Stock ”). Each share of Series L Preferred Stock shall be identical in all respects to every other share of Series L Preferred Stock. Series L Preferred Stock will rank equally with Parity Stock, if any, and will rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any voluntary or involuntary dissolution, winding-up and liquidation of the Corporation.

Section 2. Number of Shares . The authorized number of shares of Series L Preferred Stock shall be 4,025,000. Such number may from time to time be increased (but not in excess of the total number of authorized shares of Preferred Stock) or decreased (but not below the number of shares of Series L Preferred Stock then outstanding) by the board of directors. Shares of Series L Preferred Stock that are converted in accordance with the terms hereof, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. The Corporation shall have the authority to issue fractional shares of Series L Preferred Stock.

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Section 3. Definitions . As used herein with respect to Series L Preferred Stock:

“ Applicable Conversion Price ” at any given time means, for each share of Series L Preferred Stock, the price equal to $1,000 divided by the Applicable Conversion Rate in effect at such time.

“ Applicable Conversion Rate ” means the Conversion Rate in effect at any given time.

“ Base Price ” has the meaning set forth in Section 13(d)(i).

“ Business Day ” means each Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in Charlotte, North Carolina or New York, New York are not authorized or obligated by law, regulation or executive order to close.

“ Capital Stock ” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, excluding any debt securities convertible into such equity.

“ Closing Price ” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock on the New York Stock Exchange on that date. If the Common Stock is not traded on the New York Stock Exchange on any date of determination, the Closing Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange or securities exchange in the European Economic Area on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange or securities exchange in the European Economic Area on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange or securities exchange in the European Economic Area, the last quoted bid price for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or a similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by a nationally recognized independent investment banking firm (unaffiliated with the Corporation) retained by the Corporation for this purpose. The “Closing Price” for any other share of Capital Stock shall be determined on a comparable basis, mutatis mutandis .

For purposes of this Certificate of Designations, all references herein to the “Closing Price” and “last reported sale price” of the Common Stock on the New York Stock Exchange shall be such closing sale price and last reported sale price as reflected on the website of the New York Stock Exchange (http://www.nyse.com) and as reported by Bloomberg Professional Service; provided that in the event that there is a discrepancy between the closing sale price or last reported sale price as reflected on the website of the New York Stock Exchange and as reported by Bloomberg Professional Service, the closing sale price and last reported sale price on the website of the New York Stock Exchange will govern.

For purposes of calculating the Closing Price, if a Reorganization Event has occurred and (1) the Exchange Property consists only of shares of common securities, the Closing Price shall be based on the Closing Price of such common securities; (2) the Exchange Property consists only of cash,

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the Closing Price shall be the cash amount paid per share; and (3) the Exchange Property consists of securities, cash and/or other property, the Closing Price shall be based on the sum, as applicable, of (x) the Closing Price of such common securities, (y) the cash amount paid per share of Common Stock and (z) the value (as determined by the board of directors from time-to-time) of any other securities or property paid to holders of Common Stock in connection with the Reorganization Event.

“ Common Stock ” means the common stock, $1-2/3 par value per share, of the Corporation.

“ Conversion Agent ” means American Stock Transfer & Trust Company acting in its capacity as conversion agent for the Series L Preferred Stock, and its successors and assigns or any other conversion agent appointed by the Corporation.

“ Conversion Date ” has the meaning set forth in Section 13(a)(iv)(B).

“ Conversion Rate ” means for each share of Series L Preferred Stock, 6.3814 shares of Common Stock, plus cash in lieu of fractional shares, subject to adjustment as set forth herein.

“ Current Market Price ” per share of Common Stock on any date of determination means the average of the VWAP per share of Common Stock on each of the 10 consecutive VWAP Trading Days ending on the earlier of the day in question and the day before the Ex-Date or other specified date with respect to the issuance or distribution requiring such computation, appropriately adjusted to take into account the occurrence during such period of any event described in Section 14(a)(i) through (v).

“ Depositary ” means DTC or its nominee or any successor depositary appointed by the Corporation.

“ Dividend Payment Date ” has the meaning set forth in Section 4(a).

“ Dividend Period ” has the meaning set forth in Section 4(a).

“ Dividend Threshold Amount ” has the meaning set forth in Section 14(a)(iv).

“ DTC ” means The Depository Trust Company, together with its successors and assigns.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Exchange Property ” has the meaning set forth in Section 15(a).

“ Ex-Date ” when used with respect to any issuance or distribution, means the first date on which such shares of Common Stock or other securities trade without the right to receive an issuance or distribution with respect thereto.

“ Expiration Time ” has the meaning set forth in Section 12(a)(v).

“ Expiration Date ” has the meaning set forth in Section 14(a)(v).

“ Fiscal Quarter ” means, with respect to the Corporation, the fiscal quarter publicly disclosed by the Corporation.

“ Fundamental Change ” has the meaning set forth in Section 13(d)(i).

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“ Holder ” means the Person in whose name the shares of Series L Preferred Stock are registered, which may be treated by the Corporation, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owner of the shares of Series L Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.

“ Junior Stock ” means the Common Stock and any other class or series of stock of the Corporation hereafter authorized over which Series L Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets in the event of any voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Corporation.

“ Make-Whole Acquisition ” means the occurrence, prior to any Conversion Date, of one of the following:

(a) “ person ” or “ group ” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of common equity of the Corporation representing more than 50% of the voting power of the Common Stock; or

(b) consummation of any consolidation or merger of the Corporation or similar transaction or any sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, to any Person other than one of the Corporation’s subsidiaries, in each case, pursuant to which the Common Stock will be converted into cash, securities, or other property, other than pursuant to a transaction in which the Persons that “beneficially owned” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, Voting Shares immediately prior to such transaction beneficially own, directly or indirectly, Voting Shares representing a majority of the total voting power of all outstanding classes of Voting Shares of the continuing or surviving Person immediately after the transaction;

provided , however that a Make-Whole Acquisition will not be deemed to have occurred if at least 90% of the consideration received by holders of the Common Stock in the transaction or transactions (as determined by the board of directors) consists of shares of common securities of a Person or American Depositary Receipts in respect of such common securities that are traded on a U.S. national securities exchange or a securities exchange in the European Economic Area or that will be traded on a U.S. national securities exchange or a securities exchange in the European Economic Area when issued or exchanged in connection with a Make-Whole Acquisition.

“ Make-Whole Acquisition Conversion ” has the meaning set forth in Section 13(c)(i).

“ Make-Whole Acquisition Conversion Period ” has the meaning set forth in Section 13(c)(i).

“ Make-Whole Acquisition Effective Date ” has the meaning set forth in Section 13(c)(i).

“ Make-Whole Acquisition Stock Price ” means the price paid per share of Common Stock in the event of a Make-Whole Acquisition. If the holders of shares of Common Stock receive only cash in the Make-Whole Acquisition in a single per-share amount, other than with respect to appraisal and similar rights, the Make-Whole Acquisition Stock Price shall be the cash amount paid per share of Common Stock. For purposes of the preceding sentence as applied to a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a single price per share of

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Common Stock shall be deemed to have been paid only if the transaction or transactions that caused the Make-Whole Acquisition to occur was a tender offer for more than 50% of the then-outstanding Common Stock. Otherwise, the Make-Whole Acquisition Stock Price shall be the average of the Closing Price per share of Common Stock on the ten Trading Days up to, but not including, the Make-Whole Acquisition Effective Date.

“ Make-Whole Shares ” has the meaning set forth in Section 13(c)(i).

“ Mandatory Conversion Date ” has the meaning set forth in Section 13(b)(iii).

“ Market Disruption Event ” means any of the following events that has occurred:

(a) change or quotation system on which the VWAP is determined pursuant to the definition of the VWAP Trading Day (a “ Relevant Exchange ”) during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange, or otherwise relating to Common Stock or in futures or options contracts relating to the Common Stock on the Relevant Exchange;

(b) any event (other than an event described in clause (c)) that disrupts or impairs (as determined by the Corporation in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, futures or options contracts relating to the Common Stock on the Relevant Exchange; or

(c) the failure to open of the Relevant Exchange on which futures or options contracts relating to the Common Stock, are traded or the closure of such Relevant Exchange prior to its respective scheduled closing time for the regular trading session on such day (without regard to after hours or any other trading outside of the regular trading session hours) unless such earlier closing time is announced by such Relevant Exchange at least one hour prior to the earlier of the actual closing time for the regular trading session on such day and the submission deadline for orders to be entered into such Relevant Exchange for execution at the actual closing time on such day.

“ Nonpayment Event ” has the meaning set forth in Section 7(a).

“ Notice of Mandatory Conversion ” has the meaning set forth in Section 13(b)(iii).

“ Parity Stock ” means any other class or series of stock of the Corporation that ranks on a par with Series L Preferred Stock in the payment of dividends (whether such dividends are cumulative or non-cumulative) or in the distribution of assets in the event of any voluntary or involuntary dissolution, winding-up and liquidation of the Corporation.

“ Person ” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company or trust.

“ Preferred Stock Directors ” has the meaning set forth in Section 7(a).

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“ Purchased Shares ” has the meaning set forth in Section 12(a)(v).

“ Record Date ” has the meaning set forth in Section 12(d), except for purposes of Section 14.

“ Reference Price ” means the applicable Make-Whole Acquisition Stock Price.

“ Registrar ” means American Stock Transfer & Trust Company acting in its capacity as registrar for the Series L Preferred Stock, and its successors and assigns or any other registrar appointed by the Corporation.

“ Relevant Exchange ” has the meaning set forth above in the definition of Market Disruption Event.

“ Reorganization Event ” has the meaning set forth in Section 15(a).

“ Series L Preferred Stock ” has the meaning set forth in Section 1.

“ Trading Day ” means a day on which the shares of Common Stock:

(a) are not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business; and

(b) have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.

“ Transfer Agent ” shall mean American Stock Transfer & Trust Company acting in its capacity as transfer agent for the Series L Preferred Stock, and its successors and assigns or any other transfer agent appointed by the Corporation.

“ Voting Parity Stock ” means any Parity Stock having similar voting rights as the Series L Preferred Stock.

“ Voting Shares ” of a Person means shares of all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors of such Person.

“ VWAP ” per share of the Common Stock on any VWAP Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page WFC<equity>AQR (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant VWAP Trading Day until the close of trading on the relevant VWAP Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Common Stock on such VWAP Trading Days determined, using a volume-weighted average method, by a nationally recognized investment banking firm (unaffiliated with the Corporation) retained for this purpose by the Corporation). The VWAP for any other share of Capital Stock shall be determined on a comparable basis, mutatis mutandis .

“ VWAP Trading Day ” means, for purposes of determining a VWAP per share of Common Stock, a Business Day on which the Relevant Exchange (as defined in the definition of Market Disruption Event) is scheduled to be open for business and on which there has not occurred or does not exist a Market Disruption Event.

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Section 4. Dividends .

(a) Rate . Holders of Series L Preferred Stock shall be entitled to receive, if, as and when declared by the board of directors, but only out of funds legally available therefor, non-cumulative cash dividends on the liquidation preference of $1,000 per share of Series L Preferred Stock, and no more, from the date of issuance at a rate per annum equal to 7.50%, payable quarterly in arrears on each March 15, June 15, September 15 and December 15, commencing June 15, 2008. The term “Dividend Payment Date” means March 15, June 15, September 15 and December 15. If any date specified pursuant the preceding sentence is not a Business Day, then dividends will be payable on the first Business Day following such date and dividends shall be payable to the actual payment date and no interest or other payment shall be paid with respect of such delay. The term “Dividend Period” means each period from and including a Dividend Payment Date (or the date of issuance of the Series L Preferred Stock for the first Dividend Payment Date) to but excluding the next Dividend Payment Date; provided that the first Dividend Period shall be deemed to have commenced on December 15, 2008. The amount of dividends payable for any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

(b) Non-Cumulative Dividends . Dividends on shares of Series L Preferred Stock shall be non-cumulative. To the extent that any dividends payable on the shares of Series L Preferred Stock on any Dividend Payment Date are not declared and paid, in full or otherwise, on such Dividend Payment Date, then such unpaid dividends shall not cumulate and shall cease to be payable and the Corporation shall have no obligation to pay, and the holders of Series L Preferred Stock shall have no right to receive, dividends payable in respect of the Dividend Period ending immediately prior to such Dividend Payment Date after such Dividend Payment Date, whether or not dividends are declared for any subsequent Dividend Period with respect to the Series L Preferred Stock, any Parity Stock, any Junior Stock or any other class or series of authorized preferred stock of the Corporation. Holders of Series L Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full dividends for each Dividend Period on the Series L Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any Dividend Payment or Dividend Payments or failure to make any Dividend Payment or Dividend Payments.

(c) Priority of Dividends . So long as any share of Series L Preferred Stock remains outstanding and, as to any Junior Stock or Parity Stock then outstanding, unless full dividends on all outstanding shares of Series L Preferred Stock for the Dividend Period ending on or immediately prior to the dividend payment date or other payment date for such Junior Stock or Parity Stock have been paid in full or declared and set aside for payment, (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on such Junior Stock (other than a dividend payable solely in Junior Stock) or on such Parity Stock, subject to the immediately following paragraph in the case of Parity Stock, (ii) no shares of Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than (1) as a result of a reclassification of Junior Stock for or into Junior Stock, (2) the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock, (3) through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Stock or (4) in connection with the satisfaction of the Corporation’s obligations pursuant to any contract entered into in the ordinary course prior to the beginning of such Dividend Period), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation, and (iii) no shares of Parity Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than (1) as a result of a reclassification of Parity Stock for or into Parity Stock or Junior Stock, (2) the exchange or conversion of one share of Parity Stock for or into another share of Parity Stock or for or into Junior Stock, (3) through the use of the proceeds of a substantially

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contemporaneous sale of other shares of Parity Stock or Junior Stock or (4) in connection with the satisfaction of the Corporation’s obligations pursuant to any contract entered into in the ordinary course prior to the beginning of such Dividend Period), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Corporation (other than through the use of the proceeds of a substantially contemporaneous sale described in clause (ii)(3) or (iii)(3) above), otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series L Preferred Stock and such Parity Stock.

When dividends are not paid in full upon the Series L Preferred Stock and any Parity Stock, dividends upon shares of the Series L Preferred Stock and such Parity Stock will be declared on a proportional basis, based upon the ratio of the amount of dividends declared on the Series L Preferred Stock and such Parity Stock to the amount that, if declared, would be full dividends (including accrued and unpaid dividends as to any Parity Stock that bears dividends on a cumulative basis) on the Series L Preferred Stock and such Parity Stock through the next succeeding applicable dividend payment date. If the board of directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation will provide written notice to the holders of the Series L Preferred Stock prior to such date. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the board of directors may be declared and paid on any Junior Stock from time to time out of any funds legally available therefor, and the shares of Series L Preferred Stock shall not be entitled to participate in any such dividend.

Section 5. Liquidation Rights .

(a) Liquidation . In the event of any voluntary or involuntary dissolution, winding-up and liquidation of the Corporation, holders of Series L Preferred Stock shall be entitled, before any distribution or payment out of the assets of the Corporation may be made to or set aside for the holders of any Junior Stock and subject to the rights of the holders of any Parity Stock or class or series of securities ranking senior to or on parity with the Series L Preferred Stock upon liquidation and the rights of the Corporation’s creditors, to receive in full a liquidation preference in an amount equal to $1,000 per share, plus an amount equal to all declared and unpaid dividends for the then-current Dividend Period to the date of liquidation. The holder of Series L Preferred Stock shall not be entitled to any further payments in the event of any such voluntary or involuntary dissolution, winding-up and liquidation of the Corporation other than what is expressly provided for in this Section 5.

(b) Partial Payment . If the assets of the Corporation are not sufficient to pay in full the liquidation preference to all holders of Series L Preferred Stock and the liquidation preferences of any Parity Stock to all holders of such Parity Stock, the amounts paid to the holders of Series L Preferred Stock and to the holders of all Parity Stock shall be pro rata in accordance with the respective aggregate liquidation preferences of Series L Preferred Stock and all such Parity Stock.

(c) Residual Distributions . If the applicable liquidation preference has been paid in full to all holders of Series L Preferred Stock and all holders of any Parity Stock, the holders of Junior Stock shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

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with any other corporation or person or the merger, consolidation or any other business combination transaction of any other corporation or person into or with the Corporation be deemed to be a voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Corporation.

Section 6. Redemption . The shares of Series L Preferred Stock shall not be redeemable.

Section 7. Voting Rights . The holders of Series L Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by applicable law.

(a) Right To Elect Two Directors Upon Nonpayment Events . If after the issuance of the Series L Preferred Stock the Corporation fails to pay, or declare and set aside for payment, full dividends on the Series L Preferred Stock or any class or series of Voting Parity Stock for six Dividend Periods or their equivalent (whether or not consecutive) (a “ Nonpayment Event ”), the number of directors then constituting the board of directors shall automatically be increased by two and the holders of Series L Preferred Stock, voting together as a single and separate class with the holders of all outstanding shares of Voting Parity Stock, shall be entitled to elect the two additional directors (the “ Preferred Stock Directors ”) by a plurality of the votes cast; provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors; and provided further that the board of directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Parity Stock are entitled to elect pursuant to like voting rights).

In the event that the holders of Series L Preferred Stock and such other holders of Voting Parity Stock shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event at the Corporation’s next annual meeting of shareholders, and, except as provided below, at each subsequent annual meeting of shareholders of the Corporation.

When dividends have been paid in full on the Series L Preferred Stock and any and all Voting Parity Stock for at least four consecutive Dividend Periods or their equivalent after a Nonpayment Event, then the right of the holders of Series L Preferred Stock to elect the Preferred Stock Directors shall cease (but subject always to revesting of such rights in the case of any future Nonpayment Event), and, if and when all rights of holders of Series L Preferred Stock and Voting Parity Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the board of directors shall automatically be reduced accordingly.

Any Preferred Stock Director may be removed at any time without cause by the holders of a majority of the outstanding shares of Series L Preferred Stock and Voting Parity Stock, when they have the voting rights described above (voting together as a single and separate class). In case any vacancy shall occur among the Preferred Stock Directors, a successor shall be elected by a plurality of the votes cast by the holders of Series L Preferred Stock and Voting Parity Stock having the voting rights described above, voting together as a single and separate class. The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the board of directors for a vote.

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(b) Other Voting Rights . So long as any shares of Series L Preferred Stock are outstanding, the vote or consent of the holders of at least 66 2/3 % of the shares of Series L Preferred Stock at the time outstanding and entitled to vote thereon, voting separately as a single class with all other classes or series of preferred stock ranking equally with the Series L Preferred Stock and entitled to vote thereon, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating any of the following actions, whether or not such approval is required by Delaware law:

(i) Amendment Affecting Series L Preferred Stock . Any amendment, alteration or repeal of any provision of the certificate of incorporation or bylaws so as to adversely affect the rights, preferences, privileges or voting powers of the Series L Preferred Stock.

(ii) Authorization or Issuance of Senior Stock . Any amendment or alteration of any provision of the certificate of incorporation or bylaws to authorize, create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into shares of, any class or series of Capital Stock of the Corporation ranking senior to the Series L Preferred Stock with respect to either the payment of dividends or the distribution of assets in the event of any voluntary or involuntary dissolution, winding-up and liquidation of the affairs of the Corporation; or

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations . Any consummation of a binding share exchange or reclassification involving the Series L Preferred Stock, or of a merger or consolidation of the Corporation with another Person, unless in each case (x) the shares of Series L Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting Person, are converted into or exchanged for preference securities of the surviving or resulting Person or a Person controlling such Person, and (y) such Series L Preferred Stock shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers of the Series L Preferred Stock, taken as a whole;

provided , however , that any authorization, creation or increase in the authorized amount of or issuance of Series L Preferred Stock or any class or series of Parity Stock or Junior Stock or any securities convertible into any class or series of Parity Stock (whether dividends payable in respect of such Parity Stock are cumulative or non-cumulative) or Junior Stock will be deemed not to adversely affect the rights, preferences, privileges or voting powers of the Series L Preferred Stock, and holders of the Series L Preferred Stock shall have no right to vote thereon.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(b) would adversely affect one or more but not all series of voting preferred stock (including the Series L Preferred Stock), then only those series affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of preferred stock).

(c) Changes for Clarification . Without the consent of the holders of Series L Preferred Stock, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series L Preferred Stock, the Corporation may amend, alter, supplement or repeal any terms of the Series L Preferred Stock:

(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or

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(ii) to make any provision with respect to matters or questions arising with respect to the Series L Preferred Stock that is not inconsistent with the provisions of this Certificate of Designations.

(d) Procedures for Voting and Consents . The rules and procedures for calling and conducting any meeting of the holders of Series L Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the board of directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the certificate of incorporation, the bylaws, applicable law and any national securities exchange or other trading facility in which the Series L Preferred Stock is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series L Preferred Stock and any Voting Parity Stock has been cast or given on any matter on which the holders of shares of Series L Preferred Stock are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.

For purposes of determining the voting rights of the holders of Series L Preferred Stock under this Section 7, each holder will be entitled to one vote for each $1,000 of liquidation preference to which his or her shares are entitled. Holders of shares of Series L Preferred Stock will be entitled to one vote for each such share of Series L Preferred Stock held by them.

Section 8. Rank . Notwithstanding anything set forth in the certificate of incorporation or this Certificate of Designations to the contrary, the board of directors, without the vote of the holders of the Series L Preferred Stock, may authorize and issue additional shares of Junior Stock or Parity Stock.

Section 9. Repurchase . Subject to the limitations imposed herein, the Corporation may purchase and sell Series L Preferred Stock from time to time to such extent, in such manner, and upon such terms as the board of directors may determine; provided , however , that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent.

Section 10. Unissued or Reacquired Shares . Shares of Series L Preferred Stock not issued or which have been issued and converted in accordance with the terms hereof or otherwise purchased or acquired by the Corporation shall be restored to the status of authorized but unissued shares of Preferred Stock without designation as to series.

Section 11. No Sinking Fund . Shares of Series L Preferred Stock are not subject to the operation of a sinking fund.

Section 12. Right to Convert . Each Holder shall have the right, at such Holder’s option, at any time, to convert all or any portion of such Holder’s Series L Preferred Stock into shares of Common Stock at the Applicable Conversion Rate (subject to the conversion procedures set forth in Section 13 herein) plus cash in lieu of fractional shares.

Section 13. Conversion .

(a) Conversion Procedures .

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(i) Effective immediately prior to the close of business on the Mandatory Conversion Date or any applicable Conversion Date, dividends shall no longer be declared on any converted shares of Series L Preferred Stock and such shares of Series L Preferred Stock shall cease to be outstanding, in each case, subject to the right of Holders to receive any declared and unpaid dividends on such shares and any other payments to which they are otherwise entitled pursuant to Section 12, Section 13(b), Section 13(c), Section 13(d), Section 15 or Section 16, as applicable.

(ii) Prior to the close of business on the Mandatory Conversion Date or any applicable Conversion Date, shares of Common Stock issuable upon conversion of, or other securities issuable upon conversion of, any shares of Series L Preferred Stock shall not be deemed outstanding for any purpose, and Holders shall have no rights with respect to the Common Stock or other securities issuable upon conversion (including voting rights, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock and/or other securities issuable upon conversion), by virtue of holding shares of Series L Preferred Stock.

(iii) The Person or Persons entitled to receive the Common Stock and/or other securities issuable upon conversion of Series L Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or such other securities as of the close of business on the Mandatory Conversion Date or any applicable Conversion Date except to the extent that all or a portion of such Common Stock is subject to the limitations set forth in Section 18. In the event that a Holder shall not by written notice designate the name in which shares of Common Stock and/or cash, other securities or other property (including payments of cash in lieu of fractional shares) to be issued or paid upon conversion of shares of Series L Preferred Stock should be registered or paid or the manner in which such shares should be delivered, the Corporation shall be entitled to register and deliver such shares, and make such payment, in the name of the Holder and in the manner shown on the records of the Corporation through book-entry transfer through the Depositary.

(iv) Conversion into shares of Common Stock will occur on the Mandatory Conversion Date or any applicable Conversion Date as follows:

(A) On the Mandatory Conversion Date or applicable Conversion Date, certificates or evidence of shares in book-entry form representing shares of Common Stock shall be issued and delivered to Holders or their designee upon presentation and surrender of the certificate evidencing the Series L Preferred Stock to the Conversion Agent if shares of the Series L Preferred Stock are held in certificated form, and, if required, the furnishing of appropriate endorsements and transfer documents and the payment of all transfer and similar taxes. If a Holder’s interest is a beneficial interest in a global certificate representing Series L Preferred Stock, a book-entry transfer through the Depositary will be made by the Conversion Agent upon compliance with the Depositary’s procedures for converting a beneficial interest in a global security.

(B) On the date of any conversion at the option of Holders pursuant to Section 12, Section 13(c) or Section 13(d), if a Holder’s interest is in certificated form, a Holder must do each of the following in order to convert:

(1) complete and manually sign the conversion notice provided by the Conversion Agent, or a facsimile of the conversion notice, and deliver this irrevocable notice to the Conversion Agent;

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(2) surrender the shares of Series L Preferred Stock to the Conversion Agent;

(3) if required, furnish appropriate endorsements and transfer documents;

(4) if required, pay all transfer or similar taxes; and

(5) if required, pay funds equal to any declared and unpaid dividend payable on the next Dividend Payment Date.

If a Holder’s interest is a beneficial interest in a global certificate representing Series L Preferred Stock, in order to convert a Holder must comply with clauses (3) through (5) listed above and comply with the Depositary’s procedures for converting a beneficial interest in a global security.

The date on which a Holder complies with the procedures in this clause (v) is the “Conversion Date.”

(C) Conversion Agent shall, on a Holder’s behalf, convert the Series L Preferred Stock into shares of Common Stock and/or cash, other securities or other property (involving payments of cash in lieu of fractional shares), in accordance with the terms of the notice delivered by such Holder described in clause (B) above. If a Conversion Date on which a Holder elects to convert Series L Preferred Stock is prior to the Record Date relating to any declared dividend for the Dividend Period, such Holder will not have the right to receive any declared dividends for that Dividend Period. If a Conversion Date on which a Holder elects to convert Series L Preferred Stock or the Mandatory Conversion Date is after the Record Date for any declared dividend and prior to the Dividend Payment Date, such Holder shall receive that dividend on the relevant Dividend Payment Date if such Holder was the Holder of record on the Record Date for that dividend. Notwithstanding the preceding sentence, if the Conversion Date is after the Record Date and prior to the Dividend Payment Date, whether or not such Holder was the Holder of record on the Record Date, the Holder must pay to the Conversion Agent upon conversion of the shares of Series L Preferred Stock an amount in cash equal to the full dividend actually paid on the Dividend Payment Date for the then-current Dividend Period on the shares of Series L Preferred Stock being converted, unless the Holder’s shares of Series L Preferred Stock are being converted pursuant to Section 13(b), Section 13(c) or Section 13(d).

(b) Mandatory Conversion at the Corporation’s Option .

(i) On or after March 15, 2013, the Corporation may, at its option, at any time or from time to time, cause some or all of the Series L Preferred Stock to be converted into shares of Common Stock at the Applicable Conversion Rate if, for 20 Trading Days during any period of 30 consecutive Trading Days, including the last Trading Day of such period, the Closing Price of the Common Stock exceeds 130% of the Applicable Conversion Price of the Series L Preferred Stock. The Corporation will provide Notice of Mandatory Conversion as set forth in Section 13(b)(iii) within three Trading Days after the end of the 30 consecutive Trading Day period.

(ii) If the Corporation elects to cause less than all of the Series L Preferred Stock to be converted under clause (i) above, the Conversion Agent will select the Series L Preferred Stock to be converted by lot, or on a pro rata basis or by another method the Conversion Agent considers fair and appropriate, including any method required by the Depositary (so long as such method

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is not prohibited by the rules of any stock exchange or quotation association on which the Series L Preferred Stock is then traded or quoted). If the Conversion Agent selects a portion of a Holder’s Series L Preferred Stock for partial conversion at the Corporation’s option and such Holder converts a portion of its shares of Series L Preferred Stock at the same time, the portion converted at such Holder’s option will reduce the portion selected for conversion at the Corporation’s option under this Section 13(b).

(iii) If the Corporation exercises the optional conversion right described in this Section 13(b), the Corporation shall give notice (such notice a “ Notice of Mandatory Conversion ”) by (i) providing a notice of such conversion by first class mail to each Holder of record for the shares of Series L Preferred Stock to be converted or (ii) issuing a press release and making this information available on its website. The Conversion Date shall be a date selected by the Corporation (the “ Mandatory Conversion Date ”), not less than 10 days, and not more than 20 days, after the date on which the Corporation provides the Notice of Mandatory Conversion. In addition to any information required by applicable law or regulation, the Notice of Mandatory Conversion shall state, as appropriate:

(A) the Mandatory Conversion Date;

(B) the number of shares of Common Stock to be issued upon conversion of each share of Series L Preferred Stock; and

(i) In the event of a Make-Whole Acquisition occurring prior to a Mandatory Conversion Date or Conversion Date, each Holder shall have the option to convert its shares of Series L Preferred Stock (a “ Make-Whole Acquisition Conversion ”) during the period (the “ Make-Whole Acquisition Conversion Period ”) beginning on the effective date of the Make-Whole Acquisition (the “ Make-Whole Acquisition Effective Date ”) and ending on the date that is 30 days after the Make-Whole Acquisition Effective Date and receive an additional number of shares of Common Stock (the “ Make-Whole Shares ”) as set forth in clause (ii) below.

(ii) The number of Make-Whole Shares per share of Series L Preferred Stock shall be determined by reference to the table below for the applicable Make-Whole Acquisition Effective Date and the applicable Make-Whole Acquisition Stock Price:

Make-Whole Acquisition Stock Price


Effective Date	$120.54		$125.57		$138.12		$150.68		$156.71		$175.79		$203.72		$226.02		$251.13		$301.36		$401.81		$502.26
April 17, 2008		1.9153		1.8855		1.5191		1.1110		0.9497		0.6471		0.3962		0.2847		0.2091		0.1354		0.0757		0.0458
March 15, 2009		1.9153		1.8775		1.5052		1.0951		0.9437		0.6331		0.3763		0.2588		0.1852		0.1175		0.0697		0.0438
March 15, 2010		1.9153		1.8397		1.4913		1.0871		0.9378		0.6073		0.3365		0.2210		0.1533		0.0956		0.0577		0.0358
March 15, 2011		1.9153		1.7899		1.4694		1.0731		0.9238		0.5794		0.2887		0.1712		0.1075		0.0657		0.0398		0.0259
March 15, 2012		1.9153		1.7561		1.4355		1.0652		0.9139		0.5356		0.2051		0.0896		0.0458		0.0299		0.0199		0.0119
March 15, 2013		1.9153		1.6704		1.4275		1.0592		0.9119		0.5097		0.0916		0.0000		0.0000		0.0000		0.0000		0.0000

Thereafter		1.9153		1.6704		1.4275		1.0592		0.9119		0.5097		0.0916		0.0000		0.0000		0.0000		0.0000		0.0000

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(A) The exact Make-Whole Acquisition Stock Prices and Make-Whole Acquisition Effective Dates may not be set forth in the table, in which case:

(1) if the Make-Whole Acquisition Stock Price is between two Make-Whole Acquisition Stock Price amounts in the table or the Make-Whole Acquisition Effective Date is between two dates in the table, the number of Make-Whole Shares will be determined by straight-line interpolation between the number of Make-Whole Shares set forth for the higher and lower Make-Whole Acquisition Stock Price amounts and the two Make-Whole Acquisition Effective Dates, as applicable, based on a 365-day year;

(2) if the Make-Whole Acquisition Stock Price is in excess of $502.26 per share (subject to adjustment pursuant to Section 14), no Make-Whole Shares will be issued upon conversion of the Series L Preferred Stock; and

(3) if the Make-Whole Acquisition Stock Price is less than $120.54 per share (subject to adjustment pursuant to Section 14), no Make-Whole Shares will be issued upon conversion of the Series L Preferred Stock.

(B) The Make-Whole Acquisition Stock Prices set forth in the table above are subject to adjustment pursuant to Section 14 hereof and shall be adjusted as of any date the Conversion Rate is adjusted. The adjusted Make-Whole Acquisition Stock Prices will equal the Make-Whole Acquisition Stock Prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Make-Whole Acquisition Stock Prices adjustment and the denominator of which is the Conversion Rate as so adjusted. Each of the number of Make-Whole Shares in the table shall also be subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.

(iii) On or before the twentieth day prior to the date the Corporation anticipates being the effective date for the Make-Whole Acquisition or within two business days of becoming aware of a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

(A) the anticipated effective date or effective date of the Make-Whole Acquisition; and

(B) the date, which shall be 30 days after the Make-Whole Acquisition Effective Date, by which a Make-Whole Acquisition Conversion must be exercised.

(iv) On the Make-Whole Acquisition Effective Date or as soon as practicable thereafter, another written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

(A) the date that shall be 30 days after the Make-Whole Acquisition Effective Date;

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(B) the number of Make-Whole Shares;

(C) the amount of cash, securities and other consideration receivable by a Holder of Series L Preferred Stock upon conversion; and

(D) the instructions a Holder must follow to exercise its conversion option in connection with such Make-Whole Acquisition.

(v) To exercise a Make-Whole Acquisition Conversion option, a Holder must, no later than 5:00 p.m., New York City time on or before the date by which the Make-Whole Acquisition Conversion option must be exercised as specified in the notice delivered under clause (iv) above, comply with the procedures set forth in Section 13(a)(iv)(B).

(vi) If a Holder does not elect to exercise the Make-Whole Acquisition Conversion option in accordance with the provisions specified in this Section 13(c), the shares of Series L Preferred Stock or successor security held by it shall remain outstanding (unless otherwise converted as provided herein), and the Holder will not be eligible to receive Make-Whole Shares.

(vii) Upon a Make-Whole Acquisition Conversion, the Conversion Agent shall, except as otherwise provided in the instructions provided by the Holder thereof in the written notice provided to the Corporation or its successor as set forth in Section 13(a)(iv) above, deliver to the Holder such cash, securities or other property as are issuable with respect to Make-Whole Shares in the Make-Whole Acquisition.

(viii) In the event that a Make-Whole Acquisition Conversion is effected with respect to shares of Series L Preferred Stock or a successor security representing less than all the shares of Series L Preferred Stock or a successor security held by a Holder, upon such Make-Whole Acquisition Conversion the Corporation or its successor shall execute and the Conversion Agent shall, unless otherwise instructed in writing, countersign and deliver to the Holder thereof, at the expense of the Corporation or its successors, a certificate evidencing the shares of Series L Preferred Stock or such successor security held by the Holder as to which a Make-Whole Acquisition Conversion was not effected.

(d) Conversion Upon Fundamental Change .

(i) If the Reference Price in connection with a Make-Whole Acquisition is less than $120.54 (a “ Fundamental Change ”), a Holder may elect to convert each share of Series L Preferred Stock during the period beginning on the effective date of the Fundamental Change and ending on the date that is 30 days after the effective date of such Fundamental Change at an adjusted conversion price equal to the greater of (1) the Reference Price and (2) $60.27, subject to adjustment as described in clause (ii) below (the “ Base Price ”). If the Reference Price is less than the Base Price, Holders will receive a maximum of 16.5916 shares of Common Stock per share of Series L Preferred Stock converted, subject to adjustment as a result of any adjustment to the Base Price described in clause (ii) below.

(ii) The Base Price shall be adjusted as of any date the Conversion Rate of the Series L Preferred Stock is adjusted pursuant to Section 14. The adjusted Base Price shall equal the Base Price applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to the adjustment giving rise to the Conversion Rate adjustment and the denominator of which is the Conversion Rate as so adjusted.

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(iii) In lieu of issuing Common Stock upon conversion in the event of a Fundamental Change, the Corporation may at its option, and if it obtains any necessary regulatory approval, pay an amount in cash (computed to the nearest cent) equal to the Reference Price for each share of Common Stock otherwise issuable upon conversion.

(iv) On or before the twentieth day prior to the date the Corporation anticipates being the effective date for the Fundamental Change or within two business days of becoming aware of the Fundamental Change if it is a Make-Whole Acquisition of the type set forth in clause (a) of the definition Make-Whole Acquisition, a written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

(A) the anticipated effective date of the Fundamental Change; and

(B) the date, which shall be 30 days after the anticipated effective date of a Fundamental Change, by which a Fundamental Change conversion must be exercised.

(v) On the effective date of a Fundamental Change or as soon as practicable thereafter, another written notice shall be sent by or on behalf of the Corporation, by first-class mail, postage prepaid, to the Holders as they appear in the records of the Corporation. Such notice shall contain:

(A) the date that shall be 30 days after the effective date of the Fundamental Change;

(B) the adjusted conversion price following the Fundamental Change;

(C) the amount of cash, securities and other consideration received by a Holder of Series L Preferred Stock upon conversion; and

(D) the instructions a Holder must follow to exercise its conversion option in connection with such Fundamental Change.

(vi) To exercise its conversion option upon a Fundamental Change, a Holder must, no later than 5:00 p.m., New York City time on or before the date by which the conversion option upon the Fundamental Change must be exercised as specified in the notice delivered under clause (v) above, comply with the procedures set forth in Section 13 (a)(v)(B) and indicate that it is exercising the Fundamental Change conversion option.

(vii) If a Holder does not elect to exercise its conversion option upon a Fundamental Change in accordance with the provisions specified in this Section 13(d), the shares of Series L Preferred Stock or successor security held by it shall remain outstanding (unless otherwise converted as provided herein) and the Holder will not be eligible to convert its shares pursuant to this Section 13(d).

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(viii) Upon a conversion upon a Fundamental Change, the Conversion Agent shall, except as otherwise provided in the instructions provided by the Holder thereof in the written notice provided to the Corporation or its successor as set forth in Section 13(a)(iv), deliver to the Holder such cash, securities or other property as are issuable with respect to the adjusted conversion price following the Fundamental Change.

(ix) In the event that a conversion upon a Fundamental Change is effected with respect to shares of Series L Preferred Stock or a successor security representing less than all the shares of Series L Preferred Stock or a successor security held by a Holder, upon such conversion the Corporation or its successor shall execute and the Conversion Agent shall, unless otherwise instructed in writing, countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Series L Preferred Stock or such successor security held by the Holder as to which a conversion upon a Fundamental Change was not effected.

Section 14. Anti-Dilution Adjustments .

(a) Adjustments . The Conversion Rate will be subject to adjustment, without duplication, under the following circumstances:

(i) The issuance of Common Stock as a dividend or distribution to all holders of Common Stock or a subdivision or combination of Common Stock (other than in connection with a Reorganization Event), in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR ₀ × (OS ¹ / OS ₀ )

where,


CR0	=	the Conversion Rate in effect at the close of business on the Record Date
CR ¹	=	the Conversion Rate in effect immediately after the Record Date
OS ₀	=	the number of shares of Common Stock outstanding at the close of business on the Record Date prior to giving effect to such event
OS ¹	=	the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such event

Notwithstanding the foregoing, (1) no adjustment will be made for the issuance of Common Stock as a dividend or distribution to all holders of Common Stock that is made in lieu of a quarterly or annual cash dividend or distribution to such holders, to the extent such dividend or distribution does not exceed the applicable Dividend Threshold Amount (with the amount of any such dividend or distribution equaling the number of such shares being issued multiplied by the average of the VWAP of the Common Stock over each of the five consecutive VWAP Trading Days prior to the Ex-Date for such dividend or distribution) and (2) in the event any dividend, distribution, subdivision or combination that is the subject of this Section 14(a)(i) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the board of directors publicly announces its decision not to pay or make such dividend or distribution or effect such subdivision or combination, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or such subdivision or combination had not been announced.

(ii) The issuance to all holders of Common Stock of certain rights or warrants (other than rights issued pursuant to a shareholder rights plan or rights or warrants issued in

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connection with a Reorganization Event) entitling them for a period expiring 60 days or less from the date of issuance of such rights or warrants to purchase shares of Common Stock (or securities convertible into Common Stock) at less than (or having a conversion price per share less than) the Current Market Price as of the Record Date, in which event each Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR ₀ × [(OS ₀ + X) / (OS ₀ + Y)]

where,


CR ₀	=	the Conversion Rate in effect at the close of business on the Record Date
CR ¹	=	the Conversion Rate in effect immediately after the Record Date
OS ₀	=	the number of shares of Common Stock outstanding at the close of business on the Record Date
X	=	the total number of shares of Common Stock issuable pursuant to such rights or warrants (or upon conversion of such securities)
Y	=	the number of shares equal to the quotient of the aggregate price payable to exercise such rights or warrants (or the conversion price for such securities paid upon conversion) divided by the average of the VWAP of the Common Stock over each of the ten consecutive VWAP Trading Days prior to the Business Day immediately preceding the announcement of the issuance of such rights or warrants

Notwithstanding the foregoing, (1) in the event that such rights or warrants described in this Section 14(a)(ii) are not so issued, the Conversion Rate shall be immediately readjusted, effective as of the date the board of directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such issuance had not been declared and (2) to the extent that such rights or warrants are not exercised prior to their expiration or shares of the Common Stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.

In determining the aggregate price payable for such shares of the Common Stock, there shall be taken into account any consideration received by the Corporation for such rights or warrants and the value of such consideration (if other than cash, to be determined by the board of directors). If an adjustment to the Conversion Rate may be required pursuant to this Section 14(a)(ii), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required pursuant to this Section 14(a)(ii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(ii).

(iii) The dividend or other distribution to all holders of Common Stock of shares of capital stock of the Corporation (other than Common Stock) or evidences of its indebtedness or its assets (excluding any dividend, distribution or issuance covered by clauses (a)(i) or (a)(ii) above or (a)(iv) below, any dividend or distribution in connection with a Reorganization Event or any spin-off to which the provisions set forth below in this clause (a)(iii) apply) in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR ₀ × [SP ₀ / (SP ₀ – FMV)]

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where,


CR ₀	=	the Conversion Rate in effect at the close of business on the Record Date
CR ¹	=	the Conversion Rate in effect immediately after the Record Date
SP ₀	=	the Current Market Price as of the Record Date
FMV	=	the fair market value (as determined by the board of directors) on the Record Date of the shares of capital stock of the Corporation, evidences of indebtedness or assets so distributed, applicable to one share of Common Stock

However, if the transaction that gives rise to an adjustment pursuant to this clause (iii) is one pursuant to which the payment of a dividend or other distribution on Common Stock consists of shares of capital stock of the Corporation of, or similar equity interests in, a subsidiary or other business unit of the Corporation ( i.e., a spin-off) that are, or, when issued, will be, traded on the New York Stock Exchange, the Nasdaq Stock Market or any other national or regional securities exchange or market, then the Conversion Rate will instead be adjusted based on the following formula:

CR ¹ = CR ₀ × [(FMV ₀ + MP ₀ ) / MP ₀ ]

where,


CR ₀	=	the Conversion Rate in effect at the close of business on the Record Date
CR ¹	=	the Conversion Rate in effect immediately after the Record Date
FMV ₀	=	the average of the VWAP of the Capital Stock distributed to holders of Common Stock applicable to one share of Common Stock over each of the 10 consecutive VWAP Trading Days commencing on and including the third VWAP Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the NYSE or such other national or regional exchange or association or over-the-counter market, or, if not so traded or quoted, the fair market value of the capital stock or similar equity interests distributed to holders of Common Stock applicable to one share of Common Stock as determined by the board of directors
MP ₀	=	the average of the VWAP of the Common Stock over each of the 10 consecutive VWAP Trading Days commencing on and including the third VWAP Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the NYSE or such other national or regional exchange or association or over-the-counter market on which Common Stock is then traded or quoted

Notwithstanding the foregoing, (1) if any dividend or distribution of the type described in this Section 14(a)(iii) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the board of directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. If an adjustment to the Conversion Rate may be required under this Section 14(a)(iii), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 14(a)(iii) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(iii).

(iv) The Corporation makes a distribution consisting exclusively of cash to all holders of Common Stock, excluding (a) any regular cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock does not exceed $1.8835 in any fiscal

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quarter (the “ Dividend Threshold Amount ”) and (b) any consideration payable in connection with a tender or exchange offer made by the Corporation or any its subsidiaries referred to in clause (v) below, in which event, the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR ₀ × [SP ₀ / (SP ₀ – C)]

where,


CR ₀	=	the Conversion Rate in effect at the close of business on the Record Date
CR ¹	=	the Conversion Rate in effect immediately after the Record Date
SP ₀	=	the Current Market Price as of the Record Date
C	=	the amount in cash per share equal to (1) in the case of a regular quarterly dividend, the amount the Corporation distributes to holders or pays, less the Dividend Threshold Amount or (2) in any other case, the amount the Corporation distributes to holders or pays

The Dividend Threshold Amount is subject to adjustment on an inversely proportional basis whenever the Conversion Rate is adjusted; provided that no adjustment will be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate pursuant to this clause (iv).

Notwithstanding the foregoing, if any dividend or distribution of the type described in this Section 14(a)(iv) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the board of directors publicly announces its decision not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(v) The Corporation or one or more of its subsidiaries make purchases of Common Stock pursuant to a tender offer or exchange offer by the Corporation or a subsidiary of the Corporation for Common Stock to the extent that the cash and value (as determined by the board of directors) of any other consideration included in the payment per share of Common Stock validly tendered or exchanged exceeds the VWAP per share of Common Stock on the VWAP Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “ Expiration Date ”), in which event the Conversion Rate will be adjusted based on the following formula:

CR ¹ = CR ₀ × [(FMV + (SP ¹ × OS ₁ ) / (SP ¹ × OS ₀ )]

where,


CR ₀	=	the Conversion Rate in effect at the close of business on the Expiration Date
CR ¹	=	the Conversion Rate in effect immediately after the Expiration Date
FMV	=	the fair market value (as determined by the board of directors), on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the “ Purchased Shares ”)
OS ¹	=	the number of shares of Common Stock outstanding as of the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “ Expiration Time ”) less any Purchased Shares
OS ₀	=	the number of shares of Common Stock outstanding at the Expiration Time, including any Purchased Shares

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SP ¹		=		the average of the VWAP of the Common Stock over each of the ten consecutive VWAP Trading Days commencing with the VWAP Trading Day immediately after the Expiration Date.

Notwithstanding the foregoing, if the Corporation, or one of its subsidiaries, is obligated to purchase shares of Common Stock pursuant to any such tender or exchange offer, but the Corporation or such subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. If an adjustment to the Conversion Rate may be required under this Section 14(a)(v), delivery of any additional shares of Common Stock that may be deliverable upon conversion as a result of an adjustment required under this Section 14(a)(v) shall be delayed to the extent necessary in order to complete the calculations provided for in this Section 14(a)(v).

(b) Calculation of Adjustments . All adjustments to the Conversion Rate shall be calculated by the Corporation to the nearest 1/10,000th of one share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent; provided , however , that any such minor adjustments that are not required to be made will be carried forward and taken into account in any subsequent adjustment, and provided further that any such adjustment of less than one percent that has not been made will be made prior to any conversion pursuant to Section 13(b), Section 13(c) or Section 13(d).

(i) Except as otherwise provided in this Section 14, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing or for the repurchase of Common Stock.

(ii) Rights Plans . To the extent that the Corporation has a stockholders’ rights plan in effect upon conversion of the Series L Preferred Stock into Common Stock, Holders will receive, in addition to any of Common Stock deliverable and in lieu of any adjustment to the Conversion Rate, the rights under the stockholders’ rights plan, unless prior to any conversion, the rights have separated from Common Stock, in which case the Conversion Rate will be adjusted at the time of separation as if we distributed to all holders of Common Stock, shares of the Corporation’s Capital Stock, evidences of indebtedness or assets as described in Section 14(a)(iii). A further adjustment will occur as described in Section 14(a)(iii), if such rights become exercisable to purchase different securities, evidences of indebtedness or assets, subject to readjustment in the event of the expiration, termination or redemption of such rights.

(iii) No adjustment to the Conversion Rate need be made:

(A) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Stock under any plan;

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(B) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of its subsidiaries; or

(C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Series L Preferred Stock was first issued.

(iv) No adjustment to the Conversion Rate need be made for a transaction referred to in Section 14(a)(i) through (v) if Holders may participate in the transaction on a basis and with notice that the board of directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

(v) No adjustment to the Conversion Rate need be made for a change in the par value or no par value of the Common Stock.

(vi) No adjustment to the Conversion Rate will be made to the extent that such adjustment would result in the Conversion Price being less than the par value of the Common Stock.

(d) Record Date . For purposes of this Section 14, “Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the board of directors or by statute, contract or otherwise).

(e) Successive Adjustments . After an adjustment to the Conversion Rate under this Section 14, any subsequent event requiring an adjustment under this Section 14 shall cause an adjustment to such Conversion Rate as so adjusted.

(f) Multiple Adjustments . For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 14 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder.

(g) Other Adjustments . The Corporation may (but is not required to) make such increases in the Conversion Rate, in addition to those required by Section 14(a)(i) through (v), as the board of directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.

In addition to the foregoing, to the extent permitted by applicable law and subject to the applicable rules of the New York Stock Exchange, the Corporation from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 business days, the increase is irrevocable during the period and the board of directors shall have made a determination that such increase would be in the best interests of the Corporation, which determination shall be conclusive.

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(h) Notice of Adjustments . Whenever a Conversion Rate is adjusted as provided under Section 14, the Corporation shall within 10 Business Days following the occurrence of an event that requires such adjustment (or if the Corporation is not aware of such occurrence, as soon as reasonably practicable after becoming so aware) or within 15 calendar days of the date the Corporation makes an adjustment pursuant to Section 14(g):

(i) compute the adjusted applicable Conversion Rate in accordance with Section 14 and prepare and transmit to the Conversion Agent an Officers’ Certificate setting forth the applicable Conversion Rate, as the case may be, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and

(ii) provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.

(i) Conversion Agent . The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the applicable Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Conversion Agent shall be fully authorized and protected in relying on any Officers’ Certificate delivered pursuant to Section 14(h) and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any of the Series L Preferred Stock; and the Conversion Agent makes no representation with respect thereto. The Conversion Agent shall not be responsible for any failure of the Corporation to issue, transfer or deliver any shares of Common Stock pursuant to a the conversion of the Series L Preferred Stock or to comply with any of the duties, responsibilities or covenants of the Corporation contained in this Section 14.

Section 15. Reorganization Events .

(a) In the event of:

(i) any consolidation or merger of the Corporation with or into another Person, in each case pursuant to which the Common Stock will be converted into cash, securities, or other property of the Corporation or another Person;

(ii) any sale, transfer, lease, or conveyance to another Person of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, in each case pursuant to which the Common Stock will be converted into cash, securities, or other property; or

(iii) any reclassification of the Common Stock into securities, including securities other than the Common Stock; or

(iv) any statutory exchange of the Corporation’s securities with another Person (other than in connection with a merger or acquisition);

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(any such event specified in this Section 15(a), a “ Reorganization Event ”); each share of Series L Preferred Stock outstanding immediately prior to such Reorganization Event shall, without the consent of Holders, become convertible into the types and amounts of securities, cash, and other property that is or was receivable in such Reorganization Event by a holder of the shares of Common Stock that was not the counterparty to the Reorganization Event or an affiliate of such other party in exchange for such Common Stock (such securities, cash, and other property, the “ Exchange Property ”).

(b) In the event that holders of the shares of the Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the consideration that the Holders are entitled to receive upon conversion shall be deemed to be the types and amounts of consideration received by the majority of the holders of the shares of the Common Stock that affirmatively make an election (or of all such holders if none make an election). On each Conversion Date following a Reorganization Event, the Conversion Rate then in effect will be applied to the value on such Conversion Date of the securities, cash, or other property received per share of Common Stock, determined as set forth above. The amount of Exchange Property receivable upon conversion of any Series L Preferred Stock in accordance with Section 12, Section 13(b), Section 13(c) or Section 13(d) hereof shall be determined based upon the then Applicable Conversion Rate.

(c) The above provisions of this Section 15 shall similarly apply to successive Reorganization Events and the provisions of Section 14 shall apply to any shares of Capital Stock of the Corporation (or any successor) received by the holders of the Common Stock in any such Reorganization Event.

(d) The Corporation (or any successor) shall, within 20 days of the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the type and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 15.

Section 16. Fractional Shares .

(a) No fractional shares of Common Stock will be issued as a result of any conversion of shares of Series L Preferred Stock.

(b) In lieu of any fractional share of Common Stock otherwise issuable in respect of any conversion at the Corporation’s option pursuant to Section 13(b) hereof or any conversion at the option of the Holder pursuant to Section 12, Section 13(c) or Section 13(d) hereof, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common Stock determined as of the second Trading Day immediately preceding the effective date of conversion.

(c) If more than one share of the Series L Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Series L Preferred Stock so surrendered.

Section 17. Reservation of Common Stock .

(a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Series L Preferred Stock as provided in this Certificate of Designations, free from any preemptive or other similar

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rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of Series L Preferred Stock then outstanding, calculated assuming the Applicable Conversion Price equals the Base Price, subject to adjustment as described under Section 14. For purposes of this Section 17(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Series L Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.

(b) All shares of Common Stock delivered upon conversion of the Series L Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

(c) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Series L Preferred Stock, the Corporation shall use its reasonable best efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

(d) The Corporation hereby covenants and agrees that, so long as the Common Stock shall be listed on the New York Stock Exchange or any other national securities exchange or automated quotation system, the Corporation will, if permitted by the rules of such exchange or automated quotation system, list and keep listed all the Common Stock issuable upon conversion of the Series L Preferred Stock; provided , however , that if the rules of such exchange or automated quotation system permit the Corporation to defer the listing of such Common Stock until the first conversion of Series L Preferred Stock into Common Stock in accordance with the provisions hereof, the Corporation covenants to list such Common Stock issuable upon conversion of the Series L Preferred Stock in accordance with the requirements of such exchange or automated quotation system at such time.

Section 18. Limitations on Beneficial Ownership . Notwithstanding anything to the contrary contained herein, and subject to the last sentence of this Section 18, no holder of Series L Preferred Stock will be entitled to receive shares of Common Stock upon conversion pursuant to Section 12 and Section 13 hereof to the extent, but only to the extent, that such receipt would cause such converting holder to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of more than 9.9% of the shares of Common Stock outstanding at such time. Any delivery of shares of Common Stock upon a purported conversion of Series L Preferred Stock shall be void and have no effect and such shares shall for all purposes continue to represent outstanding shares of Series L Preferred Stock to the extent (but only to the extent) that such delivery would result in the converting holder becoming the beneficial owner of more than 9.9% of the shares of Common Stock outstanding at such time. If any delivery of shares of Common Stock owed to a holder upon conversion of Series L Preferred Stock is not made, in whole or in part, as a result of this limitation, the Corporation’s obligation to make such delivery shall not be extinguished and the Corporation shall deliver such shares as promptly as practicable after any such converting holder gives notice to the Corporation that such delivery would not result in it being the beneficial owner of more than 9.9% of the shares of Common Stock outstanding at such time. Notwithstanding anything in this paragraph to the contrary, these limitations on beneficial ownership shall not be applicable to or limit the number of shares of Series L Preferred Stock to be converted as a result of a mandatory conversion by the Corporation pursuant to Section 13(b).

Section 19. Preemptive or Subscription Rights . The Holders of Series L Preferred Stock shall not have any preemptive or subscription rights.

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		WELLS FARGO & COMPANY

		By:		/s/ Barbara S. Brett
				Barbara S. Brett, Senior Vice President and Assistant Treasurer

/s/ Laurel A. Holschuh

Laurel A. Holschuh, Secretary

[As filed with the Delaware Secretary of State on December 30, 2008.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2010 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at meetings of the Board duly held on January 25, 2000 and February 24, 2009, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 23, 2010, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee I (the “First Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1 2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the First Committee in its discretion shall approve, and to take any and all actions as the First Committee shall deem necessary or appropriate.

2. Pursuant to resolutions adopted on February 24, 2009, the Board designated John G. Stumpf as the sole member of the ESOP Committee, effective April 29, 2009.

3. On March 23, 2010, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

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2010 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2010 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2010 ESOP Preferred Stock”) and the number of authorized shares constituting the 2010 ESOP Preferred Stock is 1,000,000, based on an offering price for the 2010 ESOP Preferred Stock of $1,080.00 per share. Each share of 2010 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2010 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2010 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2010 ESOP Preferred Stock shall not be increased. All shares of the 2010 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2010 ESOP Preferred Stock.

(b) Shares of 2010 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2010 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2010 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2010 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2010 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2010 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2010 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2010 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2010 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2010 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2010 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2010 ESOP Preferred Stock, the transfer agent for the 2010 ESOP Preferred Stock shall note the foregoing provisions on each 2010 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2010 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2010 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2010 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph

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(a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2010 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2010 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2010 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2010 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2010 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2010 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2010 ESOP Preferred Stock (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2010 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2010 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2010 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2010 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2010 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2010 ESOP Preferred Stock and such other series of Preferred Stock voting

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together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2010 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2010 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2010 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2010 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2010 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

3. Dividends . (a)(i) Holders of shares of 2010 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $95.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2011 and on each December 1 thereafter until December 1, 2019, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2010 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $100.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2010 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $105.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year

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listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2010 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2011		35.445		41.275
2012		38.990		49.530
2013		42.889		59.436
2014		47.178		71.323
2015		51.895		85.588
2016		57.085		102.706
2017		62.793		123.247
2018		69.073		147.896
2019		75.980		177.475

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2011, the Current Market Price of one share of Common Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2010 ESOP Preferred Stock would equal $100.00, with the first quarterly payment of such $100.00 dividend to be made on March 1, 2012. If on November 30, 2012, the Current Market Price of one share of Common Stock is $60.00, then the cash dividend payable for the immediately following twelve month period per share of 2010 ESOP Preferred Stock would equal $105.00, with the first quarterly payment of such $105.00 dividend to be made on March 1, 2013. If on November 30, 2013, the Current Market Price of one share of Common Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2010 ESOP Preferred Stock would equal $95.00, with the first quarterly payment of such $95.00 dividend to be made on March 1, 2014.

(iv) Dividends payable on shares of the 2010 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2010. Dividends on shares of the 2010 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2010 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee

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thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2010 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2010 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2010 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2010 ESOP Preferred Stock, all dividends declared upon shares of 2010 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2010 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2010 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2010 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2010 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2010 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2010 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2010 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2010 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2010 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2010 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2010 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2010 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2010 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2010 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2010 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2010 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

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(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2010 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2010 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2010 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2010 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2010 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

(B) For purposes of an optional conversion of shares of 2010 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2010 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2010 ESOP Preferred Stock or by any agent for conversion of the 2010 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2010 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2010 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2010 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2010 ESOP Preferred Stock will be converted.

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(“NASDAQ”) or, if the Common Stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2010 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2010 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2010 ESOP Preferred Stock by the Company or the transfer agent for the 2010 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case of certificated 2010 ESOP Preferred Stock, the certificate or certificates representing the shares of 2010 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2010 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2010 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2010 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2010 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2010 ESOP Preferred Stock, for any shares of 2010 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2010 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2010 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2010 ESOP Preferred Stock which shall not have been converted.

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(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2010 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2010 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2010 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2010 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2010 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2010 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2010 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2010 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2010 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2010 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2010 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2010 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2010 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2010 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2010 ESOP

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Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2010 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2010 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2010 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2010 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2010 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2010 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2010 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the redemption price set forth in this Section 5, provided that, in the case of certificated 2010 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2010 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2010 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2010 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

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faith by the Board or a committee thereof. The “Fair Market Value” of the 2010 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2010 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2010 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2010 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2010 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2010 ESOP Cumulative Convertible Preferred Stock Note Agreement dated on or about March 26, 2010 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2010 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2010 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2010 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2010 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2010 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2010 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

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ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2010 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2010 ESOP Preferred Stock, then the shares of 2010 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2010 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

(c) In the event the Company shall enter into any agreement providing for any consolidation or merger or similar business combination described in paragraph (b) of this Section 6 (a “Business Combination”), then the Company shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of 2010 ESOP Preferred Stock and each such holder shall have the right to elect, by written notice to the Company, to receive, upon consummation of such transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2010 ESOP Preferred Stock, a cash payment per share of 2010 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2010 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2010 ESOP Preferred Stock shall have the right to convert shares of 2010 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

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For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2010 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2010 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

(c) After the payment to the holders of the shares of 2010 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2010 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2010 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2010 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2010 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2010 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2010 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2010 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2010 ESOP Preferred Stock shall not be entitled to share therein.

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8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2010 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2010 ESOP Preferred Stock;

(b) on a parity with shares of 2010 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2010 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2010 ESOP Preferred Stock; and

(c) junior to shares of 2010 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2010 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2010 ESOP Preferred Stock . The shares of 2010 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 2001 ESOP Cumulative Convertible Preferred Stock, its 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, its 2005 ESOP Cumulative Convertible Preferred Stock, its 2006 ESOP Cumulative Convertible Preferred Stock, its 2007 ESOP Cumulative Convertible Preferred Stock and its 2008 ESOP Cumulative Convertible Preferred Stock.

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be signed by John G. Stumpf, its Chairman, President and Chief Executive Officer, and attested by Jeannine E. Zahn, its Assistant Secretary, whereby such President and Chief Executive Officer affirms, under penalties of perjury, that this Certificate of Designations is the act and deed of the Company and that the facts stated herein are true, this 23 ^rd day of March, 2010.


WELLS FARGO & COMPANY

By		/s/ John G. Stumpf
		John G. Stumpf
		Chairman, President and
		Chief Executive Officer

Attest:

/s/ Jeannine E. Zahn

Jeannine E. Zahn

Assistant Secretary

[As filed with the Delaware Secretary of State on March 23, 2010.]

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WELLS FARGO & COMPANY

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

Laurel A. Holschuh, Senior Vice President, and Rachelle M. Graham, Assistant Secretary, of Wells Fargo & Company, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Company”), do hereby certify:

FIRST: That at a meeting of the Board of Directors of the Company duly held on February 23, 2010, a resolution was duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation of the Company, declaring the advisability of the amendment, and directing that the amendment be presented to stockholders of the Company for their consideration at the next annual meeting of the stockholders to be held on April 27, 2010. The resolution setting forth the proposed amendment is as follows:

RESOLVED that an amendment to ARTICLE FOURTH of the Company’s Restated Certificate of Incorporation, as amended, to increase the authorized common stock to 9,000,000,000 shares is hereby proposed and declared advisable, and the following amendment to the first sentence of ARTICLE FOURTH is hereby directed to be presented to the stockholders of the Company for consideration at the annual meeting of stockholders to be held on April 27, 2010:

FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is Nine Billion Twenty-Four Million (9,024,000,000), consisting of Twenty Million (20,000,000) shares of Preferred Stock without par value, Four Million (4,000,000) shares of Preference Stock without par value, and Nine Billion (9,000,000,000) shares of Common Stock of the par value of $1 2/3 per share.

SECOND: That at such annual meeting of stockholders, duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, which notice set forth in full the proposed amendment, a majority of the outstanding shares of common stock of the Company were voted in favor of the amendment.

THIRD: That the amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

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IN WITNESS WHEREOF, WELLS FARGO & COMPANY has caused this Certificate to be signed by Laurel A. Holschuh, its Senior Vice President, and attested by Rachelle M. Graham, its Assistant Secretary, this 29 ^th day of April, 2010.


	WELLS FARGO & COMPANY:

(Corporate Seal)

	By:	/s/ Laurel A. Holschuh
		Senior Vice President

ATTEST:


By:		/s/ Rachelle M. Graham
		Assistant Secretary

[As filed with the Delaware Secretary of State on April 29, 2010.]

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WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2011 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at meetings of the Board duly held on January 25, 2000 and February 24, 2009, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on March 15, 2011, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee I (the “First Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1 2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the First Committee in its discretion shall approve, and to take any and all actions as the First Committee shall deem necessary or appropriate.

2. Pursuant to resolutions adopted on February 24, 2009, the Board designated John G. Stumpf as the sole member of the ESOP Committee, effective April 29, 2009.

3. On March 15, 2011, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2011 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2011 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2011 ESOP Preferred Stock”) and the number of authorized shares constituting the 2011 ESOP Preferred Stock is 1,200,000, based on an offering price for the 2011 ESOP Preferred Stock of $1,085.00 per share. Each share of 2011 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2011 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2011 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2011 ESOP Preferred Stock shall not be increased. All shares of the 2011 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2011 ESOP Preferred Stock.

(b) Shares of 2011 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2011 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2011 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2011 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2011 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2011 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2011 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2011 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2011 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2011 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2011 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2011 ESOP Preferred Stock, the transfer agent for the 2011 ESOP Preferred Stock shall note the foregoing provisions on each 2011 ESOP Preferred Stock book entry account. The Company may require that, as a condition to transferring record ownership of any uncertificated 2011 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2011 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2011 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph

2. Voting Rights . No shares of 2011 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2011 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2011 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2011 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2011 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2011 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2011 ESOP Preferred Stock (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2011 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2011 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2011 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2011 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2011 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2011 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2011 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2011 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2011 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2011 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2011 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

3. Dividends . (a)(i) Holders of shares of 2011 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $90.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2012 and on each December 1 thereafter until December 1, 2020, as follows:

(1) If the Current Market Price (as hereinafter defined) of one share of Common Stock on November 30 (or the next preceding Trading Day (as hereinafter defined) if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the First Target Price but less than the Second Target Price shown opposite that year in such table, then holders of shares of the 2011 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $95.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2011 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $100.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year

listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2011 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price		Second Target Price
2012		38.559		45.346
2013		42.705		55.095
2014		47.295		66.941
2015		52.380		81.333
2016		58.010		98.820
2017		64.247		120.066
2018		71.153		145.880
2019		78.802		177.244
2020		87.273		215.352

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2012, the Current Market Price of one share of Common Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2011 ESOP Preferred Stock would equal $95.00, with the first quarterly payment of such $95.00 dividend to be made on March 1, 2013. If on November 30, 2013, the Current Market Price of one share of Common Stock is $60.00, then the cash dividend payable for the immediately following twelve month period per share of 2011 ESOP Preferred Stock would equal $100.00, with the first quarterly payment of such $100.00 dividend to be made on March 1, 2014. If on November 30, 2014, the Current Market Price of one share of Common Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2011 ESOP Preferred Stock would equal $90.00, with the first quarterly payment of such $90.00 dividend to be made on March 1, 2015.

(iv) Dividends payable on shares of the 2011 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing June 1, 2011. Dividends on shares of the 2011 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2011 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by

dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b)(i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2011 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2011 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2011 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2011 ESOP Preferred Stock, all dividends declared upon shares of 2011 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2011 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2011 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2011 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2011 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2011 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2011 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2011 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2011 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2011 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2011 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2011 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2011 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2011 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2011 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2011 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2011 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2011 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2011 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2011 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2011 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2011 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

(B) For purposes of an optional conversion of shares of 2011 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2011 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2011 ESOP Preferred Stock or by any agent for conversion of the 2011 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2011 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2011 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2011 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2011 ESOP Preferred Stock will be converted.

closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2011 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2011 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2011 ESOP Preferred Stock by the Company or the transfer agent for the 2011 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case of certificated 2011 ESOP Preferred Stock, the certificate or certificates representing the shares of 2011 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2011 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2011 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2011 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2011 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2011 ESOP Preferred Stock, for any shares of 2011 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2011 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2011 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2011 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2011 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2011 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2011 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2011 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2011 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2011 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2011 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2011 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2011 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2011 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2011 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2011 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2011 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2011 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2011 ESOP Preferred Stock called

for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2011 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2011 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2011 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2011 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2011 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2011 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2011 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the redemption price set forth in this Section 5, provided that, in the case of certificated 2011 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2011 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2011 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2011 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2011 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2011 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2011 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2011 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2011 ESOP Cumulative Convertible Preferred Stock Note Agreement dated on or about March 18, 2011 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2011 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2011 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2011 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2011 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2011 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2011 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2011 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2011 ESOP Preferred Stock, then the shares of 2011 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2011 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

(c) In the event the Company shall enter into any agreement providing for any consolidation or merger or similar business combination described in paragraph (b) of this Section 6 (a “Business Combination”), then the Company shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of 2011 ESOP Preferred Stock and each such holder shall have the right to elect, by written notice to the Company, to receive, upon consummation of such transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2011 ESOP Preferred Stock, a cash payment per share of 2011 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2011 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2011 ESOP Preferred Stock shall have the right to convert shares of 2011 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2011 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2011 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

(c) After the payment to the holders of the shares of 2011 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2011 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2011 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2011 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2011 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2011 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2011 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2011 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2011 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2011 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2011 ESOP Preferred Stock;

(b) on a parity with shares of 2011 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2011 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2011 ESOP Preferred Stock; and

(c) junior to shares of 2011 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2011 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2011 ESOP Preferred Stock . The shares of 2011 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 2002 ESOP Cumulative Convertible Preferred Stock, its 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, its 2005 ESOP Cumulative Convertible Preferred Stock, its 2006 ESOP Cumulative Convertible Preferred Stock, its 2007 ESOP Cumulative Convertible Preferred Stock, its 2008 ESOP Cumulative Convertible Preferred Stock and its 2010 ESOP Cumulative Convertible Preferred Stock.


WELLS FARGO & COMPANY

By		/s/ John G. Stumpf
		John G. Stumpf
		Chairman, President and
		Chief Executive Officer

Attest:

/s/ Jeannine E. Zahn

Jeannine E. Zahn

Assistant Secretary

[As filed with the Delaware Secretary of State on March 17, 2011.]

WELLS FARGO & COMPANY

CERTIFICATE OF DESIGNATIONS

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

2012 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

(Without Par Value)

WELLS FARGO & COMPANY, a corporation organized and existing under the laws of the State of Delaware (the “Company”), HEREBY CERTIFIES that, pursuant to authority conferred upon the Board of Directors of the Company (the “Board”) by the provisions of the Restated Certificate of Incorporation of the Company, as amended, which authorizes the issuance of not more than 20,000,000 shares of Preferred Stock, without par value (the “Preferred Stock”), and pursuant to authority conferred upon the ESOP Preferred Stock Committee I of the Board (the “ESOP Committee”) in accordance with Section 141(c) of the General Corporation Law of the State of Delaware (the “General Corporation Law”) and by the resolutions of the Board set forth herein, the following resolutions were duly adopted by the Board at meetings of the Board duly held on January 25, 2000 and February 24, 2009, and by the ESOP Committee pursuant to the written consent of the ESOP Committee duly adopted on January 9, 2012, in accordance with Section 141(f) of the General Corporation Law:

RESOLVED that a committee of one member of the Board of the Company is hereby appointed by the Board as the ESOP Preferred Stock Committee I (the “First Committee”), which shall have and may exercise the full powers of the Board, subject to these resolutions, to issue from time to time one or more series of ESOP Preferred Stock, including any shares of Company common stock ($1 2/3 par value) issuable upon conversion of ESOP Preferred Stock, and in connection therewith, to fix the designations, voting powers, preferences, and all other rights, qualifications and restrictions of such ESOP Preferred Stock, to sell such ESOP Preferred Stock to the Plan on such terms and conditions and for such purchase price as the First Committee in its discretion shall approve, and to take any and all actions as the First Committee shall deem necessary or appropriate.

2. Pursuant to resolutions adopted on February 24, 2009, the Board designated John G. Stumpf as the sole member of the ESOP Committee, effective April 29, 2009.

3. On January 9, 2012, pursuant to authority conferred upon it by the Board in the ESOP Board Resolutions, the ESOP Committee adopted the following resolutions by written consent in accordance with Section 141(f) of the General Corporation Law:

2012 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation and Number of Shares; Restricted Issue .

(a) The designation of the series of Preferred Stock, without par value, provided for herein shall be “2012 ESOP Cumulative Convertible Preferred Stock” (hereinafter referred to as the “2012 ESOP Preferred Stock”) and the number of authorized shares constituting the 2012 ESOP Preferred Stock is 940,000, based on an offering price for the 2012 ESOP Preferred Stock of $1,094.00 per share. Each share of 2012 ESOP Preferred Stock shall have a stated value of $1,000.00 per share. The number of authorized shares of 2012 ESOP Preferred Stock may be reduced by further resolution duly adopted by the Board or the Securities Committee and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, provided, however, that the authorized number of shares of 2012 ESOP Preferred Stock shall not be decreased below the then outstanding number of such shares, and provided further that the number of authorized shares of 2012 ESOP Preferred Stock shall not be increased. All shares of the 2012 ESOP Preferred Stock purchased, redeemed, or converted by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of 2012 ESOP Preferred Stock.

(b) Shares of 2012 ESOP Preferred Stock shall be issued only to a trustee (the “Trustee”) acting on behalf of the Wells Fargo & Company 401(k) Plan, or any successor to such plan (the “Plan”). All references to the holder of shares of 2012 ESOP Preferred Stock shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee under the trust agreement with respect to the Plan. In the event of any transfer of record ownership of shares of 2012 ESOP Preferred Stock to any person other than any successor trustee under the Plan, the shares of 2012 ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Company or the holder thereof, shall be automatically converted into shares of the common stock, par value $1-2/3 per share, of the Company (the “Common Stock”) on the terms otherwise provided for the conversion of the shares of 2012 ESOP Preferred Stock into shares of Common Stock pursuant to paragraph (a) of Section 4 hereof, and no such transferee shall have any of the voting powers, preferences, and relative, participating, optional or special rights ascribed to shares of 2012 ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of 2012 ESOP Preferred Stock shall be so converted. In the event of such a conversion, the transferee of the shares of 2012 ESOP Preferred Stock shall be treated for all purposes as the record holder of the shares of Common Stock into which such shares of 2012 ESOP Preferred Stock have been automatically converted as of the date of such transfer. Shares of 2012 ESOP Preferred Stock may be certificated or uncertificated, at the Company’s option. Certificates representing shares of 2012 ESOP Preferred Stock shall bear a legend to reflect the foregoing provisions. In the case of uncertificated 2012 ESOP Preferred Stock, the transfer agent for the 2012 ESOP Preferred Stock shall note the foregoing provisions on each 2012 ESOP Preferred Stock book entry account. The Company may require that, as a condition to

transferring record ownership of any uncertificated 2012 ESOP Preferred Stock, the proposed transferee acknowledge in writing that the shares of 2012 ESOP Preferred Stock are subject to the foregoing provisions. Notwithstanding the foregoing provisions of this paragraph (b) of Section 1, shares of 2012 ESOP Preferred Stock (i)(A) shall be converted into shares of Common Stock as provided in paragraph (a) of Section 4 hereof, and (B) may be converted into shares of Common Stock as provided by paragraph (b) of Section 4 hereof and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and (ii) shall be redeemable by the Company upon the terms and conditions provided in Sections 5 and 6(c) hereof.

2. Voting Rights . No shares of 2012 ESOP Preferred Stock shall have voting rights except such voting rights as may from time to time be required by law and as set forth in this Section 2, as follows:

(a) Whenever, at any time or times, dividends payable on shares of 2012 ESOP Preferred Stock shall be in arrears for such number of dividend periods which shall in the aggregate contain not less than 540 days, the holders of the outstanding shares of 2012 ESOP Preferred Stock shall have the exclusive right, voting together as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the shares of 2012 ESOP Preferred Stock, either as to dividends or on the distribution of assets upon liquidation, dissolution or winding up, and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Company at the Company’s next annual meeting of stockholders and at each subsequent annual meeting of stockholders. At elections for such directors, each holder of the shares of 2012 ESOP Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of Preferred Stock held as may be granted to them). Upon the vesting of such right of such holders, the maximum authorized number of members of the Board shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of such outstanding shares of 2012 ESOP Preferred Stock (together with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as herein set forth. The right of such holders of such shares of 2012 ESOP Preferred Stock (voting together as a class with the holders of shares of any one or more other series of Preferred Stock ranking on such a parity and upon which like voting rights have been conferred and are exercisable) to elect members of the Board as aforesaid shall continue until such time as all dividends accumulated on such shares of 2012 ESOP Preferred Stock shall have been paid in full, at which time such right with respect to such shares of 2012 ESOP Preferred Stock shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned.

(c) So long as any shares of 2012 ESOP Preferred Stock remain outstanding, the consent of the holders of the outstanding shares of 2012 ESOP Preferred Stock and outstanding shares of all other series of Preferred Stock ranking on a parity with such shares of 2012 ESOP Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable, by a vote of at least two-thirds of all such outstanding shares of 2012 ESOP Preferred Stock and such other series of Preferred Stock voting together as a class, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following:

(i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to shares of 2012 ESOP Preferred Stock with respect to payment of dividends or the distribution of assets on liquidation, dissolution or winding up, or

(ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation or of the resolutions set forth in a Certificate of Designations designating shares of 2012 ESOP Preferred Stock and the preferences and relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof which would materially and adversely affect any right, preference, privilege or voting power of the shares of 2012 ESOP Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock, or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of any series of Preferred Stock, in each case ranking on a parity with or junior to the shares of 2012 ESOP Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of 2012 ESOP Preferred Stock shall have been redeemed or sufficient funds shall have been deposited in trust to effect such redemption.

3. Dividends . (a)(i) Holders of shares of 2012 ESOP Preferred Stock will be entitled to receive, when and as declared by the Board or a duly authorized committee thereof, out of assets of the Company legally available for payment, an annual cash dividend of $100.00 (the “Base Dividend”) per share, which Base Dividend shall be subject to adjustment from time to time as provided in this Section 3.

(ii) The Base Dividend shall be adjusted, effective on December 1, 2013 and on each December 1 thereafter until December 1, 2021, as follows:

shares of the 2012 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $105.00 per share (the “First Adjusted Dividend”).

(2) If the Current Market Price of one share of Common Stock on November 30 (or the next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is equal to or greater than the Second Target Price shown opposite that year in such table, then holders of shares of 2012 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to $110.00 per share (the “Second Adjusted Dividend”).

(3) If the Current Market Price of one share of Common Stock on November 30 (or next preceding Trading Day if November 30 is not a Trading Day) of any year listed in the Dividend Adjustment Table below is less than the First Target Price shown opposite that year in such table, then the holders of shares of 2012 ESOP Preferred Stock will be entitled to receive a cash dividend for the immediately following twelve month period equal to the Base Dividend.

Dividend Adjustment Table


Closing Price on 11/30	First Target Price	Second Target Price
2013	28.424	30.617
2014	31.124	34.980
2015	34.081	39.964
2016	37.319	45.659
2017	40.864	52.166
2018	44.746	59.599
2019	48.997	68.092
2020	53.652	77.795

(4) As an example of the adjustments described in subparagraphs (1) through (3) above, if on November 30, 2013, the Current Market Price of one share of Common Stock is $30.00, then the cash dividend payable for the immediately following twelve month period per share of 2012 ESOP Preferred Stock would equal $105.00, with the first quarterly payment of such $105.00 dividend to be made on March 1, 2014. If on November 30, 2014, the Current Market Price of one share of Common Stock is $40.00, then the cash dividend payable for the immediately following twelve month period per share of 2012 ESOP Preferred Stock would equal $110.00, with the first quarterly payment of such $110.00 dividend to be made on March 1, 2015. If on November 30, 2015, the Current Market Price of one share of Common Stock is $30.00, then the cash dividend payable for the immediately following twelve month period per share of 2012 ESOP Preferred Stock would equal $100.00, with the first quarterly payment of such $100.00 dividend to be made on March 1, 2016.

(iv) Dividends payable on shares of the 2012 ESOP Preferred Stock (whether such dividends are equal to the Base Dividend or to an Adjusted Dividend) shall be payable quarterly on March 1, June 1, September 1, and December 1 of each year, commencing March 1, 2012. Dividends on shares of the 2012 ESOP Preferred Stock will be cumulative from the date of initial issuance of such shares of 2012 ESOP Preferred Stock. Dividends will be payable, in arrears, to holders of record as they appear on the stock books of the Company on such record dates, not more than 30 days nor less than 15 days preceding the payment dates thereof, as shall be fixed by the Board or a duly authorized committee thereof. The amount of dividends payable per share for each dividend period shall be computed by dividing by four the Base Dividend or the Adjusted Dividend, whichever is then applicable. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be calculated on the basis of actual days elapsed in a 360-day year of twelve 30-day months.

(b) (i) No full dividends shall be declared or paid or set apart for payment on any stock of the Company ranking, as to dividends, on a parity with or junior to the 2012 ESOP Preferred Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been set apart for such payment on shares of 2012 ESOP Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full, as aforesaid, upon the shares of 2012 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2012 ESOP Preferred Stock, all dividends declared upon shares of 2012 ESOP Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with 2012 ESOP Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on 2012 ESOP Preferred Stock and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of 2012 ESOP Preferred Stock and such other series of Preferred Stock bear to each other. Holders of shares of 2012 ESOP Preferred Stock shall not be entitled to any dividend, whether payable in cash, property, or stock, in excess of full cumulative dividends, as herein provided, on 2012 ESOP Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on 2012 ESOP Preferred Stock which may be in arrears.

(ii) So long as any shares of 2012 ESOP Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants, or rights to subscribe for or purchase shares of, Common Stock or any other stock ranking junior to 2012 ESOP Preferred Stock as to dividends or upon liquidation and other than as provided in paragraph (b)(i) of this Section 3) shall be declared or paid or set aside for payment or other distribution declared or made upon Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2012 ESOP Preferred Stock as to dividends or upon liquidation, nor shall any Common Stock or any other capital stock of the Company ranking junior to or on a parity with 2012 ESOP Preferred Stock as to dividends or upon liquidation be redeemed, purchased, or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Company (except by conversion into or exchange for stock of the Company ranking junior to 2012 ESOP Preferred Stock as to dividends or upon liquidation), unless, in each case, the full cumulative dividends on all outstanding shares of 2012 ESOP Preferred Stock shall have been paid or declared and set aside for payment of the then current dividend payment period and all past dividend payment periods.

4. Conversion . Shares of 2012 ESOP Preferred Stock are convertible from time to time hereafter pursuant to the provisions of paragraphs (a) or (b) of this Section 4 into that number of shares of Common Stock determined by dividing the stated value of each share of 2012 ESOP Preferred Stock by the then applicable Conversion Price, (as determined in accordance with the provisions of paragraph (c)(iii) of this Section 4), as follows:

(a) Each share of 2012 ESOP Preferred Stock released from the unallocated reserve of the Plan in accordance with the terms thereof shall be automatically converted, without any further action by the Company or the holder thereof, as of the date such release occurs (the “Release Date”), into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for the 2012 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(b) Subject to and upon compliance with the provisions of this Section 4, a holder of 2012 ESOP Preferred Stock shall be entitled at any time, prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 5 or 6 hereof, to cause any or all of the shares of 2012 ESOP Preferred Stock held by such holder to be converted into fully paid and nonassessable shares of Common Stock at the then applicable Conversion Price for 2012 ESOP Preferred Stock provided for in paragraph (c) of this Section 4.

(ii) A “Business Day” means each day that is not a Saturday, Sunday, or a day on which state or federally chartered banking institutions in the State of New York are not required to be open.

(iii) (A) For purposes of a mandatory conversion of shares of 2012 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (a) of this Section 4, the “Conversion Price” for such shares of 2012 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the relevant Release Date.

(B) For purposes of an optional conversion of shares of 2012 ESOP Preferred Stock into shares of Common Stock pursuant to the provisions of paragraph (b) of this Section 4, the “Conversion Price” for such shares of 2012 ESOP Preferred Stock shall be the Current Market Price of one share of Common Stock on the date the Conversion Notice (as that term is defined in paragraph (d) of this Section 4) is received by the Company, by the transfer agent for the 2012 ESOP Preferred Stock or by any agent for conversion of the 2012 ESOP Preferred Stock designated as such pursuant to paragraph (d) of this Section 4.

(C) For purposes of a conversion of shares of 2012 ESOP Preferred Stock into shares of Common Stock in connection with a “Purchase Offer” (as defined in Section 6(d) hereof), the “Conversion Price” for such shares of 2012 ESOP Preferred Stock shall be the Average Current Market Price of one share of Common Stock.

Each share of 2012 ESOP Preferred Stock shall be valued at its stated value of $1,000.00 for purposes of computing, based on the applicable Conversion Price, the number of shares of Common Stock into which the shares of 2012 ESOP Preferred Stock will be converted.

which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or, if the Common Stock is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for the Common Stock on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof or, if no such quotations are available, the fair market value of the Common Stock as determined by a New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof.

(v) “Common Stock” shall mean the Common Stock of the Company as the same exists at the date of this Certificate of Designations or as such stock may be constituted from time to time.

(d) In connection with any conversion of 2012 ESOP Preferred Stock pursuant to this Section 4, a written notice of conversion (the “Conversion Notice”) shall be delivered to the Company at its principal executive office or the offices of the transfer agent for the 2012 ESOP Preferred Stock or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the 2012 ESOP Preferred Stock by the Company or the transfer agent for the 2012 ESOP Preferred Stock, which notice shall be accompanied by (a) in the case of certificated 2012 ESOP Preferred Stock, the certificate or certificates representing the shares of 2012 ESOP Preferred Stock being converted pursuant to this Section 4, duly assigned or endorsed for transfer to the Company (or accompanied by duly executed stock powers relating thereto) and (b) in the case of uncertificated 2012 ESOP Preferred Stock, duly executed assignment and transfer documents for the shares of 2012 ESOP Preferred Stock being converted pursuant to this Section 4. Each Conversion Notice shall specify (i)(y) in the case of a mandatory conversion pursuant to paragraph (a) of this Section 4, the number of shares of 2012 ESOP Preferred Stock released from the unallocated reserve of the Plan on the Release Date or (z) in the case of an optional conversion pursuant to paragraph (b) of this Section 4, the number of shares of 2012 ESOP Preferred Stock being converted, and (ii) in connection with any conversion hereunder, (x) the name or names in which such holder wishes the certificate or certificates for Common Stock and, in the case of certificated 2012 ESOP Preferred Stock, for any shares of 2012 ESOP Preferred Stock not to be so converted to be issued, (y) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion, and (z) such other information as the Company or its agents may reasonably request.

(e) Upon delivery to the Company or the transfer agent for the 2012 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4, the Company shall issue and send by hand delivery, by courier or by first-class mail (postage prepaid) to the holder

thereof or to such holder’s designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. If there shall have been surrendered a certificate or certificates representing shares of 2012 ESOP Preferred Stock only part of which are to be converted, the Company shall issue and deliver to such holder or such holder’s designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of 2012 ESOP Preferred Stock which shall not have been converted.

(f) The issuance by the Company of shares of Common Stock upon a conversion of shares of 2012 ESOP Preferred Stock into shares of Common Stock made pursuant to this Section 4 shall be effective (i) in the case of a mandatory conversion of shares of 2012 ESOP Preferred Stock pursuant to paragraph (a) of this Section 4, as of the Release Date; and (ii) in the case of an optional conversion of such shares pursuant to paragraph (b) of this Section 4, as of the earlier of (A) the delivery to such holder or such holder’s designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (B) the commencement of business on the second Business Day after the delivery to the Company or the transfer agent for the 2012 ESOP Preferred Stock of the Conversion Notice and all other documentation and certificates required to effect the conversion, as provided in paragraph (d) of this Section 4. On and after the effective date of conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock, but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Company shall not be obligated to pay any dividends which shall have accrued or have been declared and shall be payable to holders of shares of 2012 ESOP Preferred Stock if the date on which such dividends are paid is on or after the effective date of conversion of such shares.

(g) The Company shall not be obligated to deliver to holders of 2012 ESOP Preferred Stock any fractional share or shares of Common Stock issuable upon any conversion of such shares of 2012 ESOP Preferred Stock, but in lieu thereof may make a cash payment in respect thereof in any manner permitted by law.

(h) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of 2012 ESOP Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of 2012 ESOP Preferred Stock then outstanding.

(i) The Company will use its best efforts to cause the listing of the shares of Common Stock required to be delivered upon conversion of the 2012 ESOP Preferred Stock prior to distribution to Plan participants on the national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery.

(j) The Company will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the 2012 ESOP Preferred Stock pursuant hereto; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the 2012 ESOP Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

5. Redemption At the Option of the Company . (a) The 2012 ESOP Preferred Stock shall be redeemable, in whole or in part, at the option of the Company at any time, at a redemption price per share of 2012 ESOP Preferred Stock equal to the higher of (x) $1,000.00 per share, plus an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption, and (y) the Fair Market Value (as that term is defined in paragraph (d) of this Section 5) per share of 2012 ESOP Preferred Stock on the date fixed for redemption. Payment of the redemption price shall be made by the Company in cash or shares of Common Stock, or a combination thereof, as permitted by paragraph (c) of this Section 5. From and after the date fixed for redemption, dividends on shares of 2012 ESOP Preferred Stock called for redemption will cease to accrue and all rights in respect of such shares of the Company shall cease, except the right to receive the redemption price. Upon payment of the redemption price, such shares shall be deemed to have been transferred to the Company, to be retired as provided in paragraph (a) of Section 1. If the full cumulative dividends have not been paid, or contemporaneously declared and set aside for payment, on all outstanding shares of 2012 ESOP Preferred Stock, the Company may not redeem fewer than all the outstanding shares of 2012 ESOP Preferred Stock pursuant to this Section 5.

(b) Unless otherwise required by law, notice of any redemption pursuant to this Section 5 will be sent to the holders of 2012 ESOP Preferred Stock at the address shown on the books of the Company or any transfer agent for the 2012 ESOP Preferred Stock by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of the 2012 ESOP Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) whether the redemption price shall be paid in cash or in shares of Common Stock, or in a combination of such Common Stock and cash; (v) in the case of certificated 2012 ESOP Preferred Stock the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (vi) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the shares to be redeemed, the period within which conversion rights may be exercised and the manner in which the number of shares of Common Stock issuable upon conversion of a share of 2012 ESOP Preferred Stock will be determined. The Company shall redeem shares so called for redemption and not previously converted at the date fixed for redemption and at the redemption price set forth in this Section 5, provided that, in the case of certificated 2012 ESOP Preferred Stock, the Company shall not be obligated to pay the redemption price until the certificates for the shares to be redeemed are surrendered (properly endorsed or assigned for transfer, if the Board of Directors of the Company shall so require and the notice shall so state).

(c) The Company, at its option, may make payment of the redemption price required upon redemption of shares of 2012 ESOP Preferred Stock in cash or in shares of Common Stock, or in a combination of such Common Stock and cash, any such shares of Common Stock to be valued for such purposes at their Fair Market Value (as defined in paragraph (d)(ii) of this Section 5) or their Current Market Price, in either case as of the date fixed for redemption of the 2012 ESOP Preferred Stock, whichever value will result in the issuance of the greater number of shares of Common Stock to the holder of the 2012 ESOP Preferred Stock then being redeemed.

(d) For purposes of these resolutions, the following terms shall have the meanings set forth below:

(i) “Adjustment Period” shall mean the period of five (5) consecutive Trading Days preceding the date as of which the Fair Market Value of a security is to be determined.

(ii) “Fair Market Value” shall mean, as to shares of Common Stock or any other class of capital stock or securities of the Company or any other issue which are publicly traded, the average of the Current Market Prices of such shares or securities for each day of the Adjustment Period. The “Fair Market Value” of any security which is not publicly traded (other than the 2012 ESOP Preferred Stock) or of any other property shall mean the fair value thereof on the date as of which the Fair Market Value of the security is to be determined, as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board or a committee thereof. The “Fair Market Value” of the 2012 ESOP Preferred Stock for purposes of paragraph (a) of Section 5, and for purposes of paragraph (c) of Section 6 shall mean the fair market value thereof determined by an independent appraiser, appointed by the Trustee of the Plan in accordance with the provisions of the Plan, as of the date fixed for redemption of the 2012 ESOP Preferred Stock (in the case of a redemption pursuant to Section 5) or as of the date specified in paragraph (c) of Section 6 (in the case of a redemption under that section). For purposes of determining the Fair Market Value of the 2012 ESOP Preferred Stock, the independent appraiser shall assume (i) that all dividends on the 2012 ESOP Preferred Stock would have been paid when due, and (ii) that the mandatory conversion of shares of 2012 ESOP Preferred Stock held by the Plan into shares of Common Stock pursuant to Section 4(a) hereof would have occurred when and as payments of principal (together with accrued interest thereon) would have been made by the Trustee of the Plan in accordance with the terms of that certain 2012 ESOP Cumulative Convertible Preferred Stock Note Agreement dated on or about January 12, 2012 between the Company and the Plan (including any amendments or modifications thereto).

6. Consolidation, Merger, etc. (a) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock of any successor or resulting corporation (including the Company) that constitutes “qualifying employer securities” with respect to a holder of 2012 ESOP Preferred Stock within the meaning of Section 409(1) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provisions of law, and, if applicable, for a cash payment in lieu of fractional shares, if any, the shares of 2012 ESOP Preferred Stock of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become Preferred Stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 5 and 6 hereof), and the qualifications, limitations or restrictions thereon, that the 2012 ESOP Preferred Stock had immediately prior to such transaction, subject to the following:

(1) After such transaction each share of the 2012 ESOP Preferred Stock shall be convertible, otherwise on the terms and conditions provided by Section 4 hereof, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such shares of 2012 ESOP Preferred Stock could have been converted immediately prior to such transaction.

(2) The Company shall not consummate any such merger, consolidation or similar transaction unless all then outstanding shares of 2012 ESOP Preferred Stock shall be assumed and authorized by the successor or resulting corporation as aforesaid.

(b) If the Company consummates any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration which is constituted solely of qualifying employer securities (as referred to in paragraph (a) of this Section 6) and cash payments, if applicable, in lieu of fractional shares, outstanding shares of 2012 ESOP Preferred Stock shall, without any action on the part of the Company or any holder thereof (but subject to paragraph (c) of this Section 6), be automatically converted by virtue of such merger, consolidation or similar transaction immediately prior to such consummation into the number of shares of Common Stock into which such shares of 2012 ESOP Preferred Stock could have been converted at such time so that each share of 2012 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in like kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2012 ESOP Preferred Stock could have been converted immediately prior to such transaction. However, if by virtue of the structure of such transaction, a holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holders of the 2012 ESOP Preferred Stock, then the shares of 2012 ESOP Preferred Stock shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such shares of 2012 ESOP Preferred Stock could have been converted immediately prior to such transaction if such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction. If the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share, then the kind and amount of stock, securities, cash or other property receivable upon such transaction for each non-electing share shall be the kind and amount so receivable per share by a plurality of the non-electing shares.

(c) In the event the Company shall enter into any agreement providing for any consolidation or merger or similar business combination described in paragraph (b) of this Section 6 (a “Business Combination”), then the Company shall as soon as practicable thereafter (and in any event at least fifteen (15) Business Days before consummation of such transaction) give notice of such agreement and the material terms thereof to each holder of 2012 ESOP Preferred Stock and each such holder shall have the right to elect, by written notice to the Company, to receive, upon consummation of such transaction (if and when such transaction is consummated), from the Company or the successor of the Company, in redemption and retirement of such 2012 ESOP Preferred Stock, a cash payment per share of 2012 ESOP Preferred Stock equal to the higher of (x) $1,000.00, plus accrued and unpaid dividends thereon to the date of consummation of such transaction or (y) the Fair Market Value per share of 2012 ESOP Preferred Stock, as of the last Business Day (as defined in paragraph (c) of Section 4 hereof) immediately preceding the date the Business Combination is consummated. No such

notice of redemption shall be effective unless given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction, unless the Company or the successor of the Company shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Company prior to the close of business on the last Business Day prior to consummation of such transaction.

(d) In the event that a Purchase Offer (as defined below) shall have been made and shall be continuing, each holder of 2012 ESOP Preferred Stock shall have the right to convert shares of 2012 ESOP Preferred Stock into shares of Common Stock at the Conversion Price specified in Section 4(c)(iii)(C) hereof until the date the Purchase Offer is terminated, including without limitation because the original Purchase Offer is withdrawn or because the Purchase Offer has expired and is not renewed, upon notice of such conversion given to the Company not later than the close of business on the date the Purchase Offer terminates (the “Purchase Offer Conversion Period”), unless the Company or any successor of the Company shall waive such prior notice, but any notice of conversion so given may be withdrawn by notice of withdrawal given to the Company prior to the end of the Purchase Offer Conversion Period.

For purposes of this paragraph (d), the following terms shall have the meanings set forth below:

7. Liquidation Rights . (a) Upon the dissolution, liquidation, or winding up of the Company, the holders of the shares of 2012 ESOP Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders, before any payment or distribution shall be made on the Common Stock or any other class of stock ranking junior to 2012 ESOP Preferred Stock upon liquidation, the amount of $1,000.00 per share, plus a sum equal to all dividends (whether or not earned or declared) on such shares accrued and unpaid thereon to the date of final distribution.

(c) After the payment to the holders of the shares of 2012 ESOP Preferred Stock of the full preferential amounts provided for in this Section 7, the holders of 2012 ESOP Preferred Stock, as such, shall have no right or claim to any of the remaining assets of the Company.

(d) In the event the assets of the Company available for distribution to the holders of shares of 2012 ESOP Preferred Stock upon any dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) of this Section 7, no such distribution shall be made on account of any shares of any other series of Preferred Stock or other capital stock of the Company ranking on a parity with the shares of 2012 ESOP Preferred Stock upon such dissolution, liquidation, or winding up unless proportionate distributive amounts shall be paid on account of the shares of 2012 ESOP Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation, or winding up.

(e) Subject to the rights of the holders of the shares of any series or class or classes of stock ranking on a parity with or prior to the shares of 2012 ESOP Preferred Stock upon liquidation, dissolution, or winding up, upon any liquidation, dissolution, or winding up of the Company, after payment shall have been made in full to the holders of the shares of 2012 ESOP Preferred Stock as provided in this Section 7, but not prior thereto, any other series or class or classes of stock ranking junior to the shares of 2012 ESOP Preferred Stock upon liquidation shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the shares of 2012 ESOP Preferred Stock shall not be entitled to share therein.

8. Ranking . For the purposes of these resolutions, any stock of any series or class or classes of the Company shall be deemed to rank:

(a) prior to the shares of 2012 ESOP Preferred Stock, either as to dividends or upon liquidation, if the holders of such series or class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of 2012 ESOP Preferred Stock;

(b) on a parity with shares of 2012 ESOP Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, or redemption or liquidation prices per share, or sinking fund provisions, if any, be different from those of 2012 ESOP Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of 2012 ESOP Preferred Stock; and

(c) junior to shares of 2012 ESOP Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of 2012 ESOP Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation, or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such series or class or classes.

9. Priority of 2012 ESOP Preferred Stock . The shares of 2012 ESOP Preferred Stock will rank on a parity, both as to payment of dividends and the distribution of assets upon liquidation, with the Company’s 2003 ESOP Cumulative Convertible Preferred Stock, its 2004 ESOP Cumulative Convertible Preferred Stock, its 2005 ESOP Cumulative Convertible Preferred Stock, its 2006 ESOP Cumulative Convertible Preferred Stock, its 2007 ESOP Cumulative Convertible Preferred Stock, its 2008 ESOP Cumulative Convertible Preferred Stock, its 2010 ESOP Cumulative Convertible Preferred Stock and its 2011 ESOP Cumulative Convertible Preferred Stock.


WELLS FARGO & COMPANY

By		/s/ John G. Stumpf
		John G. Stumpf
		Chairman, President and Chief Executive Officer

Attest:

/s/ Jeannine E. Zahn

Jeannine E. Zahn

Assistant Secretary

[As filed with the Delaware Secretary of State on January 10, 2012.]

Exhibit 10(a)

Form of Performance Share Award Agreement for Grants on or after February 28, 2012

Brackets identify provisions that may vary depending on the particular grant, grant recipient and/or other relevant factor.

WELLS FARGO & COMPANY

LONG-TERM INCENTIVE COMPENSATION PLAN

PERFORMANCE SHARE AWARD AGREEMENT


Name:		Grant Date:

I.D. Number:		Target Award Number of Performance Shares:

Award. Wells Fargo & Company (the “Company”) has awarded you Performance Shares to provide an incentive for you to remain in the Company’s employment and provide valuable services to the Company. The target number of Performance Shares (“Target Award Number”) awarded you [ if award agreement posted on plan administrator’s website: is identified as the “Total Granted” on the acknowledgement screen for your grant on this website] [ if award agreement not posted: is set forth above]. The Target Award Number is subject to upward and downward adjustments based on Company performance during the [performance period] (the “Performance Period”) as set forth on Exhibit A. The “Final Award Number” is the number of Performance Shares awarded to you under this Award Agreement after adjusting the Target Award Number in accordance with Exhibit A. This Award Agreement also grants Performance Shares with respect to dividend equivalents as provided in paragraph 4. Each Performance Share entitles you to receive one share of Wells Fargo & Company common stock (“Common Stock”) contingent upon earning such Performance Share based on the Company performance criteria set forth on Exhibit A, vesting as set forth in paragraph 2 and subject to the other terms and conditions set forth in the Company’s Long-Term Incentive Compensation Plan (the “Plan”) and this Award Agreement, including Exhibits A and B hereto and the attached Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, and Non-Solicitation.

Vesting. Except as otherwise provided in this Award Agreement, the Final Award Number of Performance Shares will vest in full on the Determination Date as set forth on Exhibit A (“Determination Date”). Shares of Common Stock will be issued to you or, in case of your death, your Beneficiary determined in accordance with the Plan. You will have no rights as a stockholder of the Company with respect to your Performance Shares (including any Performance Shares with respect to dividend equivalents as provided below) until settlement. However, you may be entitled to dividend equivalents as set forth in paragraph 4. Except as otherwise provided in the Plan or this Award Agreement, vested Performance Shares will be settled and distributed in shares of Common Stock on [applicable date] .

Termination.

(a)

If prior to [end of Performance Period or other applicable date] you cease to be an Employee due to your death, the Target Award Number of Performance Shares under this Award Agreement after giving effect to any Net Operating Loss adjustments determined in accordance with Exhibit A for any years in the Performance Period completed prior to the year in which you die (and any Performance Shares with respect to dividend equivalents as provided below) will immediately vest upon the date of your death and will be distributed to your Beneficiary in shares of Common Stock on the January 2 following the year in which you die. If you cease to be an Employee due to your death on or after [end of Performance Period or other applicable date] and prior to the Determination Date, the Final Award Number of Performance Shares under this Award Agreement (and any Performance Shares with respect to dividend equivalents as provided below) will vest upon the Determination Date and will be distributed to your Beneficiary on [applicable date] .

(b)

If prior to the Determination Date you have an involuntary Separation from Service other than for Cause due to (i) application of the Company’s Extended Absence Policy (as in effect as of the Grant Date) in connection with a Disability, (ii) placement on a Salary Continuation Leave of Absence or receipt of a lump sum severance benefit, or (iii) the Company or an Affiliate entering into a corporate transaction with another company (the “buyer”) (including a transaction where the buyer acquires all or any portion of the

assets, stock or operations of the Company or Affiliate) and pursuant to the terms of the transaction you continue in employment with the buyer after completion of the transaction, then the Final Award Number of Performance Shares under this Award Agreement (and any Performance Shares with respect to dividend equivalents as provided below) will vest upon the Determination Date and will be distributed to you (or your Beneficiary if you have died before such distribution) in shares of Common Stock on [applicable date] . For purposes of this Award, the term “Separation from Service” is determined by the Company in accordance with Section 409A (as defined in paragraph 11 below) and in accordance with the definition set forth on Exhibit B to this Award Agreement, which definition is incorporated by reference herein. For purposes of this Award, the terms “Cause” and “Disability” are defined as set forth on Exhibit B to this Award Agreement, which definitions are incorporated by reference herein. Notwithstanding the foregoing, if you die following any such involuntary Separation from Service and prior to [end of Performance Period or other applicable date] , the Target Award Number of Performance Shares under this Award Agreement after giving effect to any Net Operating Loss adjustments determined in accordance with Exhibit A for any years in the Performance Period completed prior to the year in which you die (and any Performance Shares with respect to dividend equivalents as provided below) will immediately vest and will be distributed to your Beneficiary in accordance with paragraph 3(a) above.

(c)

If prior to the Determination Date, the Affiliate that employs you incurs a Change in Control and you do not continue employment with the Company or another Affiliate immediately after the Change in Control, then the Final Award Number of Performance Shares under this Award Agreement (and any Performance Shares with respect to dividend equivalents as provided below) will vest upon the Determination Date and will be distributed to you (or your Beneficiary if you have died before such distribution) in shares of Common Stock on [applicable date] . For purposes of this Award, the term “Change in Control” is defined as set forth on Exhibit B to this Award Agreement, which definition is incorporated by reference herein. Notwithstanding the foregoing, if you die following such event and prior to [end of Performance Period or other applicable date] , the Target Award Number of Performance Shares under this Award Agreement after giving effect to any Net Operating Loss adjustments determined in accordance with Exhibit A for any years in the Performance Period completed prior to the year in which you die (and any Performance Shares with respect to dividend equivalents as provided below) will immediately vest and will be distributed to your Beneficiary in accordance with paragraph 3(a) above.

(d)

If prior to the Determination Date you have a Separation from Service that constitutes a Retirement under the Plan, the Final Award Number of Performance Shares under this Award Agreement (and any Performance Shares with respect to dividend equivalents as provided below) will vest upon the Determination Date and will be distributed to you (or your Beneficiary if you have died before such distribution) in shares of Common Stock on [applicable date] provided that beginning immediately after you cease to be an Employee and continuing until the vesting date you satisfy each of the following conditions (“vesting conditions”): (i) you comply with the terms of the attached Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, and Non-Solicitation, which agreement is incorporated by reference herein, (ii) you do not express any derogatory or damaging statements about the Company or any Affiliate, the management or the board of directors of the Company or any Affiliate, the products, services or the business condition of the Company or any Affiliate in any public way or to anyone who could make those statements public, and (iii) you do not perform services as an officer, director, employee, consultant or otherwise for any business which is in competition with any line of business of the Company or any Affiliate for which you had executive responsibilities while you were employed by the Company or any Affiliate (including predecessors thereof) and which does business in any location in the geographic footprint of the Company or any Affiliate in which you had executive responsibilities. Notwithstanding the foregoing, if you die following your Retirement and prior to [end of Performance Period or other applicable date] and have satisfied the vesting conditions set forth above through your date of death, the Target Award Number of Performance Shares under this Award Agreement after giving effect to any Net Operating Loss adjustments determined in accordance with Exhibit A for any years in the Performance Period completed prior to the year in which you die (and any Performance Shares with respect to dividend equivalents as provided below) will immediately vest and will be distributed to your Beneficiary in accordance with paragraph 3(a) above.

(e)

If you incur a Separation from Service other than for a reason described in paragraph 3(a), 3(b), 3(c) or 3(d), or you fail to comply with any applicable vesting condition (including the vesting conditions set forth in paragraph 3(d)), any then unvested Performance Shares awarded hereby (including any Performance Shares with respect to dividend equivalents as provided below) will immediately terminate without notice to you and will be forfeited. For avoidance of doubt, a “Separation from Service other than for a reason described in paragraph 3(a), 3(b), 3(c) or 3(d)” includes, without limitation, a voluntary Separation from Service that does not constitute a Retirement and an involuntary Separation from Service for Cause.

Dividend Equivalents . [During the period beginning on the Grant Date and ending on the date the Performance Shares vest or terminate, whichever occurs first, if the Company pays a dividend on the Common Stock, you will automatically receive, as of the payment date for such dividend, dividend equivalents in the form of additional Performance Shares based on the amount or number of shares that would have been paid on the Final Award Number of Performance Shares (or the NOL Adjusted Target Award Number of Performance Shares as applicable under paragraphs 3(a), 3(b), 3(c) and 3(d)) [other base amount] had they been issued and outstanding shares of Common Stock as of the record date and, if a cash dividend, the closing price of the Common Stock on the New York Stock Exchange as of the dividend payment date. You will also automatically receive dividend equivalents with respect to the additional Performance Shares, to be determined in the same manner. Performance Shares granted with respect to dividend equivalents will be subject to the same vesting schedule and conditions as the underlying Performance Shares and will be distributed in shares of Common Stock when, and if, the underlying Performance Shares are settled and distributed.] [During the period beginning on the Grant Date and ending on the date the Performance Shares vest or terminate, whichever occurs first, if the Company pays a cash dividend on the Common Stock, you will receive cash payments based on and payable at approximately the same time as the cash dividend that would have been paid on the [applicable base amount] had they been issued and outstanding shares of Common Stock as of the record date for the dividend. Cash payments will be net of federal, state and local withholding taxes.] [During the period beginning on the Grant Date and ending on the date the Performance Shares vest and are distributed, or terminate, whichever occurs first, if the Company pays a cash dividend on the Common Stock, you will not be entitled to receive any dividend equivalents or cash payments in respect of such dividend.]

Nontransferable. Unless the Committee provides otherwise, (i) no rights under this Award will be assignable or transferable, and neither you nor your Beneficiary will have any power to anticipate, alienate, dispose of, pledge or encumber any rights under this Award, and (ii) the rights and the benefits of this Award may be exercised and received during your lifetime only by you or your legal representative.

Other Restrictions; Amendment. The issuance of Common Stock hereunder is subject to compliance by the Company and you with all legal requirements applicable thereto, including tax withholding obligations, and with all applicable regulations of any stock exchange on which the Common Stock may be listed at the time of issuance. Subject to paragraph 11 below, the Committee may, in its sole discretion and without your consent, reduce, delay vesting, modify, revoke, cancel, impose additional conditions and restrictions on or recover all or a portion of this Award if the Committee deems it necessary or advisable to comply with applicable laws, rules and regulations. This Award is subject to any applicable recoupment or “clawback” policies of the Company, as amended from time to time, and any applicable recoupment or clawback requirements imposed under laws, rules and regulations.

[Stock Ownership Provision. If you are an Executive Officer of the Company or a member of its Operating Committee, as a condition to receiving this Award, you agree to hold, while employed by the Company or any Affiliate and for a period of one year after your Retirement, shares of Common Stock equal to at least 50% of the after-tax shares of Common Stock (assuming a 50% tax rate) acquired upon vesting and settlement of this Award. If you are not an Executive Officer or member of the Operating Committee, you are expected to hold that number of shares while employed by the Company or any Affiliate.]

Additional Provisions. This Award Agreement is subject to the provisions of the Plan. Capitalized terms not defined in this Award Agreement or by reference to another document are used as defined in the Plan. If the Plan and this Award Agreement conflict, the provisions of the Plan will govern. Interpretations of the Plan and this Award Agreement by the Committee are binding on you and the Company.

10.

No Employment Agreement. Neither the award to you of the Performance Shares nor the delivery to you of this Award Agreement or any other document relating to the Performance Shares will confer on you the right to continued employment with the Company or any Affiliate. You understand that your employment with the Company or any Affiliate is “at will” and nothing in this document changes, alters or modifies your “at will” status or your obligation to comply with all policies, procedures and rules of the Company, as they may be adopted or amended from time to time.

11.

Section 409A . This Award is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the applicable Treasury regulations or other binding guidance

thereunder (“Section 409A”). Accordingly, all provisions included in this Award Agreement, or incorporated by reference, will be interpreted and administered in accordance with that intent. If any provision of the Plan would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended or limited so as to avoid the conflict; provided, however, that the Company makes no representation that the Award is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Award.

12.

Six-month Delay . Notwithstanding any provision of the Plan or this Award Agreement to the contrary, if, upon your Separation from Service with the Company for any reason, the Company determines that you are a “Specified Employee” as defined in Section 409A and in accordance with the definition set forth on Exhibit B to this Award Agreement, which definition is incorporated by reference herein, your Performance Shares, if subject to settlement upon your Separation from Service and if required pursuant to Section 409A, will not settle before the date that is the first business day following the six-month anniversary of such Separation from Service, or, if earlier, upon your death.

13.

No Fractional Shares. The number of Performance Shares to be distributed to you under this Award Agreement will be rounded down to the nearest whole share.

14.

Severability and Judicial Modification. If any provision of this Award Agreement is held to be invalid or unenforceable under pertinent state law or otherwise or Wells Fargo elects not to enforce such restriction, the remaining provisions shall remain in full force and effect and the invalid or unenforceable provision shall be modified only to the extent necessary to render that provision valid and enforceable to the fullest extent permitted by law. If the invalid or unenforceable provision cannot be, or is not, modified, that provision shall be severed from the Award Agreement and all other provisions shall remain valid and enforceable.

15.

Applicable Law. This Award Agreement and the award of Performance Shares evidenced hereby will be governed by, and construed in accordance with the laws of the state of Delaware (without regard to their choice-of-law provisions) except to the extent Federal law would apply.

16.

Electronic Delivery and Acceptance. The Company is electronically delivering documents related to current or future participation in the Plan and is requesting your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through the current plan administrator’s on-line system, or any other on-line system or electronic means that the Company may decide, in its sole discretion, to use in the future.

[Insert requirement to acknowledge and accept grant terms]

WELLS FARGO & COMPANY

LONG-TERM INCENTIVE COMPENSATION PLAN

PERFORMANCE SHARE AWARD AGREEMENT

Exhibit A to Performance Share Award Agreement

This Exhibit A sets forth the manner in which the Final Award Number will be determined.

Definitions

Capitalized terms used but not defined herein (including, but not limited to, Return on Realized Common Equity) shall have the same meanings assigned to them in the Plan and the Award Agreement. In addition, the following terms used in the text of this Exhibit A shall have the meanings set forth below:

“Average Return on Realized Common Equity” means for each of the Financial Performance Group Companies the sum of such company’s Return on Realized Common Equity for each of the 12-month periods ending [applicable dates during the Performance Period or during other applicable period] , which sum is then divided by [applicable divisor] .

“Company Return on Realized Common Equity Ranking” means the rank of the Company’s Average Return on Realized Common Equity relative to the Average Return on Realized Common Equity achieved by each of the other Financial Performance Group Companies.

“Final Award Number Percentage” means the “Final Award Number Percentage” determined in accordance with the Determination of Final Award Number section of this Exhibit A.

“Financial Performance Group Companies” means, in addition to the Company, the companies listed below provided that any such company for which financial data as of [end of Performance Period or other applicable date] , is not publicly available shall be eliminated as a Financial Performance Group Company.

[Financial Performance Group Companies]

“Net Operating Loss” means for any year in the Performance Period a loss that results from adjusting a net loss as reported in the Company’s consolidated financial statements to eliminate the effect of the following items, each determined based on generally accepted accounting principles: (1) losses resulting from discontinued operations; (2) extraordinary losses; (3) the cumulative effect of changes in generally accepted accounting principles; and (4) any other unusual or infrequent loss which is separately identified and quantified.

Determination of Final Award Number

Net Operating Loss Adjustments . If the Company incurs a Net Operating Loss for any year in the Performance Period, the Target Award Number will be reduced by one-third for each such year, effective upon certification by the Committee of a Net Operating Loss for such year. The Target Award Number after giving effect to each such Net Operating Loss adjustment is referred to herein as the “NOL Adjusted Target Award Number.” If the Company does not incur a Net Operating Loss in any year in the Performance Period, your NOL Adjusted Target Award Number will be the same as your Target Award Number.

RORCE Adjustment . The NOL Adjusted Target Award Number will be adjusted upward or downward depending on the Company Return on Realized Common Equity Ranking in accordance with the chart below to calculate your Final Award Number of Performance Shares. The Final Award Number of Performance Shares will be determined by multiplying (i) the Final Award Number Percentage by (ii) your NOL Adjusted Target Award Number.


Company Return on Realized Common Equity Ranking	Final Award Number Percentage	Final Award Number of Performance Shares
[applicable ranking]	[applicable %]	[applicable % ] x NOL Adjusted Target Award Number
[applicable ranking]	[applicable %]	[applicable %] x NOL Adjusted Target Award Number
[applicable ranking]	[applicable %]	[applicable %] x NOL Adjusted Target Award Number
[applicable ranking]	[applicable %]	[applicable %] x NOL Adjusted Target Award Number

If the Company Return on Realized Common Equity Ranking is between [applicable ranking range] , the Final Award Number Percentage shall be interpolated on a straight-line basis between [applicable percentage range] and the Final Award Number of Performance Shares shall be interpolated on a corresponding straight-line basis between [applicable percentage range] of the NOL Adjusted Target Award Number.

If the Company does not have the lowest Average Return on Realized Common Equity among the Financial Performance Group Companies and the Company Return on Realized Common Equity Ranking is less than [ applicable ranking] , the Final Award Number Percentage shall be interpolated on a straight-line basis between [applicable percentage range] and the Final Award Number of Performance Shares shall be interpolated on a straight-line basis between [applicable percentage range] of the NOL Adjusted Target Award Number.

In no event shall the Final Award Number Percentage be greater than [applicable percentage] nor shall the Final Award Number of Performance Shares be greater than [applicable percentage] of the NOL Adjusted Target Award Number.

As provided in paragraph 4, you will be entitled to receive Performance Shares with respect to dividend equivalents on the Final Award Number (or the Target Award Number, as applicable and as may be adjusted under paragraphs 3(a), 3(b), 3(c) and 3(d)) to determine the total number of Performance Shares that will be distributed to you upon settlement.

[alternative performance criteria and/or adjustments to determine Final Award Number of Performance Shares]

Committee Determination

The Committee shall determine the Final Award Number of Performance Shares after the end of the Performance Period and not later than [applicable date] and the date the Committee makes such determination is referred to in this Award as the “Determination Date.” The Committee shall make all determinations in calculating the Final Award Number of Performance Shares and the Committee’s determination shall be binding.

WELLS FARGO & COMPANY

LONG-TERM INCENTIVE COMPENSATION PLAN

PERFORMANCE SHARE AWARD AGREEMENT

Exhibit B to Performance Share Award Agreement

Cause

“Cause” means your termination of employment by the Company arising from or on or after (1) the continued failure by you to substantially perform your duties; (2) your conviction of a crime involving dishonesty or breach of trust, conviction of a felony, or commission of any act that makes you ineligible for coverage under Wells Fargo’s fidelity bond or otherwise makes you ineligible for continued employment; or (3) your violation of the Company’s policies, including but not limited to Wells Fargo’s Code of Ethics and Business Conduct, Information Security Policies and Compliance and Risk Management Accountability Policy.

Change in Control

“Change in Control” means a change in the ownership or effective control of the Company or the Affiliate that employs you, or in the ownership of a substantial portion of the assets of the Company or the Affiliate that employs you within the meaning of Treas. Reg. section 1.409A-3(i)(5) as determined by the Company.

Disability

You will be considered to a have a “Disability” if you are receiving income replacement benefits for a period of not less than three months under the Company’s long-term disability plan as a result of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

Separation from Service

A “Separation from Service” occurs upon your death, retirement or other termination of employment or other event that qualifies as a “separation from service” under Internal Revenue Code Section 409A and the applicable regulations thereunder as in effect from time to time. The Company shall determine in each case when a Separation from Service has occurred, which determination shall be made in a manner consistent with Treasury Regulation Section 1.409A-1(h). The Company shall determine that a Separation from Service has occurred as of a certain date when the facts and circumstances indicate that the Company (or an Affiliate, if applicable) and you reasonably anticipate that, after that date, you will render no further services, or your level of bona fide services (either as an employee or independent contractor) will permanently decrease to a level that is 20% or less than the average level of your bona fide services (either as an employee or independent contractor) previously in effect for you over the immediately preceding 36-month period (or your entire period of service, if you have been providing services for less than 36 months).

The following presumptions shall also apply to all such determinations:

(1)	Transfers . A Separation from Service has not occurred upon your transfer of employment from the Company to an Affiliate or vice versa, or from an Affiliate to another Affiliate.

(2)

Medical leave of absence . Where you have a medical leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, and you have not returned to employment with the Company or an Affiliate, a Separation from Service has occurred on the earlier of: (A) the first day on which you would not be considered “disabled” under any disability policy of the Company or Affiliate under which you are then receiving a benefit; or (B) the first day on which your medical leave of absence period exceeds 29 months.

(3)	Military leave of absence . Where you have a military leave of absence, and you have not returned to employment with the Company or an Affiliate, a Separation from Service has occurred on the day next following the last day on which you are entitled to reemployment rights under USERRA.

(4)	Salary continuation leave . A Separation from Service has occurred on the first day of your salary continuation leave taken under the Company’s salary continuation leave program.

(5)

Other leaves of absence . In the event that you are on a bona fide leave of absence, not otherwise described in this definition, from which you have not returned to employment with the Company or an Affiliate, your Separation from Service has occurred on the first day on which your leave of absence period exceeds six months or, if earlier, upon your termination of employment (provided that such termination of employment constitutes a Separation from Service in accordance with the last sentence of the first paragraph of this definition).

(6)

Asset purchase transaction . If, in connection with the sale or other disposition of substantial assets (such as a division or substantially all assets of a trade or business) of the Company or an Affiliate to an unrelated buyer, you become an employee of the buyer or an affiliate of the buyer upon the closing of or in connection with such transaction, a Separation from Service has not occurred if the Company and the buyer have specified that such transaction will not, with respect to any individual affected by such transaction who becomes an employee of the buyer or an affiliate, be considered a “separation from service” under Treasury Regulation Section 1.409A-1(h), and such specification meets the requirements of Treasury Regulation Section 1.409A-1(h)(4).

Specified Employee

A “Specified Employee” means:

(1)

Any Participant who is a “key employee” under Internal Revenue Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Internal Revenue Code Section 416(i)(5)) at any time during the 12-month period ending on the specified employee identification date. For purposes of determining “key employee” status under Internal Revenue Code Section 416(i)(1)(A)(i), except as required under such provision and the regulations thereunder, the term “officer” shall refer to an employee of the Company or an Affiliate with the title Senior Vice President or above, and

(2)

Any participant who served as a member of the Company’s Management Committee at any time during the 12-month period ending on the specified employee identification date.

For purposes of applying Internal Revenue Code section 409A, the “specified employee identification date” is each December 31. Any person described in (1) or (2) above on a specified employee effective date shall be treated as a Specified Employee for the entire 12-month period beginning on the following April 1.

Notwithstanding the above, in the event of a corporate transaction to which the Company or an Affiliate is a party, the Company may, in its discretion, establish a method for determining Specified Employees pursuant to Treasury Regulation Section 1.409A-1(i)(6).

Wells Fargo Agreement

Regarding Trade Secrets, Confidential Information, and Non-Solicitation

I. Introduction

In consideration for the Performance Share Award granted to me by Wells Fargo & Company on [applicable grant date] , on the terms and conditions contained in the Performance Share Award Agreement (“Performance Share Award Agreement”), I acknowledge that the nature of my employment with and performance of services for Wells Fargo & Company and its affiliates (the “Company”) permits me to have access to certain of its trade secrets and confidential and proprietary information and that such information is, and shall always remain, the sole property of the Company. Any unauthorized disclosure or use of this information would be wrongful and would cause the Company irreparable harm. Therefore, I agree as follows:

II. Trade Secrets and Confidential Information

During the course of my employment I have acquired, and will acquire, knowledge of the Company’s Trade Secrets and other proprietary information relating to its business, business methods, personnel, and customers (collectively referenced as “Confidential Information”). “Trade Secrets” are defined as information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The Company’s Trade Secrets include, but are not limited to, the following:

•

the names, address, and contact information of the Company’s customers and prospective customers, as well as any other personal or financial information relating to any customer or prospect, including, without limitation, account numbers, balances, portfolios, maturity and/or expiration or renewal dates, loans, policies, investment activities, purchasing practices, insurance, annuity policies and objectives;

•

any information concerning the Company’s operations, including without limitation, information related to its methods, services, pricing, costs, margins and mark-ups, finances, practices, strategies, business plans, agreements, decision-making, systems, technology, policies, procedures, marketing, sales, techniques, agent information and processes;

•

any other proprietary and/or confidential information relating to the Company’s customers, employees, products, services, sales, technologies, or business affairs.

I understand that Records of the Company also constitute Confidential Information and that my obligation to maintain the confidentiality thereof continues at all times during and after my employment. “Records” include, but are not limited to, original, duplicated, computerized, memorized, handwritten or any other form of information, whether contained in materials provided to me by the Company, or by any institution acquired by the Company, or compiled by me in any form or manner including information in documents or electronic devices, such as software, flowcharts, graphs, spreadsheets, resource manuals, videotapes, calendars, day timers, planners, rolodexes, or telephone directories maintained in personal computers, laptop computers, personal digital assistants or any other device. These records do not become any less confidential or proprietary to the Company because I may commit some of them to memory or because I may otherwise maintain them outside of the Company’s offices.

I agree that Confidential Information of the Company is to be used by me solely and exclusively for the purpose of conducting business on behalf of the Company. I am expected to keep such Confidential Information confidential and not to divulge,use or disclose this information except for that purpose. If I resign or am terminated from my employment for any reason, I agree to immediately return to the Company all Records and Confidential Information, including information maintained by me in my office, personal electronic devices, and/or at home.

III. Non-Solicitation of Company’s Employees and Customers

I agree that for the period beginning on my termination date with the Company through the greater of (i) the period beginning on my termination date through the Determination Date as defined in the Performance Share Award Agreement or (ii) the one-year period following my termination date (“the Non-Solicitation Period”), I will not do any of the following, either directly or indirectly or through associates, agents, or employees:

a.	solicit, recruit or promote the solicitation or recruitment of any employee or consultant of the Company for the purpose of encouraging that employee or consultant to leave the Company’s employ or sever an agreement for services; or

solicit, participate in or promote the solicitation of any of the Company’s clients, customers, or prospective customers with whom I had Material Contact and/or regarding whom I received Confidential Information, for the purpose of providing products or services (“Competitive Products/Services”). “Material Contact” means

interaction between me and the customer, client or prospective customer within one (1) year prior to my Separation of Service (as defined in the Performance Award Agreement) which takes place to manage, service or further the business relationship.

This limitation is not intended to limit the Company’s right to prevent misappropriation of its Confidential Information beyond the Non-Solicitation Period.

IV. Assignment of Inventions

I acknowledge and agree that all inventions and all worldwide intellectual property rights that I make, conceive or first reduce to practice (alone or in conjunction with others) during my employment with the Company are owned by the Company that (1) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company whether or not I made, conceived or first reduced the inventions to practice during normal working hours; and (2) involve the use of any time, material, information, or facility of the Company.

V. Partial Invalidity

If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect and the invalid or unenforceable provision shall be modified only to the extent necessary to render that provision valid and enforceable to the fullest extent permitted by law. If the invalid or unenforceable provision cannot be modified, that provision shall be severed from the Agreement and all other provisions shall remain valid and enforceable.

VI. Choice of Law/Integration/Survival

This Agreement and any dispute, controversy or claim which arises under or relates in any way to it shall be governed by the law of the state where the incident(s) giving rise to the dispute or claim arose. This Agreement supersedes any prior written or verbal agreements pertaining to the subject matter herein, and is intended to be a final expression of our Agreement with respect only to the terms contained herein; provided, however, that the employee and customer non-solicitation provisions herein are in addition to, and not in lieu of, any such provisions contained in any prior agreements. There may be no modification of this Agreement except in writing signed by me and an executive officer of the Company. This Agreement shall survive my employment by the Company, inure to the benefit of successors and assigns of the Company, and is binding upon my heirs and legal representatives.

Acknowledgement

I acknowledge that I have read, understand, and received a copy of this Agreement, and will abide by its terms.



[Name of Executive]				Date

[End of Form of Performance Share Award Agreement

for Grants on or after February 28, 2012]

Form of Restricted Share Rights Award Agreement for Grants on or after February 28, 2012

Brackets identify provisions that may vary depending on the particular grant, grant recipient and/or other relevant factor.

WELLS FARGO & COMPANY

LONG-TERM INCENTIVE COMPENSATION PLAN

RESTRICTED SHARE RIGHTS AWARD AGREEMENT

[table below to be included only if award agreement is not posted on plan administrator’s website]


Name:		Grant Date:
I.D. Number:		Number of RSRs:

Award. To encourage your continued employment with the Company or any Affiliate and to motivate you to help the Company increase stockholder value over the long term, Wells Fargo & Company (the “Company”) has awarded you the number of Restricted Share Rights [ if award agreement posted on plan administrator’s website : as set forth on the acknowledgement screen for your grant on this website] [ if not posted : indicated above] (the “Award”). Each Restricted Share Right entitles you to receive one share of Wells Fargo & Company common stock (“Common Stock”) contingent upon vesting and subject to the other terms and conditions set forth in the Company’s Long-Term Incentive Compensation Plan (the “Plan”) and this Award Agreement.

2.	Vesting. Except as otherwise provided in this Award Agreement, and subject to the Company’s right to recoup this Award as provided in this Award Agreement, the Restricted Share Rights will vest according to the following schedule:

[vesting schedule]

Shares of Common Stock will be issued to you or, in case of your death, your Beneficiary determined in accordance with the Plan. Except for dividend equivalents as provided below, you will have no rights as a stockholder of the Company with respect to your Restricted Share Rights until settlement. Upon vesting, Restricted Share Rights will be settled and distributed in shares of Common Stock except as otherwise provided in the Plan or this Award Agreement.

3.	Termination.

(a)

If you cease to be an Employee due to your death, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest upon your date of death and will be settled and distributed to your Beneficiary in shares of Common Stock on the January 2 following the year in which you die or, if January 2 is not a business day, the first business day following that January 2.

(b)

If you have an involuntary Separation from Service for a reason other than for Cause due to:

(1)

application of the Company’s Extended Absence Policy in connection with a Disability,

(2)

placement on a Salary Continuation Leave of Absence or receipt of a lump sum severance benefit, or

(3)

the Company or an Affiliate enters into a corporate transaction with another company (the “buyer”) (including a transaction where the buyer acquires all or any portion of the assets, stock or operations of the Company or Affiliate) and pursuant to the terms of the transaction you continue in employment with the buyer after completion of the corporate transaction,

then any unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest and will be settled and distributed to you in shares of Common Stock within 90 days from your Separation from Service.

The terms “Separation from Service” (which is determined by the Company in accordance with Section 409A (as defined in paragraph 10 below)), “Disability” and “Cause” are set forth on Exhibit A to this Award Agreement, which definitions are incorporated by reference herein.

(c)

If you have a Separation from Service for a reason other than Cause that is not addressed in paragraph (b) above and that Separation from Service constitutes a Retirement under the Plan, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will vest upon the scheduled vesting date as set forth in paragraph 2 above; provided, however, if you die following Retirement, any then unvested Restricted Share Right will

vest immediately upon your date of death and will be settled and distributed to your Beneficiary in shares of Common Stock on the January 2 following the year in which you die or, if January 2 is not a business day, the first business day following that January 2.

(d)

If the Affiliate that employs you incurs a Change in Control and you do not continue employment with the Company or another Affiliate of the Company immediately after the Change in Control, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest and will be settled and distributed to you in shares of Common Stock no later than March 1 of the year immediately following the year in which the Change in Control occurred. Exhibit A to this Award Agreement sets forth the definition of the term “Change in Control,” which definition is incorporated in this Award Agreement by reference.

(e)

If you incur a Separation from Service other than for a reason described in paragraphs (a), (b), (c), and (d) above, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately terminate without notice to you and will be forfeited.

[alternative Paragraph 3]

3.	Termination.

(a)

If you cease to be an Employee due to your death, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest upon your date of death and will be settled and distributed to your Beneficiary in shares of Common Stock no later than March 1 of the year immediately following the year in which you die.

(b)

If you incur an involuntary termination of employment for a reason other than for Cause due to:

(1)

Application of the Company’s Extended Absence Policy in connection with a Disability.

(2)

Placement on a Salary Continuation Leave of Absence or receipt of a lump sum severance benefit, or

(3)

the Company or an Affiliate enters into a corporate transaction with another company (the “buyer”) (including a transaction where the buyer acquires all or any portion of the assets, stock or operations of the Company or Affiliate) and pursuant to the terms of the transaction you continue in employment with the Buyer after completion of the corporate transaction,

any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest and will be settled and distributed to you in shares of Common Stock within 90 days from your termination of employment. For purposes of this Award, you will be considered to a have a “Disability” if you are receiving income replacement benefits for a period of not less than three months under the Company’s long-term disability plan as a result of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. For purposes of this Award, “Cause” is defined as your termination of employment by the Company arising from or on or after (1) the continued failure by you to substantially perform your duties; (2) your conviction of a crime involving dishonesty or breach of trust, conviction of a felony, or commission of any act that makes you ineligible for coverage under Wells Fargo’s fidelity bond or otherwise makes you ineligible for continued employment; or (3) your violation of the Company’s policies, including but not limited to Wells Fargo’s Code of Ethics and Business Conduct, Information Security Policies and Compliance and Risk Management Accountability Policy.

(c)

If the Affiliate that employs you incurs a Change in Control and you do not continue employment with the Company or another Affiliate of the Company immediately after the Change in Control, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately vest and will be settled and distributed to you in shares of Common Stock no later than March 1 of the year immediately following the year in which the Change in Control occurred. For purposes of this Award, “Change in Control” means a change in the ownership or effective control of the Company or the Affiliate that employs you, or in the ownership of a substantial portion of the assets of the Company or the Affiliate that employs you within the meaning of Treas. Reg. section 1.409A-3(i)(5) as determined by the Company.

(d)

If you terminate employment other than for a reason described in paragraphs (a), (b) and (c) above, any then unvested Restricted Share Right awarded hereby (including any Restricted Share Right granted with respect to dividend equivalents as provided below) will immediately terminate without notice to you and will be forfeited.

Dividend Equivalents. [During the period beginning on the Grant Date and ending on the date the Restricted Share Rights vest and are distributed, or terminate, whichever occurs first, if the Company pays a dividend on the Common Stock, you will automatically receive, as of the payment date for such dividend, dividend equivalents in the form of additional Restricted Share Rights based on the amount or number of shares that would have been paid on the Restricted Share Rights had they been issued and outstanding shares of Common Stock as of the record date and, if a cash dividend, the closing price of the Common Stock on the New York Stock Exchange as of the dividend payment date. You will also automatically receive dividend equivalents with respect to the additional Restricted Share Rights, to be granted in the same manner. Restricted Share Rights granted with respect to dividend equivalents will be subject to the same vesting schedule and conditions as the underlying Restricted Share Rights, including the Company’s right of recoupment, and will be distributed in shares of Common Stock when, and if, the underlying Restricted Share Rights are settled and distributed. [During the period beginning on the Grant Date and ending on the date the Restricted Share Rights vest and are distributed, or terminate, whichever occurs first, if the Company pays a cash dividend on the Common Stock, you will receive cash payments based on and payable at approximately the same time as the cash dividend that would have been paid on the Restricted Share Rights had they been issued and outstanding shares of Common Stock as of the record date for the dividend. Cash payments will be net of federal, state and local withholding taxes.] [During the period beginning on the Grant Date and ending on the date the Restricted Share Rights vest and are distributed, or terminate, whichever occurs first, if the Company pays a cash dividend on the Common Stock, you will not be entitled to receive any dividend equivalents or cash payments in respect of such dividend.]

Tax Withholding. The Company will withhold from the number of shares of Common Stock otherwise issuable hereunder (including with respect to dividend equivalents) a number of shares necessary to satisfy any and all applicable federal, state, local and foreign tax withholding obligations and employment-related tax requirements. In addition, the Company may withhold from your compensation any and all applicable federal, state, local, foreign and employment-related taxes in the event all or a portion of the Restricted Share Rights are treated as taxable prior to or other than on the vesting dates set forth in paragraph 2 above and the number of shares of Common Stock otherwise issuable is insufficient to satisfy such tax withholding obligations and employment-related tax requirements.

Other Restrictions; Amendment. The issuance of Common Stock hereunder is subject to compliance by the Company and you with all applicable legal requirements applicable thereto, including tax withholding obligations, and with all applicable regulations of any stock exchange on which the Common Stock may be listed at the time of issuance. Subject to paragraph 10 below, the Committee may, in its sole discretion and without your consent, reduce, delay vesting, modify, revoke, cancel, impose additional conditions and restrictions on or recover all or a portion of this Award if the Committee deems it necessary or advisable to comply with applicable laws, rules and regulations. This Award is subject to any applicable recoupment or “clawback” policies of the Company, as amended from time to time, and any applicable recoupment or clawback requirements imposed under laws, rules and regulations.

[Restrictive Covenants. In consideration of the terms of this Award and your access to Confidential Information, you agree to the restrictive covenants and associated remedies as set forth below, which exist independently of and in addition to any obligation to which you are subject under the terms of the Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, Non-Solicitation, And Assignment Of Inventions (the “TSA”):

(a)

Trade Secrets and Confidential Information. During the course of your employment, you will acquire knowledge of the Company’s and/or any Affiliate’s (collectively “WFC”) Trade Secrets and other proprietary information relating to its business, business methods, personnel, and customers (collectively, “Confidential Information”). “Trade Secrets” means WFC’s confidential information, which has an economic value in being secret and which WFC has taken steps to keep secret and you understand and agree that Trade Secrets include, but are not limited to confidentially maintained client and customer lists and information, and confidentially maintained prospective client and customer lists and information. You agree that Confidential Information of WFC is to be used solely and exclusively for the purpose of conducting business on behalf of WFC. You agree to keep such Confidential Information confidential and will not divulge, use or disclose this information except for that purpose. In addition, you agree that, both during and after your employment, you will not remove, share, disseminate or otherwise use WFC’s Trade Secrets to directly or indirectly solicit, participate in or promote the solicitation of any of WFC’s clients, customers, or prospective customers for the purpose of providing products or services that are in competition with WFC’s products or services.

(b)

Assignment of Inventions. You acknowledge and agree that all inventions and all worldwide intellectual property rights that you make, conceive or first reduce to practice (alone or in conjunction with others) during your employment with WFC are owned by WFC that (1) relate at the time of conception or reduction to practice of the invention to WFC’s business, or actual or demonstrably anticipated research or development of WFC whether or not you made, conceived or first reduced the inventions to practice during normal working hours; and (2) involve the use of any time, material, information, or facility of WFC.

(c)

Non-solicitation. If you are currently subject to a TSA, you shall continue to be bound by the terms of the TSA. If you are not currently subject to a TSA, you agree to the following:

For a period of one (1) year immediately following termination of your employment for any reason, you will not do any of the following, either directly or indirectly or through associates, agents, or employees:

solicit, recruit or promote the solicitation or recruitment of any employee or consultant of WFC for the purpose of encouraging that employee or consultant to leave WFC’s employ or sever an agreement for services; or

ii.

to the fullest extent enforceable under the applicable state law, solicit, participate in or promote the solicitation of any of WFC’s clients, customers, or prospective customers with whom you had Material Contact and/or regarding whom you received Confidential Information, for the purpose of providing products or services that are in competition with WFC’s products or services. “Material Contact” means interaction between you and the customer, client or prospective customer within one (1) year prior to your last day as a team member which takes place to manage, service or further the business relationship.

The one-year limitation is not intended to limit WFC’s right to prevent misappropriation of its Confidential Information beyond the one-year period.

(d)

Violation of TSA or Restrictive Covenants. If you breach any of the terms of a TSA and/or the restrictive covenants above, all unvested Restricted Share Rights shall be immediately and irrevocably forfeited. For any Restricted Share Rights that vested within one (1) year prior to the termination of your employment with WFC or at any time after your termination, you shall be required to repay or otherwise reimburse WFC an amount having a value equal to the aggregate fair market value (determined as of the date of vesting) of such vested shares. This paragraph does not constitute the Company’s exclusive remedy for violation of your restrictive covenant obligations, and WFC may seek any additional legal or equitable remedy, including injunctive relief, for any such violation.]

No Employment Agreement. Neither the award to you of the Restricted Share Rights nor the delivery to you of this Award Agreement or any other document relating to the Restricted Share Rights will confer on you the right to continued employment with the Company or any Affiliate. You understand that your employment with the Company or any Affiliate is “at will” and nothing in this document changes, alters or modifies your “at will” status or your obligation to comply with all policies, procedures and rules of the Company, as they may be adopted or amended from time to time.

10.

[Section 409A . This Award is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the applicable Treasury Regulations or other binding guidance thereunder (“Section 409A”). Accordingly, all provisions included in this Award, or incorporated by reference, will be interpreted and administered in accordance with that intent. If any provision of the Plan would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended or limited so as to avoid the conflict; provided, however, that the Company makes no representation that the Award is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Award.]

11.

Six-month Delay . Notwithstanding any provision of the Plan or this Award Agreement to the contrary, if, upon your Separation from Service with the Company for any reason, the Company determines that you are a “Specified Employee” as defined in Section 409A and in accordance with the definition set forth on Exhibit A to this Award Agreement, which definition is incorporated by reference herein, your Restricted Share Rights, if subject to settlement upon your Separation from Service and if required pursuant to Section 409A, will not settle before the date that is the first business day following the six-month anniversary of such Separation from Service, or, if earlier, upon your death.

12.

13.

Severability and Judicial Modification. If any provision of this Award Agreement is held to be invalid or unenforceable under pertinent state law or otherwise or Wells Fargo elects not to enforce such restriction, including but not limited to paragraph 8(c)ii, the remaining provisions shall remain in full force and effect and the invalid or unenforceable provision shall be modified only to the extent necessary to render that provision valid and enforceable to the fullest extent permitted by law. If the invalid or unenforceable provision cannot be, or is not, modified, that provision shall be severed from the Award Agreement and all other provisions shall remain valid and enforceable.

14.

Additional Provisions. This Award Agreement is subject to the provisions of the Plan. Capitalized terms not defined in this Award Agreement are used as defined in the Plan. If the Plan and this Award Agreement are inconsistent, the provisions of the Plan will govern. Interpretations of the Plan and this Award Agreement by the Committee are binding on you and the Company.

15.	Applicable Law. This Award Agreement and the award of Restricted Share Rights evidenced hereby will be governed by, and construed in accordance with the laws of the state of Delaware (without regard to their choice-of-law provisions) except to the extent Federal law would apply.

16.

[Insert requirement to acknowledge and accept grant terms]

Exhibit A

[Certain Definitions

Separation from Service

A Participant’s “Separation from Service” occurs upon his or her death, retirement or other termination of employment or other event that qualifies as a “separation from service” under Internal Revenue Code Section 409A and the applicable regulations thereunder as in effect from time to time. The Company shall determine in each case when a Participant’s Separation from Service has occurred, which determination shall be made in a manner consistent with Treasury Regulation Section 1.409A-1(h). The Company shall determine that a Separation from Service has occurred as of a certain date when the facts and circumstances indicate that the Company (or an Affiliate, if applicable) and the Participant reasonably anticipate that, after that date, the Participant will render no further services, or the Participant’s level of bona fide services (either as an employee or independent contractor) will permanently decrease to a level that is 20% or less than the average level of the Participant’s bona fide services (either as an employee or independent contractor) previously in effect for such Participant over the immediately preceding 36-month period (or the Participant’s entire period of service, if the Participant has been providing services for less than 36 months).

The following presumptions shall also apply to all such determinations:

(1)	Transfers . A Separation from Service has not occurred upon the Participant’s transfer of employment from the Company to an Affiliate or vice versa, or from an Affiliate to another Affiliate.

(2)

Medical leave of absence . Where the Participant has a medical leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, and he or she has not returned to employment with the Company or an Affiliate, a Separation from Service has occurred on the earlier of: (A) the first day on which the Participant would not be considered “disabled” under any disability policy of the Company or Affiliate under which the Participant is then receiving a benefit; or (B) the first day on which the Participant’s medical leave of absence period exceeds 29 months.

(3)

Military leave of absence . Where the Participant has a military leave of absence, and he or she has not returned to employment with the Company or an Affiliate, a Separation from Service has occurred on the day next following the last day on which the Participant is entitled to reemployment rights under USERRA.

(4)	Salary continuation leave . A Separation from Service has occurred on the first day of the Participant’s salary continuation leave taken under the Company’s salary continuation leave program.

(5)

Other leaves of absence . In the event that the Participant is on a bona fide leave of absence, not otherwise described in this definition, from which he or she has not returned to employment with the Company or an Affiliate, the Participant’s Separation from Service has occurred on the first day on which the Participant’s leave of absence period exceeds six months or, if earlier, upon the Participant’s termination of employment (provided that such termination of employment constitutes a Separation from Service in accordance with the last sentence of the first paragraph of this definition).

(6)

Asset purchase transaction . If, in connection with the sale or other disposition of substantial assets (such as a division or substantially all assets of a trade or business) of the Company or an Affiliate to an unrelated buyer, the Participant becomes an employee of the buyer or an affiliate of the buyer upon the closing of or in connection with such transaction, a Separation from Service has not occurred if the Company and the buyer have specified that such transaction will not, with respect to any individual affected by such transaction who becomes an employee of the buyer or an affiliate, be considered a “separation from service” under Treasury Regulation Section 1.409A-1(h), and such specification meets the requirements of Treasury Regulation Section 1.409A-1(h)(4).

Specified Employee

A “Specified Employee” means:

(1)

(2)

Any participant who served as a member of the Company’s Management Committee at any time during the 12-month period ending on the specified employee identification date.

Disability

You will be considered to have a “Disability” if you are receiving income replacement benefits for a period of not less than three months under the Company’s long-term disability plan as a result of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

Cause

Change in Control

End of Form of Restricted Share Rights Award Agreement

for Grants on or after February 28, 2012

Exhibit 10(f)

Amendment to Directors Stock Compensation and Deferral Plan

Effective January 24, 2012, Article III of the Wells Fargo & Company Directors Stock Compensation and Deferral Plan (the “Plan”) is amended to insert the following new proviso (iv) and renumber the subsequent proviso as (v):

“(iv) effective January 24, 2012, an additional 500,000 shares of Common Stock shall be available for, but limited to, deferrals of Cash Compensation and dividend credits to Deferred Stock Accounts;”

Exhibit 10(t)

Description of Non-Employee Director Equity Compensation Program

(Effective January 1, 2012)

Stock Awards

•

Award Value :

Each non-employee director elected at the Company’s annual meeting of stockholders shall automatically be granted, as of the date of such meeting, under the Long-Term Incentive Compensation Plan (LTICP), an award of Company common stock having an award value of $150,000.

A non-employee director who joins the Board effective as of any other date shall automatically be granted, as of such other date, under the LTICP, an award of Company common stock having an award value based on the full-year award value of $150,000 prorated to reflect the number of months (rounded up to the next whole month) remaining until the next annual meeting of stockholders; provided, however, that if the New York Stock Exchange (NYSE) is not open on the day such director joins the Board, the award shall be granted as of the next following day on which the NYSE is open.

•

Number of Shares Subject to Award : The number of shares of Company common stock subject to an award shall be determined by dividing the award value by the NYSE-only closing price of Company common stock on the date of grant (rounded up to the nearest whole share).

•

Vesting : The stock awards shall vest in full immediately upon grant.

•

Deferral : Non-employee directors may elect to defer receipt of their stock awards in accordance with the terms and conditions of the Company’s Directors Stock Compensation and Deferral Plan.

EXHIBIT 12(a)

WELLS FARGO & COMPANY AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

		,		,		,		,		,
	Year ended December 31,

(in millions)	2011		2010		2009		2008		2007


Earnings including interest on deposits (1):
Income before income tax expense	$	23,656		19,001		17,998		3,300		11,835
Less: Net income from noncontrolling interests		342		301		392		43		208

Income before income tax expense and noncontrolling interests		23,314		18,700		17,606		3,257		11,627
Fixed charges		7,013		8,463		10,455		9,991		14,428

		30,327		27,163		28,061		13,248		26,055


Fixed charges (1):
Interest expense		6,649		8,039		9,950		9,755		14,203
Estimated interest component of net rental expense		364		424		505		236		225

		7,013		8,463		10,455		9,991		14,428


Ratio of earnings to fixed charges (2)		4.32		3.21		2.68		1.33		1.81


Earnings excluding interest on deposits:
Income before income tax expense and noncontrolling interests		23,314		18,700		17,606		3,257		11,627
Fixed charges		4,738		5,631		6,681		5,470		6,276

		28,052		24,331		24,287		8,727		17,903


Fixed charges:
Interest expense		6,649		8,039		9,950		9,755		14,203
Less: Interest on deposits		2,275		2,832		3,774		4,521		8,152
Estimated interest component of net rental expense		364		424		505		236		225

	$	4,738		5,631		6,681		5,470		6,276


Ratio of earnings to fixed charges (2)		5.92		4.32		3.64		1.60		2.85

(1)	As defined in Item 503(d) of Regulation S-K.

(2)

These computations are included herein in compliance with Securities and Exchange Commission regulations. However, management believes that fixed charge ratios are not meaningful measures for the business of the Company because of two factors. First, even if there was no change in net income, the ratios would decline with an increase in the proportion of income which is tax-exempt or, conversely, they would increase with a decrease in the proportion of income which is tax-exempt. Second, even if there was no change in net income, the ratios would decline if interest income and interest expense increase by the same amount due to an increase in the level of interest rates or, conversely, they would increase if interest income and interest expense decrease by the same amount due to a decrease in the level of interest rates.

EXHIBIT 12(b)

WELLS FARGO & COMPANY AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

AND PREFERRED DIVIDENDS



	Year ended December 31,

(in millions)	2011		2010		2009		2008		2007

Earnings including interest on deposits (1):
Income before income tax expense	$	23,656		19,001		17,998		3,300		11,835
Less: Net income from noncontrolling interests		342		301		392		43		208

Income before income tax expense and noncontrolling interests		23,314		18,700		17,606		3,257		11,627
Fixed charges		7,013		8,463		10,455		9,991		14,428

		30,327		27,163		28,061		13,248		26,055

Preferred dividend requirement		844		730		4,285		286		–
Tax factor (based on effective tax rate)		1.47		1.51		1.43		1.23		1.44

Preferred dividends (2)		1,240		1,104		6,128		351		–

Fixed charges (1):
Interest expense		6,649		8,039		9,950		9,755		14,203
Estimated interest component of net rental expense		364		424		505		236		225

		7,013		8,463		10,455		9,991		14,428

Fixed charges and preferred dividends		8,253		9,567		16,583		10,342		14,428

Ratio of earnings to fixed charges and preferred dividends (3)		3.67		2.84		1.69		1.28		1.81

Earnings excluding interest on deposits:
Income before income tax expense and noncontrolling interests		23,314		18,700		17,606		3,257		11,627
Fixed charges		4,738		5,631		6,681		5,470		6,276

		28,052		24,331		24,287		8,727		17,903

Preferred dividends (2)		1,240		1,104		6,128		351		–

Fixed charges:
Interest expense		6,649		8,039		9,950		9,755		14,203
Less: Interest on deposits		2,275		2,832		3,774		4,521		8,152
Estimated interest component of net rental expense		364		424		505		236		225

		4,738		5,631		6,681		5,470		6,276

Fixed charges and preferred dividends	$	5,978		6,735		12,809		5,821		6,276

Ratio of earnings to fixed charges and preferred dividends (3)		4.69		3.61		1.90		1.50		2.85

(1)	As defined in Item 503(d) of Regulation S-K.

(2)	The preferred dividends, including accretion, were increased to amounts representing the pretax earnings that would be required to cover such dividend and accretion requirements.

(3)

EXHIBIT 13



				Financial Review

	26			Overview

	30			Earnings Performance

	41			Balance Sheet Analysis

	44			Off-Balance Sheet Arrangements

	46			Risk Management

	84			Capital Management

	87			Regulatory Reform

	89			Critical Accounting Policies

	95			Current Accounting Developments

	96			Forward-Looking Statements

	97			Risk Factors

				Controls and Procedures

	112			Disclosure Controls and Procedures

	112			Internal Control over Financial Reporting

	112			Management’s Report on Internal Control over Financial Reporting

	113			Report of Independent Registered Public Accounting Firm

				Financial Statements

	114			Consolidated Statement of Income

	115			Consolidated Balance Sheet

	116			Consolidated Statement of Changes in Equity and Comprehensive Income

	120			Consolidated Statement of Cash Flows

				Notes to Financial Statements

	121			1 Summary of Significant Accounting Policies

	131			2 Business Combinations

	132			3 Cash, Loan and Dividend Restrictions



	132			4 Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments

	133			5 Securities Available for Sale

	141			6 Loans and Allowance for Credit Losses

	159			7 Premises, Equipment, Lease Commitments and Other Assets

	160			8 Securitizations and Variable Interest Entities

	171			9 Mortgage Banking Activities

	174			10 Intangible Assets

	175			11 Deposits

	176			12 Short-Term Borrowings

	177			13 Long-Term Debt

	179			14 Guarantees

	181			15 Legal Actions

	184			16 Derivatives

	190			17 Fair Values of Assets and Liabilities

	206			18 Preferred Stock

	208			19 Common Stock and Stock Plans

	212			20 Employee Benefits and Other Expenses

	219			21 Income Taxes

	221			22 Earnings Per Common Share

	222			23 Other Comprehensive Income

	223			24 Operating Segments

	225			25 Condensed Consolidating Financial Statements

	230			26 Regulatory and Agency Capital Requirements

	231			Report of Independent Registered Public Accounting Firm

	232			Quarterly Financial Data

	233			Glossary of Acronyms

This Annual Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” and “Risk Factors” sections in this Report, and the “Regulation and Supervision” section of our Annual Report on Form 10-K for the year ended December 31, 2011 (2011 Form 10-K).

When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. When we refer to “legacy Wells Fargo,” we mean Wells Fargo excluding Wachovia Corporation (Wachovia). See the Glossary of Acronyms at the end of this Report for terms used throughout this Report.

Financial Review

Overview

Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, insurance, trust and investments, mortgage banking, investment banking, retail banking, brokerage services and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the internet and other distribution channels to individuals, businesses and institutions across North America and internationally. With approximately 264,000 active, full-time equivalent team members, we serve one in three households in America and ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. We ranked fourth in assets and first in the market value of our common stock among all U.S. banks at December 31, 2011.

Our vision is to satisfy all our customers’ financial needs, help them succeed financially, be recognized as the premier financial services company in our markets and be one of America’s great companies. Our primary strategy to achieve this vision is to increase the number of products our customers utilize and to offer them all of the financial products that fulfill their needs. Our cross-sell strategy, diversified business model and the breadth of our geographic reach facilitate growth in both strong and weak economic cycles, as we can grow by expanding the number of products our current customers have with us, gain new customers in our extended markets, and increase market share in many businesses. Our retail bank household cross-sell increased each quarter during 2011 to 5.92 products per household in fourth quarter 2011, up from 5.70 in fourth quarter 2010. We believe there is more opportunity for cross-sell as we continue to earn more business from our customers. Our goal is eight products per customer, which is approximately half of our estimate of potential demand for an average U.S. household. Currently, one of every four of our retail banking households has eight or more products.

Our pursuit of growth and earnings performance is influenced by our belief that it is important to maintain a well controlled operating environment. We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our loan portfolio. We manage the interest rate and market risks inherent in our asset and liability balances

within established ranges, while ensuring adequate liquidity and funding. We maintain strong capital levels to facilitate future growth.

Expense management is also important to us, but we approach this in a manner intended to help ensure our revenue is not adversely affected. Our current company-wide expense management initiative is focused on removing unnecessary complexity and eliminating duplication as a way to improve the customer experience and the work process of our team members. With this initiative and the completion of Wachovia merger integration activities, we are targeting fourth quarter 2012 noninterest expense of $11 billion. We expect first quarter 2012 noninterest expense to remain elevated because of seasonally higher personnel expenses and our final quarter of Wachovia integration expenses, partially offset by continued gains from efficiency and cost save initiatives. We expect quarterly total expenses to decline over the rest of 2012, driven by the benefit from ongoing efficiency initiatives and the conclusion of integration activities. However, quarterly expenses may vary due to cyclical or seasonal factors, among others. In addition, we will continue to invest in our businesses and add team members where appropriate.

Financial Performance

Our 2011 results were strong despite continued economic volatility during the year, with improved credit quality and lower expenses as well as solid growth in deposits and capital, which funded growth in loans and investment securities. Regulatory reform and related initiatives also created a difficult environment in which to achieve strong financial performance. For example, changes mandated by Regulation E and related overdraft policy changes implemented in third quarter 2010 decreased our service charges on deposit accounts. Also, implementation of the Durbin Amendment to the Dodd-Frank Act in fourth quarter 2011 reduced debit interchange fees and the mortgage servicing regulatory consent orders that we entered into with our regulators in April 2011 and other regulatory activities contributed to lowered residential mortgage servicing rights (MSRs) valuation and increased our estimate of losses for repurchases of serviced loans.

Wells Fargo net income was $15.9 billion and diluted earnings per common share were $2.82 for 2011, both up 28% from 2010. Our net income growth from 2010 was primarily driven by a lower provision for credit losses and lower noninterest expense, which more than offset lower revenues. Net income growth from 2010 included contributions from each of our three business segments: Community Banking (up 30%); Wholesale Banking (up 19%); and Wealth, Brokerage and Retirement (up 28%). Return on average assets was 1.25% for 2011, compared with 1.01% for 2010. Our return on equity was 11.93% in 2011, up from 10.33% in 2010.

On a year-over-year basis, revenue was down 5% in 2011, predominantly reflecting decreased interest income on securities available for sale and loans due to lower yields as market rates declined. The decline in revenue was also affected by lower mortgage banking noninterest income as a result of lower originations and higher servicing-related costs caused by the regulatory consent orders and other mortgage-related regulatory matters as well as lower net gains from trading activities. These decreases in revenue were partially offset by increased interest income on trading assets and decreased interest expense. Noninterest expense was down 2% from 2010 reflecting the benefit of reduced merger integration costs and lower foreclosed asset expense.

We believe loan and deposit growth have positioned us for continued improvement in financial performance. Total loans were $769.6 billion at December 31, 2011, up from $757.3 billion at December 31, 2010, and averaged $757.1 billion for 2011 compared with $770.6 billion for 2010. The net growth in loans from December 31, 2010, included the consolidation of $5.6 billion of reverse mortgage loans previously sold as well as the purchases with a period end balance of $3.6 billion of U.S.-based commercial real estate (CRE), offset by a $21.0 billion decrease in our non-strategic and liquidating loan portfolios. Our core deposits totaled $872.6 billion at December 31, 2011, up 9% from December 31, 2010, and our average core deposits grew 7% from 2010 to $826.7 billion for 2011. Average core deposits were 109% of average loans for 2011, up from 100% for 2010. We continued to attract high quality core deposits in the form of checking and savings deposits, which on average totaled $757.0 billion, up 11% from 2010 as we added new customers and deepened our relationships with existing customers. Average core checking and savings deposits were 92% of average core deposits, up from 89% for 2010.

Table 1 provides a six-year summary of selected financial data and Table 2 presents key ratios and per common share data.

Credit Quality

As in 2010, we again experienced credit improvement during 2011 in our loan portfolios with lower net charge-offs and improved or stable delinquency trends. The rate of improvement moderated in some portfolios during the latter half of 2011, consistent with our expectations at this point in the credit cycle. The improvement in our credit portfolio was due in part to the continued decline in balances in our non-strategic and liquidating loan portfolios (primarily from the Wachovia acquisition), which decreased $21.0 billion

during 2011, and $78.5 billion in total since the beginning of 2009, to $112.3 billion at December 31, 2011.

Reflecting the continued improved credit performance in our loan portfolios, the $7.9 billion provision for credit losses for 2011 was $7.9 billion less than a year ago. The 2011 provision for credit losses was $3.4 billion less than net charge-offs, compared with $2.0 billion less for 2010. Absent significant deterioration in the economy, we expect future allowance releases in 2012, although at more modest levels. Since first quarter 2010 net charge-offs have decreased every quarter until fourth quarter 2011 when they were essentially flat compared with third quarter 2011. Nonperforming assets (NPAs) have decreased every quarter since their peak in third quarter 2010. Net charge-offs totaled $11.3 billion for 2011, compared with $17.8 billion for 2010. NPAs decreased to $26.0 billion at December 31, 2011, from $32.3 billion at December 31, 2010. Loans 90 days or more past due and still accruing (excluding government insured/guaranteed loans) decreased to $2.0 billion at December 31, 2011, from $2.6 billion at December 31, 2010. In addition, our portfolio of purchased credit-impaired (PCI) loans continued to perform better than expected at the time of acquisition.

Capital

We continued to build capital in 2011, with total equity up $13.8 billion to $141.7 billion from December 31, 2010. Our Tier 1 common equity ratio grew 116 basis points during 2011 to 9.46% of risk-weighted assets under Basel I, reflecting strong internal capital generation. Based on our interpretation of current Basel III capital proposals, we estimate that our Tier 1 common equity ratio was 7.50% at the end of 2011. Our other regulatory capital ratios remained strong with a Tier 1 capital ratio of 11.33% and Tier 1 leverage ratio of 9.03% at December 31, 2011. See the “Capital Management” section in this Report for more information regarding our capital, including Tier 1 common equity.

During 2011 we redeemed $9.2 billion of trust preferred securities that carried a higher cost than other funding sources available to us, repurchased approximately 80 million shares of our common stock and entered into two separate $150 million private forward repurchase transactions. The first transaction settled in fourth quarter 2011 for approximately 6 million shares of common stock and the second transaction settled in first quarter 2012 for approximately 6 million shares of common stock. We also paid common stock dividends of $0.12 per share each quarter in 2011.

Overview (continued)

Table 1: Six-Year Summary of Selected Financial Data



(in millions, except per share amounts)	2011		2010		2009		2008		2007		2006		% Change 2011/ 2010			Five-year compound growth rate

Income statement
Net interest income	$	42,763		44,757		46,324		25,143		20,974		19,951		(4	)%		16
Noninterest income		38,185		40,453		42,362		16,734		18,546		15,817		(6	)		19

Revenue		80,948		85,210		88,686		41,877		39,520		35,768		(5	)		18
Provision for credit losses		7,899		15,753		21,668		15,979		4,939		2,204		(50	)		29
Noninterest expense		49,393		50,456		49,020		22,598		22,746		20,767		(2	)		19
Net income before noncontrolling interests		16,211		12,663		12,667		2,698		8,265		8,567		28			14
Less: Net income from noncontrolling interests		342		301		392		43		208		147		14			18

Wells Fargo net income		15,869		12,362		12,275		2,655		8,057		8,420		28			14
Earnings per common share		2.85		2.23		1.76		0.70		2.41		2.50		28			3
Diluted earnings per common share		2.82		2.21		1.75		0.70		2.38		2.47		28			3
Dividends declared per common share		0.48		0.20		0.49		1.30		1.18		1.08		140			(15	)

Balance sheet (at year end)
Securities available for sale	$	222,613		172,654		172,710		151,569		72,951		42,629		29	%		39
Loans		769,631		757,267		782,770		864,830		382,195		319,116		2			19
Allowance for loan losses		19,372		23,022		24,516		21,013		5,307		3,764		(16	)		39
Goodwill		25,115		24,770		24,812		22,627		13,106		11,275		1			17
Assets		1,313,867		1,258,128		1,243,646		1,309,639		575,442		481,996		4			22
Core deposits (1)		872,629		798,192		780,737		745,432		311,731		288,068		9			25
Long-term debt		125,354		156,983		203,861		267,158		99,393		87,145		(20	)		8
Wells Fargo stockholders’ equity		140,241		126,408		111,786		99,084		47,628		45,814		11			25
Noncontrolling interests		1,446		1,481		2,573		3,232		286		254		(2	)		42
Total equity		141,687		127,889		114,359		102,316		47,914		46,068		11			25

(1)	Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).

Table 2: Ratios and Per Common Share Data



	Year ended December 31,
	2011			2010		2009

Profitability ratios
Wells Fargo net income to average assets (ROA)		1.25	%		1.01		0.97
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)		11.93			10.33		9.88
Efficiency ratio (1)		61.0			59.2		55.3
Capital ratios
At year end:
Wells Fargo common stockholders’ equity to assets		9.87			9.41		8.34
Total equity to assets		10.78			10.16		9.20
Risk-based capital (2)
Tier 1 capital		11.33			11.16		9.25
Total capital		14.76			15.01		13.26
Tier 1 leverage (2)		9.03			9.19		7.87
Tier 1 common equity (3)		9.46			8.30		6.46
Average balances:
Average Wells Fargo common stockholders’ equity to average assets		9.91			9.17		6.41
Average total equity to average assets		10.80			9.96		9.34
Per common share data
Dividend payout (4)		17.0			9.0		27.9
Book value	$	24.64			22.49		20.03
Market price (5)
High		34.25			34.25		31.53
Low		22.58			23.02		7.80
Year end		27.56			30.99		26.99

(1)	The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(2)	See Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.

(3)	See the “Capital Management” section in this Report for additional information.

(4)	Dividends declared per common share as a percentage of earnings per common share.

(5)	Based on daily prices reported on the New York Stock Exchange Composite Transaction Reporting System.

Earnings Performance

Wells Fargo net income for 2011 was $15.9 billion ($2.82 diluted earnings per common share) compared with $12.4 billion ($2.21 diluted earnings per common share) for 2010 and $12.3 billion ($1.75 diluted earnings per common share) for 2009. Our 2011 earnings reflected strong execution of our business strategy in a difficult economic environment. The key drivers of our financial performance in 2011 were improved credit quality, lower operating costs, diversified sources of fee income, balanced net interest and fee income, a diversified loan portfolio and increased deposits.

Revenue, the sum of net interest income and noninterest income, was $80.9 billion in 2011, compared with $85.2 billion in 2010 and $88.7 billion in 2009. The decline in revenue in 2011 was predominantly due to lower net interest income, mortgage banking and net gains from trading activities. Net interest income of $42.8 billion in 2011, represented 53% of revenue, compared with $44.8 billion (53%) in 2010 and $46.3 billion (52%) in 2009. The 4% decline in 2011 net interest income from 2010 reflected a 32 basis points decline in the net interest margin and a 2% decline in average loans. The decline in average loans from 2010 reflected reductions in the non-strategic and liquidating loan

portfolios, partially offset by loan growth and loan acquisitions. Continued success in generating low-cost deposits enabled the Company to grow assets by funding loan and securities growth while reducing higher cost long-term debt.

Noninterest income was $38.2 billion in 2011, representing 47% of revenue, compared with $40.5 billion (47%) in 2010 and $42.4 billion (48%) in 2009. The decrease in noninterest income in 2011 was due largely to lower service charges on deposit accounts, net gains on mortgage loan origination/sales activities and net gains from trading activities.

Noninterest expense was $49.4 billion in 2011, compared with $50.5 billion in 2010 and $49.0 billion in 2009. Noninterest expense as a percentage of revenue was 61% in 2011, 59% in 2010 and 55% in 2009. Noninterest expense for 2011 included $1.7 billion of Wachovia merger-related integration expense, compared with $1.9 billion in 2010 and $895 million in 2009.

Table 3 presents the components of revenue and noninterest expense as a percentage of revenue for year-over-year results.

Table 3: Net Interest Income, Noninterest Income and Noninterest Expense as a Percentage of Revenue



	Year ended December 31,

(in millions)		2011		% of revenue			2010		% of revenue			2009		% of revenue

Interest income
Trading assets	$	1,463		2	%	$	1,121		1	%	$	944		1	%
Securities available for sale		9,107		11			10,236		12			11,941		13
Mortgages held for sale (MHFS)		1,644		2			1,736		2			1,930		2
Loans held for sale (LHFS)		58		—			101		—			183		—
Loans		37,302		46			39,808		47			41,659		48
Other interest income		548		1			437		1			336		—

Total interest income		50,122		62			53,439		63			56,993		64

Interest expense
Deposits		2,275		3			2,832		3			3,774		4
Short-term borrowings		94		—			106		—			231		—
Long-term debt		3,978		5			4,888		6			5,786		7
Other interest expense		316		—			227		—			172		—

Total interest expense		6,663		8			8,053		9			9,963		11

Net interest income (on a taxable-equivalent basis)		43,459		54			45,386		54			47,030		53

Taxable-equivalent adjustment		(696	)	(1	)		(629	)	(1	)		(706	)	(1	)

Net interest income (A)		42,763		53			44,757		53			46,324		52
Noninterest income
Service charges on deposit accounts		4,280		5			4,916		6			5,741		6
Trust and investment fees (1)		11,304		14			10,934		12			9,735		11
Card fees		3,653		5			3,652		4			3,683		4
Other fees (1)		4,193		5			3,990		5			3,804		4
Mortgage banking (1)		7,832		10			9,737		11			12,028		15
Insurance		1,960		2			2,126		2			2,126		2
Net gains from trading activities		1,014		1			1,648		2			2,674		3
Net gains (losses) on debt securities available for sale		54		—			(324	)	—			(127	)	—
Net gains from equity investments		1,482		2			779		1			185		—
Operating leases		524		1			815		1			685		1
Other		1,889		2			2,180		3			1,828		2

Total noninterest income (B)		38,185		47			40,453		47			42,362		48

Noninterest expense
Salaries		14,462		18			13,869		16			13,757		15
Commission and incentive compensation		8,857		11			8,692		10			8,021		9
Employee benefits		4,348		5			4,651		5			4,689		5
Equipment		2,283		3			2,636		3			2,506		3
Net occupancy		3,011		4			3,030		4			3,127		4
Core deposit and other intangibles		1,880		2			2,199		3			2,577		3
FDIC and other deposit assessments		1,266		2			1,197		1			1,849		2
Other (2)		13,286		16			14,182		17			12,494		14

Total noninterest expense		49,393		61			50,456		59			49,020		55

Revenue (A) + (B)	$	80,948				$	85,210				$	88,686

(1)	See Table 7 – Noninterest Income in this Report for additional detail.

(2)	See Table 8 – Noninterest Expense in this Report for additional detail.

Earnings Performance (continued)

Net Interest Income

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid for deposits, short-term borrowings and long-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and the net interest margin are presented on a taxable-equivalent basis in Table 5 to consistently reflect income from taxable and tax-exempt loans and securities based on a 35% federal statutory tax rate.

Net interest income and the net interest margin are significantly influenced by the mix and overall size of our earning asset portfolio and the cost of funding those assets. In addition, some sources of interest income, such as loan prepayment fees and collection of interest on nonaccrual loans, can vary from period to period. Net interest income on a taxable-equivalent basis was $43.5 billion in 2011, compared with $45.4 billion in 2010 and $47.0 billion in 2009. The net interest margin was 3.94% in 2011, down 32 basis points from 4.26% in 2010 and down 34 basis points from 4.28% in 2009. The decline in net interest income and the net interest margin was largely due to repricing of the balance sheet as higher-yielding loan and security runoff was partially offset by new loans, investment portfolio purchases and growth in short-term investments. The decline in earning asset income was mitigated by a reduction in funding costs resulting from disciplined deposit pricing, debt maturities, and redemptions of higher cost trust preferred securities.

Table 4 presents the components of earning assets and funding sources as a percentage of earning assets and provides an analysis of year-over-year changes that influenced net interest income.

Soft consumer loan demand and the impact of liquidating certain loan portfolios reduced average loans in 2011 to 69% of average earning assets compared with 72% in 2010. Average short-term investments and trading account assets were 12% of earning assets in 2011 up from 9% in 2010.

Core deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Core deposits include noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). Average core deposits rose to $826.7 billion in 2011 from $772.0 billion in 2010 and funded 109% and 100% of average loans, respectively. Average core deposits increased to 75% of average earning assets in 2011, compared with 73% a year ago. The cost of these deposits declined significantly as the mix shifted from higher cost certificates of deposit to checking and savings products, which were also at lower yields relative to 2010. About 91% of our average core deposits are in checking and savings deposits, one of the highest percentages in the industry.

Table 5 presents the individual components of net interest income and the net interest margin. The effect on interest income and costs of earning asset and funding mix changes described above, combined with rate changes during 2011, are analyzed in Table 6.

Table 4: Average Earning Assets and Funding Sources as a Percentage of Average Earning Assets



	Year ended December 31,

	2011						2010
(in millions)	Average balance			% of earning assets			Average balance			% of earning assets

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	87,186			8	%	$	62,961			6	%
Trading assets		39,737			4			29,920			3
Debt securities available for sale:
Securities of U.S. Treasury and federal agencies		5,503			–			1,870			–
Securities of U.S. states and political subdivisions		24,035			2			16,089			2
Mortgage-backed securities:
Federal agencies		74,665			7			71,953			7
Residential and commercial		31,902			3			31,815			3

Total mortgage-backed securities		106,567			10			103,768			10
Other debt securities (1)		38,625			4			32,611			3

Total debt securities available for sale (1)		174,730			16			154,338			15
Mortgages held for sale (2)		37,232			3			36,716			3
Loans held for sale (2)		1,104			–			3,773			–
Loans:
Commercial:
Commercial and industrial		157,608			15			149,576			14
Real estate mortgage		102,236			9			98,497			9
Real estate construction		21,592			2			31,286			3
Lease financing		12,944			1			13,451			1
Foreign		36,768			3			29,726			3

Total commercial		331,148			30			322,536			30

Consumer:
Real estate 1-4 family first mortgage		226,980			21			235,568			22
Real estate 1-4 family junior lien mortgage		90,705			8			101,537			10
Credit card		21,463			2			22,375			2
Other revolving credit and installment		86,848			8			88,585			8

Total consumer		425,996			39			448,065			42

Total loans (2)		757,144			69			770,601			72
Other		4,929			–			5,849			1

Total earning assets	$	1,102,062			100	%	$	1,064,158			100	%

Funding sources
Deposits:
Interest-bearing checking	$	47,705			4	%	$	60,941			6	%
Market rate and other savings		464,450			42			416,877			39
Savings certificates		69,711			6			87,133			8
Other time deposits		13,126			1			14,654			1
Deposits in foreign offices		61,566			6			55,097			5

Total interest-bearing deposits		656,558			59			634,702			59
Short-term borrowings		51,781			5			46,824			4
Long-term debt		141,079			13			185,426			18
Other liabilities		10,955			1			6,863			1

Total interest-bearing liabilities		860,373			78			873,815			82
Portion of noninterest-bearing funding sources		241,689			22			190,343			18

Total funding sources	$	1,102,062			100	%	$	1,064,158			100	%

Noninterest-earning assets
Cash and due from banks	$	17,388						17,618
Goodwill		24,904						24,824
Other		125,911						120,338

Total noninterest-earning assets	$	168,203						162,780

Noninterest-bearing funding sources
Deposits	$	215,242						183,008
Other liabilities		57,399						47,877
Total equity		137,251						122,238
Noninterest-bearing funding sources used to fund earning assets		(241,689	)					(190,343	)

Net noninterest-bearing funding sources	$	168,203						162,780

Total assets	$	1,270,265						1,226,938

(1)	Includes certain preferred securities.

(2)	Nonaccrual loans are included in their respective loan categories.

Earnings Performance (continued)

Table 5: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)(2)(3)



	2011								2010

(in millions)	Average balance			Yields/ rates			Interest income/ expense		Average balance			Yields/ rates			Interest income/ expense

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	87,186			0.40	%	$	345		62,961			0.36	%	$	230
Trading assets		39,737			3.68			1,463		29,920			3.75			1,121
Securities available for sale (4):
Securities of U.S. Treasury and federal agencies		5,503			1.25			69		1,870			3.24			61
Securities of U.S. states and political subdivisions		24,035			5.09			1,223		16,089			6.09			980
Mortgage-backed securities:
Federal agencies		74,665			4.36			3,257		71,953			5.14			3,697
Residential and commercial		31,902			8.20			2,617		31,815			10.67			3,396

Total mortgage-backed securities		106,567			5.51			5,874		103,768			6.84			7,093
Other debt and equity securities		38,625			5.03			1,941		32,611			6.45			2,102

Total securities available for sale		174,730			5.21			9,107		154,338			6.63			10,236
Mortgages held for sale (5)		37,232			4.42			1,644		36,716			4.73			1,736
Loans held for sale (5)		1,104			5.25			58		3,773			2.67			101
Loans:
Commercial:
Commercial and industrial		157,608			4.37			6,894		149,576			4.80			7,186
Real estate mortgage		102,236			4.07			4,163		98,497			3.89			3,836
Real estate construction		21,592			4.88			1,055		31,286			3.36			1,051
Lease financing		12,944			7.54			976		13,451			9.21			1,239
Foreign		36,768			2.56			941		29,726			3.49			1,037

Total commercial		331,148			4.24			14,029		322,536			4.45			14,349

Consumer:
Real estate 1-4 family first mortgage		226,980			4.89			11,090		235,568			5.18			12,206
Real estate 1-4 family junior lien mortgage		90,705			4.33			3,926		101,537			4.45			4,519
Credit card		21,463			13.02			2,794		22,375			13.35			2,987
Other revolving credit and installment		86,848			6.29			5,463		88,585			6.49			5,747

Total consumer		425,996			5.46			23,273		448,065			5.68			25,459

Total loans (5)		757,144			4.93			37,302		770,601			5.17			39,808
Other		4,929			4.12			203		5,849			3.56			207

Total earning assets	$	1,102,062			4.55	%	$	50,122		1,064,158			5.02	%	$	53,439

Funding sources
Deposits:
Interest-bearing checking	$	47,705			0.08	%	$	40		60,941			0.12	%	$	72
Market rate and other savings		464,450			0.18			836		416,877			0.26			1,088
Savings certificates		69,711			1.43			995		87,133			1.43			1,247
Other time deposits		13,126			2.04			268		14,654			2.07			302
Deposits in foreign offices		61,566			0.22			136		55,097			0.22			123

Total interest-bearing deposits		656,558			0.35			2,275		634,702			0.45			2,832
Short-term borrowings		51,781			0.18			94		46,824			0.22			106
Long-term debt		141,079			2.82			3,978		185,426			2.64			4,888
Other liabilities		10,955			2.88			316		6,863			3.31			227

Total interest-bearing liabilities		860,373			0.77			6,663		873,815			0.92			8,053
Portion of noninterest-bearing funding sources		241,689			–			–		190,343			–			–

Total funding sources	$	1,102,062			0.61			6,663		1,064,158			0.76			8,053

Net interest margin and net interest income on a taxable-equivalent basis (6)					3.94	%	$	43,459					4.26	%	$	45,386

Noninterest-earning assets
Cash and due from banks	$	17,388								17,618
Goodwill		24,904								24,824
Other		125,911								120,338

Total noninterest-earning assets	$	168,203								162,780

Noninterest-bearing funding sources
Deposits	$	215,242								183,008
Other liabilities		57,399								47,877
Total equity		137,251								122,238
Noninterest-bearing funding sources used to fund earning assets		(241,689	)							(190,343	)

Net noninterest-bearing funding sources	$	168,203								162,780

Total assets	$	1,270,265								1,226,938

(1)	Because the Wachovia acquisition was completed at the end of 2008, Wachovia’s assets and liabilities are included in average balances, and Wachovia’s results are reflected in interest income/expense beginning in 2009.

(2)	Our average prime rate was 3.25%, 3.25%, 3.25%, 5.09%, and 8.05% for 2011, 2010, 2009, 2008, and 2007, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.34%, 0.34%, 0.69%, 2.93%, and 5.30% for the same years, respectively.

(3)	Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(4)

Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost and the previously reported average balance amounts for all periods prior to 2011 have been changed to amortized cost, the basis used to determine yields for those periods.



2009								2008								2007
Average balance			Yields/ rates			Interest income/ expense		Average balance			Yields/ rates			Interest income/ expense		Average balance			Yields/ rates			Interest income/ expense


$	26,869			0.56	%	$	150		5,293			1.71	%	$	90		4,468			4.99	%	$	223
	21,092			4.48			944		4,971			3.80			189		4,291			4.37			188

	2,436			2.83			69		1,065			3.84			41		851			4.26			36
	13,098			6.42			840		7,329			6.83			501		4,643			7.37			342

	84,295			5.45			4,591		43,968			5.97			2,623		38,181			6.10			2,328
	45,672			9.09			4,150		23,357			6.04			1,412		6,524			6.12			399

	129,967			6.73			8,741		67,325			5.99			4,035		44,705			6.10			2,727
	32,022			7.16			2,291		13,956			7.17			1,000		6,343			7.52			477

	177,523			6.73			11,941		89,675			6.22			5,577		56,542			6.34			3,582
	37,416			5.16			1,930		25,656			6.13			1,573		33,066			6.50			2,150
	6,293			2.90			183		837			5.69			48		896			7.76			70


	180,924			4.22			7,643		98,620			6.12			6,034		77,965			8.17			6,367
	96,273			3.50			3,365		41,659			5.80			2,416		32,722			7.38			2,414
	40,885			2.91			1,190		19,453			5.08			988		16,934			7.80			1,321
	14,751			9.32			1,375		7,141			5.62			401		5,921			5.84			346
	30,661			3.95			1,212		7,127			10.50			748		7,321			11.68			855

	363,494			4.07			14,785		174,000			6.08			10,587		140,863			8.02			11,303


	238,359			5.45			12,992		75,116			6.67			5,008		61,527			7.25			4,463
	106,957			4.76			5,089		75,375			6.55			4,934		72,075			8.12			5,851
	23,357			12.16			2,841		19,601			12.13			2,378		15,874			13.58			2,155
	90,666			6.56			5,952		54,368			8.72			4,744		54,436			9.71			5,285

	459,339			5.85			26,874		224,460			7.60			17,064		203,912			8.71			17,754

	822,833			5.06			41,659		398,460			6.94			27,651		344,775			8.43			29,057
	6,113			3.05			186		1,920			4.73			91		1,402			5.07			71

$	1,098,139			5.19	%	$	56,993		526,812			6.69	%	$	35,219		445,440			7.93	%	$	35,341



$	70,179			0.14	%	$	100		5,650			1.12	%	$	64		5,057			3.16	%	$	160
	351,892			0.39			1,375		166,691			1.32			2,195		147,939			2.78			4,105
	140,197			1.24			1,738		39,481			3.08			1,215		40,484			4.38			1,773
	20,459			2.03			415		6,656			2.83			187		8,937			4.87			435
	53,166			0.27			146		47,578			1.81			860		36,761			4.57			1,679

	635,893			0.59			3,774		266,056			1.70			4,521		239,178			3.41			8,152
	51,972			0.44			231		65,826			2.25			1,478		25,854			4.81			1,245
	231,801			2.50			5,786		102,283			3.70			3,789		93,193			5.18			4,824
	4,904			3.50			172		–			–			–		–			–			–

	924,570			1.08			9,963		434,165			2.25			9,788		358,225			3.97			14,221
	173,569			–			–		92,647			–			–		87,215			–			–

$	1,098,139			0.91			9,963		526,812			1.86			9,788		445,440			3.19			14,221

				4.28	%	$	47,030					4.83	%	$	25,431					4.74	%	$	21,120


$	19,218								11,175								11,806
	23,997								13,353								11,957
	121,000								53,056								51,549

$	164,215								77,584								75,312


$	171,712								87,820								88,907
	48,193								28,658								26,287
	117,879								53,753								47,333
	(173,569	)							(92,647	)							(87,215	)

$	164,215								77,584								75,312

$	1,262,354								604,396								520,752

(5)	Nonaccrual loans and related income are included in their respective loan categories.

(6)

Includes taxable-equivalent adjustments of $696 million, $629 million, $706 million, $288 million and $146 million for 2011, 2010, 2009, 2008 and 2007, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 35% for the periods presented.

Earnings Performance (continued)

Table 6 allocates the changes in net interest income on a taxable-equivalent basis to changes in either average balances or average rates for both interest-earning assets and interest-bearing liabilities. Because of the numerous simultaneous volume and rate changes during any period, it is not possible

to precisely allocate such changes between volume and rate. For this table, changes that are not solely due to either volume or rate are allocated to these categories in proportion to the percentage changes in average volume and average rate.

Table 6: Analysis of Changes in Net Interest Income



	Year ended December 31,

	2011 over 2010									2010 over 2009

(in millions)	Volume			Rate			Total			Volume			Rate			Total

Increase (decrease) in interest income:
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	89			26			115			148			(68	)		80
Trading assets		363			(21	)		342			349			(172	)		177
Debt securities available for sale (1):
Securities of U.S. Treasury and federal agencies		62			(54	)		8			(2	)		(6	)		(8	)
Securities of U.S. states and political subdivisions		424			(181	)		243			338			(198	)		140
Mortgage-backed securities:
Federal agencies		135			(575	)		(440	)		(114	)		(780	)		(894	)
Residential and commercial		9			(788	)		(779	)		(176	)		(578	)		(754	)

Total mortgage-backed securities		144			(1,363	)		(1,219	)		(290	)		(1,358	)		(1,648	)
Other debt securities		349			(510	)		(161	)		79			(268	)		(189	)

Total debt securities available for sale		979			(2,108	)		(1,129	)		125			(1,830	)		(1,705	)
Mortgages held for sale		24			(116	)		(92	)		(35	)		(159	)		(194	)
Loans held for sale		(100	)		57			(43	)		(69	)		(13	)		(82	)
Loans:
Commercial:
Commercial and industrial		373			(665	)		(292	)		(1,425	)		968			(457	)
Real estate mortgage		147			180			327			81			390			471
Real estate construction		(385	)		389			4			(306	)		167			(139	)
Lease financing		(45	)		(218	)		(263	)		(120	)		(16	)		(136	)
Foreign		215			(311	)		(96	)		(36	)		(139	)		(175	)

Total commercial		305			(625	)		(320	)		(1,806	)		1,370			(436	)

Consumer:
Real estate 1-4 family first mortgage		(440	)		(676	)		(1,116	)		(150	)		(636	)		(786	)
Real estate 1-4 family junior lien mortgage		(473	)		(120	)		(593	)		(249	)		(321	)		(570	)
Credit card		(120	)		(73	)		(193	)		(123	)		269			146
Other revolving credit and installment		(111	)		(173	)		(284	)		(140	)		(65	)		(205	)

Total consumer		(1,144	)		(1,042	)		(2,186	)		(662	)		(753	)		(1,415	)

Total loans		(839	)		(1,667	)		(2,506	)		(2,468	)		617			(1,851	)

Other		(35	)		31			(4	)		(8	)		29			21

Total increase (decrease) in interest income		481			(3,798	)		(3,317	)		(1,958	)		(1,596	)		(3,554	)

Increase (decrease) in interest expense:
Deposits:
Interest-bearing checking		(13	)		(19	)		(32	)		(13	)		(15	)		(28	)
Market rate and other savings		112			(364	)		(252	)		224			(511	)		(287	)
Savings certificates		(252	)		–			(252	)		(729	)		238			(491	)
Other time deposits		(30	)		(4	)		(34	)		(121	)		8			(113	)
Deposits in foreign offices		13			–			13			5			(28	)		(23	)

Total interest-bearing deposits		(170	)		(387	)		(557	)		(634	)		(308	)		(942	)
Short-term borrowings		9			(21	)		(12	)		(21	)		(104	)		(125	)
Long-term debt		(1,227	)		317			(910	)		(1,209	)		311			(898	)
Other liabilities		122			(33	)		89			65			(10	)		55

Total increase (decrease) in interest expense		(1,266	)		(124	)		(1,390	)		(1,799	)		(111	)		(1,910	)

Increase (decrease) in net interest income on a taxable-equivalent basis	$	1,747			(3,674	)		(1,927	)		(159	)		(1,485	)		(1,644	)

(1)	Volume and rate amounts for 2010 over 2009 have been revised to reflect the use of amortized cost as the basis for calculating the change between periods.

Noninterest Income

Table 7: Noninterest Income



	Year ended December 31,

(in millions)	2011		2010			2009

Service charges on deposit accounts	$	4,280		4,916			5,741
Trust and investment fees:
Trust, investment and IRA fees		4,099		4,038			3,588
Commissions and all other fees		7,205		6,896			6,147

Total trust and investment fees		11,304		10,934			9,735


Card fees		3,653		3,652			3,683
Other fees:
Cash network fees		389		260			231
Charges and fees on loans		1,641		1,690			1,801
Processing and all other fees		2,163		2,040			1,772


Total other fees		4,193		3,990			3,804


Mortgage banking:
Servicing income, net		3,266		3,340			5,791
Net gains on mortgage loan origination/sales activities		4,566		6,397			6,237


Total mortgage banking		7,832		9,737			12,028


Insurance		1,960		2,126			2,126
Net gains from trading activities		1,014		1,648			2,674
Net gains (losses) on debt securities available for sale		54		(324	)		(127	)
Net gains from equity investments		1,482		779			185
Operating leases		524		815			685
All other		1,889		2,180			1,828


Total	$	38,185		40,453			42,362

Noninterest income of $38.2 billion represented 47% of revenue for 2011 compared with $40.5 billion, or 47%, for 2010. The decrease in noninterest income from 2010 was due largely to lower service charges on deposit accounts, lower net gains on mortgage loan origination/sales activities and lower net gains from trading activities.

Our service charges on deposit accounts decreased in 2011 by $636 million, or 13% from 2010, predominantly due to changes implemented in third quarter 2010 mandated by Regulation E (which limited certain overdraft fees) and related overdraft policy changes.

We earn trust, investment and IRA (Individual Retirement Account) fees from managing and administering assets, including mutual funds, corporate trust, personal trust, employee benefit trust and agency assets. At December 31, 2011, these assets totaled $2.2 trillion, up 5% from $2.1 trillion at December 31, 2010. Trust, investment and IRA fees are largely based on a tiered scale relative to the market value of the assets under management or administration. These fees increased to $4.1 billion in 2011 from $4.0 billion in 2010.

We receive commissions and other fees for providing services to full-service and discount brokerage customers as well as from investment banking activities including equity and bond underwriting. These fees increased to $7.2 billion in 2011 from $6.9 billion in 2010. Our commission and other fees include transactional commissions, which are based on the number of transactions executed at the customer’s direction, and

asset-based fees, which are based on the market value of the customer’s assets. Brokerage client assets totaled $1.1 trillion and $1.2 trillion at December 31, 2011 and 2010, respectively.

Card fees were $3.7 billion in 2011, essentially flat from 2010. Legislative and regulatory changes enacted in 2010 led to a reduction in card fee income, which was offset by growth in purchase volume and new accounts growth. The final Federal Reserve Board (FRB) rules implementing the Durbin Amendment to the Dodd-Frank Act became effective in October 2011, placing limits on debit card interchange fees. As a result, debit card interchange fees were reduced by $365 million during fourth quarter 2011 as compared to fees that would have been earned without the limits. We currently expect future volume, product or account changes may over time mitigate at least half of the earnings reduction resulting from the FRB’s debit card interchange rules.

Mortgage banking noninterest income, consisting of net servicing income and net gains on loan origination/sales activities, totaled $7.8 billion in 2011, compared with $9.7 billion in 2010. The reduction in mortgage banking noninterest income was primarily driven by a decline in net gains on mortgage loan origination/sales activities as discussed below.

Net mortgage loan servicing income includes both changes in the fair value of MSRs during the period as well as changes in the value of derivatives (economic hedges) used to hedge the MSRs. Net servicing income for 2011 included a $1.6 billion net MSR valuation gain ($3.7 billion decrease in the fair value of the MSRs offset by a $5.3 billion hedge gain) and for 2010 included a $1.5 billion net MSR valuation gain ($3.0 billion decrease in the fair value of MSRs offset by a $4.5 billion hedge gain). See the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section of this Report for additional information regarding our MSRs risks and hedging approach. The valuation of our MSRs at the end of 2011 reflected our assessment of expected future levels in servicing and foreclosure costs. See the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report for information on the regulatory consent orders. Our portfolio of loans serviced for others was $1.85 trillion at December 31, 2011, and $1.84 trillion at December 31, 2010. At December 31, 2011, the ratio of MSRs to related loans serviced for others was 0.76%, compared with 0.86% at December 31, 2010.

Income from loan origination/sale activities was $4.6 billion in 2011 compared with $6.4 billion in 2010. The decrease in 2011 was driven by lower loan origination volume and margins on loan originations, partially offset by lower provision for mortgage loan repurchase losses. Residential real estate originations were $357 billion in 2011, compared with $386 billion a year ago, and mortgage applications were $537 billion in 2011, compared with $620 billion in 2010. The 1-4 family first mortgage unclosed pipeline was $72 billion at December 31, 2011, and $73 billion at December 31, 2010. For additional information, see the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section and Note 1 (Summary of Significant Accounting Policies), Note 9 (Mortgage Banking Activities) and Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

Earnings Performance (continued)

Net gains on mortgage loan origination/sales activities include the cost of any additions to the mortgage repurchase liability. Mortgage loans are repurchased from third parties based on standard representations and warranties, and early payment default clauses in mortgage sale contracts. Additions to the mortgage repurchase liability that were charged against net gains on mortgage loan origination/sales activities during 2011 totaled $1.3 billion (compared with $1.6 billion for 2010), of which $1.2 billion ($1.5 billion for 2010) was for subsequent increases in estimated losses on prior year’s loan sales. For additional information about mortgage loan repurchases, see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section and Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Net gains from trading activities, which reflect unrealized changes in fair value of our trading positions and realized gains and losses, were $1.0 billion in 2011 and $1.6 billion in 2010. The year-over-year decrease was driven by challenging market conditions, including sovereign debt concerns, which pressured credit spreads, reduced prices on financial assets and limited new issue origination and trading opportunities. The decline also reflects a loss of $377 million in 2011 relating to our resolution of a legacy Wachovia position. Net gains from trading activities do not include interest income and other fees earned from related activities. Those amounts are reported within interest income from trading assets and other noninterest income, respectively, in the income statement. Net gains from trading activities are primarily from trading conducted on behalf of or driven by the needs of our customers (customer accommodation trading) and also include the results of certain economic hedging and proprietary trading activity. Net gains (losses) from proprietary trading were a $14 million net loss in 2011 and a $22 million net gain in 2010. Proprietary trading results also included interest and fees reported in their corresponding income statement line items. Proprietary trading activities are not significant to our client-focused business model. Our trading activities, customer accommodation, economic hedging and proprietary trading are further discussed in the “Asset/Liability Management – Market Risk – Trading Activities” section in this Report.

Net gains on debt and equity securities totaled $1.5 billion for 2011 and $455 million for 2010, after other-than-temporary impairment (OTTI) write downs of $711 million for 2011 and $940 million for 2010. Included in net gains on debt and equity securities for 2011 was a $271 million gain related to a legacy Wachovia position, due to redemption of our interest in an investment fund. Other income in 2011 also included a $153 million gain on the sale of our H.D. Vest Financial Services business.

Noninterest Expense

Table 8: Noninterest Expense



	Year ended December 31,

(in millions)	2011		2010		2009

Salaries	$	14,462		13,869		13,757
Commission and incentive compensation		8,857		8,692		8,021
Employee benefits		4,348		4,651		4,689
Equipment		2,283		2,636		2,506
Net occupancy		3,011		3,030		3,127
Core deposit and other intangibles		1,880		2,199		2,577
FDIC and other deposit assessments		1,266		1,197		1,849
Outside professional services		2,692		2,370		1,982
Contract services		1,407		1,642		1,088
Foreclosed assets		1,354		1,537		1,071
Operating losses		1,261		1,258		875
Postage, stationery and supplies		942		944		933
Outside data processing		935		1,046		1,027
Travel and entertainment		821		783		575
Advertising and promotion		607		630		572
Telecommunications		523		596		610
Insurance		515		464		845
Operating leases		112		109		227
All other		2,117		2,803		2,689

Total	$	49,393		50,456		49,020

Noninterest expense was $49.4 billion in 2011, down 2% from $50.5 billion in 2010, driven by lower merger integration costs, which also contributed to decreases in equipment expense ($2.3 billion, down from $2.6 billion in 2010), lower contract services expense ($1.4 billion, down from $1.6 billion in 2010) and lower foreclosed asset expense ($1.4 billion, down from $1.5 billion in 2010). The increase in 2010 over 2009 was predominantly due to merger integration costs, Wells Fargo Financial restructuring costs and a $400 million charitable donation to the Wells Fargo Foundation.

Personnel-related expenses were up 2% in 2011 compared with 2010, primarily due to higher revenues generated by businesses with revenue-based compensation, including the retail securities brokerage and mortgage businesses, and severance expense related to our expense initiative.

Outside professional services included increased investments by our businesses in 2011 in their service delivery systems and approximately $100 million of higher costs associated with the mortgage servicing regulatory consent orders.

Merger integration costs totaled $1.7 billion in 2011 and $1.9 billion in 2010. The integration of Wachovia remained on track, and with the successful North Carolina conversion in October 2011, all retail banking store conversions are complete. Remaining integration activities are expected to be concluded by first quarter 2012.

We continue to target $11 billion of noninterest expense for fourth quarter 2012. However, we currently expect first quarter 2012 expenses to remain elevated driven by seasonally higher personnel expenses and our final quarter of Wachovia integration expenses, partially offset by continued gains from efficiency and cost save initiatives.

Income Tax Expense

The 2011 annual effective tax rate was 31.9% compared with 33.9% in 2010 and 30.3% in 2009. The lower effective tax rate for 2011 reflected tax benefits from the realization for tax purposes of a previously written down investment, a decrease in tax expense associated with leveraged leases, as well as tax benefits related to charitable donations of appreciated securities.

Earnings Performance (continued)

Operating Segment Results

We are organized for management reporting purposes into three operating segments: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. These segments are defined by product type and customer segment and their results are based on our management accounting process, for which there is no comprehensive, authoritative financial accounting guidance equivalent to generally accepted accounting principles (GAAP). In fourth quarter 2010, we aligned certain lending businesses into Wholesale Banking from Community Banking to

reflect our previously announced restructuring of Wells Fargo Financial. In first quarter 2011, we realigned a private equity business into Wholesale Banking from Community Banking. Prior periods have been revised to reflect these changes. Table 9 and the following discussion present our results by operating segment. For a more complete description of our operating segments, including additional financial information and the underlying management accounting process, see Note 24 (Operating Segments) to Financial Statements in this Report.

Table 9: Operating Segment Results – Highlights



	Year ended December 31,

(in billions)	Community Banking				Wholesale Banking				Wealth, Brokerage and Retirement

	2011		2010		2011		2010		2011		2010

Revenue	$	50.7		54.5		21.7		22.4		12.2		11.7
Net income		9.1		7.0		7.0		5.9		1.3		1.0

Average loans		498.1		530.1		249.1		230.5		43.0		43.0
Average core deposits		556.2		536.4		202.1		170.0		130.4		121.2

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Mortgage business units.

Community Banking reported net income of $9.1 billion and revenue of $50.7 billion in 2011. Revenue decreased $3.8 billion, or 7%, from 2010 due to reduced mortgage banking income, lower yields on investment securities and expected reductions in the non-strategic and liquidating loan portfolios, partially offset by long-term debt run-off and lower deposit costs. Net interest income decreased $2.3 billion, or 7%, from 2010, mostly due to lower average loans (down $32.0 billion from 2010) as a result of planned run-off in the non-strategic and liquidating loan portfolios (including home equity and Pick-A-Pay), loan repricing at lower rates, and lower yields on our investment securities. This decline in interest income was mitigated by long-term debt run-off and continued low funding costs. Average core deposits increased $19.8 billion, or 4%, from 2010, as growth in liquid deposits more than offset maturities of higher yielding certificates of deposit. The number of consumer checking accounts grew 3.2% from December 31, 2010. Noninterest income decreased $1.5 billion, or 7%, from 2010, mainly due to lower volume-related mortgage banking income and lower deposit service charges as a result of the third quarter 2010 implementation of Regulation E, partially offset by lower other than temporary impairments. Noninterest expense decreased $837 million, or 3%, from 2010, due to reduced expenses across most categories, as well as a 2010 charitable donation expense of $400 million. The provision for credit losses decreased $5.8 billion from 2010 as credit quality in most of our consumer and business loan portfolios continued to improve. Charge-offs decreased $4.8 billion from 2010, reflecting improvement primarily in the home equity, credit card, and small business lending portfolios. Additionally, we released $2.4 billion of

allowance for credit losses in 2011, compared with $1.4 billion released in 2010.

Wholesale Banking provides financial solutions across the U.S. and globally to middle market and large corporate customers with annual revenue generally in excess of $20 million. Products and businesses include commercial banking, investment banking and capital markets, securities investment, government and institutional banking, corporate banking, commercial real estate, treasury management, capital finance, international, insurance, real estate capital markets, commercial mortgage servicing, corporate trust, equipment finance, asset backed finance, and asset management.

Wholesale Banking reported net income of $7.0 billion in 2011, up $1.1 billion, or 19%, from $5.9 billion in 2010. Average loans of $249.1 billion increased $18.6 billion, or 8%, driven by strong demand from both our domestic and international customers. Average core deposits of $202.1 billion in 2011 increased $32.1 billion, or 19%, from 2010 reflecting continued strong customer liquidity.

The year over year increase in net income was the result of a decrease in the provision for credit losses and noninterest expenses, which more than offset a decrease in revenue. Revenue decreased $759 million, or 3%, from 2010, as broad-based growth among many businesses, including strong loan and deposit growth, was offset by lower PCI resolutions revenue, lower sales and trading revenue, and lower crop insurance revenue.

Total noninterest expense in 2011 decreased $75 million compared with 2010 as lower operating losses and foreclosed asset expenses were partially offset by higher personnel expense. The provision for credit losses declined $2.0 billion from 2010, and reflected a $1.6 billion improvement in net credit losses along with a $950 million allowance release (compared with a $561 million release in 2010).

Wholesale Banking’s 2011 financial results benefited from loan portfolio acquisitions and strong borrowing demand across all customers segments, with most lending areas experiencing double-digit rates of growth in loans outstandings, including in Asset Backed Finance, Capital Finance, Commercial Banking, Commercial Real Estate, Government and Institutional Banking, International, and Real Estate Capital Markets.

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client’s needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and trust. Family Wealth (which will be rebranded as Abbot Downing, a Wells Fargo Business, in April 2012) meets the unique needs of ultra high net worth customers. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses, retail retirement solutions for

individuals, and reinsurance services for the life insurance industry.

Wealth, Brokerage and Retirement reported net income of $1.3 billion in 2011, up $283 million, or 28%, from 2010. Revenue increased $458 million, or 4%, from 2010, as net interest income increased $148 million, or 5%, and noninterest income increased $310 million, or 3%, from 2010. Net interest income increased due to higher investment income and the impact of deposit balance growth. Average core deposits of $130.4 billion in 2011 increased 8% from 2010. Noninterest income increased as higher asset-based fees and a gain on the sale of the H.D. Vest Financial Services business exceeded losses on deferred compensation plan investments (offset in expense) and lower brokerage transaction revenue. Noninterest expense increased $167 million, or 2%, from 2010, primarily due to growth in personnel cost largely due to higher broker commissions driven by increased production levels, as well as increases in other incentive compensation, offset by lower deferred compensation. The provision for credit losses decreased $164 million, or 49%, from 2010, due to lower net charge-offs.

Balance Sheet Analysis

During 2011, our total assets grew 4%, funded by core deposit growth of 9% and internal capital generation, partially offset by a reduction in our long-term borrowings. Our total loans and core deposits at December 31, 2011, were up from the previous year. At December 31, 2011, core deposits totaled 113% of the loan portfolio, and we have the capacity to add higher yielding earning assets to generate future revenue and earnings growth. The strength of our business model produced record earnings and high rates of internal capital generation as reflected in our improved capital ratios. Tier 1 capital increased to 11.33% as a percentage of total risk-weighted assets, and Tier 1 common equity to 9.46% at December 31, 2011, up from 11.16% and

8.30%, respectively, at December 31, 2010. Total capital was 14.76% and Tier 1 leverage was 9.03%, compared with 15.01% and 9.19%, respectively, at December 2010. For additional information about our capital requirements, see Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

The following discussion provides additional information about the major components of our balance sheet. Information about changes in our asset mix and about our capital is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections of this Report.

Securities Available for Sale

Table 10: Securities Available for Sale – Summary

December 31,

2011

2010

(in millions)

Cost

Net
unrealized
gain

Fair
value

Cost

Net
unrealized
gain

Fair
value

Debt securities available for sale

212,642

6,554

219,196

160,071

7,394

167,465

Marketable equity securities

2,929

488

3,417

4,258

931

5,189

Total securities available for sale

215,571

7,042

222,613

164,329

8,325

172,654

Table 10 presents a summary of our securities available-for-sale portfolio. Securities available for sale consist of both debt and marketable equity securities. We hold debt securities available for sale primarily for liquidity, interest rate risk management and long-term yield enhancement. Accordingly, this portfolio consists primarily of liquid,

high-quality federal agency debt and privately issued mortgage-backed securities (MBS). The total net unrealized gains on securities available for sale were $7.0 billion at December 31, 2011, down from net unrealized gains of $8.3 billion at December 31, 2010, primarily due to gains realized from sales partially offset by slight widening of credit spreads in some asset classes.

Balance Sheet Analysis (continued)

We analyze securities for OTTI quarterly, or more often if a potential loss-triggering event occurs. Of the $711 million OTTI write-downs recognized in 2011, $423 million related to debt securities. There were $118 million in OTTI write-downs for marketable equity securities and $170 million in OTTI write-downs related to nonmarketable equity securities. For a discussion of our OTTI accounting policies and underlying considerations and analysis see Note 1 (Summary of Significant Accounting Policies – Securities) and Note 5 (Securities Available for Sale) to Financial Statements in this Report.

At December 31, 2011, debt securities available for sale included $32.6 billion of municipal bonds, of which 78% were rated “A-” or better, based on external and, in some cases, internal ratings. Additionally, some of these bonds are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment grade and were generally underwritten in accordance with our own investment standards prior to the determination to purchase, without relying on the bond insurer’s guarantee in making the investment decision. Our municipal bond holdings continue to be monitored as part of our ongoing impairment analysis of our securities available for sale.

The weighted-average expected maturity of debt securities available for sale was 4.9 years at December 31, 2011. Because 61% of this portfolio is MBS, the expected remaining maturity may differ from contractual maturity because borrowers generally have the right to prepay obligations before the underlying mortgages mature. The estimated effect of a 200 basis point increase or decrease in interest rates on the fair value and the expected remaining maturity of the MBS available for sale are shown in Table 11.

Table 11: Mortgage-Backed Securities



(in billions)	Fair value		Net unrealized gain (loss)			Expected remaining maturity (in years)

At December 31, 2011
Actual	$	132.7		5.6			3.8
Assuming a 200 basis point:
Increase in interest rates		122.6		(4.5	)		5.2
Decrease in interest rates		137.4		10.3			3.1

See Note 5 (Securities Available for Sale) to Financial Statements in this Report for securities available for sale by security type.

Loan Portfolio

Total loans were $769.6 billion at December 31, 2011, up $12.4 billion from December 31, 2010. Table 12 provides a summarized breakdown by loan portfolio. Increased balances in many commercial loan portfolios more than offset the continued reduction in the non-strategic and liquidating loan portfolios, which have declined $21.0 billion since December 31, 2010, as well as the soft demand in consumer loans in response to economic conditions. Additional information on the non-strategic and liquidating loan portfolios is included in Table 17 in the “Credit Risk Management” section of this Report.

Many loan portfolios had double-digit year-over-year loan growth in average balances, including government and institutional banking, asset-backed finance, capital finance, commercial banking, commercial real estate, international and real estate capital markets. Included in the growth of loans from year end 2010 were loan purchases in 2011 with a period end balance of $3.6 billion of U.S.-based commercial real estate. Consumer loans include the consolidation of $5.6 billion of reverse mortgage loans previously sold.

Table 12: Loan Portfolios



	December 31,

(in millions)	2011		2010		2009		2008		2007

Commercial	$	345,450		322,058		336,465		389,964		160,282
Consumer		424,181		435,209		446,305		474,866		221,913

Total loans	$	769,631		757,267		782,770		864,830		382,195

A discussion of average loan balances and a comparative detail of average loan balances is included in Table 5 under “Earnings Performance – Net Interest Income” earlier in this Report. Year-end balances and other loan related information are in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 13 shows contractual loan maturities for selected loan categories and sensitivities of those loans to changes in interest rates.

Table 13: Maturities for Selected Loan Categories

December 31,

2011

2010

(in millions)

Within
one
year

After
one year
through
five years

After
five
years

Total

Within
one
year

After
one year
through
five years

After
five
years

Total

Selected loan maturities:

Commercial and industrial

44,258

101,273

21,685

167,216

39,576

90,497

21,211

151,284

Real estate mortgage

22,537

54,201

29,237

105,975

27,544

44,627

27,264

99,435

Real estate construction

10,059

8,178

1,145

19,382

15,009

9,189

1,135

25,333

Foreign

35,258

3,142

1,360

39,760

25,087

5,508

2,317

32,912

Total selected loans

112,112

166,794

53,427

332,333

107,216

149,821

51,927

308,964

Distribution of loans due after one year to changes in interest rates:

Loans at fixed interest rates

19,319

13,712

29,886

14,543

Loans at floating/variable interest rates

147,475

39,715

119,935

37,384

Total selected loans

166,794

53,427

149,821

51,927

Balance Sheet Analysis (continued)

Deposits

Deposits totaled $920.1 billion at December 31, 2011, compared with $847.9 billion at December 31, 2010. Table 14 provides additional detail regarding deposits. Comparative detail of average deposit balances is provided in Table 5 under

“Earnings Performance – Net Interest Income” earlier in this Report. Total core deposits were $872.6 billion at December 31, 2011, up $74.4 billion from $798.2 billion at December 31, 2010. We continued to gain new deposit customers and deepen our relationships with existing customers in 2011.

Table 14: Deposits



	December 31,

(in millions)	2011		% of total deposits			2010		% of total deposits			% Change

Noninterest-bearing	$	243,961		26	%	$	191,231		23	%		28
Interest-bearing checking		37,027		4			63,440		7			(42	)
Market rate and other savings		485,534		53			431,883		51			12
Savings certificates		63,617		7			77,292		9			(18	)
Foreign deposits (1)		42,490		5			34,346		4			24

Core deposits		872,629		95			798,192		94			9
Other time and savings deposits		20,745		2			19,412		2			7
Other foreign deposits		26,696		3			30,338		4			(12	)

Total deposits	$	920,070		100	%	$	847,942		100	%		9

(1)	Reflects Eurodollar sweep balances included in core deposits.

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded in the balance sheet, or may be recorded in the balance sheet in amounts that are different from the full contract or notional amount of the transaction. These transactions are designed to (1) meet the financial needs of customers, (2) manage our credit, market or liquidity risks, (3) diversify our funding sources, and/or (4) optimize capital.

Off-Balance Sheet Transactions with Unconsolidated Entities

We routinely enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts or partnerships that are established for a limited purpose. Historically, the majority of SPEs were formed in connection with securitization transactions. For more information on securitizations, including sales proceeds and cash flows from securitizations, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Certain Contingent Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, securities lending and other indemnifications, liquidity agreements, written put options, recourse obligations, residual value guarantees and contingent consideration.

For more information on guarantees and certain contingent arrangements, see Note 14 (Guarantees) to Financial Statements in this Report.

Contractual Obligations

In addition to the contractual commitments and arrangements previously described, which, depending on the nature of the obligation, may or may not require use of our resources, we enter into other contractual obligations in the ordinary course of business, including debt issuances for the funding of operations and leases for premises and equipment.

Table 15 summarizes these contractual obligations as of December 31, 2011, excluding obligations for short-term borrowing arrangements and pension and postretirement benefit plans. More information on those obligations is in Note 12 (Short-Term Borrowings) and Note 20 (Employee Benefits and Other Expenses) to Financial Statements in this Report.

Table 15: Contractual Obligations



(in millions)	Note(s) to Financial Statements		Less than 1 year		1-3 years		3-5 years		More than 5 years		Indeterminate maturity			Total

Contractual payments by period:
Deposits		11	$	98,309		26,945		14,502		3,427		776,887	(1)		920,070
Long-term debt (2)		7, 13		18,605		25,080		26,689		54,980		–			125,354
Operating leases		7		1,319		2,291		1,589		3,239		–			8,438
Unrecognized income tax obligations		21		10		–		–		–		2,219			2,229
Commitments to purchase debt securities				17		1,010		–		–		–			1,027
Purchase and other obligations (3)				454		311		125		6		–			896

Total contractual obligations			$	118,714		55,637		42,905		61,652		779,106			1,058,014

(1)	Includes interest-bearing and noninterest-bearing checking, and market rate and other savings accounts.

(2)	Includes obligations under capital leases of $116 million.

(3)	Includes agreements to purchase goods or services and an annual minimum property tax obligation.

We are subject to the income tax laws of the U.S., its states and municipalities, and those of the foreign jurisdictions in which we operate. We have various unrecognized tax obligations related to these operations that may require future cash tax payments to various taxing authorities. Because of their uncertain nature, the expected timing and amounts of these payments generally are not reasonably estimable or determinable. We estimate the amount payable in the next 12 months based on the status of our tax examinations and settlement discussions. See Note 21 (Income Taxes) to Financial Statements in this Report for more information.

We enter into derivatives, which create contractual obligations, as part of our interest rate risk management process for our customers or for other trading activities. See the “Risk Management – Asset/Liability” section and Note 16 (Derivatives) to Financial Statements in this Report for more information.

Transactions with Related Parties

The Related Party Disclosures topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification) requires disclosure of material related-party transactions, other than compensation arrangements, expense allowances and other similar items in the ordinary course of business. We had no material related-party transactions required to be reported for the years ended December 31, 2011, 2010 and 2009.

Risk Management

All financial institutions must manage and control a variety of business risks that can significantly affect their financial performance. Key among those are credit, asset/liability and market risk. The discussion that follows provides information on how we manage these risks.

Credit Risk Management

Table 16: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable



	December 31,

(in millions)	2011		2010

Commercial:
Commercial and industrial	$	167,216		151,284
Real estate mortgage		105,975		99,435
Real estate construction		19,382		25,333
Lease financing		13,117		13,094
Foreign (1)		39,760		32,912

Total commercial		345,450		322,058

Consumer:
Real estate 1-4 family first mortgage		228,894		230,235
Real estate 1-4 family junior lien mortgage		85,991		96,149
Credit card		22,836		22,260
Other revolving credit and installment		86,460		86,565

Total consumer		424,181		435,209

Total loans	$	769,631		757,267

(1)	Substantially all of our foreign loan portfolio is commercial. Loans are classified as foreign if the borrower’s primary address is outside of the United States.

We employ various credit risk management and monitoring activities to mitigate risks associated with multiple risk factors affecting loans we hold, could acquire or originate including:

•

Loan concentrations and related credit quality

•

Counterparty credit risk

•

Economic and market conditions

•

Legislative or regulatory mandates

•

Changes in interest rates

•

Merger and acquisition activities

•

Reputation risk

Our credit risk management process is governed centrally, but provides for decentralized management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process. The Credit Committee of our Board of Directors (Board) receives reports from management, including our Chief Risk Officer and Chief Credit Officer, and its responsibilities include oversight of the administration and effectiveness of, and compliance with, our credit policies and the adequacy of the allowance for credit losses.

A key to our credit risk management is adherence to a well controlled underwriting process, which we believe is appropriate for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.

Non-Strategic and Liquidating Loan Portfolios We continually evaluate and modify our credit policies to address appropriate levels of risk. We may designate certain portfolios and loan products as non-strategic or liquidating to cease their continued origination as we actively work to limit losses and reduce our exposures.

Table 17 identifies our non-strategic and liquidating loan portfolios. They consist primarily of the Pick-a-Pay mortgage portfolio and other PCI loans acquired from Wachovia as well as some portfolios from legacy Wells Fargo Home Equity and

Wells Fargo Financial. Effective first quarter 2011, we added our education finance government guaranteed loan portfolio to the non-strategic and liquidating loan portfolios as there is no longer a U.S. Government guaranteed student loan program available to private financial institutions pursuant to legislation in 2010. The outstanding balances on non-strategic and liquidating loan portfolios have decreased 41% since the merger with Wachovia at December 31, 2008, and decreased 16% from the end of 2010.

Table 17: Non-Strategic and Liquidating Loan Portfolios



	Outstanding balance December 31,

(in millions)	2011		2010		2009		2008

Commercial:
Legacy Wachovia commercial and industrial, CRE and foreign PCI loans (1)	$	5,695		7,935		12,988		18,704

Total commercial		5,695		7,935		12,988		18,704

Consumer:
Pick-a-Pay mortgage (1)		65,652		74,815		85,238		95,315
Liquidating home equity		5,710		6,904		8,429		10,309
Legacy Wells Fargo Financial indirect auto		2,455		6,002		11,253		18,221
Legacy Wells Fargo Financial debt consolidation		16,542		19,020		22,364		25,299
Education Finance - government guaranteed (2)		15,376		17,510		21,150		20,465
Legacy Wachovia other PCI loans (1)		896		1,118		1,688		2,478

Total consumer		106,631		125,369		150,122		172,087

Total non-strategic and liquidating loan portfolios	$	112,326		133,304		163,110		190,791

(1)	Net of purchase accounting adjustments related to PCI loans.

(2)

Effective first quarter 2011, we included our education finance government guaranteed loan portfolio as there is no longer a U.S. Government guaranteed student loan program available to private financial institutions, pursuant to legislation in 2010. Prior periods have been adjusted to reflect this change.

The Wells Fargo Financial debt consolidation portfolio included $1.1 billion of loans at December 31, 2011, that were considered prime based on secondary market standards, compared with $1.2 billion at December 31, 2010. The rest is non-prime but was originated with underwriting standards to reduce credit risk. Wells Fargo Financial ceased originating loans and leases through its indirect auto business channel by the end of 2008.

The home equity liquidating portfolio was designated in fourth quarter 2007 from loans generated through third party channels. This portfolio is discussed in more detail in the “Credit Risk Management – Home Equity Portfolios” section of this Report.

Information about the liquidating PCI and Pick-a-Pay loan portfolios is provided in the discussion of loan portfolios that follows.

Risk Management – Credit Risk Management (continued)

PURCHASED CREDIT-IMPAIRED (PCI) LOANS Loans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are accounted for using the measurement provisions for PCI loans. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. Such loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments. Substantially all of our PCI loans were acquired in the Wachovia acquisition on December 31, 2008.

A nonaccretable difference is established for PCI loans to absorb losses expected on those loans at the date of acquisition. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses.

Substantially all commercial and industrial, CRE and foreign PCI loans are accounted for as individual loans. Conversely, Pick-a-Pay and other consumer PCI loans have been aggregated into several pools based on common risk characteristics. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

Resolutions of loans may include sales to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. Our policy is to remove an individual PCI loan from a pool based on comparing the amount

received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference. This removal method assumes that the amount received from resolution approximates pool performance expectations. The accretable yield percentage is unaffected by the resolution and any changes in the effective yield for the remaining loans in the pool are addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full, there is no release of the nonaccretable difference for the pool because there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed troubled debt restructurings (TDRs). Modified PCI loans that are accounted for individually are TDRs, and removed from PCI accounting, if there has been a concession granted in excess of the original nonaccretable difference. We include these TDRs in our impaired loans.

During 2011, we recognized in income $239 million released from the nonaccretable difference related to commercial PCI loans due to payoffs and other resolutions. We also transferred $373 million from the nonaccretable difference to the accretable yield for PCI loans with improving credit-related cash flows and absorbed $2.3 billion of losses in the nonaccretable difference from loan resolutions and write-downs. Table 18 provides an analysis of changes in the nonaccretable difference.

Table 18: Changes in Nonaccretable Difference for PCI Loans



(in millions)	Commercial			Pick-a-Pay			Other consumer			Total

Balance, December 31, 2008	$	10,410			26,485			4,069			40,964
Release of nonaccretable difference due to:
Loans resolved by settlement with borrower (1)		(330	)		–			–			(330	)
Loans resolved by sales to third parties (2)		(86	)		–			(85	)		(171	)
Reclassification to accretable yield for loans with improving credit-related cash flows (3)		(138	)		(27	)		(276	)		(441	)
Use of nonaccretable difference due to:
Losses from loan resolutions and write-downs (4)		(4,853	)		(10,218	)		(2,086	)		(17,157	)

Balance, December 31, 2009		5,003			16,240			1,622			22,865
Release of nonaccretable difference due to:
Loans resolved by settlement with borrower (1)		(817	)		–			–			(817	)
Loans resolved by sales to third parties (2)		(172	)		–			–			(172	)
Reclassification to accretable yield for loans with improving credit-related cash flows (3)		(726	)		(2,356	)		(317	)		(3,399	)
Use of nonaccretable difference due to:
Losses from loan resolutions and write-downs (4)		(1,698	)		(2,959	)		(391	)		(5,048	)

Balance, December 31, 2010		1,590			10,925			914			13,429
Addition of nonaccretable difference due to acquisitions		188			–			–			188
Release of nonaccretable difference due to:
Loans resolved by settlement with borrower (1)		(198	)		–			–			(198	)
Loans resolved by sales to third parties (2)		(41	)		–			–			(41	)
Reclassification to accretable yield for loans with improving credit-related cash flows (3)		(352	)		–			(21	)		(373	)
Use of nonaccretable difference due to:
Losses from loan resolutions and write-downs (4)		(258	)		(1,799	)		(241	)		(2,298	)

Balance, December 31, 2011	$	929			9,126			652			10,707

(1)

Release of the nonaccretable difference for settlement with borrower, on individually accounted PCI loans, increases interest income in the period of settlement. Pick-a-Pay and Other consumer PCI loans do not reflect nonaccretable difference releases for settlements with borrowers due to pool accounting for those loans, which assumes that the amount received approximates the pool performance expectations.

(2)	Release of the nonaccretable difference as a result of sales to third parties increases noninterest income in the period of the sale.

(3)	Reclassification of nonaccretable difference to accretable yield for loans with increased cash flow estimates will result in increased interest income as a prospective yield adjustment over the remaining life of the loan or pool of loans.

(4)	Write-downs to net realizable value of PCI loans are absorbed by the nonaccretable difference when severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

Since December 31, 2008, we have released $5.9 billion in nonaccretable difference, including $4.2 billion transferred from the nonaccretable difference to the accretable yield and $1.7 billion released to income through loan resolutions. We have provided $1.8 billion in the allowance for credit losses for certain PCI loans or pools of PCI loans that have had credit-related decreases to cash flows expected to be collected. The net result is a $4.2 billion reduction from December 31, 2008, through December 31, 2011, in our initial projected losses on all PCI loans.

At December 31, 2011, the allowance for credit losses on certain PCI loans was $231 million. The allowance is necessary to absorb credit-related decreases since acquisition in cash flows expected to be collected and primarily relates to individual PCI loans. Table 19 analyzes the actual and projected loss results on PCI loans since acquisition through December 31, 2011.

For additional information on PCI loans, see Note 1 (Summary of Significant Accounting Policies – Loans) and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 19: Actual and Projected Loss Results on PCI Loans



(in millions)	Commercial			Pick-a-Pay		Other consumer			Total

Release of nonaccretable difference due to:
Loans resolved by settlement with borrower (1)	$	1,345			–		–			1,345
Loans resolved by sales to third parties (2)		299			–		85			384
Reclassification to accretable yield for loans with improving credit-related cash flows (3)		1,216			2,383		614			4,213

Total releases of nonaccretable difference due to better than expected losses		2,860			2,383		699			5,942
Provision for losses due to credit deterioration (4)		(1,668	)		–		(116	)		(1,784	)

Actual and projected losses on PCI loans less than originally expected	$	1,192			2,383		583			4,158

(1)

(2)	Release of the nonaccretable difference as a result of sales to third parties increases noninterest income in the period of the sale.

(3)	Reclassification of nonaccretable difference to accretable yield for loans with increased cash flow estimates will result in increased interest income as a prospective yield adjustment over the remaining life of the loan or pool of loans.

(4)	Provision for additional losses recorded as a charge to income, when it is estimated that the cash flows expected to be collected for a PCI loan or pool of loans may not support full realization of the carrying value.

Significant Portfolio Reviews Measuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, FICO scores, economic trends by geographic areas, loan-level risk grading for certain portfolios (typically commercial) and other indications of credit risk. Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following analysis reviews the relevant concentrations and certain credit metrics of our significant portfolios. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information.

COMMERCIAL REAL ESTATE (CRE) The CRE portfolio, consisting of both CRE mortgage loans and CRE construction loans, totaled $125.4 billion, or 16% of total loans, at December 31, 2011. CRE construction loans totaled $19.4 billion at December 31, 2011, and CRE mortgage loans totaled $106.0 billion, of which 33% was to owner-occupants. Table 20 summarizes CRE loans by state and property type with the related nonaccrual totals. CRE nonaccrual loans totaled 5% of the non-PCI CRE outstanding balance at December 31, 2011, a decline of 24% from December 31, 2010. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of combined CRE loans are in California and Florida, which represented 25% and 9% of the total CRE portfolio, respectively. By property type, the largest concentrations are office buildings at 26% and industrial/warehouse at 11% of the portfolio. We subject commercial loans to individual risk assessment using our

internal borrower and collateral quality ratings. Our ratings are aligned to pass and criticized categories with our criticized categories aligned to special mention, substandard and doubtful categories as defined by bank regulatory agencies. At December 31, 2011, we had $22.5 billion of criticized non-PCI CRE mortgage loans, a decrease of 13% from December 31, 2010, and $6.8 billion of criticized non-PCI construction loans, a decrease of 39% from December 31, 2010. Total criticized non-PCI CRE loans remained relatively high as a result of the continued challenging conditions in the real estate market. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further detail on criticized loans.

The underwriting of CRE loans primarily focuses on cash flows inherent in the creditworthiness of the customer, in addition to collateral valuations. To identify and manage newly emerging problem CRE loans, we employ a high level of monitoring and regular customer interaction to understand and manage the risks associated with these loans, including regular loan reviews and appraisal updates. Management is engaged to identify issues and dedicated workout groups are in place to manage problem loans. At December 31, 2011, the recorded investment in PCI CRE loans totaled $5.0 billion, down from $12.3 billion at December 31, 2008, reflecting the reduction resulting from principal payments, loan resolutions and write-downs.

Risk Management – Credit Risk Management (continued)

Table 20: CRE Loans by State and Property Type



	December 31, 2011

	Real estate mortgage					Real estate construction				Total					% of

(in millions)	Nonaccrual loans		Outstanding balance (1)			Nonaccrual loans		Outstanding balance (1)		Nonaccrual loans		Outstanding balance (1)			total loans

By state:
PCI loans (1):
New York	$	–		709			–		186		–		895			*	%
California		–		533			–		104		–		637			*
Florida		–		326			–		230		–		556			*
North Carolina		–		64			–		242		–		306			*
Texas		–		193			–		103		–		296			*
Other		–		1,445			–		880		–		2,325	(2)		*

Total PCI loans	$	–		3,270			–		1,745		–		5,015			*	%

All other loans:
California	$	1,042		28,012			323		3,073		1,365		31,085			4	%
Florida		645		9,130			242		1,609		887		10,739			1
Texas		307		7,188			61		1,572		368		8,760			1
New York		33		5,010			5		899		38		5,909			*
North Carolina		277		4,331			205		1,058		482		5,389			*
Virginia		90		3,485			31		1,294		121		4,779			*
Arizona		190		3,966			49		607		239		4,573			*
Georgia		228		3,536			239		676		467		4,212			*
Washington		54		3,130			7		445		61		3,575			*
Colorado		93		2,953			34		460		127		3,413			*
Other		1,126		31,964			694		5,944		1,820		37,908	(3)		5

Total all other loans	$	4,085		102,705			1,890		17,637		5,975		120,342			16	%

Total	$	4,085		105,975			1,890		19,382		5,975		125,357			16	%

By property:
PCI loans (1):
Office buildings	$	–		1,512			–		126		–		1,638			*	%
Apartments		–		672			–		335		–		1,007			*
1-4 family land		–		81			–		341		–		422			*
Shopping center		–		261			–		102		–		363			*
Retail (excluding shopping center)		–		257			–		87		–		344			*
Other		–		487			–		754		–		1,241			*

Total PCI loans	$	–		3,270			–		1,745		–		5,015			*	%

All other loans:
Office buildings	$	960		29,200			99		1,757		1,059		30,957			4	%
Industrial/warehouse		547		12,892			32		495		579		13,387			2
Retail (excluding shopping center)		598		11,675			45		484		643		12,159			2
Apartments		256		9,809			105		2,127		361		11,936			2
Real estate – other		357		9,690			62		335		419		10,025			1
Shopping center		306		8,811			123		1,196		429		10,007			1
Hotel/motel		264		7,366			35		809		299		8,175			1
Land (excluding 1-4 family)		48		261			544		6,382		592		6,643			*
Institutional		107		3,015			–		266		107		3,281			*
Agriculture		165		2,714			–		18		165		2,732			*
Other		477		7,272			845		3,768		1,322		11,040			1

Total all other loans	$	4,085		102,705			1,890		17,637		5,975		120,342			16	%

Total	$	4,085		105,975	(4)		1,890		19,382		5,975		125,357			16	%

*	Less than 1%.

(1)	For PCI loans, amounts represent carrying value. PCI loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

(2)	Includes 33 states; no state had loans in excess of $284 million.

(3)	Includes 40 states; no state had loans in excess of $3.0 billion.

(4)	Includes $34.9 billion of loans to owner-occupants where 51% or more of the property is used in the conduct of their business.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCING For purposes of portfolio risk management, we aggregate commercial and industrial loans and lease financing according to market segmentation and standard industry codes. Table 21 summarizes commercial and industrial loans and lease financing by industry with the related nonaccrual totals. Across our non-PCI commercial loans and leases, the commercial and industrial loans and lease financing portfolio generally experienced better credit improvement than our CRE portfolios in 2011. Of the total commercial and industrial loans and lease financing non-PCI portfolio, 0.09% was 90 days or more past due and still accruing, 1.22% was nonaccruing and 12.5% was criticized. In comparison, of the total non-PCI CRE portfolio, 0.29% was 90 days or more past due and still accruing, 4.97% was nonaccruing and 24.3% was criticized. Also, the net charge-off rate for both portfolios declined in 2011 from 2010. We believe the commercial and industrial loans and lease financing portfolio is well underwritten and is diverse in its risk with relatively level concentrations across several industries. Our credit risk management process for this portfolio primarily focuses on a customer’s ability to repay the loan through their cash flow.

A majority of our commercial and industrial loans and lease financing portfolio is secured by short-term liquid assets, such as accounts receivable, inventory and securities, as well as long-lived assets, such as equipment and other business assets. Generally, the collateral securing this portfolio represents a secondary source of repayment. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information.

Table 21: Commercial and Industrial Loans and Lease Financing by Industry



	December 31, 2011

(in millions)	Nonaccrual loans		Outstanding balance (1)			% of total loans

PCI loans (1):
Technology	$	–		65			*	%
Investors		–		49			*
Healthcare		–		39			*
Insurance		–		38			*
Aerospace and defense		–		36			*
Residential construction		–		26			*
Other		–		146	(2)		*

Total PCI loans	$	–		399			*	%

All other loans:
Financial institutions	$	146		13,597			2	%
Cyclical retailers		41		10,364			1
Oil and gas		89		10,198			1
Food and beverage		36		10,150			1
Healthcare		78		8,419			1
Investors		2		8,407			1
Industrial equipment		97		7,365			*
Technology		66		6,404			*
Business services		42		6,377			*
Transportation		17		6,260			*
Real estate lessor		44		6,067			*
Utilities		1		5,357			*
Other		1,536		80,969	(3)		11

Total all other loans	$	2,195		179,934			23	%

Total	$	2,195		180,333			23	%

*	Less than 1%.

(1)	For PCI loans, amounts represent carrying value. PCI loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

(2)	No other single category had loans in excess of $24 million.

(3)	No other single category had loans in excess of $4.9 billion.

Risk Management – Credit Risk Management (continued)

During the current credit cycle, we have experienced an increase in loans requiring risk mitigation activities including the restructuring of loan terms and requests for extensions of commercial and industrial and CRE loans. All actions are based on a re-underwriting of the loan and our assessment of the borrower’s ability to perform under the agreed-upon terms. Extension terms generally range from six to thirty-six months and may require that the borrower provide additional economic support in the form of partial repayment, or additional collateral or guarantees. In cases where the value of collateral or financial condition of the borrower is insufficient to repay our loan, we may rely upon the support of an outside repayment guarantee in providing the extension.

Our ability to seek performance under a guarantee is directly related to the guarantor’s creditworthiness, capacity and willingness to perform, which is evaluated on an annual basis, or more frequently as warranted. Our evaluation is based on the most current financial information available and is focused on various key financial metrics, including net worth, leverage, and current and future liquidity. We consider the guarantor’s reputation, creditworthiness, and willingness to work with us based on our analysis as well as other lenders’ experience with the guarantor. Our assessment of the guarantor’s credit strength is reflected in our loan risk ratings for such loans. The loan risk rating and accruing status are important factors in our allowance methodology for commercial and industrial and CRE loans.

In considering the accrual status of the loan, we evaluate the collateral and future cash flows as well as the anticipated support of any repayment guarantor. In many cases the strength of the guarantor provides sufficient assurance that full repayment of the loan is expected. When full and timely collection of the loan becomes uncertain, including the performance of the guarantor, we place the loan on nonaccrual status and we charge-off all or a portion of the loan based on the fair value of the collateral securing the loan, if any.

At the time of restructuring, we evaluate whether the loan should be classified as a TDR, and account for it accordingly. For more information on TDRs, see “Troubled Debt Restructurings” later in this section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

FOREIGN LOANS AND EUROPEAN EXPOSURE Our foreign country risk monitoring process incorporates frequent dialogue with our foreign financial institution customers, counterparties and regulatory agencies, enhanced by centralized monitoring of macroeconomic and capital markets conditions. We establish exposure limits for each country via a centralized oversight process based on the needs of our customers, and in consideration of relevant economic, political, social, legal, and transfer risks. We monitor exposures closely and adjust our limits in response to changing conditions. We conduct periodic stress tests of our significant country risk exposures, analyzing the potential direct and indirect impacts of various macroeconomic and capital market scenarios.

At December 31, 2011, foreign loans represented approximately 5% of our total consolidated loans outstanding and approximately 3% of our total assets. Our largest foreign country exposure on an ultimate risk basis was the United Kingdom, which amounted to approximately $11.0 billion, or 0.84%, of our consolidated assets, and included $1.7 billion of sovereign claims. Our United Kingdom sovereign claims arise primarily from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.

Several European countries have been experiencing significant fiscal and economic deterioration in recent months. In January 2012, Standard & Poor’s Ratings Service (S&P) downgraded the long-term sovereign debt ratings of France, Italy, Spain, Cyprus, Portugal, Austria, Malta, Slovakia and Slovenia, as well as the rating of the European Financial Stability Facility. In addition, in February 2012, Moody’s Investors Service lowered the sovereign debt ratings of Italy, Malta, Portugal, Slovakia, Slovenia, and Spain, and Fitch Ratings and S&P downgraded Greece to the lowest rating above a default. At December 31, 2011, our exposure to these downgraded countries, including cross-border claims on an ultimate risk basis, and foreign exchange and derivative products, aggregated approximately $3.4 billion, including $182.3 million of sovereign claims.

Based on our most recent stress testing activities conducted in fourth quarter 2011, in the event of a rapid deterioration in financial and economic conditions in Europe we believe it is unlikely we would experience a material impact to our financial condition, results of operations, liquidity, or capital resources as a result of our European exposures due to the relatively small magnitude of our exposures as well as its diversity by country, type, and counterparty.

Table 22 provides information regarding our exposures to European sovereign entities and institutions located within such countries, including cross-border claims on an ultimate risk basis, and foreign exchange and derivative products.

Table 22: European Exposure



	Lending (1)(2)				Securities (3)				Derivatives and other (4)				Total exposure

(in millions)	Sovereign		Non- sovereign		Sovereign		Non- sovereign		Sovereign		Non- sovereign		Sovereign		Non- sovereign (5)		Total

December 31, 2011
Eurozone:
Germany	$	57		2,547		–		240		–		185		57		2,972		3,029
Netherlands		–		2,107		–		111		–		72		–		2,290		2,290
Spain		–		1,109		–		97		–		30		–		1,236		1,236
Luxembourg		–		1,010		–		123		–		2		–		1,135		1,135
France		87		517		–		302		–		165		87		984		1,071
Ireland		100		772		–		53		–		23		100		848		948
Italy		–		465		–		124		–		1		–		590		590
Austria		95		222		–		19		–		1		95		242		337
Other (6)		21		531		4		185		–		27		25		743		768

Total Eurozone exposure		360		9,280		4		1,254		–		506		364		11,040		11,404

United Kingdom		1,707		3,996		–		4,983		–		331		1,707		9,310		11,017
Other European countries		–		4,996		3		268		8		955		11		6,219		6,230

Total European exposure	$	2,067		18,272		7		6,505		8		1,792		2,082		26,569		28,651

(1)	Lending exposure includes funded loans and unfunded commitments, leveraged leases, and money market placements presented on a gross basis prior to the deduction of impairment allowance and collateral received under the terms of the credit agreements.

(2)	Includes $1.6 billion in PCI loans, predominantly to customers in Germany and United Kingdom territories, and $3.1 billion in defeased leases secured predominantly by U.S. Treasury and government agency securities, or government guaranteed.

(3)	Represents issuer exposure on cross-border debt and equity securities, held in trading or available-for-sale portfolio, at fair value.

(4)

Represents counterparty exposure on foreign exchange and derivative contracts, and securities resale and lending agreements. This exposure is presented net of counterparty netting adjustments and reduced by the amount of cash collateral. It includes credit default swaps (CDS) predominantly used to manage our U.S. and London-based cash credit trading businesses, which sometimes results in selling and purchasing protection on the identical reference entity. Generally, we do not use market instruments such as CDS to hedge the credit risk of our investment or loan positions, although we do use them to manage risk in our trading businesses. At December 31, 2011, the gross notional amount of our CDS sold on reference assets domiciled in Europe was substantially offset by the notional of CDS purchased from investment-grade counterparties. Additionally, at December 31, 2011, we did not have any net exposure on sovereign CDS associated with European countries.

(5)	Total non-sovereign exposure is comprised of $12.3 billion exposure to financial institutions and $14.3 billion to non-financial corporations at December 31, 2011.

(6)	Includes non-sovereign exposure to Greece and Portugal in the amount of $9.5 million and $ 49.1 million, respectively. We had no sovereign debt exposure to these countries at December 31, 2011.

REAL ESTATE 1-4 FAMILY MORTGAGE LOANS Our real estate 1-4 family mortgage loans primarily include loans we have made to customers and retained as part of our asset liability management strategy. These loans also include the Pick-a-Pay portfolio acquired from Wachovia and the home equity portfolio, which are discussed later in this Report. In addition, these loans include other purchased loans and loans included on our balance sheet due to the adoption of consolidation accounting guidance related to VIEs.

Our underwriting and periodic review of loans collateralized by residential real property includes appraisals or estimates from automated valuation models (AVMs) to support property values. AVMs are computer-based tools used to estimate the market value of homes. AVMs are a lower-cost alternative to appraisals and support valuations of large numbers of properties in a short period of time using market comparables and price trends for local market areas. The primary risk associated with the use of AVMs is that the value of an individual property may vary significantly from the average for the market area. We have processes to periodically validate AVMs and specific risk management guidelines addressing the circumstances when AVMs may be used. AVMs are generally used in underwriting to support property values on loan originations only where the loan amount is under $250,000. We generally require property visitation appraisals by a qualified independent appraiser for larger residential property loans.

We believe we have manageable adjustable-rate mortgage (ARM) reset risk across our owned mortgage loan portfolios. We

do not offer option ARM products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. Our liquidating option ARM portfolio was acquired from Wachovia.

We continue to modify real estate 1-4 family mortgage loans to assist homeowners and other borrowers in the current difficult economic cycle. Loans are underwritten at the time of the modification in accordance with underwriting guidelines established for governmental and proprietary loan modification programs. As a participant in the U.S. Treasury’s Making Home Affordable (MHA) programs, we are focused on helping customers stay in their homes. The MHA programs create a standardization of modification terms including incentives paid to borrowers, servicers, and investors. MHA includes the Home Affordable Modification Program (HAMP) for first lien loans and the Second Lien Modification Program (2MP) for junior lien loans. Under both our proprietary programs and the MHA programs, we may provide concessions such as interest rate reductions, forbearance of principal, and in some cases, principal forgiveness. These programs generally include trial payment periods of three to four months, and after successful completion and compliance with terms during this period, the loan is permanently modified. During both the trial payment period and/or permanent modification period, the loan is accounted for as a TDR loan. See Table 32 for discussion on trial modifications, including balances. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for discussion on how we determine the allowance attributable to our modified residential real estate portfolios.

Risk Management – Credit Risk Management (continued)

The concentrations of real estate 1-4 family first and junior lien mortgage loans by state are presented in Table 23. Our real estate 1-4 family mortgage loans to borrowers in California represented approximately 13% of total loans (3% of this amount were PCI loans from Wachovia) at December 31, 2011, mostly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 3% of total loans. We continuously monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family mortgage portfolio as part of our credit risk management process.

Part of our credit monitoring includes tracking delinquency, FICO scores and collateral values (LTV/CLTV) on the entire real estate 1-4 family mortgage loan portfolio. These metrics experienced improvement throughout 2011, on the non-PCI mortgage portfolio, with the majority of the improvement occurring in the first half of 2011. Loans 30 days or more delinquent at December 31, 2011, totaled $18.4 billion, or 6%, of total non-PCI mortgages, compared with $20.3 billion, or 7%, at December 31, 2010. Loans with FICO scores lower than 640 totaled $44.1 billion at December 31, 2011, or 15% of all non-PCI mortgages, compared with $50.7 billion, or 17%, at December 31, 2010. Mortgages with a LTV/CLTV greater than 100% totaled $74.2 billion at December 31, 2011, or 26% of total non-PCI mortgages, compared with $84.9 billion, or 29%, at December 31, 2010. Information regarding credit risk trends can be found in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 23: Real Estate 1-4 Family Mortgage Loans by State



	December 31, 2011

(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage		Total real estate 1-4 family mortgage		% of total loans

PCI loans:
California	$	19,336		42		19,378		3	%
Florida		2,700		38		2,738		*
New Jersey		1,285		25		1,310		*
Other (1)		6,425		101		6,526		*

Total PCI loans	$	29,746		206		29,952		4	%

All other loans:
California	$	54,312		23,934		78,246		10	%
Florida		16,001		7,664		23,665		3
New Jersey		9,007		6,240		15,247		2
New York		9,045		3,597		12,642		2
Virginia		5,874		4,431		10,305		1
Pennsylvania		5,978		3,929		9,907		1
North Carolina		5,642		3,582		9,224		1
Georgia		4,583		3,369		7,952		1
Texas		6,444		1,335		7,779		1
Other (2)		55,707		27,704		83,411		12
Government insured/ guaranteed loans (3)		26,555		–		26,555		3

Total all other loans	$	199,148		85,785		284,933		37	%

Total	$	228,894		85,991		314,885		41	%

*	Less than 1%.

(1)	Consists of 45 states; no state had loans in excess of $729 million.

(2)	Consists of 41 states; no state had loans in excess of $6.6 billion.

(3)	Represents loans whose repayments are insured by the FHA or guaranteed by the VA. In 2011, we consolidated $5.6 billion of previously sold FHA insured real estate 1-4 family reverse mortgages.

PICK-A-PAY PORTFOLIO The Pick-a-Pay portfolio was one of the consumer residential first mortgage portfolios we acquired from Wachovia and a majority of the portfolio was identified as PCI loans. The Pick-a-Pay portfolio is a liquidating portfolio, as Wachovia ceased originating new Pick-a-Pay loans in 2008.

The Pick-a-Pay portfolio includes loans that offer payment options (Pick-a-Pay option payment loans), and also includes loans that were originated without the option payment feature, loans that no longer offer the option feature as a result of our modification efforts since the acquisition, and loans where the customer voluntarily converted to a fixed-rate product. The Pick-a-Pay portfolio is included in the consumer real estate 1-4 family first mortgage class of loans throughout this Report. Real estate 1-4 family junior lien mortgages and lines of credit associated with Pick-a-Pay loans are reported in the home equity portfolio. Table 24 provides balances over time related to the types of loans included in the portfolio since acquisition.

Table 24: Pick-a-Pay Portfolio - Comparison to Acquisition Date



	December 31,

	2011					2008

(in millions)	Adjusted unpaid principal balance (1)		% of total			Adjusted unpaid principal balance (1)		% of total

Option payment loans	$	39,164		53	%	$	99,937		86	%
Non-option payment adjustable-rate and fixed-rate loans		9,986		14			15,763		14
Full-term loan modifications		24,207		33			–		–

Total adjusted unpaid principal balance	$	73,357		100	%	$	115,700		100	%

Total carrying value	$	65,652				$	95,315

(1)	Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

PCI loans in the Pick-a-Pay portfolio had an adjusted unpaid principal balance of $36.9 billion and a carrying value of $29.1 billion at December 31, 2011. The carrying value of the PCI loans is net of remaining purchase accounting write-downs, which reflected their fair value at acquisition. At acquisition, we recorded a $22.4 billion write-down in purchase accounting on Pick-a-Pay loans that were impaired.

Pick-a-Pay option payment loans may be adjustable or fixed rate. They are home mortgages on which the customer has the option each month to select from among four payment options: (1) a minimum payment as described below, (2) an interest-only payment, (3) a fully amortizing 15-year payment, or (4) a fully amortizing 30-year payment.

The minimum monthly payment for substantially all of our Pick-a-Pay loans is reset annually. The new minimum monthly payment amount usually cannot increase by more than 7.5% of the then-existing principal and interest payment amount. The minimum payment may not be sufficient to pay the monthly interest due and in those situations a loan on which the customer has made a minimum payment is subject to “negative amortization,” where unpaid interest is added to the principal balance of the loan. The amount of interest that has been added to a loan balance is referred to as “deferred interest.” Total deferred interest of $2.0 billion at December 31, 2011, was down from $2.7 billion at December 31, 2010, due to loan modification efforts as well as interest rates remaining low, resulting in the minimum payment option covering the interest and some principal on many loans. Approximately 83% of the Pick-a-Pay customers making a minimum payment in December 2011 did not defer interest, compared with 75% in December 2010.

Deferral of interest on a Pick-a-Pay loan may continue as long as the loan balance remains below a pre-defined principal cap, which is based on the percentage that the current loan balance represents to the original loan balance. Loans with an original loan-to-value (LTV) ratio equal to or below 85% have a cap of 125% of the original loan balance, and these loans represent substantially all the Pick-a-Pay portfolio. Loans with an original LTV ratio above 85% have a cap of 110% of the original loan balance. Most of the Pick-a-Pay loans on which there is a deferred interest balance re-amortize (the monthly payment amount is reset or “recast”) on the earlier of the date

when the loan balance reaches its principal cap, or the 10-year anniversary of the loan. For a small population of Pick-a-Pay loans, the recast occurs at the five-year anniversary. After a recast, the customers’ new payment terms are reset to the amount necessary to repay the balance over the rest of the original loan term.

Due to the terms of the Pick-a-Pay portfolio, there is little recast risk in the near term. Based on assumptions of a flat rate environment, if all eligible customers elect the minimum payment option 100% of the time and no balances prepay, we would expect the following balances of loans to recast based on reaching the principal cap: $7 million in 2012, $22 million in 2013 and $81 million in 2014. In 2011, $3 million was recast based on reaching the principal cap. In addition, in a flat rate environment, we would expect the following balances of loans to start fully amortizing due to reaching their recast anniversary date and also having a payment change at the recast date greater than the annual 7.5% reset: $47 million in 2012, $100 million in 2013 and $373 million in 2014. In 2011, the amount of loans reaching their recast anniversary date and also having a payment change over the annual 7.5% reset was $7 million.

Table 25 reflects the geographic distribution of the Pick-a-Pay portfolio broken out between PCI loans and all other loans. In stressed housing markets with declining home prices and increasing delinquencies, the LTV ratio is a useful metric in predicting future real estate 1-4 family first mortgage loan performance, including potential charge-offs. Because PCI loans were initially recorded at fair value, including write-downs for expected credit losses, the ratio of the carrying value to the current collateral value will be lower compared with the LTV ratio based on the adjusted unpaid principal balance. For informational purposes, we have included both ratios for PCI loans in the following table.

Risk Management – Credit Risk Management (continued)

Table 25: Pick-a-Pay Portfolio (1)



											December 31, 2011

	PCI loans										All other loans

(in millions)	Adjusted unpaid principal balance (2)		Current LTV ratio (3)			Carrying value (4)		Ratio of carrying value to current value (5)			Carrying value (4)		Ratio of carrying value to current value (5)

California	$	25,036		121	%	$	19,269		93	%	$	17,870		86	%
Florida		3,325		122			2,562		89			3,760		100
New Jersey		1,336		92			1,224		84			2,321		79
New York		757		95			685		84			1,013		82
Texas		340		78			312		72			1,487		64
Other states		6,111		110			5,004		89			10,145		87

Total Pick-a-Pay loans	$	36,905				$	29,056				$	36,596

(1)	The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2011.

(2)	Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

(3)

The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas.

(4)

Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include the nonaccretable difference and the accretable yield and, for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs.

(5)	The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value.

To maximize return and allow flexibility for customers to avoid foreclosure, we have in place several loss mitigation strategies for our Pick-a-Pay loan portfolio. We contact customers who are experiencing financial difficulty and may in certain cases modify the terms of a loan based on a customer’s documented income and other circumstances.

We also have taken steps to work with customers to refinance or restructure their Pick-a-Pay loans into other loan products. For customers at risk, we offer combinations of term extensions of up to 40 years (from 30 years), interest rate reductions, forbearance of principal, and, in geographies with substantial property value declines, we may offer permanent principal forgiveness.

In 2011, we completed more than 19,000 proprietary and HAMP Pick-a-Pay loan modifications and have completed more than 99,000 modifications since the Wachovia acquisition, resulting in $4.0 billion of principal forgiveness to our Pick-a-Pay customers as well as an additional $516 million of conditional forgiveness that can be earned by borrowers through performance over the next three years. As announced in October 2010, we entered into agreements with certain state attorneys general whereby we agreed to offer loan modifications to eligible Pick-a-Pay customers through June 2013. These agreements cover the majority of our option payment loan portfolio and require that we offer modifications (both HAMP and proprietary) to eligible customers with the option payment loan product. In response to these agreements, we developed an enhanced proprietary modification product

that allows for various means of principal forgiveness along with changes to other loan terms. Given that these agreements cover all modification efforts to eligible customers for the applicable states, our modifications (both HAMP and proprietary) for our Pick-a-Pay loan portfolio performed in 2011 were primarily consistent with these agreements.

Due to better than expected performance observed on the Pick-a-Pay portfolio compared with the original acquisition estimates, we have reclassified $2.4 billion from the nonaccretable difference to the accretable yield since acquisition. This performance is primarily attributable to significant modification efforts as well as the portfolio’s delinquency stabilization. The resulting increase in the accretable yield will be realized over the remaining life of the portfolio, which is estimated to have a weighted-average life of approximately 11 years at December 31, 2011. The accretable yield percentage at the end of 2011 was 4.45%, down from 4.54% at the end of 2010. Fluctuations in the accretable yield are driven by changes in interest rate indices for variable rate PCI loans, prepayment assumptions, and expected principal and interest payments over the estimated life of the portfolio, which will be affected by the pace and degree of improvements in the U.S. economy and housing markets and projected lifetime performance resulting from loan modification activity. Changes in the projected timing of cash flow events, including loan liquidations, modifications and short sales, can also affect the accretable yield percentage and the estimated weighted-average life of the portfolio.

HOME EQUITY PORTFOLIOS Our home equity portfolios consist of real estate 1-4 family junior lien mortgages and first and junior lines of credit secured by real estate. Our first lien lines of credit represent 20% of our home equity portfolio and are included in real estate 1-4 family first mortgages. The majority of our junior lien loan products are amortizing payment loans with fixed interest rates and repayment periods between 5 to 30 years. Junior lien loans with balloon payments at the end of the repayment term represent a small portion of our junior lien loans.

Our first and junior lien lines of credit products generally have a draw period of 10 years with variable interest rates and payment options during the draw period of (1) interest only or (2) 1.5% of total outstanding balance. During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment loan with repayment terms of up to 30 years based on the balance at time of conversion. The draw periods for a majority of our lines of credit end after 2015.

We continuously monitor the credit performance of our junior lien mortgage portfolio for trends and factors that influence the frequency and severity of loss. We have observed that the severity of loss for junior lien mortgages is high and generally not affected by whether we or a third party own or service the related first mortgage, but that the frequency of loss is lower when we own or service the first mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced senior lien where we also have a junior lien. To capture this inherent loss content, we use the experience of our junior lien mortgages behind delinquent first liens that are owned or serviced by us adjusted for observed higher delinquency rates associated with junior lien mortgages behind third party first mortgages. We incorporate this inherent loss content into our allowance for loan losses. During 2011 we refined our allowance process for junior liens to ensure appropriate consideration of the relative difference in loss experience for junior liens behind first lien mortgage loans we own or service, compared with those behind first lien mortgage loans owned or serviced by third parties. In addition, we refined our allowance process for junior liens that are current, but are in their revolving period, to more appropriately reflect the inherent loss where the borrower is delinquent on the corresponding first lien mortgage loans. The impact of these revisions was not significant to our allowance. Table 26 summarizes delinquency and loss rates by the holder of the lien.

Table 26: Home Equity Portfolios Performance by Holder of 1st Lien (1)(2)



	Outstanding balance						% of loans two payments or more past due							Loss rate (annualized) quarter ended

(in millions)	Dec. 31, 2011		Sept. 30, 2011		June 30, 2011		Dec. 31, 2011			Sept. 30, 2011		June 30, 2011		Dec. 31, 2011		Sept. 30, 2011		June 30, 2011

First lien lines	$	20,786		21,011		20,941		3.10	%		3.00		2.85		0.95		0.91		0.82
Junior lien mortgages and lines behind:
Wells Fargo owned or serviced first lien		42,810		44,403		44,963		2.91			2.83		2.78		3.48		3.43		3.76
Third party first lien		42,996		43,668		44,779		3.59			3.58		3.53		3.83		4.11		4.32

Total	$	106,592		109,082		110,683		3.22			3.16		3.09		3.13		3.22		3.43

(1)	Excludes PCI loans and real estate 1-4 family first lien line reverse mortgages added to the consumer portfolio in fourth quarter 2011 as a result of consolidating reverse mortgage loans previously sold. These reverse mortgage loans are insured by the FHA.

(2)	Includes $1.5 billion, $1.5 billion and $1.6 billion at December 31, September 30 and June 30, 2011, respectively, associated with the Pick-a-Pay portfolio.

Risk Management – Credit Risk Management (continued)

We also monitor the number of borrowers paying the minimum amount due on a monthly basis. In December 2011, approximately 94% of our borrowers with home equity outstanding balances paid at least the minimum amount due, which included 46% of our borrowers paying only the minimum amount due.

The home equity liquidating portfolio includes home equity loans generated through third party channels, including correspondent loans. This liquidating portfolio represents less than 1% of our total loans outstanding at December 31, 2011, and contains some of the highest risk in our home equity portfolio, with a loss rate of 9.36% compared with 3.02% for the core (non-liquidating) home equity portfolio. Table 27 shows the credit attributes of the core and liquidating home equity portfolios and

lists the top five states by outstanding balance. California loans represent the largest state concentration in each of these portfolios. The decrease in outstanding balances primarily reflects loan paydowns and charge-offs. As of December 31, 2011, 36% of the outstanding balance of the core home equity portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. CLTV means the ratio of the total loan balance of first mortgages and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. The unsecured portion of the outstanding balances of these loans (the outstanding amount that was in excess of the most recent property collateral value) totaled 17% of the core home equity portfolio at December 31, 2011.

Table 27: Home Equity Portfolios (1)



	Outstanding balance				% of loans two payments or more past due					Loss rate

	December 31,				December 31,					December 31,

(in millions)	2011		2010		2011			2010		2011		2010

Core portfolio (2)
California	$	25,555		27,850		3.03	%		3.30		3.61		4.92
Florida		10,870		12,036		4.99			5.46		4.99		6.13
New Jersey		7,973		8,629		3.73			3.44		2.31		1.95
Virginia		5,248		5,667		2.15			2.33		1.68		1.86
Pennsylvania		5,071		5,432		2.82			2.48		1.40		1.24
Other		46,165		50,976		2.79			2.83		2.66		3.04

Total		100,882		110,590		3.13			3.24		3.02		3.62

Liquidating portfolio
California		2,024		2,555		5.50			6.66		12.64		15.19
Florida		265		330		7.02			8.85		11.56		13.72
Arizona		116		149		6.64			6.91		17.51		20.89
Texas		97		125		0.93			2.02		2.89		2.81
Minnesota		75		91		2.83			5.39		7.67		9.57
Other		3,133		3,654		4.13			4.53		6.88		7.48

Total		5,710		6,904		4.73			5.54		9.36		10.90

Total core and liquidating portfolios	$	106,592		117,494		3.22			3.37		3.37		4.08

(1)

Consists predominantly of real estate 1-4 family junior lien mortgages and first and junior lines of credit secured by real estate, but excludes PCI loans because their losses are generally covered by PCI accounting adjustment at the date of acquisition, and excludes real estate 1-4 family first lien open-ended line reverse mortgages because they do not have scheduled payments. These reverse mortgage loans are insured by the FHA.

(2)	Includes $1.5 billion and $1.7 billion at December 31, 2011 and 2010, respectively, associated with the Pick-a-Pay portfolio.

CREDIT CARDS Our credit card portfolio totaled $22.8 billion at December 31, 2011, which represented 3% of our total outstanding loans. Net charge-offs were 5.58% of average loans for 2011, down from 9.74% in 2010.

OTHER REVOLVING CREDIT AND INSTALLMENT Other revolving credit and installment loans totaled $86.5 billion at December 31, 2011, and predominantly include automobile, student and security-based margin loans. The loss rate for other revolving credit and installment loans was 1.22% of average loans for 2011 compared with 1.94% for 2010. Excluding government guaranteed student loans, the loss rates were 1.46% and 2.43% of average loans for 2011 and 2010, respectively.

NONACCRUAL LOANS AND FORECLOSED ASSETS (NPA s) Table 28 shows the five-year trend for NPAs and Table 29 summarizes NPAs for each of the four quarters of 2011. We generally place loans on nonaccrual status when:

•

the full and timely collection of interest or principal becomes uncertain (generally based on an assessment of the borrower’s financial condition and the adequacy of collateral, if any);

•

they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest

or principal, unless both well-secured and in the process of collection; or

•

part of the principal balance has been charged off and no restructuring has occurred.

Note 1 (Summary of Significant Accounting Policies – Loans) to Financial Statements in this Report describes our accounting policy for nonaccrual and impaired loans.

Table 28: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)



	December 31,

(in millions)	2011			2010		2009		2008		2007

Nonaccrual loans:
Commercial:
Commercial and industrial	$	2,142			3,213		4,397		1,253		432
Real estate mortgage		4,085			5,227		3,696		594		128
Real estate construction		1,890			2,676		3,313		989		293
Lease financing		53			108		171		92		45
Foreign		47			127		146		57		45

Total commercial (1)		8,217			11,351		11,723		2,985		943

Consumer:
Real estate 1-4 family first mortgage (2)		10,913			12,289		10,100		2,648		1,272
Real estate 1-4 family junior lien mortgage		1,975			2,302		2,263		894		280
Other revolving credit and installment		199			300		332		273		184

Total consumer		13,087			14,891		12,695		3,815		1,736

Total nonaccrual loans (3)(4)(5)		21,304			26,242		24,418		6,800		2,679

As a percentage of total loans		2.77	%		3.47		3.12		0.79		0.70
Foreclosed assets:
Government insured/guaranteed (6)	$	1,319			1,479		960		667		535
Non-government insured/guaranteed		3,342			4,530		2,199		1,526		649

Total foreclosed assets		4,661			6,009		3,159		2,193		1,184

Total nonperforming assets	$	25,965			32,251		27,577		8,993		3,863

As a percentage of total loans		3.37	%		4.26		3.52		1.04		1.01

(1)	Includes LHFS of $25 million, $3 million and $27 million at December 31, 2011, 2010 and 2009, respectively.

(2)	Includes MHFS of $301 million, $426 million, $339 million, $193 million and $222 million at December 31, 2011, 2010, 2009, 2008 and 2007, respectively.

(3)	Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms.

(4)

Real estate 1-4 family mortgage loans insured by the FHA or guaranteed by the VA and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status because they are insured or guaranteed.

(5)	See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further information on impaired loans.

(6)

Consistent with regulatory reporting requirements, foreclosed real estate securing government insured/guaranteed loans is classified as nonperforming. Both principal and interest for government insured/guaranteed loans secured by the foreclosed real estate are collectible because the loans are insured by the FHA or guaranteed by the VA.

Risk Management – Credit Risk Management (continued)

Table 29: Nonperforming Assets During 2011



	December 31, 2011						September 30, 2011						June 30, 2011						March 31, 2011

($ in millions)	Balances			% of total loans			Balances			% of total loans			Balances			% of total loans			Balances			% of total loans

Nonaccrual loans:
Commercial:
Commercial and industrial	$	2,142			1.28	%	$	2,128			1.29	%	$	2,393			1.52	%	$	2,653			1.76	%
Real estate mortgage		4,085			3.85			4,429			4.24			4,691			4.62			5,239			5.18
Real estate construction		1,890			9.75			1,915			9.71			2,043			9.56			2,239			9.79
Lease financing		53			0.40			71			0.55			79			0.61			95			0.73
Foreign		47			0.12			68			0.18			59			0.16			86			0.24

Total commercial		8,217			2.38			8,611			2.53			9,265			2.80			10,312			3.19

Consumer:
Real estate 1-4 family first mortgage		10,913			4.77			11,024			4.93			11,427			5.13			12,143			5.36
Real estate 1-4 family junior lien mortgage		1,975			2.30			2,035			2.31			2,098			2.33			2,235			2.40
Other revolving credit and installment		199			0.23			230			0.27			255			0.29			275			0.31

Total consumer		13,087			3.09			13,289			3.16			13,780			3.27			14,653			3.42

Total nonaccrual loans		21,304			2.77			21,900			2.88			23,045			3.06			24,965			3.32

Foreclosed assets:
Government insured/guaranteed		1,319						1,336						1,320						1,457
Non-government insured/guaranteed		3,342						3,608						3,541						4,055

Total foreclosed assets		4,661						4,944						4,861						5,512

Total nonperforming assets	$	25,965			3.37	%	$	26,844			3.53	%	$	27,906			3.71	%	$	30,477			4.06	%

Reduction in NPAs from prior quarter	$	(879	)					(1,062	)					(2,571	)					(1,774	)

Total NPAs were $26.0 billion (3.37% of total loans) at December 31, 2011, and included $21.3 billion of nonaccrual loans and $4.7 billion of foreclosed assets. Nonaccrual loans

declined throughout 2011. Table 30 provides an analysis of the changes in nonaccrual loans.

Table 30: Analysis of Changes in Nonaccrual Loans



	Quarter ended

(in millions)	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011

Commercial nonaccrual loans
Balance, beginning of quarter	$	8,611			9,265			10,312			11,351
Inflows		1,329			1,148			1,622			1,881
Outflows:
Returned to accruing		(185	)		(275	)		(501	)		(496	)
Foreclosures		(161	)		(156	)		(174	)		(192	)
Charge-offs		(382	)		(397	)		(399	)		(522	)
Payments, sales and other (1)		(995	)		(974	)		(1,595	)		(1,710	)

Total outflows		(1,723	)		(1,802	)		(2,669	)		(2,920	)

Balance, end of quarter		8,217			8,611			9,265			10,312

Consumer nonaccrual loans
Balance, beginning of quarter		13,289			13,780			14,653			14,891
Inflows		3,465			3,544			3,443			3,955
Outflows:
Returned to accruing		(1,277	)		(1,411	)		(1,562	)		(1,670	)
Foreclosures		(209	)		(286	)		(221	)		(269	)
Charge-offs		(1,404	)		(1,385	)		(1,494	)		(1,545	)
Payments, sales and other (1)		(777	)		(953	)		(1,039	)		(709	)

Total outflows		(3,667	)		(4,035	)		(4,316	)		(4,193	)

Balance, end of quarter		13,087			13,289			13,780			14,653

Total nonaccrual loans		21,304			21,900			23,045			24,965

(1)	Other outflows include the effects of VIE deconsolidations and adjustments for loans carried at fair value.

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that reach a specified past due status, offset by reductions for loans that are charged off, sold, transferred to foreclosed properties, or are no longer classified as nonaccrual as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities.

While nonaccrual loans are not free of loss content, we believe the estimated loss exposure remaining in these balances is significantly mitigated by four factors. First, 99% of consumer nonaccrual loans and 96% of commercial nonaccrual loans are secured. Of the $13.1 billion of consumer nonaccrual loans at December 31, 2011, 99% are secured by real estate and 36% have a combined LTV (CLTV) ratio of 80% or below. Second, losses have already been recognized on 51% of the remaining balance of consumer nonaccruals and commercial nonaccruals have been written down by $2.1 billion. Generally, when a consumer real estate loan is 120 days past due, we transfer it to nonaccrual status. When the loan reaches 180 days past due it is our policy to write these loans down to net realizable value (fair value of collateral less estimated costs to sell), except for modifications in their trial period that are not written down as long as trial payments are made on time. Thereafter, we revalue each loan regularly and recognize additional write-downs if needed. Third, as of December 31, 2011, 58% of commercial nonaccrual loans were current on interest. Fourth, the risk of loss for all nonaccruals has been

considered and we believe is appropriately covered by the allowance for loan losses.

Under both our proprietary modification programs and the MHA programs, customers may be required to provide updated documentation, and some programs require completion of trial payment periods to demonstrate sustained performance, before the loan can be removed from nonaccrual status. In addition, for loans in foreclosure, many states, including California, Florida and New Jersey, have enacted legislation that significantly increases the time frames to complete the foreclosure process, meaning that loans will remain in nonaccrual status for longer periods.

If interest due on all nonaccrual loans (including loans that were, but are no longer on nonaccrual at year end) had been accrued under the original terms, approximately $1.1 billion of interest would have been recorded as income on these loans, compared with $344 million actually recorded as interest income in 2011 versus $1.3 billion and $362 million, respectively, in 2010.

Table 31 provides a summary of foreclosed assets and an analysis of the changes.

Risk Management – Credit Risk Management (continued)

Table 31: Foreclosed Assets

(in millions)

Dec. 31,
2011

Sept. 30,
2011

June 30,
2011

Mar. 31,
2011

Dec. 31,
2010

Government insured/guaranteed (1)

1,319

1,336

1,320

1,457

1,479

PCI loans:

Commercial

840

1,079

993

1,005

967

Consumer

465

530

469

741

1,068

Total PCI loans

1,305

1,609

1,462

1,746

2,035

All other loans:

Commercial

1,379

1,322

1,409

1,408

1,412

Consumer

658

677

670

901

1,083

Total all other loans

2,037

1,999

2,079

2,309

2,495

Total foreclosed assets

4,661

4,944

4,861

5,512

6,009

Analysis of changes in foreclosed assets

Balance, beginning of quarter

4,944

4,861

5,512

6,009

6,127

Net change in government insured/guaranteed (2)

(17

)

(137

)

(22

)

(13

)

Additions to foreclosed assets

934

1,440

880

1,361

2,099

Reductions:

Sales

(1,123

)

(1,260

)

(1,294

)

(1,656

)

(1,790

)

Write-downs and loss on sales

(77

)

(113

)

(100

)

(180

)

(414

)

Total reductions

(1,200

)

(1,373

)

(1,394

)

(1,836

)

(2,204

)

Balance, end of quarter

4,661

4,944

4,861

5,512

6,009

(1)

(2)

Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA. The net change in government insured/guaranteed foreclosed assets is made up of inflows from MHFI and MHFS, and outflows when we are reimbursed by FHA/VA.

NPAs at December 31, 2011, included $1.3 billion of foreclosed real estate that is FHA insured or VA guaranteed and expected to have little to no loss content, and $3.3 billion of foreclosed assets, which have been written down to estimated net realizable value. Foreclosed assets decreased $1.3 billion, or 22%, in 2011 from December 31, 2010. Of this decrease, $730 million were foreclosed loans from the PCI portfolio. At December 31, 2011, 74% of our foreclosed assets of $4.7 billion have been in the foreclosed assets portfolio one year or less. Given our real estate-secured loan concentrations and current economic conditions, we anticipate we will continue to hold a high level of NPAs on our balance sheet.

We process foreclosures on a regular basis for the loans we service for others as well as those we hold in our loan portfolio. We use foreclosure, however, only as a last resort for dealing with borrowers experiencing financial hardships. We employ extensive contact and restructuring procedures to attempt to find other solutions for our borrowers. We maintain appropriate staffing in our workout and collection teams to ensure troubled borrowers receive appropriate attention and assistance.

TROUBLED DEBT RESTRUCTURINGS (TDRs)

Table 32: Troubled Debt Restructurings (TDRs) (1)



(in millions)	Dec. 31, 2011		Sept. 30, 2011		June 30, 2011		Mar. 31, 2011

Commercial TDRs
Commercial and industrial	$	2,026		2,192		1,821		1,251
Real estate mortgage		2,262		1,752		1,444		1,152
Real estate construction		1,008		795		694		711
Leasing		33		51		84		25
Foreign		20		9		10		6

Total commercial TDRs		5,349		4,799		4,053		3,145

Consumer TDRs
Real estate 1-4 family first mortgage		13,799		13,512		12,938		12,261
Real estate 1-4 family junior lien mortgage		1,986		1,975		1,910		1,824
Other revolving credit and installment		872		875		838		859
Trial modifications (2)		651		668		942		944

Total consumer TDRs		17,308		17,030		16,628		15,888

Total TDRs	$	22,657		21,829		20,681		19,033

TDRs on nonaccrual status	$	6,811		6,758		6,568		6,129
TDRs on accrual status		15,846		15,071		14,113		12,904

Total TDRs	$	22,657		21,829		20,681		19,033

(1)

Amounts reported for June 30 and March 31, 2011, have been revised to reflect the retrospective adoption from the beginning of 2011 during third quarter 2011 of ASU 2011-02, which provides guidance under what circumstances a restructured loan should be classified as a TDR. The impact of adopting ASU 2011-02 increased total commercial TDRs by $1.5 billion and $793 million at June 30 and March 31, 2011, respectively.

(2)

Based on clarifying guidance from the Securities and Exchange Commission (SEC) received in December 2011, we classify trial modifications as TDRs at the beginning of the trial period. For many of our consumer real estate modification programs, we may require a borrower to make trial payments generally for a period of three to four months. Prior to the SEC clarification, we classified trial modifications as TDRs once a borrower successfully completed the trial period in accordance with the terms.

Table 32 provides information regarding the recorded investment of loans modified in TDRs. It reflects the retrospective adoption from the beginning of 2011 of ASU 2011-2, which provided additional guidance for classifying modifications as TDRs. This new guidance specifically clarifies, among other things, the definition of a concession, including how to evaluate modified loan terms against terms that would be commensurate for loans with similar credit risk. For our commercial loan modifications, we do not typically modify principal through forgiveness or forbearance or reduce the contractual interest rate. In fact, in many cases, we obtain higher rates of interest, additional collateral or guarantor support, or other improvements to the terms. Certain commercial loan modifications are now classified as TDRs under the clarified guidance. The allowance for loan losses for TDRs was $5.2 billion and $3.9 billion at December 31, 2011 and 2010, respectively. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for more information.

We do not forgive principal for a majority of our TDRs, but in those situations where principal is forgiven, the entire amount of such principal forgiveness is immediately charged off to the extent not done so prior to the modification. We sometimes delay the timing on the repayment of a portion of principal (principal forbearance) and charge off the amount of forbearance if that amount is not considered fully collectible.

Our nonaccrual policies are generally the same for all loan types when a restructuring is involved. We underwrite loans at the time of restructuring to determine whether there is sufficient evidence of sustained repayment capacity based on the borrower’s documented income, debt to income ratios, and other factors. Loans lacking sufficient evidence of sustained repayment capacity at the time of modification are charged down to the fair value of the collateral, if applicable. For an accruing loan that has been modified, if the borrower has demonstrated performance under the previous terms and the underwriting process shows the capacity to continue to perform under the restructured terms, the loan will remain in accruing status. Otherwise, the loan will be placed in nonaccrual status until the borrower demonstrates a sustained period of performance, generally six consecutive months of payments, or equivalent, inclusive of consecutive payments made prior to modification. Loans will also be placed on nonaccrual, and a corresponding charge-off is recorded to the loan balance, if we believe that principal and interest contractually due under the modified agreement will not be collectible.

Risk Management – Credit Risk Management (continued)

Table 33 provides an analysis of the changes in TDRs.

Table 33: Analysis of Changes in TDRs



	Quarter ended

(in millions)	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011

Commercial TDRs
Balance, beginning of quarter	$	4,799			4,053			3,145			1,751
Inflows		1,271			1,321			1,275			1,512
Outflows
Charge-offs		(84	)		(68	)		(36	)		(64	)
Foreclosures		(16	)		(23	)		(21	)		(4	)
Payments, sales and other (1)		(621	)		(484	)		(310	)		(50	)

Balance, end of quarter		5,349			4,799			4,053			3,145

Consumer TDRs
Balance, beginning of quarter		17,030			16,628			15,888			14,929
Inflows		904			1,455			1,574			1,740
Outflows
Charge-offs		(261	)		(290	)		(289	)		(251	)
Foreclosures		(33	)		(39	)		(33	)		(39	)
Payments, sales and other (1)		(315	)		(450	)		(510	)		(513	)
Net change in trial modifications (2)		(17	)		(274	)		(2	)		22

Balance, end of quarter		17,308			17,030			16,628			15,888

Total TDRs	$	22,657			21,829			20,681			19,033

(1)	Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale.

(2)

Net change in trial modifications is made up of inflows of new TDRs entering trial payment period, and outflows of modifications that successfully perform and enter into a permanent modification or do not perform according to the terms of the trial period plan, and as a result are charged-off or moved to foreclosure. Our recent experience is that most of the mortgages that enter a trial payment period program are successful in completing the program requirements.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Loans 90 days or more past due as to interest or principal are still accruing if they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $8.7 billion, $11.6 billion and $16.1 billion at December 31, 2011, 2010 and 2009, respectively, are excluded from this disclosure even though they are 90 days or more contractually past due. These PCI loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

Excluding insured/guaranteed loans, loans 90 days or more past due and still accruing at December 31, 2011, were down $601 million, or 23%, from December 31, 2010. The decline was due to loss mitigation activities including modifications and

increased collection capacity/process improvements, charge-offs, lower early stage delinquency levels and credit stabilization. Loans 90 days or more past due and still accruing whose repayments are insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $20.5 billion at December 31, 2011, up from $15.8 billion at December 31, 2010, due primarily to growth in the FHA/VA portfolio over the past two years and the subsequent seasoning of those loans.

Table 34 reflects non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 34: Loans 90 Days or More Past Due and Still Accruing



	December 31,

(in millions)	2011		2010		2009		2008		2007

Loans 90 days or more past due and still accruing:
Total (excluding PCI)	$	22,569		18,488		22,188		11,831		6,393
Less: FHA Insured/VA guaranteed (1)		19,240		14,733		15,336		8,185		4,834
Less: Student loans guaranteed under the FFELP (2)		1,281		1,106		994		765		333

Total, not government insured/guaranteed	$	2,048		2,649		5,858		2,881		1,226

By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	153		308		590		218		32
Real estate mortgage		256		104		1,014		70		10
Real estate construction		89		193		909		250		24
Foreign		6		22		73		34		52

Total commercial		504		627		2,586		572		118

Consumer:
Real estate 1-4 family first mortgage (3)		781		941		1,623		883		286
Real estate 1-4 family junior lien mortgage (3)		279		366		515		457		201
Credit card		346		516		795		687		402
Other revolving credit and installment		138		199		339		282		219

Total consumer		1,544		2,022		3,272		2,309		1,108

Total, not government insured/guaranteed	$	2,048		2,649		5,858		2,881		1,226

(1)	Represents loans whose repayments are insured by the FHA or guaranteed by the VA.

(2)	Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP).

(3)	Includes mortgages held for sale 90 days or more past due and still accruing.

Risk Management – Credit Risk Management (continued)

NET CHARGE-OFFS

Table 35: Net Charge-offs



	Year ended					Quarter ended

	December 31,					December 31,						September 30,					June 30,					March 31,

($ in millions)	Net loan charge- offs		% of avg. loans			Net loan charge- offs			% of avg. loans (1)			Net loan charge- offs		% of avg. loans (1)			Net loan charge- offs		% of avg. loans (1)			Net loan charge- offs		% of avg. loans (1)

2011
Commercial:
Commercial and industrial	$	1,179		0.75	%	$	310			0.74	%	$	261		0.65	%	$	254		0.66	%	$	354		0.96	%
Real estate mortgage		493		0.48			117			0.44			96		0.37			128		0.50			152		0.62
Real estate construction		205		0.95			(5	)		(0.09	)		55		1.06			72		1.32			83		1.38
Lease financing		14		0.11			4			0.13			3		0.11			1		0.01			6		0.18
Foreign		128		0.35			45			0.45			8		0.08			47		0.52			28		0.34

Total commercial		2,019		0.61			471			0.54			423		0.50			502		0.62			623		0.79

Consumer:
Real estate 1-4 family first mortgage		3,478		1.53			844			1.46			821		1.46			909		1.62			904		1.60
Real estate 1-4 family junior lien mortgage		3,545		3.91			800			3.64			842		3.75			909		3.97			994		4.25
Credit card		1,198		5.58			256			4.63			266		4.90			294		5.63			382		7.21
Other revolving credit and installment		1,059		1.22			269			1.24			259		1.19			224		1.03			307		1.42

Total consumer		9,280		2.18			2,169			2.02			2,188		2.06			2,336		2.21			2,587		2.42

Total	$	11,299		1.49	%	$	2,640			1.36	%	$	2,611		1.37	%	$	2,838		1.52	%	$	3,210		1.73	%


2010
Commercial:
Commercial and industrial	$	2,348		1.57	%	$	500			1.34	%	$	509		1.38	%	$	689		1.87	%	$	650		1.68	%
Real estate mortgage		1,083		1.10			234			0.94			218		0.87			360		1.47			271		1.12
Real estate construction		1,079		3.45			171			2.51			276		3.72			238		2.90			394		4.45
Lease financing		100		0.74			21			0.61			23		0.71			27		0.78			29		0.85
Foreign		145		0.49			28			0.36			39		0.52			42		0.57			36		0.52

Total commercial		4,755		1.47			954			1.19			1,065		1.33			1,356		1.69			1,380		1.68

Consumer:
Real estate 1-4 family first mortgage		4,378		1.86			1,024			1.77			1,034		1.78			1,009		1.70			1,311		2.17
Real estate 1-4 family junior lien mortgage		4,723		4.65			1,005			4.08			1,085		4.30			1,184		4.62			1,449		5.56
Credit card		2,178		9.74			452			8.21			504		9.06			579		10.45			643		11.17
Other revolving credit and installment		1,719		1.94			404			1.84			407		1.83			361		1.64			547		2.45

Total consumer		12,998		2.90			2,885			2.63			3,030		2.72			3,133		2.79			3,950		3.45

Total	$	17,753		2.30	%	$	3,839			2.02	%	$	4,095		2.14	%	$	4,489		2.33	%	$	5,330		2.71	%

(1)	Quarterly net charge-offs as a percentage of average loans are annualized.

Table 35 presents net charge-offs for the four quarters and full year of 2011 and 2010. Net charge-offs in 2011 were $11.3 billion (1.49% of average total loans outstanding) compared with $17.8 billion (2.30%) in 2010. Total net charge-offs decreased in 2011 due in part to modestly improving economic conditions, aggressive loss mitigation activities aimed at working with our customers through their financial challenges, and a runoff of the pool of the most challenged vintages/relationships in the portfolio. Total net charge-offs decreased in each of the first three quarters of the year and were essentially flat in fourth quarter 2011.

Net charge-offs in the 1-4 family first mortgage portfolio totaled $3.5 billion in 2011, compared with $4.4 billion a year ago.

Net charge-offs in the real estate 1-4 family junior lien portfolio decreased $1.2 billion to $3.5 billion in 2011. More information about the home equity portfolio, which includes substantially all of our real estate 1-4 family junior lien mortgage loans, is available in Table 27 in this Report and the related discussion.

Credit card charge-offs decreased $980 million to $1.2 billion in 2011. Delinquency levels stabilized and loss levels continued to improve in 2011 as the economy showed signs of stabilization.

Commercial net charge-offs were $2.0 billion in 2011 compared with $4.8 billion in 2010, as market liquidity and improving market conditions helped stabilize performance results.

ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio and unfunded credit commitments at the balance sheet date, excluding loans carried at fair value. The detail of the changes in the allowance for credit losses by portfolio segment (including charge-offs and recoveries by loan class) is in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

We employ a disciplined process and methodology to establish our allowance for credit losses each quarter. This process takes into consideration many factors, including historical and forecasted loss trends, loan-level credit quality ratings and loan grade-specific loss factors. The process involves subjective as well as complex judgments. In addition, we review a variety of credit metrics and trends. These trends, however, do not solely determine the appropriate allowance amount as we use several analytical tools. For additional information on our allowance for credit losses, see the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

We believe the allowance for credit losses of $19.7 billion at December 31, 2011, was appropriate to cover credit losses inherent in the loan portfolio, including unfunded credit commitments, at December 31, 2011. The allowance for credit losses is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the allowance for credit losses to changes in the business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. In addition to the allowance for credit losses there was $10.7 billion and $13.4 billion of nonaccretable difference at December 31, 2011 and 2010, respectively, to absorb losses for PCI loans.

As a result of PCI accounting, the book value of high risk loans was written down at the time of acquisition. Therefore, the allowance for credit losses is lower than otherwise would have been required without PCI loan accounting and certain ratios of the Company may not be directly comparable with periods prior to the merger or with credit-related ratios of other financial institutions. For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

The ratio of the allowance for credit losses to total nonaccrual loans may fluctuate significantly from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength and the value and marketability of collateral. Over half of nonaccrual loans were home mortgages, auto and other consumer loans at December 31, 2011.

Risk Management – Credit Risk Management (continued)

The $3.7 billion decline in the allowance for loan losses in 2011 reflected the release of allowance due to lower levels of inherent credit loss in the portfolio compared with prior year-end levels. Total provision for credit losses was $7.9 billion in 2011, $15.8 billion in 2010 and $21.7 billion in 2009. The 2011 provision was $3.4 billion less than net charge-offs. Primary drivers of the 2011 provision reduction were decreased net charge-offs and continued improvement in the credit quality of the commercial and consumer portfolios and related loss estimates as seen in declining delinquency and nonperforming loan levels. Absent significant deterioration in the economy, we expect future allowance releases in 2012, although at more modest levels.

In 2010, the provision of $15.8 billion was $2.0 billion less than net charge-offs. The reduction in the provision was primarily due to continued improvement in the consumer portfolios and related loss estimates and improvement in economic conditions. These drivers were partially offset by an increase in impaired loans and related allowance primarily associated with increased consumer loan modification efforts and a $693 million addition to the allowance due to adoption of consolidation accounting guidance on January 1, 2010.

In 2009, the provision of $21.7 billion was $3.5 billion greater than net charge-offs. Primary drivers of the 2009 provision were deterioration in economic conditions that increased the projected losses in our commercial portfolios, additional allowance associated with loan modification programs designed to keep qualifying borrowers in their homes, and the establishment of additional allowance for PCI loans.

In determining the appropriate allowance attributable to our residential real estate portfolios, the loss rates used in our analysis include the impact of our established loan modification programs. When modifications occur or are probable to occur, our allowance considers the impact of these modifications, taking into consideration the associated credit cost, including re-defaults of modified loans and projected loss severity. The loss content associated with existing and probable loan modifications has been considered in our allowance reserving methodology.

Changes in the allowance reflect changes in statistically derived loss estimates, historical loss experience, current trends in borrower risk and/or general economic activity on portfolio performance, and management’s estimate for imprecision and uncertainty, including ongoing discussions with regulatory and government agencies regarding mortgage foreclosure-related matters.

Table 36 presents an analysis of the allowance for credit losses by loan segments and classes for the last five years.

Table 36: Allocation of the Allowance for Credit Losses (ACL)



	December 31,

	2011					2010					2009(1)					2008(1)					2007

(in millions)	ACL		Loans as % of total loans			ACL		Loans as % of total loans			ACL		Loans as % of total loans			ACL		Loans as % of total loans			ACL		Loans as % of total loans

Commercial:
Commercial and industrial	$	2,649		22	%	$	3,299		20	%	$	4,014		20	%	$	4,129		23	%	$	1,137		24	%
Real estate mortgage		2,550		14			3,072		13			2,398		12			931		11			288		9
Real estate construction		893		2			1,387		4			1,242		5			1,103		5			156		5
Lease financing		82		2			173		2			181		2			135		2			51		2
Foreign		185		5			237		4			306		4			265		4			144		2

Total commercial		6,358		45			8,169		43			8,141		43			6,563		45			1,776		42

Consumer:
Real estate 1-4 family first mortgage		6,934		30			7,603		30			6,449		29			4,938		28			415		19
Real estate 1-4 family junior lien mortgage		3,897		11			4,557		13			5,430		13			4,496		13			1,329		20
Credit card		1,294		3			1,945		3			2,745		3			2,463		3			834		5
Other revolving credit and installment		1,185		11			1,189		11			2,266		12			3,251		11			1,164		14

Total consumer		13,310		55			15,294		57			16,890		57			15,148		55			3,742		58

Total	$	19,668		100	%	$	23,463		100	%	$	25,031		100	%	$	21,711		100	%	$	5,518		100	%



	December 31,

	2011					2010					2009					2008					2007

Components:
Allowance for loan losses	$			19,372					23,022					24,516					21,013					5,307
Allowance for unfunded credit commitments				296					441					515					698					211

Allowance for credit losses	$			19,668					23,463					25,031					21,711					5,518

Allowance for loan losses as a percentage of total loans				2.52	%				3.04					3.13					2.43					1.39
Allowance for loan losses as a percentage of total net charge-offs				171					130					135					268					150
Allowance for credit losses as a percentage of total loans				2.56					3.10					3.20					2.51					1.44
Allowance for credit losses as a percentage of total nonaccrual loans				92					89					103					319					206

(1)	Certain amounts have been revised from previous presentation to conform with the allocation methodology used in 2011 and to recognize a reclassification of loans from commercial real estate to commercial construction that occurred on a retrospective basis in 2010.

Risk Management – Credit Risk Management (continued)

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES We sell residential mortgage loans to various parties, including (1) government-sponsored entities Freddie Mac and Fannie Mae (GSEs) who include the mortgage loans in GSE-guaranteed mortgage securitizations, (2) SPEs that issue private label MBS, and (3) other financial institutions that purchase mortgage loans for investment or private label securitization. In addition, we pool FHA-insured and VA-guaranteed mortgage loans that back securities guaranteed by GNMA. We may be required to repurchase these mortgage loans, indemnify the securitization trust, investor or insurer, or reimburse the securitization trust, investor or insurer for credit losses incurred on loans (collectively “repurchase”) in the event of a breach of contractual representations or warranties that is not remedied within a period (usually 90 days or less) after we receive notice of the breach.

We have established a mortgage repurchase liability related to various representations and warranties that reflect management’s estimate of losses for loans for which we have a repurchase obligation, whether or not we currently service those loans, based on a combination of factors. Our mortgage repurchase liability estimation process also incorporates a forecast for repurchase demands associated with mortgage insurance rescission activity. Currently, repurchase demands primarily relate to 2006 through 2008 vintages and to GSE-guaranteed MBS.

During 2011, we continued to experience elevated levels of repurchase activity measured by the number of investor repurchase demands and our level of repurchases. We repurchased or reimbursed investors for incurred losses on mortgage loans with original balances of $2.8 billion in 2011, compared with $2.6 billion in 2010. Additionally, we negotiated settlements on pools of mortgage loans with original sold balances of $341 million in 2011, compared with $675 million in 2010, to eliminate the risk of repurchase on these loans. We incurred net losses on repurchased loans, investor reimbursements and loan pool global settlements totaling $1.2 billion in 2011, compared with $1.4 billion in 2010.

Table 37 provides the number of unresolved repurchase demands and mortgage insurance rescissions. We do not typically receive repurchase requests from GNMA, FHA/HUD or VA. As an originator of an FHA insured or VA guaranteed loan, we are responsible for obtaining the insurance with FHA or the guarantee with the VA. To the extent we are not able to obtain the insurance or the guarantee we must request to repurchase the loan from the GNMA pool. Such repurchases from GNMA pools typically represent a self-initiated process upon discovery of the uninsurable loan (usually within 180 days from funding of the loan). Alternatively, in lieu of repurchasing loans from GNMA pools, we may be asked by the FHA/HUD or the VA to indemnify them (as applicable) for defects found in the Post Endorsement Technical Review process or audits performed by FHA/HUD or the VA. Our liability for mortgage loan repurchase losses incorporates probable losses associated with such indemnification.

Table 37: Unresolved Repurchase Demands and Mortgage Insurance Rescissions



	Government sponsored entities (1)				Private				Mortgage insurance rescissions with no demand (2)				Total

($ in millions)	Number of loans		Original loan balance (3)		Number of loans		Original loan balance (3)		Number of loans		Original loan balance (3)		Number of loans		Original loan balance (3)

2011
December 31,		7,066	$	1,575		470	$	167		1,178	$	268		8,714	$	2,010
September 30,		6,577		1,500		582		208		1,508		314		8,667		2,022
June 30,		6,876		1,565		695		230		2,019		444		9,590		2,239
March 31,		6,210		1,395		1,973		424		2,885		674		11,068		2,493

2010
December 31,		6,501		1,467		2,899		680		3,248		801		12,648		2,948
September 30,		9,887		2,212		3,605		882		3,035		748		16,527		3,842
June 30,		12,536		2,840		3,160		707		2,979		760		18,675		4,307
March 31,		10,804		2,499		2,320		519		2,843		737		15,967		3,755

(1)

Includes repurchase demands of 861 and $161 million, 878 and $173 million, 892 and $179 million, 685 and $132 million, 1,495 and $291 million, 2,263 and $437 million, 2,141 and $417 million, and 1,824 and $372 million for December 31, September 30, June 30 and March 31, 2011 and 2010, respectively, received from investors on mortgage servicing rights acquired from other originators. We generally have the right of recourse against the seller and may be able to recover losses related to such repurchase demands subject to counterparty risk associated with the seller.

(2)

As part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Similar to repurchase demands, we evaluate mortgage insurance rescission notices for validity and appeal for reinstatement if the rescission was not based on a contractual breach. When investor demands are received due to lack of mortgage insurance, they are reported as unresolved repurchase demands based on the applicable investor category for the loan (GSE or private). Over the last year, approximately 20% of our repurchase demands from GSEs had mortgage insurance rescission as one of the reasons for the repurchase demand. Of all the mortgage insurance rescissions notices received in 2010, approximately 70% have resulted in repurchase demands through December 2011. Not all mortgage insurance rescissions received in 2010 have been completed through the appeals process with the mortgage insurer and upon successful appeal, we work with the investor to rescind the repurchase demand.

(3)

While the original loan balances related to these demands are presented above, the establishment of the repurchase liability is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third-party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property.

The level of repurchase demands outstanding at December 31, 2011, was down from a year ago in both number of outstanding loans and in total dollar balances as we continued to work through the demands. Customary with industry practice, we have the right of recourse against correspondent lenders from whom we have purchased loans with respect to representations and warranties. Of total repurchase demands and mortgage insurance recissions outstanding as of December 31, 2011, presented in Table 37, approximately 20% relate to loans purchased from correspondent lenders. Due primarily to the financial difficulties of some correspondent lenders, we typically recover on average approximately 50% of losses from these lenders. Historical recovery rates as well as projected lender performance are incorporated in the establishment of our mortgage repurchase liability.

Our liability for repurchases, included in “Accrued expenses and other liabilities” in our consolidated financial statements, was $1.3 billion at both December 31, 2011 and 2010. In 2011 $1.3 billion of additions to the liability were recorded, which reduced net gains on mortgage loan origination/sales activities, compared with $1.6 billion in 2010. Our additions to the repurchase liability in 2011 and 2010 predominately reflect updated assumptions about probable future demands on prior vintages. This increase in our estimate for probable future demands in 2011 was primarily due to an increase in repurchase demands from the GSEs on the 2006-2008 vintages with a higher than anticipated increase from the Federal National Mortgage Association (FNMA) in the latter half of 2011.

We believe we have a high quality residential mortgage loan servicing portfolio. Of the $1.8 trillion in the residential mortgage loan servicing portfolio at December 31, 2011, 92% was current, less than 2% was subprime at origination, and less than 1% was home equity securitizations. Our combined delinquency and foreclosure rate on this portfolio was 7.96% at December 31, 2011, compared with 8.02% at December 31, 2010. In this portfolio 5% are private label securitizations where we originated the loan and therefore have some repurchase risk. We believe the risk of repurchase in our private label securitizations is substantially reduced, relative to other private label securitizations, because approximately half of this portfolio of private label securitizations that include our mortgage loans do not contain representations and warranties regarding borrower or other third party misrepresentations related to the mortgage loan, general compliance with underwriting guidelines, or property valuation, which are commonly asserted bases for repurchase. For this 5% private label securitization segment of our residential mortgage loan servicing portfolio, 58% are loans from 2005 vintages or earlier (weighted average age of 75 months); 79% were prime at origination; and approximately 66% are jumbo loans. The weighted-average LTV as of December 31, 2011, for this private securitization segment was 78%. We believe the highest risk segment of these private label securitizations is the subprime loans originated in 2006 and 2007. These subprime loans have seller representations and warranties and currently have LTVs close to or exceeding 100%, and represent 9% of the 5% private label securitization portion of the residential mortgage servicing portfolio. We had only $110 million of repurchases related to private label securitizations in 2011. Of the servicing portfolio, 4% is non-agency acquired servicing and 2% is private whole loan sales. We did not underwrite and securitize the non-agency acquired servicing and therefore we have no obligation on that portion of our servicing portfolio to the investor for any repurchase demands arising from origination practices. For the private whole loan segment, while we do have repurchase risk on these prior loan sales, less than 2% were subprime at origination and loans that were sold and subsequently securitized are included in the private label securitization segment discussed above.

Table 38 summarizes the changes in our mortgage repurchase liability.

Risk Management – Credit Risk Management (continued)

Table 38: Changes in Mortgage Repurchase Liability



	Quarter ended

	Dec. 31, 2011			Sept. 30, 2011			June 30, 2011			Mar. 31, 2011			Year ended Dec. 31,

(in millions)													2011			2010

Balance, beginning of period	$	1,194			1,188			1,207			1,289			1,289			1,033
Provision for repurchase losses:
Loan sales		27			19			20			35			101			144
Change in estimate (1)		377			371			222			214			1,184			1,474

Total additions		404			390			242			249			1,285			1,618
Losses		(272	)		(384	)		(261	)		(331	)		(1,248	)		(1,362	)

Balance, end of period	$	1,326			1,194			1,188			1,207			1,326			1,289

(1)	Results from such factors as credit deterioration, changes in investor demand and mortgage insurer practices, and changes in the financial stability of correspondent lenders.

The mortgage repurchase liability of $1.3 billion at December 31, 2011, represents our best estimate of the probable loss that we may incur for various representations and warranties in the contractual provisions of our sales of mortgage loans. Because the level of mortgage loan repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, the level of the liability for mortgage loan repurchase losses is difficult to estimate and requires considerable management judgment. We maintain regular contact with the GSEs and other significant investors to monitor and address their repurchase demand practices and concerns. Because of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses in excess of our recorded liability was $2.1 billion at December 31, 2011, and was determined based upon modifying the assumptions utilized in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions. For additional information on our repurchase liability, see the “Critical Accounting Policies – Liability for Mortgage Loan Repurchase Losses” section and Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

The repurchase liability is predominantly applicable to loans we originated and sold with representations and warranties. Most of these loans are included in our servicing portfolio. Our repurchase liability estimate involves consideration of many factors that influence the key assumptions of what our repurchase volume may be and what loss on average we may incur. Those key assumptions and the sensitivity of the liability to immediate adverse changes in them at December 31, 2011, are presented in Table 39. For additional information about the range of loss that is reasonably possible in excess of the recorded mortgage repurchase liability, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Table 39: Mortgage Repurchase Liability – Sensitivity / Assumptions



(in millions)	Mortgage repurchase liability

Balance at December 31, 2011	$	1,326
Loss on repurchases (1)		40.0	%
Increase in liability from:
10% higher losses	$	133
25% higher losses		333
Repurchase rate assumption		0.3	%
Increase in liability from:
10% higher repurchase rates	$	122
25% higher repurchase rates		304

(1)	Represents total estimated average loss rate on repurchased loans, net of recovery from third party originators, based on historical experience and current economic conditions. The average loss rate includes the impact of repurchased loans for which no loss is expected to be realized.

To the extent that economic conditions and the housing market do not improve or future investor repurchase demands and appeals success rates differ from past experience, we could continue to have increased demands and increased loss severity on repurchases, causing future additions to the repurchase liability. However, some of the underwriting standards that were permitted by the GSEs for conforming loans in the 2006 through 2008 vintages, which significantly contributed to recent levels of repurchase demands, were tightened starting in mid to late 2008. Accordingly, we do not expect a similar rate of repurchase requests from the 2009 and prospective vintages, absent deterioration in economic conditions or changes in investor behavior.

In October 2011, the Arizona Department of Insurance assumed full and exclusive power of management and control of PMI Mortgage Insurance Co. (PMI) and announced that PMI will pay 50% of claim amounts in cash, with the rest deferred. In November 2011, PMI’s parent company, PMI Group Inc., filed for Chapter 11 bankruptcy. Wells Fargo has previously utilized PMI to provide mortgage insurance on certain loans originated and held in our portfolio. Additionally, PMI has provided mortgage insurance on loans originated and sold to third-party investors. For loans sold to third-party investors, there is no additional risk of repurchase loss to Wells Fargo associated with the deferred insurance claim amounts from PMI since this credit

risk is owned by the investor in the loan. We also hold a small amount of residential mortgage-backed securities, which are backed by mortgages with a limited amount of insurance provided by PMI. Because the loans and securities held in our portfolios with PMI insurance support are limited in amount, we do not anticipate the deferred claim payments will result in a material adverse effect on our consolidated financial statements.

RISKS RELATING TO SERVICING ACTIVITIES In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential mortgage loans included in GSE-guaranteed mortgage securitizations, FHA/VA/GNMA-guaranteed mortgage securitizations and private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors. The following discussion summarizes the primary duties and requirements of servicing and related recent industry developments.

General Servicing Duties and Requirements

The loans we service were originated by us or by other mortgage loan originators. As servicer, our primary duties are typically to (1) collect payments due from borrowers, (2) advance certain delinquent payments of principal and interest, (3) maintain and administer any hazard, title or primary mortgage insurance policies relating to the mortgage loans, (4) maintain any required escrow accounts for payment of taxes and insurance and administer escrow payments, (5) foreclose on defaulted mortgage loans or, to the extent consistent with the documents governing a securitization, consider alternatives to foreclosure, such as loan modifications or short sales, and (6) for loans sold into private label securitizations, manage the foreclosed property through liquidation. As master servicer, our primary duties are typically to (1) supervise, monitor and oversee the servicing of the mortgage loans by the servicer, (2) consult with each servicer and use reasonable efforts to cause the servicer to observe its servicing obligations, (3) prepare monthly distribution statements to security holders and, if required by the securitization documents, certain periodic reports required to be filed with the SEC, (4) if required by the securitization documents, calculate distributions and loss allocations on the mortgage-backed securities, (5) prepare tax and information returns of the securitization trust, and (6) advance amounts required by non-affiliated servicers who fail to perform their advancing obligations.

Each agreement under which we act as servicer or master servicer generally specifies a standard of responsibility for actions we take in such capacity and provides protection against expenses and liabilities we incur when acting in compliance with the specified standard. For example, most private label securitization agreements under which we act as servicer or master servicer typically provide that the servicer and the master servicer are entitled to indemnification by the securitization trust for taking action or refraining from taking action in good faith or for errors in judgment. However, we are not indemnified, but rather are required to indemnify the securitization trustee, against any failure by us, as servicer or master servicer, to perform our servicing obligations or against any of our acts or omissions that involve wilful misfeasance, bad

faith or gross negligence in the performance of, or reckless disregard of, our duties. In addition, if we commit a material breach of our obligations as servicer or master servicer, we may be subject to termination if the breach is not cured within a specified period following notice, which can generally be given by the securitization trustee or a specified percentage of security holders. Whole loan sale contracts under which we act as servicer generally include similar provisions with respect to our actions as servicer. The standards governing servicing in GSE-guaranteed securitizations, and the possible remedies for violations of such standards, vary, and those standards and remedies are determined by servicing guides maintained by the GSEs, contracts between the GSEs and individual servicers and topical guides published by the GSEs from time to time. Such remedies could include indemnification or repurchase of an affected mortgage loan.

Foreclosure and Securitization Matters

During fourth quarter 2010, we identified practices where the final steps relating to the execution of foreclosure affidavits, as well as some aspects of the notarization process were not adhered to. Any re-execution or redelivery of any documents in connection with foreclosures will involve costs that may not be legally or otherwise reimbursable to us to the extent they relate to securitized mortgage loans. Further, if the validity of any foreclosure action is challenged by a borrower, whether successfully or not, we may incur significant litigation costs, which may not be reimbursable to us to the extent they relate to securitized mortgage loans. In addition, if a court were to overturn a foreclosure due to errors or deficiencies in the foreclosure process, we may have liability to the borrower if the required process was not followed and such failure resulted in damages to the borrower. We could also have liability to a title insurer that insured the title to the property sold in foreclosure. Any such liabilities may not be reimbursable to us to the extent they relate to a securitized mortgage loan.

When we securitize mortgage loans we have an obligation to deliver mortgage notes, assignments and other critical documents. Although we continue to believe that we delivered all documents in accordance with the requirements of each securitization involving our mortgage loans, if any required document with respect to a securitized mortgage loan sold by us is missing or materially defective, we would be obligated to cure the defect or to repurchase the loan.

To facilitate securitizations it is a common industry practice to record mortgages in the name of Mortgage Electronic Registration Systems, Inc. (MERS). Attorneys general of most states have alleged that this common industry practice creates issues regarding whether a securitization trust has good title to the mortgage loan. MERS is a company that acts as mortgagee of record and as nominee for the owner of the related mortgage note. When mortgages are assigned, such as between an originator and a securitization trust, the change is recorded electronically on a register maintained by MERS. The purpose of MERS is to save borrowers and lenders from having to record assignments of mortgages in county land offices each time ownership of the mortgage note is assigned. Although MERS has been in existence and used for many years, it has recently been

Risk Management – Credit Risk Management (continued)

alleged by attorneys general that having a mortgagee of record that is different from the owner of the mortgage note “breaks the chain of title” and clouds the ownership of the loan. We do not believe that to be the case, and believe that the operative legal principle is that the ownership of a mortgage follows the ownership of the mortgage note, and that a securitization trust should have good title to a mortgage loan if the note is endorsed and delivered to it, regardless of whether MERS is the mortgagee of record or whether an assignment of mortgage is recorded to the trust. However, in order to foreclose on the mortgage loan, it may be necessary for an assignment of the mortgage to be completed by MERS to the trust, in order to comply with state law requirements governing foreclosure. Our practice is to obtain assignments of mortgages from MERS prior to commencing the foreclosure process.

Consent Orders and Settlement in Principle

In April 2011, the Board of Governors of the Federal Reserve System (FRB) and the Office of the Comptroller of the Currency (OCC) issued Consent Orders that require us to correct deficiencies in our residential mortgage loan servicing and foreclosure practices that were identified by federal banking regulators in their fourth quarter 2010 review. The Consent Orders also require that we improve our servicing and foreclosure practices. We have already implemented many of the operational changes that will result from the expanded servicing responsibilities outlined in the Consent Orders.

On February 9, 2012, the OCC and FRB announced the imposition of civil money penalties of $83 million and $85 million, respectively, pursuant to the Consent Orders. These penalties will be satisfied through payments made under a separate simultaneous federal/state settlement in principle, announced on the same day, among the Department of Justice, Department of Housing and Urban Development (HUD), the Department of the Treasury, the Department of Veterans Affairs, the Federal Trade Commission (FTC), the Executive Office of the U.S. Trustee, the Consumer Financial Protection Bureau, a task force of Attorneys General representing 49 states, Wells Fargo, and four other servicers related to investigations of mortgage industry servicing and foreclosure practices. While Oklahoma is not participating in the larger settlement, it is settling separately with the five servicers with a simplified agreement. Under the settlement in principle, the terms of which do not become final until approval of the settlement agreement by the U.S. District Court and execution of a consent order, which will be in effect for three and one-half years (subject to a trailing review period), we have agreed to the following programmatic commitments, consisting of three components totalling $5.3 billion:

•

broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and “anti-blight” provisions designed to reduce the impact on communities of vacant properties. As of December 31, 2011, the expected impact of the Consumer Relief Program was covered in our allowance for credit losses and in the nonaccretable difference relating to our purchased credit-impaired residential mortgage portfolio.

•

Refinance Program For qualified borrowers with little or negative equity in their home and a loan owned and serviced by Wells Fargo, an expanded first-lien refinance program commitment estimated to provide $900 million of aggregate payment relief over the life of the refinanced loans. The Refinance Program will not result in any current-period charge as its impact will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the program.

•

Foreclosure Assistance Payment $1 billion paid directly to the federal government and the participating states for their use to address the impact of foreclosure challenges as they see fit and which may include direct payments to consumers. As of December 31, 2011, we had fully accrued for the Foreclosure Assistance Payment.

California (under a separate California Agreement) and Florida (under a separate Florida Agreement) will receive state-specific sub-commitments totaling $1.95 billion and $1.0 billion, respectively, regarding the amount of Consumer Relief and Refinance Program benefits for these two states as a part of, and not in addition to, the overall commitment to all states for these two programs.

The amount of credit we will receive toward fulfilling our commitments under the Consumer Relief and Refinance Programs will be determined based upon the nature of the modification or other relief to the borrower, the characteristics of the loan and the timing of the modification or relief. The terms of the Consumer Relief and Refinance Programs as well as other servicing matters are discussed in more detail below.

Consumer Relief Program

The Consumer Relief Program allows for selection from a menu of various alternatives to meet the $3.4 billion overall commitment, subject to servicer agreements, agreements with the U.S. Treasury, investor guidelines, mortgage or bond insurer requirements, or other applicable requirements, and is intended to provide assistance to eligible borrowers who are experiencing financial difficulty. Eligible borrowers include borrowers who have a pre-modification LTV in excess of 100%. The settlement provides for various modification and assistance programs with varying levels of credits, minimums, and maximums that can be used to satisfy the overall commitment amount for different activities, primarily including:

•

first lien principal forgiveness for LTV less than or equal to 175%: 100% credit (must constitute at least 30% of the Consumer Relief Program credits);

•

first lien principal forgiveness for LTV greater than 175%: 50% credit for portion forgiven over 175% LTV;

•

forgiveness of forbearance amounts on existing loan modifications – 40% credit;

•

earned forgiveness over no more than a 3 year period: 85% credit for LTV less than or equal to 175%; 45% credit for forgiveness over 175% LTV;

•

second lien principal forgiveness: 90% credit for loans 90 days or less delinquent; 50% credit for loans greater than 90 but less than 180 days delinquent; 10% credit for loans 180 days more delinquent. Subject to a number of requirements, servicers participating in the settlement will be obligated to implement second lien principal forgiveness on second mortgages it owns when another participating servicer reduces principal on a first mortgage via its proprietary non-HAMP modification programs (must constitute at least 60% of the Consumer Relief Program credits when combined with the first lien principal forgiveness credits);

•

deficiency balance waivers on first and second lien loans: 10% credit;

•

short sale deficiency balance waivers on first and second lien loans: 20% to 100% credit depending on whether the servicer, servicer/lien holder or investor incurs the loss;

•

payment arrearages forgiveness for unemployed borrowers: 100% credit;

•

transitional funds paid to homeowners in connection with a short sale or deed-in-lieu of foreclosure for payments in excess of $1,500: 45% credit if a non-GSE investor bears the cost or 100% if the servicer bears the cost;

•

anti-blight – forgiveness of principal associated with properties where foreclosure is not pursued: 50% credit;

•

anti-blight – cash costs paid by servicer for property demolition – 100% credit; and

•

anti-blight – donation of real estate owned properties to qualifying recipients such as non-profit organizations: 100% credit.

Additionally, the Consumer Relief Program limits the total amount of credits that may be applied toward the $3.4 billion commitment from certain activities such as:

•

credits from deficiency balance waivers are limited to 10% of credits under the Consumer Relief Program;

•

credits for forgiveness of forbearance are limited to 12.5% of credits under the Consumer Relief Program; and

•

anti-blight provisions are limited to 12% of credits under the Consumer Relief Program.

We will begin to receive credit towards satisfaction of the requirements of the Consumer Relief Program for any activities taken on or after March 1, 2012. We can also receive an additional 25% credit for any first or second lien principal reduction taken within one year from March 1, 2012. Because we will not receive dollar-for-dollar credit for the relief provided in some circumstances, the actual relief we provide to borrowers will likely exceed our commitment. The terms also require that we satisfy 75% of the commitments under the Consumer Relief Program within two years from March 1, 2012. If we do not meet this two-year requirement and also do not meet the entire commitment within three years, we are

required to pay an amount equal to 140% of the unmet commitment amount. If we meet the two-year commitment target, but do not meet the entire commitment amount within the three years, we are required to pay an amount equal to 125% of the unmet commitment amount. We expect that we will be able to meet our commitment (and state-level sub-commitments) on the Consumer Relief Program within the required timeframes.

We expect to be able to meet our Consumer Relief Program commitment primarily through our first and second lien modification and short sale and other deficiency balance waiver programs. We have evaluated our commitment along with the menu of credits and believe that fulfilling our commitment under the Consumer Relief Program has been appropriately considered in our estimation for the allowance for loan losses as well as our cash flow projections to evaluate the nonaccretable difference for our PCI portfolios at December 31, 2011.

Refinance Program

The Refinance Program is intended for borrowers in good standing who are not experiencing financial difficulty, but are not able to take advantage of refinancing at lower rates to lower their payments because they have little or negative equity in their home. The terms of the pending settlement for the Refinance Program require that we provide notification to eligible borrowers indicating that they may refinance under the program. The minimum eligibility criteria for the program are as follows:

•

must be Wells Fargo owned first lien mortgage loan on property that is occupied;

•

loan must be current with no delinquencies in the last 12 months;

•

must be fixed rate, adjustable rate, or interest-only mortgages with an initial period of five years or more;

•

current LTV is greater than 100%;

•

loans originated prior to January 1, 2009;

•

loans must have a current interest rate of at least 5.25% or 100 basis points above the Freddie Mac current primary mortgage market survey rate, whichever is greater;

•

the minimum difference between the current interest rate and the offered interest rate under the Refinance Program must be at least 25 basis points or there must be at least a $100 reduction in monthly payment; and

•

the maximum unpaid principal balance must be below the GSE lending limit applicable to the respective state where the property is located.

Additionally, there are defined exclusions from the eligibility criteria such as FHA/VA loans, properties outside the 50 states, the District of Columbia and Puerto Rico, and loans for borrowers who have been in bankruptcy or foreclosure anytime in the prior 24 months. We are also permitted to extend the Refinance Program to borrowers beyond the minimum eligible population detailed above provided they have an LTV over 80% and would not have qualified for a refinance under our other offered refinance programs in existence as of September 30, 2011. The structure of the refinanced loans can vary to include interest rate reductions for the entire life of the loan or,

Risk Management – Credit Risk Management (continued)

depending on current interest rates, a minimum of 5 years. Additionally, the original term of the loan can be changed and the rate reduction can be executed via a modification of the existing loan terms or a refinance into a new loan. The new loan or modified loan must be a fully amortizing product and the new interest rate will be capped at 100 basis points over the Freddie Mac current primary mortgage market survey rate or 5.25%, whichever is greater, during the initial rate reduction period.

The credit we receive for each refinanced loan towards satisfying the $900 million financial commitment for the Refinance Program is calculated as the difference between the pre-existing interest rate and the new interest rate multiplied by the unpaid principal balance multiplied by a defined multiplier. The defined multiplier is 5 if the rate reduction only applies for 5 years or if the remaining term is less than 10 years, 6 if the remaining term is between 10 and 15 years, and 8 if the remaining term is greater than 15 years. In addition, the terms of the settlement allow for additional dollars spent on the Refinance Program to be credited towards satisfying the requirements of the Consumer Relief Program (25% for the first lien principal reduction obligations and 75% for the second lien principal reduction obligations) subject to certain caps. We will receive credit under the Refinance Program for activities taken on or after March 1, 2012. The Refinance Program allows for an additional 25% credit (additional credit) for all refinance credits earned in the first 12 months of the program. We expect that we will be able to complete the number of refinances necessary to satisfy the entire credit in the first 12 months of offering the Refinance Program. If successful in this regard, the estimated lifetime amount of interest income reduction to the portfolio will be approximately $720 million and the additional credit earned will be $180 million.

We expect that we will refinance approximately 20,000 borrowers with an unpaid principal balance of approximately $4.0 billion in order to meet the commitment amount under the Refinance Program. Based on the mix of loans we anticipate will be refinanced, we estimate their weighted average note rate will be reduced by approximately 260 annual basis points and that their weighted average estimated remaining life will be approximately 7 years. These estimates will be impacted by the actual number of eligible borrowers that accept a refinance offer, their existing and new note rates and the remaining term of the actual loans refinanced. The impact of fulfilling our commitment under the Refinance Program will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the Refinance Program. Based on our expectation that we will fulfill the credit needs for the Refinance Program within the first 12 months, we expect the future reduction in interest income to be approximately $100 million annually. As a result of refinancings under the Refinance Program we will be foregoing interest that we may not otherwise have agreed to forego. No loss was recognized in our financial statements for this estimated foregone interest income as the impact will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the Refinance Program. This impact to foregone interest

income will be increased if we do not meet our expectation for fulfilling the total commitment for the Refinance Program in the first twelve months. The impact of this foregone interest income on our future net interest margin is anticipated to be modestly adverse and will be influenced by the overall mortgage interest rate environment, which products are accepted by the eligible borrowers, and the pace of the execution of the program. The Refinance Program will also impact our fair value for these loans. The estimated reduction to the fair value of our loans for the Refinance Program is approximately $700 million and will be impacted by our actual execution of the program and borrower acceptance rates.

Given that this component of the settlement relates to borrowers in good standing as to their payment history who are not experiencing financial difficulty, we will evaluate each borrower to confirm their ability to repay their mortgage obligation. This evaluation will include reviewing key credit and underwriting policy metrics to validate that these borrowers are not experiencing financial difficulty and therefore, actions taken under the Refinance Program would not be considered a troubled debt restructuring. To the extent we determine that an eligible borrower is experiencing financial difficulty, we will consider alternative modification programs which may result in loans being classified and accounted for as troubled debt restructurings.

We expect that we will be able to meet the obligations of our commitment for the Refinance Program (and any state-level sub-commitments) and will not be required to pay for not meeting our commitment.

Comprehensive National Servicing Standards

The settlement also establishes comprehensive national servicing standards that will govern loan default and foreclosure activities. These standards reflect a new set of best practices for mortgage servicing and not the identification of existing flaws or errors in current servicing practices. The national servicing standards include:

•

rules governing the preparation of documentation submitted in connection with judicial foreclosures, including foreclosure affidavits, declarations, and sworn statements;

•

rules governing the preparation of evidence submitted to support non-judicial and quasi-judicial foreclosures;

•

requirements for ensuring the accuracy of borrower’s account information;

•

documentation of the foreclosing entity’s enforceable interest in the note, holder status, and chain of assignment;

•

rules governing bankruptcy documentation and process including proofs of claim and motions for relief from stay;

•

rules governing the oversight of third-party providers including foreclosure law firms, foreclosure trustees, subservicers, and other third parties retained to provide foreclosure, bankruptcy, or mortgage servicing activities;

•

requirements for loss mitigation programs, including:

^¡

notification to borrowers of loss mitigation options and enhanced communication of status of loss mitigation review;

^¡

restriction of “dual track” progression of foreclosure during consideration for loan modification;

^¡

establishment of a borrower “single point of contact”;

^¡

development of electronic loan portals for status of first lien loan modifications; and

^¡

establishment of loan modification decision review process

•

enhanced protections for service members;

•

restrictions on certain default, foreclosure, and bankruptcy-related service fees; and

•

restrictions on the imposition of force-placed insurance

Monitoring and Other Settlement Matters

The settlement will be overseen by a third party monitor who will receive quarterly reports from servicers capturing progress towards implementing the servicing standards and satisfaction of the commitments of the Consumer Relief Program and the Refinance Program. These reports will be based on an agreed upon set of metrics and other information relevant to our compliance obligations. The enforcement provisions of the settlement include the parties’ right to seek penalties for non-compliance, the monitor’s right to seek additional measurement metrics, and the right to enforce the Consent Order in federal court.

As part of the settlement, servicers will be released by the participating states and federal agencies from a number of servicing and origination claims. The releases given by the states and the federal agencies generally apply to “covered servicing conduct” and “covered origination conduct.” The state release and the federal release extend to “covered servicing conduct” prior to the effective date of the settlement. The federal release for “covered origination conduct” depends on which agency and which law is involved. The Department of Justice and the Treasury are releasing claims under federal consumer credit laws governing loan origination. The FTC is releasing claims relating to origination conduct. HUD’s release of claims relating to origination conduct is limited to claims based exclusively on false annual certifications of compliance that are submitted to HUD, and retains the right to pursue individual loan-level violations of the Federal Housing Administration origination rules and regulations. The

Department of Justice’s release from claims under the Financial Institutions Reform, Recovery, and Enforcement Act (claims involving harm to financial institutions or federal agencies based on intentional fraud or misrepresentation by a bank or its affiliates) is also limited.

A number of subject areas are carved out from the releases: criminal law violations, claims by natural persons, unpaid taxes, fair lending claims (the state release applies this exception only to loan origination conduct, while the federal release extends the exception to origination and servicing conduct), securitization claims (includes claims that the government could bring as an investor in mortgage-related securities and for the benefit of investors or for conduct directed at investors), claims against MERS or MERSCORP, Inc., although we are released from claims relating to our use of MERS (but still retain an obligation as a MERS shareholder to indemnify MERS against third-party claims), claims of county recorders, and certain existing litigation and other obligations. Under the sub-commitment agreement with California, there is a limited expansion of its ability to pursue certain origination claims involving individual claims for actual fraud against consumers for origination conduct occurring on or after July 1, 2009. There are also side agreements with New York, Delaware and Massachusetts whereby these states retain the right to pursue their existing MERS litigation, subject to certain limitations.

Other aspects of the federal release include a carve out under federal consumer credit laws for violations of RESPA related to private mortgage insurance and the retention of all rights by FHFA, Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Home Loan Bank, the SEC, the CFPB (after July 21, 2011) and the federal banking agencies.

Additional information on risks and litigation relating to servicing activities is included in Note 15 (Legal Actions) to Financial Statements in this Report.

Asset/Liability Management

Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The Corporate Asset/Liability Management Committee (Corporate ALCO), which oversees these risks and reports periodically to the Finance Committee of the Board, consists of senior financial and business executives. Each of our principal business groups has its own asset/liability management committee and process linked to the Corporate ALCO process.

INTEREST RATE RISK Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

•

assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally falling, earnings will initially decline);

•

assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is falling, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates);

•

short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding costs differently); or

•

the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates decline sharply, MBS held in the securities available-for-sale portfolio may prepay significantly earlier than anticipated, which could reduce portfolio income).

Interest rates may also have a direct or indirect effect on loan demand, credit losses, mortgage origination volume, the fair value of MSRs and other financial instruments, the value of the pension liability and other items affecting earnings.

We assess interest rate risk by comparing our most likely earnings plan with various earnings simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. For example, as of December 31, 2011, our most recent simulation indicated estimated earnings at risk of less than 1% of our most likely earnings plan over the next 12 months under a range of both lower and higher interest rates, including a scenario in which the federal funds rate remains unchanged and the 10-year Constant Maturity Treasury bond yield averages below 2.00%, and a scenario in which the federal funds rate rises to 3.75% and the 10-year Constant Maturity Treasury bond yield increases to 5.10%. Simulation estimates depend on, and will change with, the size and mix of our actual and projected balance sheet at the time of each simulation. Due to timing differences between the quarterly valuation of MSRs and the eventual impact of interest rates on mortgage banking volumes, earnings at risk in any particular quarter could be higher than the average earnings at risk over the 12-month simulation period, depending on the path

of interest rates and on our hedging strategies for MSRs. See the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for more information.

We use exchange-traded and over-the-counter (OTC) interest rate derivatives to hedge our interest rate exposures. The notional or contractual amount, credit risk amount and estimated net fair value of these derivatives as of December 31, 2011 and 2010, are presented in Note 16 (Derivatives) to Financial Statements in this Report. We use derivatives for asset/liability management in three main ways:

•

to convert a major portion of our long-term fixed-rate debt, which we issue to finance the Company, from fixed-rate payments to floating-rate payments by entering into receive-fixed swaps;

•

to convert the cash flows from selected asset and/or liability instruments/portfolios from fixed-rate payments to floating-rate payments or vice versa; and

•

to economically hedge our mortgage origination pipeline, funded mortgage loans and MSRs using interest rate swaps, swaptions, futures, forwards and options.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. Based on market conditions and other factors, we reduce credit and liquidity risks by selling or securitizing some or all of the long-term fixed-rate mortgage loans we originate and most of the ARMs we originate. On the other hand, we may hold originated ARMs and fixed-rate mortgage loans in our loan portfolio as an investment for our growing base of core deposits. We determine whether the loans will be held for investment or held for sale at the time of commitment. We may subsequently change our intent to hold loans for investment and sell some or all of our ARMs or fixed-rate mortgages as part of our corporate asset/liability management. We may also acquire and add to our securities available for sale a portion of the securities issued at the time we securitize MHFS.

Notwithstanding the continued downturn in the housing sector, and the continued lack of liquidity in the nonconforming secondary markets, our mortgage banking revenue remained strong, reflecting the complementary origination and servicing strengths of the business. The secondary market for agency-conforming mortgages functioned well during 2011.

Interest rate and market risk can be substantial in the mortgage business. Changes in interest rates may potentially reduce total origination and servicing fees, the value of our residential MSRs measured at fair value, the value of MHFS and the associated income and loss reflected in mortgage banking noninterest income, the income and expense associated with instruments (economic hedges) used to hedge changes in the fair value of MSRs and MHFS, and the value of derivative loan commitments (interest rate “locks”) extended to mortgage applicants.

Interest rates affect the amount and timing of origination and servicing fees because consumer demand for new mortgages and the level of refinancing activity are sensitive to changes in mortgage interest rates. Typically, a decline in mortgage interest rates will lead to an increase in mortgage originations and fees

and may also lead to an increase in servicing fee income, depending on the level of new loans added to the servicing portfolio and prepayments. Given the time it takes for consumer behavior to fully react to interest rate changes, as well as the time required for processing a new application, providing the commitment, and securitizing and selling the loan, interest rate changes will affect origination and servicing fees with a lag. The amount and timing of the impact on origination and servicing fees will depend on the magnitude, speed and duration of the change in interest rates.

We measure MHFS at fair value for prime MHFS originations for which an active secondary market and readily available market prices exist to reliably support fair value pricing models used for these loans. Loan origination fees on these loans are recorded when earned, and related direct loan origination costs are recognized when incurred. We also measure at fair value certain of our other interests held related to residential loan sales and securitizations. We believe fair value measurement for prime MHFS and other interests held, which we hedge with free-standing derivatives (economic hedges) along with our MSRs measured at fair value, reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. During 2011 and 2010, in response to continued secondary market illiquidity, we continued to originate certain prime non-agency loans to be held for investment for the foreseeable future rather than to be held for sale. In addition, in 2011 and 2010, we originated certain prime agency-eligible loans to be held for investment as part of our asset/liability management strategy.

We initially measure all of our MSRs at fair value and carry substantially all of them at fair value depending on our strategy for managing interest rate risk. Under this method, the MSRs are recorded at fair value at the time we sell or securitize the related mortgage loans. The carrying value of MSRs carried at fair value reflects changes in fair value at the end of each quarter and changes are included in net servicing income, a component of mortgage banking noninterest income. If the fair value of the MSRs increases, income is recognized; if the fair value of the MSRs decreases, a loss is recognized. We use a dynamic and sophisticated model to estimate the fair value of our MSRs and periodically benchmark our estimates to independent appraisals. The valuation of MSRs can be highly subjective and involve complex judgments by management about matters that are inherently unpredictable. See “Critical Accounting Policies – Valuation of Residential Mortgage Servicing Rights” section of this Report for additional information. Changes in interest rates influence a variety of significant assumptions included in the periodic valuation of MSRs, including prepayment speeds, expected returns and potential risks on the servicing asset portfolio, the value of escrow balances and other servicing valuation elements.

A decline in interest rates generally increases the propensity for refinancing, reduces the expected duration of the servicing portfolio and therefore reduces the estimated fair value of MSRs. This reduction in fair value causes a charge to income for MSRs carried at fair value, net of any gains on free-standing derivatives (economic hedges) used to hedge MSRs. We may choose not to

fully hedge all the potential decline in the value of our MSRs resulting from a decline in interest rates because the potential increase in origination/servicing fees in that scenario provides a partial “natural business hedge.” An increase in interest rates generally reduces the propensity for refinancing, extends the expected duration of the servicing portfolio and therefore increases the estimated fair value of the MSRs. However, an increase in interest rates can also reduce mortgage loan demand and therefore reduce origination income.

The price risk associated with our MSRs is economically hedged with a combination of highly liquid interest rate forward instruments including mortgage forward contracts, interest rate swaps and interest rate options. All of the instruments included in the hedge are marked to market daily. Because the hedging instruments are traded in highly liquid markets, their prices are readily observable and are fully reflected in each quarter’s mark to market. Quarterly MSR hedging results include a combination of directional gain or loss due to market changes as well as any carry income generated. If the economic hedge is effective, its overall directional hedge gain or loss will offset the change in the valuation of the underlying MSR asset. Gains or losses associated with these economic hedges are included in mortgage banking noninterest income. Consistent with our longstanding approach to hedging interest rate risk in the mortgage business, the size of the hedge and the particular combination of hedging instruments at any point in time is designed to reduce the volatility of the mortgage business’s earnings over various time frames within a range of mortgage interest rates. Because market factors, the composition of the mortgage servicing portfolio and the relationship between the origination and servicing sides of our mortgage business change continually, the types of instruments used in our hedging are reviewed daily and rebalanced based on our evaluation of current market factors and the interest rate risk inherent in our MSRs portfolio. Throughout 2011, our economic hedging strategy generally used forward mortgage purchase contracts that were effective at offsetting the impact of interest rates on the value of the MSR asset.

Mortgage forward contracts are designed to pass the full economics of the underlying reference mortgage securities to the holder of the contract, including both the directional gain or loss from the forward delivery of the reference securities and the corresponding carry income. Carry income represents the contract’s price accretion from the forward delivery price to the current spot price including both the yield earned on the reference securities and the market implied cost of financing during the period. The actual amount of carry income earned on the hedge each quarter will depend on the amount of the underlying asset that is hedged and the particular instruments included in the hedge. The level of carry income is driven by the slope of the yield curve and other market driven supply and demand factors affecting the specific reference securities. A steep yield curve generally produces higher carry income while a flat or inverted yield curve can result in lower or potentially negative carry income. The level of carry income is also affected by the type of instrument used. In general, mortgage forward contracts tend to produce higher carry income than interest rate swap contracts. Carry income is recognized over the life of the mortgage forward as a component of the contract’s mark to market gain or loss.

Risk Management – Asset/Liability Management (continued)

Hedging the various sources of interest rate risk in mortgage banking is a complex process that requires sophisticated modeling and constant monitoring. While we attempt to balance these various aspects of the mortgage business, there are several potential risks to earnings:

•

Valuation changes for MSRs associated with interest rate changes are recorded in earnings immediately within the accounting period in which those interest rate changes occur, whereas the impact of those same changes in interest rates on origination and servicing fees occur with a lag and over time. Thus, the mortgage business could be protected from adverse changes in interest rates over a period of time on a cumulative basis but still display large variations in income from one accounting period to the next.

•

The degree to which the “natural business hedge” offsets valuation changes for MSRs is imperfect, varies at different points in the interest rate cycle, and depends not just on the direction of interest rates but on the pattern of quarterly interest rate changes.

•

Origination volumes, the valuation of MSRs and hedging results and associated costs are also affected by many factors. Such factors include the mix of new business between ARMs and fixed-rate mortgages, the relationship between short-term and long-term interest rates, the degree of volatility in interest rates, the relationship between mortgage interest rates and other interest rate markets, and other interest rate factors. Many of these factors are hard to predict and we may not be able to directly or perfectly hedge their effect.

•

While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by Treasury and LIBOR index-based financial instruments used as economic hedges for such ARMs. Additionally, hedge-carry income on our economic hedges for the MSRs may not continue if the spread between short-term and long-term rates decreases, we shift composition of the hedge to more interest rate swaps, or there are other changes in the market for mortgage forwards that affect the implied carry.

The total carrying value of our residential and commercial MSRs was $14.0 billion and $15.9 billion at December 31, 2011 and 2010, respectively. The weighted-average note rate on our portfolio of loans serviced for others was 5.14% and 5.39% at December 31, 2011 and 2010, respectively. Our total MSRs represented 0.76% of mortgage loans serviced for others at December 31, 2011, compared with 0.86% at December 31, 2010.

As part of our mortgage banking activities, we enter into commitments to fund residential mortgage loans at specified times in the future. A mortgage loan commitment is an interest rate lock that binds us to lend funds to a potential borrower at a specified interest rate and within a specified period of time,

generally up to 60 days after inception of the rate lock. These loan commitments are derivative loan commitments if the loans that will result from the exercise of the commitments will be held for sale. These derivative loan commitments are recognized at fair value in the balance sheet with changes in their fair values recorded as part of mortgage banking noninterest income. The fair value of these commitments include, at inception and during the life of the loan commitment, the expected net future cash flows related to the associated servicing of the loan as part of the fair value measurement of derivative loan commitments. Changes subsequent to inception are based on changes in fair value of the underlying loan resulting from the exercise of the commitment and changes in the probability that the loan will not fund within the terms of the commitment, referred to as a fall-out factor. The value of the underlying loan commitment is affected primarily by changes in interest rates and the passage of time.

Outstanding derivative loan commitments expose us to the risk that the price of the mortgage loans underlying the commitments might decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. To minimize this risk, we employ forwards and options, Eurodollar futures and options, and Treasury futures, forwards and options contracts as economic hedges against the potential decreases in the values of the loans. We expect that these derivative financial instruments will experience changes in fair value that will either fully or partially offset the changes in fair value of the derivative loan commitments. However, changes in investor demand, such as concerns about credit risk, can also cause changes in the spread relationships between underlying loan value and the derivative financial instruments that cannot be hedged.

MARKET RISK – TRADING ACTIVITIES From a market risk perspective, our net income is exposed to changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices and their implied volatilities. The primary purpose of our trading businesses is to accommodate customers in the management of their market price risks. Also, we take positions based on market expectations or to benefit from price differences between financial instruments and markets, subject to risk limits established and monitored by Corporate ALCO. All securities, foreign exchange transactions, commodity transactions and derivatives used in our trading businesses are carried at fair value. The Market and Institutional Risk Committee, which provides governance and oversight over market risk-taking activities across the Company, establishes and monitors counterparty risk limits. The credit risk amount and estimated net fair value of all customer accommodation derivatives at December 31, 2011 and 2010 are included in Note 16 (Derivatives) to Financial Statements in this Report. Open, “at risk” positions for all trading businesses are monitored by Corporate ALCO.

Table 40 presents net gains (losses) from trading activities attributable to the following types of activity:

Table 40: Trading Activities



	Year ended December 31,

(in millions)	2011			2010		2009

Customer accommodation	$	1,029			1,448		1,854
Economic hedging		(1	)		178		278
Proprietary		(14	)		22		542

Total net trading gains (losses)	$	1,014			1,648		2,674

The amounts reflected in the table above capture only gains (losses) due to changes in fair value of our trading positions and are reported within net gains (losses) on trading activities within noninterest income line item of the income statement. These amounts do not include interest income and other fees earned from related activities, which are reported within interest income from trading assets and other fees within noninterest income line items of the income statement. Categorization of net gains (losses) from trading activities in the table above is based on our own definition of those categories, as further described below, because no uniform industry definitions currently exist.

Customer accommodation trading consists of security or derivative transactions conducted in an effort to help customers manage their market price risks and are done on their behalf or driven by their investment needs. For the majority of our customer accommodation trading we serve as intermediary between buyer and seller. For example, we may enter into financial instruments with customers that use the instruments for risk management purposes and offset our exposure on such contracts by entering into separate instruments. Customer accommodation trading also includes net gains related to market-making activities in which we take positions to facilitate expected customer order flow.

Economic hedges consist primarily of cash or derivative positions used to facilitate certain of our balance sheet risk management activities that did not qualify for hedge accounting or were not designated in a hedge accounting relationship. Economic hedges may also include securities that we elected to carry at fair value with changes in fair value recorded to earnings in order to mitigate accounting measurement mismatches or avoid embedded derivative accounting complexities.

Proprietary trading consists of security or derivative positions executed for our own account based on market expectations or to benefit from price differences between financial instruments and markets. Proprietary trading activity is expected to be restricted by the Dodd-Frank Act prohibitions known as the “Volcker Rule,” which has not yet been finalized. On October 11, 2011, federal banking agencies and the SEC issued for public comment proposed regulations to implement the Volcker Rule. We believe our definition of proprietary trading is consistent with the proposed regulations. However, given that final rule-making is required by various governmental regulatory agencies to define proprietary trading within the context of the final “Volcker Rule,” our definition of proprietary trading may change. We have reduced or exited certain business activities in anticipation of the final “Volcker Rule.” As discussed within the noninterest income section of our financial results, proprietary trading activity is not significant to our financial results.

The fair value of our trading derivatives is reported in Notes 16 (Derivatives) and 17 (Fair Values of Assets and Liabilities) to Financial Statements in this Report. The fair value of our trading securities is reported in Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

The standardized approach for monitoring and reporting market risk for the trading activities consists of value-at-risk (VaR) metrics complemented with sensitivity analysis and stress testing. VaR measures the worst expected loss over a given time interval and within a given confidence interval. We measure and report daily VaR at a 99% confidence interval based on actual changes in rates and prices over the previous 250 trading days. The analysis captures all financial instruments that are considered trading positions. The average one-day VaR throughout 2011 was $29 million, with a lower bound of $19 million and an upper bound of $42 million. The average one-day VaR for fourth quarter 2011 was $32 million, with a lower bound of $22 million and an upper bound of $42 million.

MARKET RISK – EQUITY MARKETS We are directly and indirectly affected by changes in the equity markets. We make and manage direct equity investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board. The Board’s policy is to review business developments, key risks and historical returns for the private equity investment portfolio at least annually. Management reviews the valuations of these investments at least quarterly and assesses them for possible OTTI. For nonmarketable investments, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment’s cash flows and capital needs, the viability of its business model and our exit strategy. Nonmarketable investments include private equity investments accounted for under the cost method and equity method. Private equity investments are subject to OTTI. Principal investments are carried at fair value with net unrealized gains and losses reported in noninterest income.

As part of our business to support our customers, we trade public equities, listed/OTC equity derivatives and convertible bonds. We have risk mandates that govern these activities. We also have marketable equity securities in the securities available-for-sale portfolio, including securities relating to our venture capital activities. We manage these investments within capital risk limits approved by management and the Board and monitored by Corporate ALCO. Gains and losses on these securities are recognized in net income when realized and periodically include OTTI charges.

Changes in equity market prices may also indirectly affect our net income by affecting (1) the value of third party assets under management and, hence, fee income, (2) particular borrowers, whose ability to repay principal and/or interest may be affected by the stock market, or (3) brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

Risk Management – Asset/Liability Management (continued)

Table 41 provides information regarding our marketable and nonmarketable equity investments.

Table 41: Nonmarketable and Marketable Equity Investments



	December 31,

(in millions)	2011		2010

Nonmarketable equity investments:
Private equity investments:
Cost method	$	3,444		3,240
LIHTC investments - equity method (1)		4,077		3,611
All other equity method		4,434		4,013
Federal bank stock		4,617		5,254
Principal investments		236		305

Total nonmarketable equity investments (2)	$	16,808		16,423

Marketable equity securities:
Cost	$	2,929		4,258
Net unrealized gains		488		931

Total marketable equity securities (3)	$	3,417		5,189

(1)	Represents low income housing tax credit investments

(2)	Included in other assets on the balance sheet. See Note 7 (Premises, Equipment, Lease Commitments and Other Assets) to Financial Statements in this Report for additional information.

(3)	Included in securities available for sale. See Note 5 (Securities Available for Sale) to Financial Statements in this Report for additional information.

LIQUIDITY AND FUNDING The objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under unpredictable circumstances of industry or market stress. To achieve this objective, the Corporate ALCO establishes and monitors liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. We set these guidelines for both the consolidated balance sheet and for the Parent to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries.

Unencumbered debt and equity securities in the securities available-for-sale portfolio provide asset liquidity, in addition to the immediately liquid resources of cash and due from banks and federal funds sold, securities purchased under resale agreements and other short-term investments. The weighted-average expected remaining maturity of the debt securities within this portfolio was 4.9 years at December 31, 2011. Of the $212.6 billion (cost basis) of debt securities in this portfolio at December 31, 2011, $38.5 billion (18%) is expected to mature or be prepaid in 2012 and an additional $34.8 billion (16%) in 2013. Asset liquidity is further enhanced by our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the Federal Home Loan Banks (FHLB) and the FRB. In 2011, we sold or securitized mortgage loans of $353 billion. The amount of mortgage loans and other consumer loans available to be sold, securitized or pledged was approximately $222 billion at December 31, 2011.

Core customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. At December

31, 2011, core deposits funded 113% of total loans compared with 105% a year ago. Additional funding is provided by long-term debt (including trust preferred securities), other foreign deposits, and short-term borrowings. Long-term debt averaged $141.1 billion in 2011 and $185.4 billion in 2010. Short-term borrowings averaged $51.8 billion in 2011 and $46.8 billion in 2010.

We anticipate making capital expenditures of approximately $930 million in 2012 for our stores, relocation and remodeling of our facilities, and routine replacement of furniture, equipment and servers. We fund expenditures from various sources, including funds from operations and borrowings.

In mid-2009, we froze the Wells Fargo & Company Cash Balance Plan. As a result, pension funding is not a material consideration in our liquidity management. See Note 20 (Employee Benefits and Other Expenses) to Financial Statements in this Report for additional information on pension and postretirement plans.

We access domestic and international capital markets for long-term funding through issuances of registered debt securities, private placements and asset-backed secured funding. Investors in the long-term capital markets 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, a reduction in credit rating would not cause us to violate any of our debt covenants.

In September 2011, Moody’s Investors Service, Inc. (Moody’s) downgraded the long-term senior debt ratings of the Parent and Wells Fargo Bank, N.A., the Parent’s significant banking subsidiary, one notch to A2 and Aa3, respectively, based on its determination that, as a result of the Dodd-Frank Act, the U.S. government is less likely to support systemically important financial institutions, if needed, in the future. Moody’s outlook on the Parent’s and Wells Fargo Bank, N.A.’s long-term senior debt ratings is negative based on the possibility that Moody’s may further reduce its assumptions about the likelihood of government support for systemically important financial institutions. In November 2011, S&P lowered the long-term senior debt ratings of the Parent and Wells Fargo Bank, N.A. one notch to A+ and AA-, respectively, following changes in S&P’s ratings criteria for the global banking industry. S&P also reduced the Parent’s short-term debt ratings one notch to A-1, affirmed Wells Fargo Bank, N.A.’s short-term debt rating at A-1+ and maintained a negative outlook on the Parent’s and Wells Fargo Bank, N.A.’s long-term debt, reflecting the outlook on the U.S. sovereign rating in light of the amount of U.S. government support incorporated into our ratings. In July 2011, Fitch Ratings affirmed both the Parent’s and Wells Fargo Bank, N.A.’s long-term senior and short-term debt ratings and maintained a stable watch on those ratings. In March 2011, Dominion Bond

Rating Service (DBRS) confirmed both the Parent’s and Wells Fargo Bank, N.A.’s long-term senior and short-term debt ratings, including the stable trend. The Moody’s and S&P’s ratings downgrades have not adversely affected our ability to access the capital markets and we do not believe there has been any meaningful change in our borrowing costs specifically relating to the ratings downgrades. See the “Risk Factors” section of this Report for additional information regarding our credit ratings

and the impact of a credit ratings downgrade 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, 2011, are presented in Table 42.

Table 42: Credit Ratings

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term
borrowings

Long-term
deposits

Short-term
borrowings

Moody’s

P-1

Aa3

P-1

S&P

A+

A-1

AA-

A-1+

Fitch Ratings

AA-

F1+

DBRS

R-1

*	middle ** high

On December 20, 2011, the FRB proposed enhanced liquidity planning rules that would be applicable to us. The proposed rules, among other things, require periodic stress testing, the preparation of contingent funding plans, and the establishment of corporate governance procedures for managing liquidity risk. These rules, however, are not yet final. We will continue to analyze the proposed rules and other regulatory proposals that may impact liquidity management, including Basel III, to determine the level of operational or compliance impact to Wells Fargo. For additional information see the “Capital Management” and “Regulatory Reform” sections in this Report.

Parent Under SEC rules, the Parent is classified as a “well-known seasoned issuer,” which allows it to file a registration statement that does not have a limit on issuance capacity. In June 2009, the Parent filed a registration statement with the SEC for the issuance of senior and subordinated notes, preferred stock and other securities. The Parent’s ability to issue debt and other securities under this registration statement is limited by the debt issuance authority granted by the Board. The Parent is currently authorized by the Board to issue $60 billion in outstanding short-term debt and $170 billion in outstanding long-term debt. During 2011, the Parent issued $9.3 billion in registered senior notes. In February 2011, the Parent remarketed $2.5 billion of junior subordinated notes owned by an unconsolidated, wholly owned trust. The purchasers of the junior subordinated notes exchanged them with the Parent for newly issued senior notes, which are included in the Parent issuances described above. Proceeds of the remarketed junior subordinated notes were used by the trust to purchase $2.5 billion of Class A, Series I Preferred Stock issued by the Parent. In February 2012, the Parent issued $3.3 billion in registered senior notes.

Parent’s proceeds from securities issued in 2011 and in first quarter 2012 were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the proceeds from securities issued in the future will be used for the same purposes.

Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise.

Table 43 provides information regarding the Parent’s medium-term note (MTN) programs. The Parent may issue senior and subordinated debt securities under Series I & J, and the European and Australian programmes. Under Series K, the Parent may issue senior debt securities linked to one or more indices or bearing interest at a fixed or floating rate.

Table 43: Medium-Term Note (MTN) Programs

December 31, 2011

(in billions)

Date
established

Debt
issuance
authority

Available
for
issuance

MTN program:

Series I & J (1)

August 2009

25.0

15.8

Series K (1)

April 2010

25.0

24.0

European (2)

December 2009

25.0

24.7

Australian (2)(3)

June 2005

AUD

10.0

6.8

(1)	SEC registered.

(2)	Not registered with the SEC. May not be offered in the United States without applicable exemptions from registration.

(3)	As amended in October 2005 and March 2010.

Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. is authorized by its board of directors to issue $100 billion in outstanding short-term debt and $125 billion in outstanding long-term debt. At December 31, 2011, Wells Fargo Bank, N.A. had available $100 billion in short-term debt issuance authority and $103.7 billion in long-term debt issuance authority.

Wells Fargo Canada Corporation In January 2012, Wells Fargo Canada Corporation (WFCC, formerly known as Wells Fargo Financial Canada Corporation), an indirect wholly owned Canadian subsidiary of the Parent, qualified with the Canadian provincial securities commissions a base shelf prospectus for the distribution from time to time in Canada of up

Risk Management – Asset/Liability Management (continued)

to CAD$7.0 billion in medium-term notes. During 2011, WFCC issued CAD$500 million in medium-term notes using its prior base shelf prospectus. In February 2012, WFCC issued CAD$1.5 billion in medium-term notes. All medium-term notes issued by WFCC are unconditionally guaranteed by the Parent.

FEDERAL HOME LOAN BANK MEMBERSHIP We are a member of the Federal Home Loan Banks based in Dallas, Des Moines and San Francisco (collectively, the FHLBs). Each member of each 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.

Capital Management

We have an active program for managing stockholders’ equity and regulatory capital and maintain a comprehensive process for assessing the Company’s overall capital adequacy. We generate capital primarily through the retention of earnings net of dividends. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. Our potential sources of stockholders’ equity include retained earnings and issuances of common and preferred stock. Retained earnings increased $12.5 billion from December 31, 2010, predominantly from Wells Fargo net income of $15.9 billion, less common and preferred stock dividends of $3.4 billion. During 2011, we issued approximately 86 million shares of common stock, substantially all of which related to employee benefit plans. We also repurchased approximately 86 million shares of common stock at a net cost of $2.4 billion during 2011.

Regulatory Capital Guidelines

The Company and each of our subsidiary banks are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures. At December 31, 2011, the Company and each of our subsidiary banks were “well-capitalized” under applicable regulatory capital adequacy guidelines. See Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.

Current regulatory RBC rules are based primarily on broad credit-risk considerations and limited market-related risks, but do not take into account other types of risk facing a financial services company. Our capital adequacy assessment process contemplates a wide range of risks that the Company is exposed to and also takes into consideration our performance under a variety of stressed economic conditions, as well as regulatory expectations and guidance, rating agency viewpoints and the view of capital markets participants.

In 2007, U.S. bank regulators approved a final rule adopting international guidelines for determining regulatory capital known as “Basel II.” Basel II incorporates three pillars that address (a) capital adequacy, (b) supervisory review, which relates to the computation of capital and internal assessment processes, and (c) market discipline, through increased disclosure requirements. We are well underway toward Basel II

implementation and currently anticipate entering the “parallel run phase” of Basel II in 2012. During the “parallel run phase,” banks must successfully complete at least a four quarter evaluation period under supervision from regulatory agencies in order to be compliant with the Basel II final rule. Our delayed entry into the “parallel run phase” was approved by the FRB in 2010 as a result of our acquisition of Wachovia.

In December 2010, the Basel Committee on Bank Supervision (BCBS) finalized a set of international guidelines for determining regulatory capital known as “Basel III.” These guidelines were developed in response to the financial crisis of 2008 and 2009 and address many of the weaknesses identified in the banking sector as contributing to the crisis including excessive leverage, inadequate and low quality capital and insufficient liquidity buffers. The guidelines, among other things, increase minimum capital requirements and when fully phased in require bank holding companies to maintain a minimum ratio of Tier 1 common equity to risk-weighted assets of at least 7.0%. The U.S. regulatory bodies are reviewing the final international standards and final U.S. rulemaking is expected to be completed in 2012.

The BCBS also proposed additional Tier 1 common equity surcharge requirements for global systemically important banks (G-SIBs). The surcharge ranges from 1.0% to 3.5% depending on the bank’s systemic importance to be determined under an indicator-based approach that would consider five broad categories: cross-jurisdictional activity, size, inter-connectedness, substitutability/
financial institution infrastructure and complexity. These additional capital requirements, which would be phased in beginning in January 2016 and become fully effective on January 1, 2019, would be in addition to the Basel III 7.0% Tier 1 common equity requirement finalized in December 2010. The Financial Stability Board has determined that the Company is one of the initial 29 G-SIBs that would be subject to the surcharge, but has not yet determined the surcharge amount for us and the other banks.

The FRB also recently proposed rules required under the Dodd-Frank Act that will impose enhanced prudential standards on large bank holding companies (BHCs) such as Wells Fargo, including enhanced capital, stress testing and liquidity requirements. We are reviewing the proposed rules to determine their potential effect on our business.

Table 44 and Table 45, which appear at the end of this Capital Management section, provide information regarding our Tier 1 common equity calculation under Basel I and as estimated under Basel III, respectively.

Capital Planning

In connection with its increased focus on the adequacy of regulatory capital and risk management for large financial firms, the FRB required large banks to submit a capital plan in early 2011 as part of its Comprehensive Capital Analysis and Review (CCAR). Following submission of our capital plan on January 7, 2011, the FRB notified us on March 18, 2011, that it did not object to our 2011 capital plan. Since that notification, the Company took several capital actions, including increasing the quarterly common stock dividend to $0.12 a share, repurchasing $2.4 billion of our common stock, and redeeming $9.2 billion of trust preferred securities that will no longer count as Tier 1 capital under the Dodd-Frank Act and the proposed Basel III capital standards.

Under the FRB’s new capital plan rule, the 2012 CCAR will include a comprehensive capital plan supported by an assessment of expected uses and sources of capital over a given planning horizon under a range of expected and stress scenarios, similar to the process the FRB relied upon to conduct the 2011 CCAR. As part of the 2012 CCAR, the FRB will also generate a supervisory stress test driven by a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance. The FRB has indicated it will publish its estimates of performance under this scenario on a BHC-specific basis. We submitted our board-approved 2012 capital plan to the FRB on January 6, 2012. We expect the FRB’s response to our submission in March 2012.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Additionally, we may enter into plans to purchase stock that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for

employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including the FRB’s response to our capital plan.

In 2008, the Board authorized the repurchase of up to 25 million additional shares of our outstanding common stock. In first quarter 2011, the Board authorized the repurchase of an additional 200 million shares. During 2011, we repurchased 80 million shares of our common stock in the open market and from our employee benefit plans and an additional 6 million shares through a private forward repurchase transaction that settled in fourth quarter 2011. During fourth quarter 2011, we entered into a second forward repurchase transaction that settled in first quarter 2012 for approximately 6 million shares of common stock. At December 31, 2011, we had utilized all previously remaining common stock repurchase authority from the 2008 authorization and had remaining authority from the 2011 authorization to purchase approximately 117 million shares. For more information about share repurchases during 2011, see Part II, Item 5 of our 2011 Form 10-K and for additional information about our forward repurchase programs see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Securities Exchange Act of 1934 including a limitation on the daily volume of repurchases. Rule 10b-18 imposes an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in our best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In connection with our participation in the Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP), we issued to the U.S. Treasury Department warrants to purchase 110,261,688 shares of our common stock with an exercise price of $34.01 per share expiring on October 28, 2018. The Board authorized the repurchase by the Company of up to $1 billion of the warrants. On May 26, 2010, in an auction by the U.S. Treasury, we purchased 70,165,963 of the warrants at a price of $7.70 per warrant. We have purchased an additional 916,216 warrants since the U.S. Treasury auction. At December 31, 2011, there were 39,179,509 warrants outstanding and exercisable and $453 million of unused warrant repurchase authority. Depending on market conditions, we may purchase from time to time additional warrants in privately negotiated or open market transactions, by tender offer or otherwise.

Securities Issuances

In March 2011, the Company issued 25,010 shares of Class A, Series I Preferred Stock, with a par value of $2.5 billion to Wachovia Capital Trust III (Trust), an unconsolidated wholly owned trust. The Trust used the proceeds from the remarketing

Capital Management (continued)

of certain junior subordinated notes issued in connection with Wachovia’s 2006 issuance of 5.80% fixed-to-floating rate trust preferred securities to purchase the Series I Preferred Stock. The action completed the Company’s and the Trust’s obligations

under an agreement dated February 1, 2006, as amended, between the Trust and the Company (as successor to Wachovia Corporation).

Table 44: Tier 1 Common Equity Under Basel I (1)



			December 31,

(in billions)			2011			2010

Total equity			$	141.7			127.9
Noncontrolling interests				(1.5	)		(1.5	)

Total Wells Fargo stockholders’ equity				140.2			126.4

Adjustments:
Preferred equity (2)				(10.6	)		(8.1	)
Goodwill and intangible assets (other than MSRs)				(34.0	)		(35.5	)
Applicable deferred taxes				3.8			4.3
MSRs over specified limitations				(0.8	)		(0.9	)
Cumulative other comprehensive income				(3.1	)		(4.6	)
Other				(0.4	)		(0.3	)

Tier 1 common equity	(A	)	$	95.1			81.3

Total risk-weighted assets (3)	(B	)	$	1,005.6			980.0

Tier 1 common equity to total risk-weighted assets	(A	)/(B)		9.46	%		8.30

(1)

Tier 1 common equity is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants.

(2)	In March 2011, we issued $2.5 billion of Series I Preferred Stock to an unconsolidated wholly-owned trust.

(3)

Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets.

Table 45: Tier 1 Common Equity Under Basel III (Estimated) (1)



			December 31,
(in billions)			2011

Tier 1 common equity under Basel I			$	95.1

Adjustments from Basel I to Basel III:
Cumulative other comprehensive income (2)				3.1
Threshold deductions defined under Basel III (2) (3)				(0.1	)
Other				(0.2	)

Tier 1 common equity under Basel III	(C	)	$	97.9

Total risk-weighted assets anticipated under Basel III (4)	(D	)	$	1,304.7

Tier 1 common equity to total risk-weighted assets anticipated under Basel III	(C	)/(D)		7.50	%

(1)

(2)	Volatility in interest rates can have a significant impact on the valuation of cumulative other comprehensive income and MSRs and therefore, impact adjustments under Basel III in future reporting periods.

(3)	Threshold deductions under Basel III include individual and aggregate limitations, as a percentage of Tier 1 common equity (as defined under Basel III), with respect to MSRs, deferred tax assets and investments in unconsolidated financial companies.

(4)

Under current Basel proposals, risk-weighted assets incorporate different classifications of assets, with certain risk weights based on a borrower’s credit rating or Wells Fargo’s own risk models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements. The amount of risk-weighted assets anticipated under Basel III is preliminary and subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities.

Regulatory Reform

The past two years have witnessed a significant increase in regulation and regulatory oversight initiatives that may substantially change how most U.S. financial services companies conduct business. The following highlights the more significant regulations and regulatory oversight initiatives that have affected or may affect our business. For additional information about the regulatory reform matters discussed below and other regulations and regulatory oversight matters, see Part I, Item 1 “Regulation and Supervision” of our 2011 Form 10-K, and the “Capital Management,” “Forward-Looking Statements” and “Risk Factors” sections and Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

Dodd-Frank Act

The Dodd-Frank Act is the most significant financial reform legislation since the 1930s and is driving much of the current U.S. regulatory reform. The Dodd-Frank Act and many of its provisions became effective in July 2010 and July 2011. However, a number of its provisions still require extensive rulemaking, guidance, and interpretation by regulatory authorities and many of the rules that have been proposed to implement its requirements remain open for public comment and have not been finalized. Where possible, the Company may, from time to time, estimate the impact to the Company’s financial results or business operations as a result of particular Dodd-Frank Act regulations. However, due to the uncertainty of pending regulations, the Company may be unable to make any such estimates. Accordingly, in many respects the ultimate impact of the Dodd-Frank Act and its effects on the U.S. financial system and the Company still remain uncertain. The following provides additional information on the Dodd-Frank Act, including the current status of certain of its rulemaking initiatives.

•

Regulation of interchange fees (the Durbin Amendment) . On October 1, 2011, FRB rules limiting debit card interchange fees to those “reasonable” and “proportional” to the transactions became effective. The rule generally established that the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. An additional charge of up to 1 cent may be added if the issuer develops and implements fraud prevention policies and procedures that meet regulation standards. As a result of the FRB’s new rules, our fourth quarter 2011 debit card interchange fees were reduced by $365 million (pre-tax).

•

Interest on business checking (Regulation Q repeal) . Effective July 21, 2011, banks are permitted to pay interest on business checking accounts. We made changes to our affected products in anticipation of the repeal of Regulation Q. To date, our product changes and the repeal of Regulation Q have had a minimal impact on our business because of the low interest rate environment.

•

Asset-based deposit assessment base; other FDIC assessment changes . In 2011, the FDIC finalized regulations

to implement the provision of the Dodd-Frank Act requiring a shift from deposits to assets as the basis for determining FDIC assessments. In addition, the FDIC approved changes to its assessment rates to implement a new minimum designated reserve ratio and impose separate risk-based assessments on large banks. The FDIC has broad discretionary authority to increase assessments on large financial institutions such as Wells Fargo on a case by case basis.

•

Regulation of swaps and other derivatives activities . The Dodd-Frank Act establishes a comprehensive framework for regulating over-the-counter derivatives. Included in this framework are certain “push-out” provisions affecting U.S. banks acting as dealers in commodity swaps, equity swaps and certain credit default swaps, which will require that these activities be conducted through an affiliate. It also authorizes the Commodity Futures Trading Commission (CFTC) and the SEC to regulate swaps and security-based swaps respectively. During 2011, the CFTC and SEC proposed rules to implement derivatives regulation, including clearing and trading requirements, data retention and reporting requirements, registration requirements, capital and margin requirements, business conduct standards, and customer eligibility requirements. At this time, the Company cannot predict the financial impact of the rules to our swaps and securities-based swaps activities or estimate the costs of complying with the rules.

•

Volcker Rule. The Volcker Rule will prohibit banking entities from engaging in proprietary trading or owning any interest in or sponsoring a hedge fund or a private equity fund. In October 2011, federal banking agencies and the SEC issued for public comment proposed regulations to implement the Volcker Rule. The comment period ended on February 13, 2012, and the Volcker Rule will become effective on July 21, 2012, regardless of the status of the rulemaking process. The proposed rules requested comments on over 1,300 questions and it is difficult to predict the content of the final rules. Although proprietary trading is not significant to our financial results, and we have reduced or exited certain businesses in anticipation of the final rules, at this time the Company cannot predict the ultimate impact of the Volcker Rule on our trading and investment activities or financial results.

•

Changes to asset-backed securities markets. The Dodd-Frank Act will generally require sponsors of asset-backed securities (ABS) to hold at least a 5% ownership stake in the ABS. Exemptions from the requirement include qualified residential mortgages and FHA/VA loans. Federal regulatory authorities have proposed joint rules to implement this credit risk retention requirement, which rules include an exemption for the GSE’s mortgage-backed securities. The proposed rules have been subject to extensive public comment. At this time, the Company cannot predict the financial impact of the credit risk retention requirement on our business.

Regulatory Reform (continued)

•

The Collins Amendment. This provision of the Dodd-Frank Act will phase out the benefit of issuing trust preferred securities by eliminating them from Tier 1 capital over three years beginning January 2013. We redeemed $9.2 billion of our trust preferred securities in 2011 as discussed in the “Capital Management” section of this Report.

•

Enhanced supervision and regulation of systemically significant firms . The Dodd-Frank Act grants broad authority to banking regulators to establish enhanced supervisory and regulatory requirements for systemically important firms. In December 2011, the FRB published proposed rules that would establish enhanced risk-based capital requirements and leverage limits, liquidity requirements, counterparty credit exposure limits, risk management requirements, stress testing requirements, debt-to-equity limits, and early remediation requirements for large BHCs like Wells Fargo. The Dodd-Frank Act also establishes the Financial Services Oversight Council and the Office of Financial Research, which may recommend new systemic risk management requirements and require new reporting of systemic risks.

•

Establishment of the Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Act established the CFPB, which became operational on July 21, 2011. The role of the CFPB is to ensure consumers get clear, accurate information to effectively evaluate mortgages, credit cards and other financial products and protect them from hidden fees, abusive terms and deceptive practices. The CFPB has broad rulemaking powers and supervisory and enforcement authority over consumer financial products and services. The CFPB has begun exercising its supervisory authority over the banks under its jurisdiction, including Wells Fargo, and is preparing for supervision of certain non-bank entities. The CFPB has indicated it will concentrate much of its rulemaking effort in 2012 on the variety of mortgage-related topics required under the Dodd-Frank Act, including the steering of consumers to certain products, discrimination, abusive or unfair lending practices, predatory lending, origination disclosures, minimum mortgage underwriting standards, and servicing practices. The CFPB has published proposed regulations on several of these topics, including minimum mortgage underwriting standards (ability to repay). At this time, the Company cannot predict the content of final CFPB regulations and impacts on our business practices or financial results.

Regulatory Capital Guidelines and Capital Plans

In December 2010, the BCBS finalized Basel III for determining regulatory capital. When fully phased in by 2019, the Basel III standards will require BHCs to maintain a minimum ratio of Tier 1 common equity to risk-weighted assets of at least 7.0%. In November 2011, the BCBS released its final rule for a common equity surcharge on certain designated G-SIBs. We have been named as one of the G-SIBs that will be subject to a surcharge, although the amount of the surcharge, ranging from 1.0% to 3.5%, has not been determined. The FRB has indicated it expects to adopt regulations implementing the G-SIB surcharge in 2014 and that the surcharge would be imposed on a phased-in basis from 2016-2019. In late 2011, the FRB finalized rules

to require BHCs with $50 billion or more of consolidated assets to submit capital plans annually and to obtain regulatory approval before making capital distributions. The rule also requires a capital adequacy assessment under a range of expected and stress scenarios. For additional information, see the “Capital Management” section of this Report.

“Living Will” Requirements

In late 2011 the FRB and the FDIC approved final resolution-plan regulations as mandated by the Dodd-Frank Act. These regulations will require large financial institutions, including Wells Fargo, to prepare and periodically revise plans that would facilitate their resolution in the event of material distress or failure. As contemplated by the Dodd-Frank Act, resolution plans are to provide for a rapid and orderly resolution – liquidation or orderly restructuring – under Bankruptcy Code and other insolvency statutes applicable to particular types of regulated entities (such as securities broker-dealers or insurance companies).

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Six of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern:

•

the allowance for credit losses;

•

PCI loans;

•

the valuation of residential MSRs;

•

liability for mortgage loan repurchase losses;

•

the fair valuation of financial instruments; and

•

income taxes.

Management has reviewed and approved these critical accounting policies and has discussed these policies with the Board’s Audit and Examination Committee.

Allowance for Credit Losses

The allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio at the balance sheet date, excluding loans carried at fair value. We develop and document our allowance methodology at the portfolio segment level. Our loan portfolio consists of a commercial loan portfolio segment and a consumer loan portfolio segment.

We employ a disciplined process and methodology to establish our allowance for credit losses. The total allowance for credit losses considers both impaired and unimpaired loans. While our methodology attributes portions of the allowance to specific portfolio segments, the entire allowance for credit losses is available to absorb credit losses inherent in the total loan portfolio and unfunded credit commitments. No single statistic or measurement determines the adequacy of the allowance for credit losses.

COMMERCIAL PORTFOLIO SEGMENT The allowance for credit losses for unimpaired commercial loans is estimated through the application of loss factors to loans based on credit risk ratings for each loan. In addition, the allowance for credit losses for unfunded commitments, including letters of credit, is estimated by applying these loss factors to loan equivalent exposures. The loss factors reflect the estimated default probability and quality of the underlying collateral. The loss factors used are statistically derived through the observation of historical losses incurred for loans within each credit risk rating over a relevant specified period of time. As appropriate, we adjust or supplement these loss factors and estimates to reflect other risks that may be identified from current conditions and developments in selected portfolios.

The allowance also includes an amount for estimated credit losses on impaired loans such as nonaccrual loans and loans that have been modified in a TDR, whether on accrual or nonaccrual status.

CONSUMER PORTFOLIO SEGMENT Loans are pooled generally by product type with similar risk characteristics. Losses are estimated using forecasted losses to represent our best estimate of inherent loss based on historical experience, quantitative and other mathematical techniques over the loss emergence period. Each business group exercises significant judgment in the determination of the credit loss estimation model that fits the credit risk characteristics of its portfolio. We use both internally developed and vendor supplied models in this process. We often use roll rate or net flow models for near-term loss projections, and vintage-based models, behavior score models, and time series or statistical trend models for longer-term projections. Management must use judgment in establishing additional input metrics for the modeling processes, considering further stratification into sub-product, origination channel, vintage, loss type, geographic location and other predictive characteristics. In addition, we establish an allowance for consumer loans modified in a TDR, whether on accrual or nonaccrual status.

The models used to determine the allowance are validated by an independent internal model validation group operating in accordance with Company policies.

OTHER ACL MATTERS The allowance for credit losses for both portfolio segments includes an amount for imprecision or uncertainty that may change from period to period. This amount represents management’s judgment of risks inherent in the processes and assumptions used in establishing the allowance. This imprecision considers economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and ongoing discussions with regulatory and government agencies regarding mortgage foreclosure-related matters.

Impaired loans, which predominantly include nonaccrual commercial loans and any loans that have been modified in a TDR, have an estimated allowance calculated as the difference, if any, between the impaired value of the loan and the recorded investment in the loan. The impaired value of the loan is generally calculated as the present value of expected future cash flows from principal and interest, which incorporates expected lifetime losses, discounted at the loan’s effective interest rate. The allowance for an unimpaired loan is based solely on principal losses without consideration for timing of those losses. The allowance for an impaired loan that was modified in a TDR may be lower than the previously established allowance for that loan due to benefits received through modification, such as lower probability of default and/or severity of loss, and the impact of prior charge-offs or charge-offs at the time of the modification that may reduce or eliminate the need for an allowance.

Commercial and consumer PCI loans may require an allowance subsequent to their acquisition. This allowance requirement is due to probable decreases in expected principal and interest cash flows (other than due to decreases in interest rate indices and changes in prepayment assumptions).

Critical Accounting Policies (continued)

SENSITIVITY TO CHANGES Changes in the allowance for credit losses and, therefore, in the related provision expense can materially affect net income. The establishment of the allowance for credit losses relies on a consistent quarterly process that requires significant management review and judgment. Management considers changes in economic conditions, customer behavior, and collateral value, among other influences. From time to time, economic factors or business decisions, such as the addition or liquidation of a loan product or business unit, may affect the loan portfolio, causing management to provide or release amounts from the allowance for credit losses.

The allowance for credit losses for commercial loans, including unfunded credit commitments (individually risk weighted) is sensitive to credit risk ratings assigned to each credit exposure. Commercial loan risk ratings are evaluated based on each situation by experienced senior credit officers and are subject to periodic review by an independent internal team of credit specialists.

The allowance for credit losses for consumer loans (statistically modeled) is sensitive to economic assumptions and delinquency trends. Forecasted losses are modeled using a range of economic scenarios.

Assuming a one risk rating downgrade throughout our commercial portfolio segment, a more pessimistic economic outlook for modeled losses on our consumer portfolio segment and incremental deterioration in our PCI portfolio could imply an additional allowance requirement of approximately $11.0 billion.

Assuming a one risk rating upgrade throughout our commercial portfolio segment and a more optimistic economic outlook for modeled losses on our consumer portfolio segment could imply a reduced allowance requirement of approximately $3.1 billion.

The sensitivity analyses provided are hypothetical scenarios and are not considered probable. They do not represent management’s view of inherent losses in the portfolio as of the balance sheet date. Because significant judgment is used, it is possible that others performing similar analyses could reach different conclusions.

See the “Risk Management – Credit Risk Management” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further discussion of our allowance.

Purchased Credit-Impaired (PCI) Loans

Loans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are accounted for using the measurement provision for PCI loans. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. Such loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments. Substantially all of our PCI loans were acquired in the Wachovia acquisition on December 31, 2008.

Management evaluated whether there was evidence of credit quality deterioration as of the purchase date using indicators such as past due and nonaccrual status, commercial risk ratings, recent borrower credit scores and recent loan-to-value percentages.

The fair value at acquisition was based on an estimate of cash flows, both principal and interest, expected to be collected, discounted at the prevailing market rate of interest. We estimated the cash flows expected to be collected at acquisition using our internal credit risk, interest rate risk and prepayment risk models, which incorporate our best estimate of current key assumptions, such as property values, default rates, loss severity and prepayment speeds.

The excess of cash flows expected to be collected over the carrying value (estimated fair value at acquisition date) is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pool of loans, in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.

Subsequent to acquisition, we regularly evaluate our estimates of cash flows expected to be collected. These evaluations, performed quarterly, require the continued usage of key assumptions and estimates, similar to our initial estimate of fair value. We must apply judgment to develop our estimates of cash flows for PCI loans given the impact of home price and property value changes, changing loss severities, modification activity, and prepayment speeds.

If we have probable decreases in cash flows expected to be collected (other than due to decreases in interest rate indices and changes in prepayment assumptions), we charge the provision for credit losses, resulting in an increase to the allowance for loan losses. If we have probable and significant increases in cash flows expected to be collected, we first reverse any previously established allowance for loan losses and then increase interest income as a prospective yield adjustment over the remaining life of the loan, or pool of loans. Estimates of cash flows are impacted by changes in interest rate indices for variable rate loans and prepayment assumptions, both of which are treated as prospective yield adjustments included in interest income.

Resolutions of loans may include sales of loans to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. Our policy is to remove an individual loan from a pool based on comparing the amount received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference for the entire pool. This removal method assumes that the amount received from resolution approximates pool performance expectations. The remaining

accretable yield balance is unaffected and any material change in remaining effective yield caused by this removal method is addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full, there is no release of the nonaccretable difference for the pool because there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed TDRs. Modified PCI loans that are accounted for individually are considered TDRs, and removed from PCI accounting if there has been a concession granted in excess of the original nonaccretable difference. We include these TDRs in our impaired loans.

The amount of cash flows expected to be collected and, accordingly, the adequacy of the allowance for loan loss due to certain decreases in cash flows expected to be collected, is particularly sensitive to changes in loan credit quality. The sensitivity of the overall allowance for credit losses, including PCI loans, is presented in the preceding section, “Critical Accounting Policies – Allowance for Credit Losses.”

See the “Risk Management – Credit Risk Management” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further discussion of PCI loans.

Valuation of Residential Mortgage Servicing Rights

MSRs are assets that represent the rights to service mortgage loans for others. We recognize MSRs when we purchase servicing rights from third parties, or retain servicing rights in connection with the sale or securitization of loans we originate (asset transfers). We also have MSRs acquired in the past under co-issuer agreements that provide for us to service loans that were originated and securitized by third-party correspondents. We initially measure and carry substantially all of our MSRs related to residential mortgage loans at fair value.

At the end of each quarter, we determine the fair value of MSRs using a valuation model that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds (including housing price volatility), discount rates, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, ancillary income and late fees.

Net servicing income, a component of mortgage banking noninterest income, includes the changes from period to period in fair value of both our residential MSRs and the free-standing derivatives (economic hedges) used to hedge our residential MSRs. Changes in the fair value of residential MSRs from period to period result from (1) changes in the valuation model inputs or assumptions (principally reflecting changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates and costs to service, including delinquency and foreclosure costs), and (2) other changes, representing changes due to collection/realization of expected cash flows over time.

We use a dynamic and sophisticated model to estimate the value of our MSRs. The model is validated by an independent internal model validation group operating in accordance with

Company policies. Senior management reviews all significant assumptions quarterly. Mortgage loan prepayment speed – a key assumption in the model – is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income – another key assumption in the model – is the required rate of return investors in the market would expect for an asset with similar risk. To determine the discount rate, we consider the risk premium for uncertainties from servicing operations (e.g., possible changes in future servicing costs, ancillary income and earnings on escrow accounts). Both assumptions can, and generally will, change quarterly as market conditions and interest rates change. For example, an increase in either the prepayment speed or discount rate assumption results in a decrease in the fair value of the MSRs, while a decrease in either assumption would result in an increase in the fair value of the MSRs. In recent years, there have been significant market-driven fluctuations in loan prepayment speeds and the discount rate. These fluctuations can be rapid and may be significant in the future. Therefore, estimating prepayment speeds within a range that market participants would use in determining the fair value of MSRs requires significant management judgment. Additionally, in recent years, we have made significant adjustments to the assumptions for servicing and foreclosure costs as a result of an increase in the number of defaulted loans as well as changes in servicing processes associated with default and foreclosure management. While our current valuation reflects our best estimate of these costs, future regulatory changes in servicing standards may have an impact on these assumptions and our MSR valuation in future periods.

The valuation and sensitivity of MSRs is discussed further in Note 1 (Summary of Significant Accounting Policies), Note 8 (Securitizations and Variable Interest Entities), Note 9 (Mortgage Banking Activities) and Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

Liability for Mortgage Loan Repurchase Losses

We sell residential mortgage loans to various parties, including (1) GSEs, which include the mortgage loans in GSE-guaranteed mortgage securitizations, (2) special purpose entities that issue private label MBS, and (3) other financial institutions that purchase mortgage loans for investment or private label securitization. In addition, we pool FHA-insured and VA-guaranteed mortgage loans, which back securities guaranteed by GNMA. The agreements under which we sell mortgage loans and the insurance or guaranty agreements with FHA and VA contain provisions that include various representations and warranties regarding the origination and characteristics of the mortgage loans. Although the specific representations and warranties vary among different sales, insurance or guarantee agreements, they typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, compliance with applicable origination laws, and other matters. For more information about these loan sales and the related risks that may result in liability see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section in this Report.

Critical Accounting Policies (continued)

We may be required to repurchase mortgage loans, indemnify the securitization trust, investor or insurer, or reimburse the securitization trust, investor or insurer for credit losses incurred on loans (collectively “repurchase”) in the event of a breach of contractual representations or warranties that is not remedied within a period (usually 90 days or less) after we receive notice of the breach. Our loan sale contracts to private investors (non-GSE) typically contain an additional provision where we would only be required to repurchase loans if any such breach is deemed to have a material and adverse effect on the value of the mortgage loan or to the interests of the investors or interests of security holders in the mortgage loan. The time periods specified in our mortgage loan sales contracts to respond to repurchase requests vary, but are generally 90 days or less. While many contracts do not include specific remedies if the applicable time period for a response is not met, contracts for mortgage loan sales to the GSEs include various types of specific remedies and penalties that could be applied to inadequate responses to repurchase requests. Similarly, the agreements under which we sell mortgage loans require us to deliver various documents to the securitization trust or investor, and we may be obligated to repurchase any mortgage loan for which the required documents are not delivered or are defective. In addition, as part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Upon receipt of a repurchase request or a mortgage insurance rescission, we work with securitization trusts, investors or insurers to arrive at a mutually agreeable resolution. Repurchase demands are typically reviewed on an individual loan by loan basis to validate the claims made by the securitization trust, investor or insurer, and to determine whether a contractually required repurchase event occurred. Occasionally, in lieu of conducting a loan level evaluation, we may negotiate global settlements in order to resolve a pipeline of demands in lieu of repurchasing the loans. We manage the risk associated with potential repurchases or other forms of settlement through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor and secondary market standards.

warranties), reimbursement by correspondent and other third party originators, and projected loss severity. We establish a liability at the time loans are sold and continually update our liability estimate during the remaining life of such loans. Although investors may demand repurchase at any time and there is often a lag from the date of default to the time we receive a repurchase demand, the majority of repurchase demands occur on loans that default in the first 24 to 36 months following origination of the mortgage loan and can vary by investor. Most repurchases under our representation and warranty provisions are attributable to borrower misrepresentations and appraisals obtained at origination that investors believe do not fully comply with applicable industry standards.

To date, repurchase demands from private label MBS have been more limited than GSE-guaranteed securities; however, it is possible that requests to repurchase mortgage loans in private label securitizations may increase in frequency as investors explore every possible avenue to recover losses on their securities. We evaluate the validity and materiality of any claim of breach of representations and warranties in private label MBS that is brought to our attention and work with securitization trustees to resolve any repurchase requests. Nevertheless, we may be subject to legal and other expenses if private label securitization trustees or investors choose to commence legal proceedings in the event of disagreements.

The mortgage loan repurchase liability at December 31, 2011, represents our best estimate of the probable loss that we may incur for various representations and warranties in the contractual provisions of our sales of mortgage loans. Because the level of mortgage loan repurchase losses are dependent on economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, the level of the liability for mortgage loan repurchase losses is difficult to estimate and requires considerable management judgment. We maintain regular contact with the GSEs and other significant investors to monitor and address their repurchase demand practices and concerns. For additional information on our repurchase liability, including an adverse impact analysis, see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section and Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Fair Valuation of Financial Instruments

We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. Trading assets, securities available for sale, derivatives, prime residential MHFS, certain commercial LHFS, certain loans held for investment, principal investments and securities sold but not yet purchased (short sale liabilities) are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as certain MHFS and LHFS, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. Additionally, for financial instruments not recorded at fair value we disclose the estimate of their fair value.

Fair value represents the price that would be received to sell the financial asset or paid to transfer the financial liability in an orderly transaction between market participants at the measurement date.

The accounting provisions for fair value measurements include a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data.

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Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury and other U.S. government securities that are traded by dealers or brokers in active OTC markets.

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Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques, such as matrix pricing, for which all significant assumptions are observable in the market. Level 2 instruments include securities traded in functioning dealer or broker markets, plain-vanilla interest rate derivatives and MHFS that are valued based on prices for other mortgage whole loans with similar characteristics.

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Level 3 – Valuation is generated primarily from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

When developing fair value measurements, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted prices in active markets to measure fair value. If quoted prices in active markets are not available, fair value measurement is based upon models that use primarily market-based or independently sourced market parameters, including interest rate yield curves, prepayment speeds, option volatilities and currency rates. However, in certain cases, when market observable inputs for model-based valuation techniques are not readily available, we are required to make judgments about assumptions market participants would use to estimate the fair value.

The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted prices in active markets or observable market parameters. For financial instruments with quoted market prices or observable market parameters in active markets, there is minimal subjectivity involved in measuring fair value. When quoted prices and observable data in active markets are not fully available, management judgment is necessary to estimate fair value. Changes in the market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and reliability of

quoted prices or observable data used to determine fair value. When significant adjustments are required to price quotes or inputs, it may be appropriate to utilize an estimate based primarily on unobservable inputs. When an active market for a financial instrument does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, adjusted for an appropriate risk premium, is acceptable.

When markets for our financial assets and liabilities become inactive because the level and volume of activity has declined significantly relative to normal conditions, it may be appropriate to adjust quoted prices. The methodology we use to adjust the quoted prices generally involves weighting the quoted prices and results of internal pricing techniques, such as the net present value of future expected cash flows (with observable inputs, where available) discounted at a rate of return market participants require to arrive at the fair value. The more active and orderly markets for particular security classes are determined to be, the more weighting we assign to quoted prices. The less active and orderly markets are determined to be, the less weighting we assign to quoted prices.

We may use independent pricing services and brokers (collectively, “pricing vendors”) to obtain fair values (“vendor prices”) which are used to either record the price of an instrument or to corroborate internally developed prices. For certain securities, we may use internal traders to price instruments. Where vendor prices are utilized for recording the price of an instrument, we determine the most appropriate and relevant pricing vendor for each security class and obtain a price from that particular pricing vendor for each security.

Determination of the fair value of financial instruments using either vendor prices or internally developed prices are both subject to our internal price validation procedures, which include, but are not limited to, one or a combination of the following procedures:

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comparison to pricing vendors (for internally developed prices) or to other pricing vendors (for vendor developed prices);

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variance analysis of prices;

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corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices;

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review of pricing by Company personnel familiar with market liquidity and other market-related conditions; and

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investigation of prices on a specific instrument-by-instrument basis.

For instruments where we utilize vendor prices to record the price of an instrument, we perform additional procedures. We evaluate pricing vendors by comparing prices from one vendor to prices of other vendors for identical or similar instruments and evaluate the consistency of prices to known market transactions when determining the level of reliance to be placed on a particular pricing vendor. Methodologies employed and inputs used by independent pricing vendors are subject to additional review when such services are provided. This review may consist of, in part, obtaining and evaluating control reports issued and pricing methodology materials distributed.

Critical Accounting Policies (continued)

Significant judgment is required to determine whether certain assets measured at fair value are included in Level 2 or Level 3. When making this judgment, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. For securities in inactive markets, we use a predetermined percentage to evaluate the impact of fair value adjustments derived from weighting both external and internal indications of value to determine if the instrument is classified as Level 2 or Level 3. Otherwise, the classification of Level 2 or Level 3 is based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the Level 3 inputs to the instruments’ fair value measurement in its entirety. If Level 3 inputs are considered significant, the instrument is classified as Level 3.

Our financial assets valued using Level 3 measurements consisted of certain asset-backed securities, including those collateralized by auto leases or loans and cash reserves, private collateralized mortgage obligations (CMOs), collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), auction-rate securities, certain derivative contracts such as credit default swaps related to CMO, CDO and CLO exposures and certain MHFS and MSRs. For additional information on how we value MSRs refer to the discussion earlier in this section.

Table 46 presents the summary of the fair value of financial instruments recorded at fair value on a recurring basis, and the amounts measured using significant Level 3 inputs (before derivative netting adjustments). The fair value of the remaining assets and liabilities were measured using valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements.

Table 46: Fair Value Level 3 Summary



	December 31,

	2011					2010

($ in billions)	Total balance			Level 3 (1)		Total balance		Level 3 (1)

Assets carried at fair value	$	373.0			53.3		293.1		47.9
As a percentage of total assets		28	%		4		23		4
Liabilities carried at fair value	$	26.4			4.6		21.2		6.4
As a percentage of total liabilities		2	%		*		2		1

*	Less than 1%

(1)	Before derivative netting adjustments.

See Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for a complete discussion on our use of fair valuation of financial instruments, our related measurement techniques and the impact to our financial statements.

Income Taxes

We are subject to the income tax laws of the U.S., its states and municipalities and those of the foreign jurisdictions in which we

operate. Our income tax expense consists of two components: current and deferred. Current income tax expense approximates taxes to be paid or refunded for the current period and includes income tax expense related to our uncertain tax positions. We determine deferred income taxes using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to management’s judgment that realization is “more likely than not.” Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. Foreign taxes paid are generally applied as credits to reduce federal income taxes payable. We account for interest and penalties as a component of income tax expense.

The income tax laws of the jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions by the government taxing authorities, both domestic and foreign. Our interpretations may be subjected to review during examination by taxing authorities and disputes may arise over the respective tax positions. We attempt to resolve these disputes during the tax examination and audit process and ultimately through the court systems when applicable.

We monitor relevant tax authorities and revise our estimate of accrued income taxes due to changes in income tax laws and their interpretation by the courts and regulatory authorities on a quarterly basis. Revisions of our estimate of accrued income taxes also may result from our own income tax planning and from the resolution of income tax controversies. Such revisions in our estimates may be material to our operating results for any given quarter.

See Note 21 (Income Taxes) to Financial Statements in this Report for a further description of our provision for income taxes and related income tax assets and liabilities.

Current Accounting Developments

The following accounting pronouncements have been issued by the FASB but are not yet effective:

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Accounting Standards Update (ASU or Update) 2011-11, Disclosures about Offsetting Assets and Liabilities;

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ASU 2011-05, Presentation of Comprehensive Income;

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ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05;

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ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs; and

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ASU 2011-03, Reconsideration of Effective Control for Repurchase Agreements.

ASU 2011-11 expands the disclosure requirements for financial instruments and derivatives that may be offset in accordance with enforceable master netting agreements or similar arrangements. The disclosures are required regardless of whether the instruments have been offset (or netted) in the statement of financial position. Under ASU 2011-11, companies must describe the nature of offsetting arrangements and provide quantitative information about those agreements, including the gross and net amounts of financial instruments that are recognized in the statement of financial position. These changes are effective for us in first quarter 2013 with retrospective application. This Update will not affect our consolidated financial results since it amends only the disclosure requirements for offsetting financial instruments.

ASU 2011-05 eliminates the option for companies to include the components of other comprehensive income in the statement of changes in stockholders’ equity. This Update requires entities to present the components of comprehensive income in either a single statement or in two separate statements, with the statement of other comprehensive income (OCI) immediately following the statement of income. This Update also requires companies to present amounts reclassified out of OCI and into net income on the face of the statement of income. In December 2011, the FASB issued ASU 2011-12 , which defers indefinitely the requirement to present reclassification adjustments on the statement of income. The remaining provisions are effective for us in first quarter 2012 with retrospective application. Early adoption is permitted. This Update will not affect our consolidated financial results as it amends only the presentation of comprehensive income.

ASU 2011-04 modifies accounting guidance and expands existing disclosure requirements for fair value measurements. This Update clarifies how fair values should be measured for instruments classified in stockholders’ equity and under what circumstances premiums and discounts should be applied in fair value measurements. This Update also permits entities to measure fair value on a net basis for financial instruments that are managed based on net exposure to market risks and/or

counterparty credit risk. ASU 2011-04 requires new disclosures for financial instruments classified as Level 3, including: 1) quantitative information about unobservable inputs used in measuring fair value, 2) qualitative discussion of the sensitivity of fair value measurements to changes in unobservable inputs, and 3) a description of valuation processes used. This Update also requires disclosure of fair value levels for financial instruments that are not recorded at fair value but for which fair value is required to be disclosed. This guidance is effective for us in first quarter 2012 with prospective application. Early adoption is not permitted. We will expand our fair value disclosures upon adoption of this Update, but we do not expect the measurement clarifications will have a material effect on our consolidated financial statements.

ASU 2011-03 amends the criteria companies use to determine if repurchase and similar agreements should be accounted for as sales or financings. Specifically, this Update removes the criterion for transferors to have the ability to meet contractual obligations through collateral maintenance provisions, even if transferees fail to return transferred assets pursuant to the agreements. This Update is effective for us in first quarter 2012 with prospective application to new transactions and existing transactions modified on or after January 1, 2012. Early adoption is not permitted. We do not expect this Update will have a material effect on our consolidated financial statements.

Forward-Looking Statements

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. Examples of forward-looking statements in this Report include, but are not limited to, statements we make about: (i) future results of the Company, including the potential effect of recent strong loan and deposit growth on future financial performance; (ii) our 2012 noninterest expense, including our targeted noninterest expense for fourth quarter 2012 as part of our expense management initiatives; (iii) future credit quality and expectations regarding future loan losses in our loan portfolios and life-of-loan estimates; our foreign loan exposure; the level and loss content of NPAs and nonaccrual loans; the adequacy of the allowance for credit losses, including our current expectation of future allowance releases in 2012; and the reduction or mitigation of risk in our loan portfolios and the effects of loan modification programs; (iv) our expectations regarding the completion of the remaining Wachovia integration activities; (v) future capital levels and our estimate regarding our Tier 1 common equity ratio under proposed Basel III capital standards as of December 31, 2011; (vi) the quality of our residential mortgage loan servicing portfolio, our mortgage repurchase exposure and exposure relating to our mortgage foreclosure practices; (vii) our expectations regarding the satisfaction of our obligations under our settlement in principle with the Department of Justice and other federal and state government entities related to our mortgage servicing and foreclosure practices, including our estimates of the impact of the settlement on our future financial results; (viii) the expected outcome and impact of legal, regulatory and legislative developments, including the Dodd-Frank Act and FRB restrictions on debit card interchange fees, including earnings expectations regarding mitigation efforts; and (ix) the Company’s plans, objectives and strategies, including our belief that we have more opportunity to increase cross-sell of our products.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

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current and future economic and market conditions, including the effects of further declines in housing prices and high unemployment rates, U. S. fiscal debt and budget matters, and the sovereign debt crisis in Europe;

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our capital and liquidity requirements (including under regulatory capital standards, such as the proposed Basel III capital standards, as determined and interpreted by applicable regulatory authorities) and our ability to generate capital internally or raise capital on favorable terms;

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financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and legislation and regulation relating to overdraft fees (and changes to our overdraft practices as a result thereof), debit card interchange fees, credit cards, and other bank services, as well as the extent of our ability to offset the loss of revenue and income from financial services reform and other legislation and regulation;

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the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications or changes in such requirements or guidance;

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the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;

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negative effects relating to our mortgage servicing and foreclosure practices, including our ability to meet our obligations under the settlement in principle with the Department of Justice and other federal and state government entities, as well as changes in our procedures or practices and/or industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;

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our ability to realize our noninterest expense target as part of our expense management initiatives when and in the amount targeted, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;

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our ability to successfully complete the remaining Wachovia integration activities, as well as realize all of the expected benefits of the Wachovia merger;

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recognition of OTTI on securities held in our available-for-sale portfolio;

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the effect of changes in interest rates on our net interest margin and our mortgage originations, MSRs and MHFS;

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hedging gains or losses;

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disruptions in the capital markets and reduced investor demand for mortgage loans;

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our ability to sell more products to our customers;

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the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;

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our election to provide support to our money market funds;

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changes in the value of our venture capital investments;

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changes in our accounting policies or in accounting standards or in how accounting standards are to be applied or interpreted;

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mergers, acquisitions and divestitures;

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changes in the Company’s credit ratings and changes in the credit quality of the Company’s customers or counterparties;

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reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions;

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a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers, including as a result of cyber attacks;

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the loss of checking and savings account deposits to other investments such as the stock market, and the resulting increase in our funding costs and impact on our net interest margin;

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fiscal and monetary policies of the FRB; and

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the other risk factors and uncertainties described under “Risk Factors” in this Report.

In addition to the above factors, we also caution that there is no assurance that our allowance for credit losses will be adequate to cover future credit losses, especially if housing prices decline and unemployment worsens. Increases in loan charge-offs or in the allowance for credit losses and related provision expense could materially adversely affect our financial results and condition.

Any forward-looking statement made by us in this Report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. We discuss below and elsewhere in this Report, including under “Forward-Looking Statements” and in our 2011 Form 10-K, as well as in other documents we file with the SEC, risk factors that could adversely affect our financial results and condition and the value of, and return on, an investment in the Company. There may be other factors not discussed below or elsewhere in this Report or in our 2011 Form 10-K that could adversely affect our financial results and condition.

RISKS RELATED TO THE ECONOMY, FINANCIAL MARKETS, INTEREST RATES AND LIQUIDITY

As one of the largest lenders in the U.S. and a provider of financial products and services to consumers and businesses across the U.S. and internationally, our financial results have been, and will continue to be, materially affected by general economic conditions, particularly unemployment levels and home prices in the U.S., and a deterioration in economic conditions or in the financial markets may materially adversely affect our lending and other businesses and our financial results and condition. We generate revenue from the interest and fees we charge on the loans and other products and services we sell, and a substantial amount of our revenue and earnings comes from the net interest income and fee income that we earn from our consumer and commercial lending and banking businesses, including our mortgage banking business where we currently are the largest mortgage originator in the U.S. These

businesses have been, and will continue to be, materially affected by the state of the U.S. economy, particularly unemployment levels and home prices. Although the U.S. economy has continued to gradually improve from the levels of 2008 and early 2009, economic growth has been slow and uneven and the housing market remains weak. In addition, the negative effects and continued uncertainty stemming from the sovereign debt crisis and economic difficulties in Europe and U. S. fiscal and political matters, including concerns about deficit reduction and U.S. debt ratings, have impacted and may continue to impact the continuing global economic recovery. A prolonged period of slow growth in the global economy, particularly in the U.S., or any deterioration in general economic conditions and/or the financial markets resulting from the above matters or any other events or factors that may disrupt or dampen the global economic recovery , could materially adversely affect our financial results and condition.

The high unemployment rate in the U.S., together with high levels of unsold housing inventory and distressed property sales and the significant decline in home prices across the U.S., including in many of our large banking markets such as California and Florida, has resulted in elevated credit costs and nonperforming asset levels, which have adversely affected our credit performance and our financial results and condition. If unemployment levels worsen or if home prices continue to fall we would expect to incur higher than normal charge-offs and provision expense from increases in our allowance for credit losses. These conditions may adversely affect not only consumer loan performance but also commercial and CRE loans, especially for those business borrowers that rely on the health of industries that may experience deteriorating economic conditions. The ability of

Risk Factors (continued)

these and other borrowers to repay their loans may be hurt, causing us, as one of the largest commercial lenders and the largest CRE lender in the U.S., to incur significantly higher credit losses. In addition, weak or deteriorating economic conditions make it more challenging for us to increase our consumer and commercial loan portfolios by making loans to creditworthy borrowers at attractive yields. Although we have significant capacity to add loans to our balance sheet and there have been some early signs of increased borrower activity, loan demand, especially consumer loan demand, has been soft resulting in our retaining a much higher amount of lower yielding liquid assets on our balance sheet. If economic conditions do not continue to improve or if the economy worsens and unemployment rises, which also would likely result in a decrease in consumer and business confidence and spending, the demand for our credit products, including our mortgages, may fall, reducing our interest and fee income and our earnings.

A deterioration in business and economic conditions, which may erode consumer and investor confidence levels, and/or increased volatility of financial markets, also could adversely affect financial results for our fee-based businesses, including our investment advisory, mutual fund, securities brokerage, wealth management, and investment banking businesses. As a result of the Wachovia merger, a greater percentage of our revenue depends on our fee income from these businesses. We earn fee income from managing assets for others and providing brokerage and other investment advisory and wealth management services. Because investment management fees are often based on the value of assets under management, a fall in the market prices of those assets could reduce our fee income. Changes in stock market prices could affect the trading activity of investors, reducing commissions and other fees we earn from our brokerage business. Poor economic conditions and volatile or unstable financial markets also can negatively affect our debt and equity underwriting and advisory businesses, as well as our trading and venture capital businesses. Extreme market volatility also could cause us to elect to provide capital support to our money market funds, which would reduce our earnings. Our acquisition of Wachovia expanded our international businesses, particularly our global financial institution and correspondent banking services, and any deterioration in global financial markets and economies, including as a result of Europe’s sovereign debt crisis or any international political unrest or disturbances, may adversely affect the revenues and earnings of these and other businesses.

For more information, refer to the “Risk Management – Asset/Liability Management” and “– Credit Risk Management” sections in this Report.

Changes in interest rates and financial market values could reduce our net interest income and earnings, including as a result of recognizing losses or OTTI on the securities that we hold in our portfolio or trade for our customers. Our net interest income is the interest we earn on loans, debt securities and other assets we hold less the interest we pay on our deposits, long-term and short-term debt, and other liabilities. Net interest income is a measure of both our net interest margin – the difference between the yield we earn on

our assets and the interest rate we pay for deposits and our other sources of funding – and the amount of earning assets we hold. Changes in either our net interest margin or the amount or mix of earning assets we hold could affect our net interest income and our earnings. Changes in interest rates can affect our net interest margin. Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract. Our liabilities tend to be shorter in duration than our assets, so they may adjust faster in response to changes in interest rates. When interest rates rise, our funding costs may rise faster than the yield we earn on our assets, causing our net interest margin to contract until the asset yield increases.

The amount and type of earning assets we hold can affect our yield and net interest margin. We hold earning assets in the form of loans and investment securities, among other assets. As noted above, if the economy remains weak or worsens we may see lower demand for loans by creditworthy customers, reducing our net interest income and yield. In addition, our net interest income and net interest margin can be negatively affected by a prolonged low interest rate environment, which as noted below is currently being experienced as a result of economic conditions and FRB monetary policies, as it may result in us holding lower yielding loans and securities on our balance sheet, particularly if we are unable to replace the maturing higher yielding assets on our balance sheet, including the loans in our non-strategic and liquidating loan portfolio, with similar higher yielding assets. Increases in interest rates, however, may negatively affect loan demand and could result in higher credit losses as borrowers may have more difficulty making higher interest payments. As described below, changes in interest rates also affect our mortgage business, including the value of our MSRs.

Changes in the slope of the “yield curve” – or the spread between short-term and long-term interest rates – could also reduce our net interest margin. Normally, the yield curve is upward sloping, meaning short-term rates are lower than long-term rates. Because our liabilities tend to be shorter in duration than our assets, when the yield curve flattens, as is the case in the current interest rate environment, or even inverts, our net interest margin could decrease as our cost of funds increases relative to the yield we can earn on our assets.

The interest we earn on our loans may be tied to U.S.-denominated interest rates such as the federal funds rate while the interest we pay on our debt may be based on international rates such as LIBOR. If the federal funds rate were to fall without a corresponding decrease in LIBOR, we might earn less on our loans without any offsetting decrease in our funding costs. This could lower our net interest margin and our net interest income.

We assess our interest rate risk by estimating the effect on our earnings under various scenarios that differ based on assumptions about the direction, magnitude and speed of interest rate changes and the slope of the yield curve. We hedge some of that interest rate risk with interest rate derivatives. We also rely on the “natural hedge” that our mortgage loan originations and servicing rights can provide.

We may not hedge all of our interest rate risk. There is always the risk that changes in interest rates could reduce our net interest income and our earnings in material amounts, especially if actual conditions turn out to be materially different than what we assumed. For example, if interest rates rise or fall faster than we assumed or the slope of the yield curve changes, we may incur significant losses on debt securities we hold as investments. To reduce our interest rate risk, we may rebalance our investment and loan portfolios, refinance our debt and take other strategic actions. We may incur losses when we take such actions.

We hold securities in our available-for-sale portfolio, including U.S. Treasury and federal agency securities and federal agency MBS, securities of U.S. states and political subdivisions, residential and commercial MBS, corporate debt securities, and marketable equity securities, including securities relating to our venture capital activities. We analyze securities held in our available-for-sale portfolio for OTTI on at least a quarterly basis. The process for determining whether impairment is other than temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving contractual principal and interest payments on the security. Because of changing economic and market conditions, as well as credit ratings, affecting issuers and the performance of the underlying collateral, we may be required to recognize OTTI in future periods, thus reducing earnings. Our net income also is exposed to changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices in connection with our trading activities, which are conducted primarily to accommodate our customers in the management of their market price risk, as well as when we take positions based on market expectations or to benefit from differences between financial instruments and markets. The securities held in these activities are carried at fair value with realized and unrealized gains and losses recorded in noninterest income. As part of our business to support our customers, we trade public securities and these securities also are subject to market fluctuations with gains and losses recognized in net income when realized and periodically include OTTI charges. Although we have processes in place to measure and monitor the risks associated with our trading activities, including stress testing and hedging strategies, there can be no assurance that our processes and strategies will be effective in avoiding losses that could have a material adverse effect on our results of operations.

Our venture capital business also is subject to market risk and can be volatile from quarter to quarter. Certain of our venture capital businesses are carried under the cost or equity method, and others (e.g., principal investments) are carried at fair value with unrealized gains and losses reflected in earnings. Our venture capital investments tend to be in technology and other volatile industries so the value of our public and private equity portfolios may fluctuate widely. Earnings from our venture capital investments may be volatile and hard to predict and may have a significant effect on our earnings from period to period. When, and if, we recognize gains may depend on a number of factors, including general economic and market conditions, the prospects of the companies in which we invest, when these companies go public, the size of our position relative to the public float, and whether we are subject to any resale restrictions.

Our venture capital investments could result in significant losses, either OTTI losses for those investments carried under the cost or equity method or mark-to-market losses for principal investments. Our assessment for OTTI is based on a number of factors, including the then current market value of each investment compared with its carrying value. If we determine there is OTTI for an investment, we write-down the carrying value of the investment, resulting in a charge to earnings. The amount of this charge could be significant. Further, our principal investing portfolio could incur significant mark-to-market losses especially if the carrying value of these investments has increased because of higher market prices.

For more information, refer to the “Risk Management – Asset/Liability Management – Interest Rate Risk”, “– Market Risk – Equity Markets”, and “– Market Risk – Trading Activities” and the “Balance Sheet Analysis – Securities Available for Sale” sections in this Report and Note 5 (Securities Available for Sale) to Financial Statements in this Report.

Effective liquidity management, which ensures that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and other unpredictable circumstances of industry or financial market stress, is essential for the operation of our business, and our financial results and condition could be materially adversely affected if we do not effectively manage our liquidity. Our liquidity is essential for the operation of our business. We primarily rely on bank deposits to be a low cost and stable source of funding for the loans we make and the operation of our business. Core customer deposits, which include noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits, have historically provided us with a sizeable source of relatively stable and low-cost funds. In addition to customer deposits, our sources of liquidity include investments in our securities portfolio, our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the FHLB and the FRB, and our ability to raise funds in domestic and international money and capital markets.

Our liquidity and our ability to fund and run our business could be materially adversely affected by a variety of conditions and factors, including financial and credit market disruption and volatility or a lack of market or customer confidence in financial markets in general similar to what occurred during the financial crisis in 2008 and early 2009, which may result in a loss of customer deposits or outflows of cash or collateral and/or our inability to access capital markets on favorable terms. Market disruption and volatility could impact our credit spreads, which are the amount in excess of the interest rate of U.S. Treasury securities, or other benchmark securities, of the same maturity that we need to pay to our funding providers. Increases in interest rates and our credit spreads could significantly increase our funding costs. Other conditions and factors that could materially adversely affect our liquidity and funding include a lack of market or customer confidence in the Company or negative news about the Company or the financial services

Risk Factors (continued)

industry generally which also may result in a loss of deposits and/or negatively affect our ability to access the capital markets; our inability to sell or securitize loans or other assets, and, as described below, reductions in one or more of our credit ratings. Many of the above conditions and factors may be caused by events over which we have little or no control. While market conditions have improved since the financial crisis, there can be no assurance that significant disruption and volatility in the financial markets will not occur in the future. For example, in the summer of 2011 concerns regarding the potential failure to raise the U.S. government debt limit and the eventual downgrade of U.S. government debt ratings caused uncertainty and volatility in financial markets. Although the U.S. debt limit was increased, a failure to raise the U.S. debt limit in the future and/or additional downgrades of the sovereign debt ratings of the U.S. government or the debt ratings of related institutions, agencies or instrumentalities, as well as other fiscal or political events could, in addition to causing economic and financial market disruptions, materially adversely affect the market value of the U.S. government securities that we hold, the availability of those securities as collateral for borrowing, and our ability to access capital markets on favorable terms, as well as have other material adverse effects on the operation of our business and our financial results and condition.

As noted above, we rely heavily on bank deposits for our funding and liquidity. We compete with banks and other financial services companies for deposits. If our competitors raise the rates they pay on deposits our funding costs may increase, either because we raise our rates to avoid losing deposits or because we lose deposits and must rely on more expensive sources of funding. Higher funding costs reduce our net interest margin and net interest income. Checking and savings account balances and other forms of customer deposits may decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. When customers move money out of bank deposits and into other investments, we may lose a relatively low cost source of funds, increasing our funding costs and negatively affecting our liquidity.

If we are unable to continue to fund our assets through customer bank deposits or access capital markets on favorable terms or if we suffer an increase in our borrowing costs or otherwise fail to manage our liquidity effectively, our liquidity, net interest margin, financial results and condition may be materially adversely affected. As we did during the financial crisis, we may also need to raise additional capital through the issuance of common stock, which could dilute the ownership of existing stockholders, or reduce or even eliminate our common stock dividend to preserve capital or in order to raise additional capital.

For more information, refer to the “Risk Management – Asset/Liability Management” section in this Report.

Adverse changes in our credit ratings could have a material adverse effect on our liquidity, cash flows, financial results and condition. Our borrowing costs and ability to obtain funding are influenced by our credit ratings. Reductions in one or more of our credit ratings could adversely

affect our ability to borrow funds and raise the costs of our borrowings substantially and could cause creditors and business counterparties to raise collateral requirements or take other actions that could adversely affect our ability to raise capital. Credit ratings and credit ratings agencies’ outlooks are based on the ratings agencies’ analysis of many quantitative and qualitative factors, such as our capital adequacy, the level and quality of our earnings, rating agency assumptions regarding the probability and extent of federal financial assistance or support, and other rating agency specific criteria. In addition to credit ratings, our borrowing costs are affected by various other external factors, including market volatility and concerns or perceptions about the financial services industry generally.

On September 21, 2011, Moody’s downgraded the long-term senior debt ratings of the Parent and Wells Fargo Bank, N.A. one notch to A2 and Aa3, respectively, based on its determination that, as a result of the Dodd-Frank Act, the U.S. government is less likely to support systemically important financial institutions, if needed, than during the financial crisis. The short-term debt ratings of the Parent and Wells Fargo Bank were affirmed at Prime-1. Moody’s also indicated that its outlook on the Parent’s and Wells Fargo Bank’s long-term senior debt ratings is negative based on the possibility that Moody’s may further reduce its assumptions about the likelihood of systemic support for systemically important financial institutions. On November 29, 2011, S&P lowered the long-term senior debt ratings of the Parent and Wells Fargo Bank one notch to A+ and AA-, respectively, following changes in S&P’s ratings criteria for the global banking industry. S&P also reduced the Parent’s short-term debt rating one notch to A-1, affirmed Wells Fargo Bank’s short-term debt rating at A-1+, and maintained a negative outlook on the Parent’s long-term debt reflecting the outlook on the U.S. sovereign rating in light of the amount of U.S. government support incorporated into our ratings. On July 15, 2011, Fitch Ratings affirmed both the Parent’s and Wells Fargo Bank’s long-term senior debt ratings and short-term debt ratings at AA- and F1+, respectively, and maintained a stable watch on those ratings. On March 29, 2011, DBRS confirmed both the Parent’s and Wells Fargo Bank’s long-term senior and short-term debt ratings, including the stable trend. There can be no assurance that we will maintain our current credit ratings.

Although the availability and cost of funding are influenced by credit ratings, to date the Moody’s and S&P ratings downgrades described above have not adversely affected our ability to access the capital markets or fund our operations. While to date we do not believe there has been any meaningful change in our borrowing costs specifically relating to the ratings downgrades described above, there can be no assurance that more severe credit ratings downgrades in the future would not materially affect our ability to borrow funds and borrowing costs.

Downgrades in our credit ratings also may trigger additional collateral or funding obligations which could negatively affect our liquidity, including as a result of credit-related contingent features in certain of our derivative contracts. The Moody’s and S&P ratings downgrades described above have not triggered, and additional one and two notch downgrades in those credit ratings would not be expected to trigger, a material increase in our collateral or funding obligations. However, in the event of a more

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severe credit rating downgrade of our long-term and short-term credit ratings, the increase in our collateral or funding obligations and the effect on our liquidity could be material. For information regarding additional collateral and funding obligations required of certain derivative instruments in the event our credit ratings were to fall below investment grade, see Note 16 (Derivatives) to Financial Statements in this Report.

We rely on dividends from our subsidiaries for liquidity, and federal and state law can limit those dividends. Wells Fargo & Company, the parent holding company, is a separate and distinct legal entity from its subsidiaries. It receives a significant portion of its funding and liquidity from dividends and other distributions from its subsidiaries. We generally use these dividends and distributions, among other things, to pay dividends on our common and preferred stock and interest and principal on our debt. Federal and state laws limit the amount of dividends and distributions that our bank and some of our nonbank subsidiaries, including our broker-dealer subsidiaries, may pay to our parent holding company. Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.

For more information, refer to the “Regulation and Supervision – Dividend Restrictions” and “– Holding Company Structure” sections in our 2011 Form 10-K and to Note 3 (Cash, Loan and Dividend Restrictions) and Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

RISKS RELATED TO FINANCIAL REGULATORY REFORM AND OTHER LEGISLATION AND REGULATIONS

Enacted legislation and regulation, including the Dodd-Frank Act, as well as future legislation and/or regulation, could require us to change certain of our business practices, reduce our revenue and earnings, impose additional costs on us or otherwise adversely affect our business operations and/or competitive position. Our parent company, our subsidiary banks and many of our nonbank subsidiaries such as those related to our retail brokerage and mutual fund businesses, are subject to significant regulation under state and federal laws in the U.S., as well as the applicable laws of the various jurisdictions outside of the U.S. where we conduct business. These regulations protect depositors, federal deposit insurance funds, consumers, investors and the banking and financial system as a whole, not necessarily our stockholders. Economic, market and political conditions during the past few years have led to a significant amount of new legislation and regulation in the U.S. and abroad. These laws and regulations may affect the manner in which we do business and the products and services that we provide, affect or restrict our ability to compete in our current businesses or our ability to enter into or acquire new businesses, reduce or limit our revenue in businesses or impose additional fees, assessments or taxes on us, intensify the regulatory supervision of us and the financial services industry, and

adversely affect our business operations or have other negative consequences.

For example, in 2009 several legislative and regulatory initiatives were adopted that affected revenue in 2011 and will continue to affect our businesses and financial results, including FRB amendments to Regulation E, which affect the way we may charge overdraft fees, and the enactment of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Card Act), which affects our ability to change interest rates and assess certain fees on card accounts. We also implemented policy changes to help customers limit overdraft and returned item fees. The continuing impact of these laws and regulations on our future revenue could vary materially due to a variety of factors, including changes in customer behavior, economic conditions and other potential offsetting factors.

On July 21, 2010, the Dodd-Frank Act, the most significant financial reform legislation since the 1930s, became law. The Dodd-Frank Act, among other things, (i) established the Financial Stability Oversight Council to monitor systemic risk posed by financial firms and imposes additional and enhanced FRB regulations, including capital and liquidity requirements, on certain large, interconnected bank holding companies such as Wells Fargo and systemically significant nonbanking firms intended to promote financial stability; (ii) creates a liquidation framework for the resolution of covered financial companies, the costs of which would be paid through assessments on surviving covered financial companies; (iii) makes significant changes to the structure of bank and bank holding company regulation and activities in a variety of areas, including prohibiting proprietary trading and private fund investment activities, subject to certain exceptions; (iv) creates a new framework for the regulation of over-the-counter derivatives and new regulations for the securitization market and strengthens the regulatory oversight of securities and capital markets by the SEC; (v) established the Consumer Financial Protection Bureau (CFPB) within the FRB, which has sweeping powers to administer and enforce a new federal regulatory framework of consumer financial regulation; (vi) may limit the existing pre-emption of state laws with respect to the application of such laws to national banks, makes federal pre-emption no longer applicable to operating subsidiaries of national banks, and gives state authorities, under certain circumstances, the ability to enforce state laws and federal consumer regulations against national banks; (vii) provides for increased regulation of residential mortgage activities; (viii) revised the FDIC’s assessment base for deposit insurance by changing from an assessment base defined by deposit liabilities to a risk-based system based on total assets; (ix) phases out over three years beginning January 2013 the Tier 1 capital treatment of trust preferred securities; (x) permitted banks to pay interest on business checking accounts beginning on July 1, 2011; (xi) authorized the FRB under the Durbin Amendment to adopt regulations that limit debit card interchange fees received by debit card issuers; and (xii) includes several corporate governance and executive compensation provisions and requirements, including mandating an advisory stockholder vote on executive compensation.

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The Dodd-Frank Act and many of its provisions became effective in July 2010 and July 2011. However, a number of its provisions still require extensive rulemaking, guidance, and interpretation by regulatory authorities. Accordingly, in many respects the ultimate impact of the Dodd-Frank Act and its effects on the U.S. financial system and the Company still remain uncertain. Nevertheless, the Dodd-Frank Act, including current and future rules implementing its provisions and the interpretation of those rules, could result in a loss of revenue, require us to change certain of our business practices, limit our ability to pursue certain business opportunities, increase our capital requirements and impose additional assessments and costs on us and otherwise adversely affect our business operations and have other negative consequences. For example, as a result of the FRB’s new rules limiting debit card interchange fees, our fourth quarter 2011 debit card interchange fees were reduced by $365 million (pre-tax). Although we expect to recapture a portion of our lost income over time through volume and product changes, there can be no assurance that we will be successful in our efforts to mitigate the negative impact to our financial results from the Durbin Amendment.

In addition, our consumer businesses, including our mortgage, credit card and other consumer lending and non-lending businesses, may be negatively affected by the activities of the CFPB, which has broad rulemaking powers and supervisory authority over consumer financial products and services. Although the full impact of the CFPB on our businesses is uncertain, the CFPB’s activities may increase our compliance costs and require changes in our business practices as a result of new regulations and requirements which could limit or negatively affect the products and services that we currently offer our customers. As a result of greater regulatory scrutiny of our consumer businesses, we also may become subject to more or expanded regulatory examinations and/or investigations, which also could result in increased costs and harm to our reputation in the event of a failure to comply with the increased regulatory requirements.

The Dodd-Frank Act’s proposed prohibitions or limitations on proprietary trading and private fund investment activities, known as the “Volcker Rule,” also may reduce our revenue and earnings, although proprietary trading has not been significant to our financial results. The Volcker Rule is subject to final rulemaking and interpretation, and the ultimate impact of the Volcker Rule on our investment activities, including our venture capital business, is uncertain.

Other future regulatory initiatives that could significantly affect our business include proposals to reform the housing finance market in the United States. These proposals, among other things, consider winding down the GSEs and reducing or eliminating over time the role of the GSEs in guaranteeing mortgages and providing funding for mortgage loans, as well as the implementation of reforms relating to borrowers, lenders, and investors in the mortgage market, including reducing the maximum size of a loan that the GSEs can guarantee, phasing in a minimum down payment requirement for borrowers, improving underwriting standards, and increasing accountability and transparency in the securitization process. As recently proposed by the Obama administration, Congress also may consider the adoption of legislation to reform the mortgage

financing market in an effort to assist borrowers experiencing difficulty in making mortgage payments or refinancing their mortgages. The extent and timing of any regulatory reform or the adoption of any legislation regarding the GSEs and/or the home mortgage market, as well as any effect on the Company’s business and financial results, are uncertain.

Any other future legislation and/or regulation, if adopted, also could significantly change our regulatory environment and increase our cost of doing business, limit the activities we may pursue or affect the competitive balance among banks, savings associations, credit unions, and other financial services companies, and have a material adverse effect on our financial results and condition.

For more information, refer to the “Regulatory Reform” section in this Report and the “Regulation and Supervision” section in our 2011 Form 10-K.

Bank regulations, including Basel capital standards and FRB guidelines and rules, may require higher capital and liquidity levels, limiting our ability to pay common stock dividends, repurchase our common stock, invest in our business or provide loans to our customers. Federal banking regulators continually monitor the capital position of banks and bank holding companies. In December 2010, the Basel Committee on Bank Supervision finalized a set of international guidelines for determining regulatory capital known as Basel III. These guidelines are designed to address many of the weaknesses identified in the banking sector as contributing to the financial crisis of 2008 and 2009 by, among other things, increasing minimum capital requirements, increasing the quality of capital, increasing the risk coverage of the capital framework, and increasing standards for the supervisory review process and public disclosure. When fully phased in, the Basel III guidelines require bank holding companies to maintain a minimum ratio of Tier 1 common equity to risk-weighted assets of at least 7.0%. The Basel Committee also proposed certain liquidity coverage and funding ratios. In June 2011, the Basel Committee proposed additional Tier 1 common equity surcharge requirements for global systemically important banks ranging from 1.0% to 3.5% depending on the bank’s systemic importance to be determined based on certain factors. This new capital surcharge, which would be phased in beginning in January 2016 and become fully effective on January 1, 2019, would be in addition to the Basel III 7.0% Tier 1 common equity requirement proposed in December 2010. The Company has been identified as one of the initial 29 global systemically important banks that would be subject to the surcharge, but the surcharge amount has not yet been determined. The U.S. regulatory bodies are reviewing the final international standards, and the ultimate impact of the Basel III standards on our capital and liquidity will depend on such final rulemaking and regulatory interpretations of the rules as we, along with our regulatory authorities, apply the final rules during the implementation process.

As part of its obligation to impose enhanced capital and risk-management standards on large financial firms pursuant to the Dodd-Frank Act, the FRB issued a final capital plan rule that became effective December 30, 2011. The final capital plan rule

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requires top-tier U.S. bank holding companies, including the Company, to submit annual capital plans for review and to obtain regulatory approval before making capital distributions. There can be no assurance that the FRB would respond favorably to the Company’s future capital plans. The FRB also recently proposed rules under the Dodd-Frank Act that will impose enhanced prudential standards on large bank holding companies such as the Company, including enhanced capital, stress testing, and liquidity requirements.

The Basel standards and FRB regulatory capital and liquidity requirements may limit or otherwise restrict how we utilize our capital, including common stock dividends and stock repurchases, and may require us to increase our capital and/or liquidity. Any requirement that we increase our regulatory capital, regulatory capital ratios or liquidity could require us to liquidate assets or otherwise change our business and/or investment plans, which may negatively affect our financial results. Although not currently anticipated, the proposed Basel capital requirements and/or our regulators may require us to raise additional capital in the future. Issuing additional common stock may dilute the ownership of existing stockholders.

For more information, refer to the “Capital Management” and “Regulatory Reform” sections in this Report and the “Regulation and Supervision” section of our 2011 Form 10-K.

FRB policies, including policies on interest rates, can significantly affect business and economic conditions and our financial results and condition. The FRB regulates the supply of money in the United States. Its policies determine in large part our cost of funds for lending and investing and the return we earn on those loans and investments, both of which affect our net interest income and net interest margin. The FRB’s interest rate policies also can materially affect the value of financial instruments we hold, such as debt securities and MSRs. In addition, its policies can affect our borrowers, potentially increasing the risk that they may fail to repay their loans. Changes in FRB policies are beyond our control and can be hard to predict. As a result of the FRB’s concerns regarding, among other things, continued slow economic growth and a weak housing market, the FRB recently indicated that it intends to keep the target range for the federal funds rate near zero at least through late 2014. The FRB also may increase its purchases of U.S. government and mortgage-backed securities or take other actions in an effort to reduce or maintain low long-term interest rates. As noted above, a declining or low interest rate environment and a flattening yield curve which may result from the FRB’s actions could negatively affect our net interest income and net interest margin as it may result in us holding lower yielding loans and investment securities on our balance sheet.

RISKS RELATED TO CREDIT AND OUR MORTGAGE BUSINESS

As one of the largest lenders in the U.S., increased credit risk, including as a result of a deterioration in economic conditions, could require us to increase our provision for credit losses and allowance for credit losses and could have a material adverse effect on our

results of operations and financial condition. When we loan money or commit to loan money we incur credit risk, or the risk of losses if our borrowers do not repay their loans. As one of the largest lenders in the U.S., the credit performance of our loan portfolios significantly affects our financial results and condition. As noted above, if the current economic environment were to deteriorate, more of our customers may have difficulty in repaying their loans or other obligations which could result in a higher level of credit losses and provision for credit losses. We reserve for credit losses by establishing an allowance through a charge to earnings. The amount of this allowance is based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). The process for determining the amount of the allowance is critical to our financial results and condition. It requires difficult, subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans. We might increase the allowance because of changing economic conditions, including falling home prices and higher unemployment, or other factors. For example, changes in borrower behavior or the regulatory environment also could influence recognition of credit losses in the portfolio and our allowance for credit losses.

Reflecting the continued improved credit performance in our loan portfolios, our provision expense was $3.4 billion and $2.0 billion less than net charge-offs in 2011 and 2010, respectively, which had a positive effect on our earnings. Absent significant deterioration in the economy, we expect future allowance releases in 2012, although at more modest levels. While we believe that our allowance for credit losses was appropriate at December 31, 2011, there is no assurance that it will be sufficient to cover future credit losses, especially if housing and employment conditions worsen. In the event of significant deterioration in economic conditions, we may be required to build reserves in future periods, which would reduce our earnings.

For more information, refer to the “Risk Management – Credit Risk Management” and “Critical Accounting Policies – Allowance for Credit Losses” sections in this Report.

We may have more credit risk and higher credit losses to the extent our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral. Our credit risk and credit losses can increase if our loans are concentrated to borrowers engaged in the same or similar activities or to borrowers who as a group may be uniquely or disproportionately affected by economic or market conditions. We experienced the effect of concentration risk in 2009 and 2010 when we incurred greater than expected losses in our home equity loan portfolio due to a housing slowdown and greater than expected deterioration in residential real estate values in many markets, including the Central Valley California market and several Southern California metropolitan statistical areas. As California is our largest banking state in terms of loans and deposits, continued deterioration in real estate values and underlying economic conditions in those markets or elsewhere in California could result in materially higher credit losses. As a result of the Wachovia merger, we have

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Risk Factors (continued)

increased our exposure to California, as well as to Arizona and Florida, two states that have also suffered significant declines in home values, as well as significant declines in economic activity. Deterioration in economic conditions, housing conditions and real estate values in these states and generally across the country could result in materially higher credit losses, including for our home equity portfolio.

The Wachovia merger also increased our CRE exposure, particularly in California and Florida, and we are currently the largest CRE lender in the U.S. A deterioration in economic conditions that negatively affects the business performance of our CRE borrowers, including increases in interest rates and/or declines in commercial property values, could result in materially higher credit losses and have a material adverse effect on our financial results and condition.

The European debt crisis, which has resulted in deteriorating economic conditions in Europe and ratings agency downgrades of the sovereign debt ratings of several European countries, has increased foreign credit risk. Although our foreign loan exposure represented only approximately 5% of our total consolidated outstanding loans and 3% of our total assets at December 31, 2011, continued European economic difficulties could indirectly have a material adverse effect on our credit performance and results of operations and financial condition to the extent it negatively affects the U.S. economy and/or our borrowers who have foreign operations.

For more information, refer to the “Risk Management – Credit Risk Management” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

We may incur losses on loans, securities and other acquired assets of Wachovia that are materially greater than reflected in our fair value adjustments. We accounted for the Wachovia merger under the purchase method of accounting, recording the acquired assets and liabilities of Wachovia at fair value. All PCI loans acquired in the merger were recorded at fair value based on the present value of their expected cash flows. We estimated cash flows using internal credit, interest rate and prepayment risk models using assumptions about matters that are inherently uncertain. We may not realize the estimated cash flows or fair value of these loans. In addition, although the difference between the pre-merger carrying value of the credit-impaired loans and their expected cash flows – the “nonaccretable difference” – is available to absorb future charge-offs, we may be required to increase our allowance for credit losses and related provision expense because of subsequent additional credit deterioration in these loans.

For more information, refer to the “Critical Accounting Policies – Purchased Credit-Impaired (PCI) Loans” and “Risk Management – Credit Risk Management” sections in this Report.

Our mortgage banking revenue can be volatile from quarter to quarter, including as a result of changes in interest rates and the value of our MSRs and MHFS, and we rely on the GSEs to purchase our conforming loans to reduce our credit risk and provide liquidity to

fund new mortgage loans. We were the largest mortgage originator and residential mortgage servicer in the U.S. as of December 31, 2011, and we earn revenue from fees we receive for originating mortgage loans and for servicing mortgage loans. As a result of our mortgage servicing business, we have a sizeable portfolio of MSRs. An MSR is the right to service a mortgage loan – collect principal, interest and escrow amounts – for a fee. We acquire MSRs when we keep the servicing rights after we sell or securitize the loans we have originated or when we purchase the servicing rights to mortgage loans originated by other lenders. We initially measure and carry substantially all our residential MSRs using the fair value measurement method. Fair value is the present value of estimated future net servicing income, calculated based on a number of variables, including assumptions about the likelihood of prepayment by borrowers. Changes in interest rates can affect prepayment assumptions and thus fair value. When interest rates fall, borrowers are usually more likely to prepay their mortgage loans by refinancing them at a lower rate. As the likelihood of prepayment increases, the fair value of our MSRs can decrease. Each quarter we evaluate the fair value of our MSRs, and any decrease in fair value reduces earnings in the period in which the decrease occurs. We also measure at fair value prime MHFS for which an active secondary market and readily available market prices exist. In addition, we measure at fair value certain other interests we hold related to residential loan sales and securitizations. Similar to other interest-bearing securities, the value of these MHFS and other interests may be negatively affected by changes in interest rates. For example, if market interest rates increase relative to the yield on these MHFS and other interests, their fair value may fall.

When rates rise, the demand for mortgage loans usually tends to fall, reducing the revenue we receive from loan originations. Under the same conditions, revenue from our MSRs can increase through increases in fair value. When rates fall, mortgage originations usually tend to increase and the value of our MSRs usually tends to decline, also with some offsetting revenue effect. Even though they can act as a “natural hedge,” the hedge is not perfect, either in amount or timing. For example, the negative effect on revenue from a decrease in the fair value of residential MSRs is generally immediate, but any offsetting revenue benefit from more originations and the MSRs relating to the new loans would generally accrue over time. It is also possible that, because of economic conditions and/or a weak or deteriorating housing market similar to current market conditions, even if interest rates were to fall or remain low, mortgage originations may also fall or any increase in mortgage originations may not be enough to offset the decrease in the MSRs value caused by the lower rates.

We typically use derivatives and other instruments to hedge our mortgage banking interest rate risk. We generally do not hedge all of our risk, and we may not be successful in hedging any of the risk. Hedging is a complex process, requiring sophisticated models and constant monitoring, and is not a perfect science. We may use hedging instruments tied to U.S. Treasury rates, LIBOR or Eurodollars that may not perfectly correlate with the value or income being hedged. We could incur significant losses from our hedging activities. There may be periods where we elect not to use derivatives and other instruments to hedge mortgage banking interest rate risk.

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We sell most of the mortgage loans we originate in order to reduce our credit risk and provide funding for additional loans. We rely on GSEs to purchase loans that meet their conforming loan requirements and on other capital markets investors to purchase loans that do not meet those requirements – referred to as “nonconforming” loans. During the past few years investor demand for nonconforming loans has fallen sharply, increasing credit spreads and reducing the liquidity for those loans. In response to the reduced liquidity in the capital markets, we may retain more nonconforming loans. When we retain a loan not only do we keep the credit risk of the loan but we also do not receive any sale proceeds that could be used to generate new loans. Continued lack of liquidity could limit our ability to fund – and thus originate – new mortgage loans, reducing the fees we earn from originating and servicing loans. In addition, we cannot assure that GSEs will not materially limit their purchases of conforming loans, including because of capital constraints or change their criteria for conforming loans (e.g., maximum loan amount or borrower eligibility). Each of the GSEs is currently in conservatorship, with its primary regulator, the Federal Housing Agency acting as conservator. We cannot predict if, when or how the conservatorship will end, or any associated changes to the GSEs business structure and operations that could result. As noted above, there are various proposals to reform the housing finance market in the U.S., including the role of the GSEs in the housing finance market. The extent and timing of any such regulatory reform regarding the housing finance market and the GSEs, including whether the GSEs will continue to exist in their current form, as well as any effect on the Company’s business and financial results, are uncertain.

For more information, refer to the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” and “Critical Accounting Policies” sections in this Report.

We may be required to repurchase mortgage loans or reimburse investors and others as a result of breaches in contractual representations and warranties. We sell residential mortgage loans to various parties, including GSEs, SPEs that issue private label MBS, and other financial institutions that purchase mortgage loans for investment or private label securitization. We may also pool FHA-insured and VA-guaranteed mortgage loans which back securities guaranteed by GNMA. The agreements under which we sell mortgage loans and the insurance or guaranty agreements with the FHA and VA contain various representations and warranties regarding the origination and characteristics of the mortgage loans, including ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and compliance with applicable origination laws. We may be required to repurchase mortgage loans, indemnify the securitization trust, investor or insurer, or reimburse the securitization trust, investor or insurer for credit losses incurred on loans in the event of a breach of contractual representations or warranties that is not remedied within a

period (usually 90 days or less) after we receive notice of the breach. Contracts for mortgage loan sales to the GSEs include various types of specific remedies and penalties that could be applied to inadequate responses to repurchase requests. Similarly, the agreements under which we sell mortgage loans require us to deliver various documents to the securitization trust or investor, and we may be obligated to repurchase any mortgage loan as to which the required documents are not delivered or are defective. We may negotiate global settlements in order to resolve a pipeline of demands in lieu of repurchasing the loans. We establish a mortgage repurchase liability related to the various representations and warranties that reflect management’s estimate of losses for loans which we have a repurchase obligation. Our mortgage purchase liability represents management’s best estimate of the probable loss that we may expect to incur for the representations and warranties in the contractual provisions of our sales of mortgage loans. Because the level of mortgage loan repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, the level of the liability for mortgage loan repurchase losses is difficult to estimate and requires considerable management judgment. As a result of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. If economic conditions and the housing market do not improve or future investor repurchase demand and our success at appealing repurchase requests differ from past experience, we could continue to have increased repurchase obligations and increased loss severity on repurchases, requiring material additions to the repurchase liability.

For more information, refer to the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section in this Report.

We may be terminated as a servicer or master servicer, be required to repurchase a mortgage loan or reimburse investors for credit losses on a mortgage loan, or incur costs, liabilities, fines and other sanctions if we fail to satisfy our servicing obligations, including our obligations with respect to mortgage loan foreclosure actions. We act as servicer and/or master servicer for mortgage loans included in securitizations and for unsecuritized mortgage loans owned by investors. As a servicer or master servicer for those loans we have certain contractual obligations to the securitization trusts, investors or other third parties, including, in our capacity as a servicer, foreclosing on defaulted mortgage loans or, to the extent consistent with the applicable securitization or other investor agreement, considering alternatives to foreclosure such as loan modifications or short sales and, in our capacity as a master servicer, overseeing the servicing of mortgage loans by the servicer. If we commit a material breach of our obligations as

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servicer or master servicer, we may be subject to termination if the breach is not cured within a specified period of time following notice, which can generally be given by the securitization trustee or a specified percentage of security holders, causing us to lose servicing income. In addition, we may be required to indemnify the securitization trustee against losses from any failure by us, as a servicer or master servicer, to perform our servicing obligations or any act or omission on our part that involves wilful misfeasance, bad faith or gross negligence. For certain investors and/or certain transactions, we may be contractually obligated to repurchase a mortgage loan or reimburse the investor for credit losses incurred on the loan as a remedy for servicing errors with respect to the loan. If we have increased repurchase obligations because of claims that we did not satisfy our obligations as a servicer or master servicer, or increased loss severity on such repurchases, we may have a significant reduction to net servicing income within mortgage banking noninterest income.

We may incur costs if we are required to, or if we elect to, re-execute or re-file documents or take other action in our capacity as a servicer in connection with pending or completed foreclosures. We may incur litigation costs if the validity of a foreclosure action is challenged by a borrower. If a court were to overturn a foreclosure because of errors or deficiencies in the foreclosure process, we may have liability to the borrower and/or to any title insurer of the property sold in foreclosure if the required process was not followed. These costs and liabilities may not be legally or otherwise reimbursable to us, particularly to the extent they relate to securitized mortgage loans. In addition, if certain documents required for a foreclosure action are missing or defective, we could be obligated to cure the defect or repurchase the loan. We may incur liability to securitization investors relating to delays or deficiencies in our processing of mortgage assignments or other documents necessary to comply with state law governing foreclosures. The fair value of our MSRs may be negatively affected to the extent our servicing costs increase because of higher foreclosure costs. We may be subject to fines and other sanctions imposed by Federal or state regulators as a result of actual or perceived deficiencies in our foreclosure practices or in the foreclosure practices of other mortgage loan servicers. Any of these actions may harm our reputation or negatively affect our residential mortgage origination or servicing business. In April 2011, we entered into consent orders with the OCC and the FRB following a joint interagency horizontal examination of foreclosure processing at large mortgage servicers, including the Company. These orders incorporate remedial requirements for identified deficiencies and require the Company to, among other things, take certain actions with respect to our mortgage servicing and foreclosure operations, including submitting various action plans to ensure that our mortgage servicing and foreclosure operations comply with legal requirements, regulatory guidance and the consent orders. As noted above, any increase in our servicing costs from changes in our foreclosure and other servicing practices, including resulting from the consent orders, negatively affects the fair value of our MSRs.

The consent orders did not provide for civil money penalties but both government entities reserved the ability to seek such penalties. On February 9, 2012, the OCC and the FRB announced that they had also imposed civil money penalties of $83 million and $85 million, respectively, related to the consent orders. These penalties will be satisfied through payments made under a separate simultaneous settlement in principle, announced on the same day, among the Department of Justice, a task force of Attorneys General from 49 states, other government entities, the Company and four other mortgage servicers related to mortgage servicing and foreclosure practices. Under the settlement in principle, which is subject to the execution of a definitive agreement and court approval, the Company agreed to certain commitments totaling $5.3 billion involving, among other things, a commitment to provide $3.4 billion in aggregate consumer relief and assistance programs for qualified borrowers, including expanded first and second lien mortgage modifications that broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and “anti-blight” provisions designed to reduce the impact on communities of vacant properties, and an expanded first-lien refinance program commitment estimated to provide $900 million of aggregate payment relief to qualified borrowers over the life of the refinanced loans. In addition, the Company will be required to implement comprehensive servicing standards. As part of the settlement in principle, the Company was released from claims and allegations relating to servicing, modification and foreclosure practices; however, the settlement does not release the Company from any claims arising out of securitization activities, including representations made to investors respecting mortgage-backed securities; criminal claims; repurchase demands from the GSEs; and inquiries into MERS, among other items. Government agencies continue investigations of whether the Company may have violated fair lending or other laws and regulations relating to mortgage origination practices and whether the Company’s offering statements included adequate disclosure of the risks associated with mortgage-backed securities. These investigations, as well as any investigations or litigation relating to any of the Company’s mortgage servicing and foreclosure practices that are not covered or released by the settlement in principle or definitive agreement, could result in material fines, penalties, equitable remedies, or other enforcement actions. The Company’s payment and other customer relief obligations under the settlement in principle were accrued for or otherwise considered in our allowance for credit losses and in the nonaccretable difference relating to our purchased-credit-impaired residential mortgage portfolio as of December 31, 2011, and, therefore, are not expected to have a material adverse effect on our financial results. However, there can be no assurance that the settlement will not result in unexpected costs or developments that could materially adversely affect our mortgage business and/or our financial results. For example, we may be required to pay additional amounts under the settlement if we fail to satisfy our commitment requirements in a timely manner. Furthermore, there can be no assurance as to when or whether a definitive agreement regarding the settlement will be reached and finalized or that it will be on terms consistent with the settlement in principle.

For more information, refer to the “Risk Management – Liability for Mortgage Loan Repurchase Losses” and “– Risks Relating to Servicing Activities,” and “Critical Accounting Policies – Valuation of Residential Mortgage Servicing Rights” sections and Note 14 (Guarantees) and Note 15 (Legal Actions) to Financial Statements in this Report.


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Financial difficulties or credit downgrades of mortgage and bond insurers may negatively affect our servicing and investment portfolios. Our servicing portfolio includes certain mortgage loans that carry some level of insurance from one or more mortgage insurance companies. To the extent that any of these companies experience financial difficulties or credit downgrades, we may be required, as servicer of the insured loan on behalf of the investor, to obtain replacement coverage with another provider, possibly at a higher cost than the coverage we would replace. We may be responsible for some or all of the incremental cost of the new coverage for certain loans depending on the terms of our servicing agreement with the investor and other circumstances, although we do not have an additional risk of repurchase loss associated with claim amounts for loans sold to third-party investors. Similarly, some of the mortgage loans we hold for investment or for sale carry mortgage insurance. If a mortgage insurer is unable to meet its credit obligations with respect to an insured loan, we might incur higher credit losses if replacement coverage is not obtained. For example, in October 2011, PMI Mortgage Insurance Co. (PMI), one of our providers of mortgage insurance, was seized by its regulator. We previously utilized PMI to provide mortgage insurance on certain loans originated and held in our portfolio and on loans originated and sold to third-party investors. We also hold a small amount of residential MBS, which are backed by mortgages with a limited amount of insurance provided by PMI. PMI has announced that it will pay 50% of insurance claim amounts in cash with the rest deferred. Although we do not expect PMI’s situation to have a material adverse effect on our financial results because of the limited amount of loans and securities held in our portfolios with PMI insurance support, we cannot be certain that any such future events involving one of our other mortgage insurance company providers will not materially adversely affect our mortgage business and/or financial results. We also have investments in municipal bonds that are guaranteed against loss by bond insurers. The value of these bonds and the payment of principal and interest on them may be negatively affected by financial difficulties or credit downgrades experienced by the bond insurers.

For more information, refer to the “Earnings Performance – Balance Sheet Analysis – Securities Available for Sale” and “Risk Management – Credit Risk Management– Liability for Mortgage Loan Repurchase Losses” sections in this Report.

OPERATIONAL AND LEGAL RISK

A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers, including as a result of cyber attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. As a large financial institution that serves over 70 million customers through over 9,000 stores, 12,000 ATMs, the Internet and other distribution channels across the U.S. and internationally, we depend on our ability to process, record and monitor a large number of customer transactions on a

continuous basis. As our customer base and locations have expanded throughout the U.S. and internationally, and as customer, public and regulatory expectations regarding operational and information security have increased, our operational systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions and breakdowns. Our business, financial, accounting, data processing systems or other operating systems and facilities may stop operating properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control. For example, there could be sudden increases in customer transaction volume; electrical or telecommunications outages; natural disasters such as earthquakes, tornados, and hurricanes; disease pandemics; events arising from local or larger scale political or social matters, including terrorist acts; and, as described below, cyber attacks. Although we have business continuity plans and other safeguards in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our businesses and customers.

Information security risks for large financial institutions such as Wells Fargo have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. Those parties also may attempt to fraudulently induce employees, customers, or other users of our systems to disclose confidential information in order to gain access to our data or that of our customers. As noted above, our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks. Our banking, brokerage, investment advisory, and capital markets businesses rely on our digital technologies, computer and email systems, software, and networks to conduct their operations. In addition, to access our products and services, our customers may use personal smartphones, tablet PC’s, and other mobile devices that are beyond our control systems. Although we believe we have robust information security procedures and controls, our technologies, systems, networks, and our customers’ devices may become the target of cyber attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of Wells Fargo’s or our customers’ confidential, proprietary and other information, or otherwise disrupt Wells Fargo’s or its customers’ or other third parties’ business operations.

Third parties with which we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries or vendors that provide services or security solutions for our operations, could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints.

Although to date we have not experienced any material losses relating to cyber attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the prominent size and scale of Wells Fargo and

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its role in the financial services industry, our plans to continue to implement our Internet banking and mobile banking channel strategies and develop additional remote connectivity solutions to serve our customers when and how they want to be served, our expanded geographic footprint and international presence, the outsourcing of some of our business operations, the continued uncertain global economic environment, and the remaining system and customer account conversions associated with our integration of Wachovia expected to be completed in first quarter 2012. As a result, cybersecurity and the continued development and enhancement of our controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for Wells Fargo. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.

Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber attacks or security breaches of the networks, systems or devices that our customers use to access our products and services could result in customer attrition, financial losses, the inability of our customers to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.

Our framework for managing risks may not be effective in mitigating risk and loss to us. Our risk management framework seeks to mitigate risk and loss to us. We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, legal and compliance risk, and reputational risk, among others. However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. For example, the recent financial and credit crisis and resulting regulatory reform highlighted both the importance and some of the limitations of managing unanticipated risks. If our risk management framework proves ineffective, we could suffer unexpected losses which could materially adversely affect our results of operations or financial condition.

We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations. We maintain systems and procedures designed to ensure that we comply with applicable laws and regulations. However, some legal/regulatory frameworks provide for the imposition of fines or penalties for noncompliance even though the noncompliance was inadvertent or unintentional and even though there was in place at the time systems and procedures designed to ensure compliance. For example, we are subject to regulations issued by the Office of

Foreign Assets Control (OFAC) that prohibit financial institutions from participating in the transfer of property belonging to the governments of certain foreign countries and designated nationals of those countries. OFAC may impose penalties for inadvertent or unintentional violations even if reasonable processes are in place to prevent the violations. There may be other negative consequences resulting from a finding of noncompliance, including restrictions on certain activities. Such a finding may also damage our reputation as described below and could restrict the ability of institutional investment managers to invest in our securities.

Negative publicity, including as a result of protests, could damage our reputation and business. Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and increased substantially because of the financial crisis and the increase in our size and profile in the financial services industry following our acquisition of Wachovia. The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the “Wells Fargo” brand, negative public opinion about one business could affect our other businesses and also could negatively affect our “cross-sell” strategy. The proliferation of social media websites utilized by Wells Fargo and other third parties, as well as the personal use of social media by our team members and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our team members interacting with our customers in an unauthorized manner in various social media outlets.

During the past several months, Wells Fargo and other financial institutions have been the targets of numerous protests throughout the U.S., such as the “Occupy Wall Street” protests and other movements designed to cause customers to close their accounts with large financial institutions. These protests have included disrupting the operation of our retail banking stores and have resulted in negative public commentary about financial institutions, including the fees charged for various products and services. There can be no assurance that continued protests and negative publicity for the Company or large financial institutions generally will not harm our reputation and adversely affect our business and financial results.

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Risks Relating to Legal Proceedings. Wells Fargo and some of its subsidiaries are involved in judicial, regulatory and arbitration proceedings or investigations concerning matters arising from our business activities. Although we believe we have a meritorious defense in all material significant litigation pending against us, there can be no assurance as to the ultimate outcome. We establish reserves for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. We may still incur legal costs for a matter even if we have not established a reserve. In addition, the actual cost of resolving a legal claim may be substantially higher than any amounts reserved for that matter. The ultimate resolution of a pending legal proceeding, depending on the remedy sought and granted, could materially adversely affect our results of operations and financial condition.

For more information, refer to Note 15 (Legal Actions) to Financial Statements in this Report.

RISKS RELATED TO OUR INDUSTRY’S COMPETITIVE OPERATING ENVIRONMENT

We face significant and increasing competition in the rapidly evolving financial services industry. We compete with other financial institutions in a highly competitive industry that is undergoing significant changes as a result of financial regulatory reform and increased public scrutiny stemming from the recent financial crisis and continued challenging economic conditions. Wells Fargo generally competes on the basis of the quality of our customer service, the wide variety of products and services that we can offer our customers and the ability of those products and services to satisfy our customers’ needs, the pricing of our products and services, the extensive distribution channels available for our customers, our innovation, and our reputation. Continued and increased competition in any one or all of these areas may negatively affect our market share and results of operations and/or cause us to increase our capital investment in our businesses in order to remain competitive. Given the current economic, regulatory, and political environment for large financial institutions such as Wells Fargo, as well as increased public protest movements and negative publicity, there is increased competitive pressure to provide products and services at current or lower prices. Consequently, our ability to reposition or reprice our products and services from time to time may be limited and could be influenced significantly by the actions of our competitors who may or may not charge similar fees for their products and services. Any changes in the types of products and services that we offer our customers and/or the pricing for those products and services could result in a loss of customers and market share and could materially adversely affect our results of operations.

Continued technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for financial institutions and other companies to provide electronic and internet-based financial solutions, including electronic payment solutions. We may not respond effectively to these competitive threats from existing and new competitors and may be forced to increase our investment in our

business to modify or adapt our existing products and services or develop new products and services to respond to our customers’ needs.

Our “cross-selling” efforts to increase the number of products our customers buy from us and offer them all of the financial products that fulfill their needs is a key part of our growth strategy, and our failure to execute this strategy effectively could have a material adverse effect on our revenue growth and financial results. Selling more products to our customers – “cross-selling” – is very important to our business model and key to our ability to grow revenue and earnings especially during the current environment of slow economic growth and regulatory reform initiatives. Many of our competitors also focus on cross-selling, especially in retail banking and mortgage lending. This can limit our ability to sell more products to our customers or influence us to sell our products at lower prices, reducing our net interest income and revenue from our fee-based products. It could also affect our ability to keep existing customers. New technologies could require us to spend more to modify or adapt our products to attract and retain customers. Our cross-sell strategy also is dependent on earning more business from our Wachovia customers, and increasing our cross-sell ratio – or the average number of products sold to existing customers – may become more challenging and we might not attain our goal of selling an average of eight products to each customer.

Our ability to attract and retain qualified team members is critical to the success of our business and failure to do so could adversely affect our business performance, competitive position and future prospects. The success of Wells Fargo is heavily dependent on the talents and efforts of our team members, and in many areas of our business, including the commercial banking, brokerage, investment advisory, and capital markets businesses, the competition for highly qualified personnel is intense. In order to attract and retain highly qualified team members, we must provide competitive compensation. As a large financial institution we may be subject to limitations on compensation by our regulators that may adversely affect our ability to attract and retain these qualified team members. Some of our competitors may not be subject to these same compensation limitations, which may further negatively affect our ability to attract and retain highly qualified team members.

RISKS RELATED TO OUR FINANCIAL STATEMENTS

Changes in accounting policies or accounting standards, and changes in how accounting standards are interpreted or applied, could materially affect how we report our financial results and condition. Our accounting policies are fundamental to determining and understanding our financial results and condition. As described below, some of these policies require use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Any changes in our accounting policies could materially affect our financial statements.

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From time to time the FASB and the SEC change the financial accounting and reporting standards that govern the preparation of our external financial statements. In addition, accounting standard setters and those who interpret the accounting standards (such as the FASB, SEC, banking regulators and our outside auditors) may change or even reverse their previous interpretations or positions on how these standards should be applied. Changes in financial accounting and reporting standards and changes in current interpretations may be beyond our control, can be hard to predict and could materially affect how we report our financial results and condition. We may be required to apply a new or revised standard retroactively or apply an existing standard differently, also retroactively, in each case resulting in our potentially restating prior period financial statements in material amounts.

Our financial statements are based in part on assumptions and estimates which, if wrong, could cause unexpected losses in the future, and our financial statements depend on our internal controls over financial reporting. Pursuant to U.S. GAAP, we are required to use certain assumptions and estimates in preparing our financial statements, including in determining credit loss reserves, reserves for mortgage repurchases, reserves related to litigation and the fair value of certain assets and liabilities, among other items. Several of our accounting policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. For a description of these policies, refer to the “Critical Accounting Policies” section in this Report. If assumptions or estimates underlying our financial statements are incorrect, we may experience material losses.

Certain of our financial instruments, including trading assets and liabilities, available-for-sale securities, certain loans, MSRs, private equity investments, structured notes and certain repurchase and resale agreements, among other items, require a determination of their fair value in order to prepare our financial statements. Where quoted market prices are not available, we may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management judgment. Some of these and other assets and liabilities may have no direct observable price levels, making their valuation particularly subjective, being based on significant estimation and judgment. In addition, sudden illiquidity in markets or declines in prices of certain loans and securities may make it more difficult to value certain balance sheet items, which may lead to the possibility that such valuations will be subject to further change or adjustment and could lead to declines in our earnings.

The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) requires our management to evaluate the Company’s disclosure controls and procedures and its internal control over financial reporting and requires our auditors to issue a report on our internal control over financial reporting. We are required to disclose, in our annual report on Form 10-K, the existence of any “material weaknesses” in our internal controls. We cannot assure that we

will not identify one or more material weaknesses as of the end of any given quarter or year, nor can we predict the effect on our stock price of disclosure of a material weakness. Sarbanes-Oxley also limits the types of non-audit services our outside auditors may provide to us in order to preserve their independence from us. If our auditors were found not to be “independent” of us under SEC rules, we could be required to engage new auditors and file financial statements and audit reports with the SEC. We could be out of compliance with SEC rules until new financial statements and audit reports were filed, limiting our ability to raise capital and resulting in other adverse consequences.

RISKS RELATED TO ACQUISITIONS

Acquisitions could reduce our stock price upon announcement and reduce our earnings if we overpay or have difficulty integrating them. We regularly explore opportunities to acquire companies in the financial services industry. We cannot predict the frequency, size or timing of our acquisitions, and we typically do not comment publicly on a possible acquisition until we have signed a definitive agreement. When we do announce an acquisition, our stock price may fall depending on the size of the acquisition, the type of business to be acquired, the purchase price, and the potential dilution to existing stockholders or our earnings per share if we issue common stock in connection with the acquisition.

We generally must receive federal regulatory approvals before we can acquire a bank, bank holding company or certain other financial services businesses depending on the size of the financial services business to be acquired. In deciding whether to approve a proposed acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition and the risk to the stability of the U.S. banking or financial system, our financial condition and future prospects including current and projected capital ratios and levels, the competence, experience, and integrity of management and record of compliance with laws and regulations, the convenience and needs of the communities to be served, including our record of compliance under the Community Reinvestment Act, and our effectiveness in combating money laundering. As a result of the Dodd-Frank Act and concerns regarding the large size of financial institutions such as Wells Fargo, the regulatory process for approving acquisitions has become more complex and regulatory approvals may be more difficult to obtain. We cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We might be required to sell banks, branches and/or business units or assets or issue additional equity as a condition to receiving regulatory approval for an acquisition. In addition, federal bank regulations prohibit FRB regulatory approval of any transaction that would create an institution holding more than 10% of total U.S. insured deposits, or of any transaction (whether or not subject to FRB approval) that would create a financial company with more than 10% of the liabilities of all financial companies in the U.S. We are approaching the deposit cap, which may limit our bank acquisition opportunities in the future.

110

Difficulty in integrating an acquired company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence, and other projected benefits from the acquisition. The integration could result in higher than expected deposit attrition, loss of key team members, disruption of our business or the business of the acquired company, or otherwise harm our ability to retain customers and team members or achieve the anticipated benefits of the acquisition. Time and resources spent on integration may also impair our ability to grow our existing businesses. Also, the negative effect of any divestitures required by regulatory authorities in acquisitions or business combinations may be greater than expected. Many of the foregoing risks may be increased if the acquired company operates internationally or in a geographic location where we do not already have significant business operations and/or team members.

* * *

Any factor described in this Report or in any of our other SEC filings could by itself, or together with other factors, adversely affect our financial results and condition. Refer to our quarterly reports on Form 10-Q filed with the SEC in 2012 for material changes to the above discussion of risk factors. There are factors not discussed above or elsewhere in this Report that could adversely affect our financial results and condition.

111

Controls and Procedures

Disclosure Controls and Procedures

As required by SEC rules, the Company’s management evaluated the effectiveness, as of December 31, 2011, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2011.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

•

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during any quarter in 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s report on internal control over financial reporting is set forth below, and should be read with these limitations in mind.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework . Based on this assessment, management concluded that as of December 31, 2011, the Company’s internal control over financial reporting was effective.

KPMG LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual Report, issued an audit report on the Company’s internal control over financial reporting. KPMG’s audit report appears on the following page.

112

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Wells Fargo & Company:

We have audited Wells Fargo & Company and Subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2011 and 2010, and the related consolidated statements of income, changes in equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2011, and our report dated February 28, 2012, expressed an unqualified opinion on those consolidated financial statements.

LOGO

San Francisco, California

February 28, 2012

113

Financial Statements

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Income



	Year ended December 31,

(in millions, except per share amounts)	2011		2010			2009

Interest income
Trading assets	$	1,440		1,098			918
Securities available for sale		8,475		9,666			11,319
Mortgages held for sale		1,644		1,736			1,930
Loans held for sale		58		101			183
Loans		37,247		39,760			41,589
Other interest income		548		435			335

Total interest income		49,412		52,796			56,274

Interest expense
Deposits		2,275		2,832			3,774
Short-term borrowings		80		92			222
Long-term debt		3,978		4,888			5,782
Other interest expense		316		227			172

Total interest expense		6,649		8,039			9,950

Net interest income		42,763		44,757			46,324
Provision for credit losses		7,899		15,753			21,668

Net interest income after provision for credit losses		34,864		29,004			24,656

Noninterest income
Service charges on deposit accounts		4,280		4,916			5,741
Trust and investment fees		11,304		10,934			9,735
Card fees		3,653		3,652			3,683
Other fees		4,193		3,990			3,804
Mortgage banking		7,832		9,737			12,028
Insurance		1,960		2,126			2,126
Net gains from trading activities		1,014		1,648			2,674
Net gains (losses) on debt securities available for sale (1)		54		(324	)		(127	)
Net gains from equity investments (2)		1,482		779			185
Operating leases		524		815			685
Other		1,889		2,180			1,828

Total noninterest income		38,185		40,453			42,362

Noninterest expense
Salaries		14,462		13,869			13,757
Commission and incentive compensation		8,857		8,692			8,021
Employee benefits		4,348		4,651			4,689
Equipment		2,283		2,636			2,506
Net occupancy		3,011		3,030			3,127
Core deposit and other intangibles		1,880		2,199			2,577
FDIC and other deposit assessments		1,266		1,197			1,849
Other		13,286		14,182			12,494

Total noninterest expense		49,393		50,456			49,020

Income before income tax expense		23,656		19,001			17,998
Income tax expense		7,445		6,338			5,331

Net income before noncontrolling interests		16,211		12,663			12,667
Less: Net income from noncontrolling interests		342		301			392

Wells Fargo net income	$	15,869		12,362			12,275

Less: Preferred stock dividends and other		844		730			4,285

Wells Fargo net income applicable to common stock	$	15,025		11,632			7,990

Per share information
Earnings per common share	$	2.85		2.23			1.76
Diluted earnings per common share		2.82		2.21			1.75
Dividends declared per common share		0.48		0.20			0.49
Average common shares outstanding		5,278.1		5,226.8			4,545.2
Diluted average common shares outstanding		5,323.4		5,263.1			4,562.7

(1)

Total other-than-temporary impairment (OTTI) losses (gains) were $349 million, $500 million and $2,352 million for the year ended December 31, 2011, 2010 and 2009, respectively. Of total OTTI, $423 million, $672 million and $1,012 million were recognized in earnings, and $(74) million, $(172) million and $1,340 million were recognized as non-credit related OTTI in other comprehensive income for the year ended December 31, 2011, 2010 and 2009, respectively.

(2)	Includes OTTI losses of $288 million, $268 million and $655 million for the year ended December 31, 2011, 2010 and 2009, respectively.

The accompanying notes are an integral part of these statements.

114

Wells Fargo & Company and Subsidiaries

Consolidated Balance Sheet



	December 31,

(in millions, except shares)	2011			2010

Assets
Cash and due from banks	$	19,440			16,044
Federal funds sold, securities purchased under resale agreements and other short-term investments		44,367			80,637
Trading assets		77,814			51,414
Securities available for sale		222,613			172,654
Mortgages held for sale (includes $44,791 and $47,531 carried at fair value)		48,357			51,763
Loans held for sale (includes $1,176 and $873 carried at fair value)		1,338			1,290

Loans (includes $5,916 and $309 carried at fair value)		769,631			757,267
Allowance for loan losses		(19,372	)		(23,022	)

Net loans		750,259			734,245

Mortgage servicing rights:
Measured at fair value		12,603			14,467
Amortized		1,408			1,419
Premises and equipment, net		9,531			9,644
Goodwill		25,115			24,770
Other assets		101,022			99,781

Total assets (1)	$	1,313,867			1,258,128

Liabilities
Noninterest-bearing deposits	$	244,003			191,256
Interest-bearing deposits		676,067			656,686

Total deposits		920,070			847,942
Short-term borrowings		49,091			55,401
Accrued expenses and other liabilities		77,665			69,913
Long-term debt (includes $0 and $306 carried at fair value)		125,354			156,983

Total liabilities (2)		1,172,180			1,130,239

Equity
Wells Fargo stockholders’ equity:
Preferred stock		11,431			8,689
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,358,522,061 shares and 5,272,414,622 shares		8,931			8,787
Additional paid-in capital		55,957			53,426
Retained earnings		64,385			51,918
Cumulative other comprehensive income		3,207			4,738
Treasury stock – 95,910,425 shares and 10,131,394 shares		(2,744	)		(487	)
Unearned ESOP shares		(926	)		(663	)

Total Wells Fargo stockholders’ equity		140,241			126,408
Noncontrolling interests		1,446			1,481

Total equity		141,687			127,889

Total liabilities and equity	$	1,313,867			1,258,128

(1)

Our consolidated assets at December 31, 2011 and at December 31, 2010, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash and due from banks, $321 million and $200 million; Trading assets, $293 million and $143 million; Securities available for sale, $3.3 billion and $2.2 billion; Mortgages held for sale, $444 million and $634 million; Net loans, $12.0 billion and $16.7 billion; Other assets, $1.9 billion and $2.1 billion; and Total assets, $18.2 billion and $21.9 billion.

(2)

Our consolidated liabilities at December 31, 2011 and at December 31, 2010, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Short-term borrowings, $24 million and $7 million; Accrued expenses and other liabilities, $175 million and $98 million; Long-term debt, $4.9 billion and $8.3 billion; and Total liabilities, $5.1 billion and $8.4 billion.

The accompanying notes are an integral part of these statements.

115

Financial Statements

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Changes in Equity and Comprehensive Income

Preferred stock

Common stock

(in millions, except shares)

Shares

Amount

Shares

Amount

Balance December 31, 2008

10,111,821

31,332

4,228,630,889

7,273

Cumulative effect from change in accounting for other-than-temporary impairment on debt securities

Effect of change in accounting for noncontrolling interests

Balance January 1, 2009

10,111,821

31,332

4,228,630,889

7,273

Comprehensive income:

Net income

Other comprehensive income, net of tax:

Translation adjustments

Net unrealized gains on securities available for sale

Net unrealized losses on derivatives and hedging activities

Defined benefit plans adjustment

Total comprehensive income

Noncontrolling interests:

Purchase of Prudential’s noncontrolling interest

All other

Common stock issued

953,285,636

1,470

Common stock repurchased

(8,274,015

)

Preferred stock redeemed

(25,000

)

(25,000

)

Preferred stock released by ESOP

Preferred stock converted to common shares

(105,881

)

(106

)

4,982,083

Common stock dividends

Preferred stock dividends and accretion

2,259

Tax benefit upon exercise of stock options

Stock incentive compensation expense

Net change in deferred compensation and related plans

Net change

(130,881

)

(22,847

)

949,993,704

1,470

Balance December 31, 2009

9,980,940

8,485

5,178,624,593

8,743

Balance January 1, 2010

9,980,940

8,485

5,178,624,593

8,743

Cumulative effect from change in accounting for VIEs

Cumulative effect from change in accounting for embedded credit derivatives

Comprehensive income:

Net income

Other comprehensive income, net of tax:

Translation adjustments

Net unrealized gains on securities available for sale

Net unrealized gains on derivatives and hedging activities

Defined benefit plans adjustment

Total comprehensive income

Noncontrolling interests

Common stock issued

58,375,566

Common stock repurchased

(3,010,451

)

Preferred stock issued to ESOP

1,000,000

1,000

Preferred stock released by ESOP

Preferred stock converted to common shares

(795,637

)

(796

)

28,293,520

Common stock warrants repurchased

Common stock dividends

Preferred stock dividends

Tax benefit upon exercise of stock options

Stock incentive compensation expense

Net change in deferred compensation and related plans

Net change

204,363

204

83,658,635

Balance December 31, 2010

10,185,303

8,689

5,262,283,228

8,787

The accompanying notes are an integral part of these statements.

(continued on following pages)

116



									Wells Fargo stockholders’ equity

Additional paid-in capital			Retained earnings			Cumulative other comprehensive income			Treasury stock			Unearned ESOP shares			Total Wells Fargo stockholders’ equity			Noncontrolling interests			Total equity

	36,026			36,543			(6,869	)		(4,666	)		(555	)		99,084			3,232			102,316


				53			(53	)
	(3,716	)														(3,716	)		3,716			–

	32,310			36,596			(6,922	)		(4,666	)		(555	)		95,368			6,948			102,316


				12,275												12,275			392			12,667

							73									73			(7	)		66
							9,806									9,806			5			9,811
							(221	)								(221	)					(221	)
							273									273						273

																22,206			390			22,596

	1,440															1,440			(4,500	)		(3,060	)
	(79	)														(79	)		(265	)		(344	)
	19,111			(898	)					2,293						21,976						21,976
										(220	)					(220	)					(220	)
																(25,000	)					(25,000	)
	(7	)											113			106						106
	(54	)								160						–						–
				(2,125	)											(2,125	)					(2,125	)
				(4,285	)											(2,026	)					(2,026	)
	18															18						18
	245															245						245
	(106	)								(17	)					(123	)					(123	)

	20,568			4,967			9,931			2,216			113			16,418			(4,375	)		12,043

	52,878			41,563			3,009			(2,450	)		(442	)		111,786			2,573			114,359

	52,878			41,563			3,009			(2,450	)		(442	)		111,786			2,573			114,359

				183												183						183
				(28	)											(28	)					(28	)

				12,362												12,362			301			12,663

							45									45			12			57
							1,525									1,525			13			1,538
							89									89						89
							70									70						70

																14,091			326			14,417
																–			(1,418	)		(1,418	)
	375			(376	)					1,349						1,375						1,375
										(91	)					(91	)					(91	)
	80												(1,080	)		–						–
	(63	)											859			796						796
	212									567						–						–
	(545	)														(545	)					(545	)
	4			(1,049	)											(1,045	)					(1,045	)
				(737	)											(737	)					(737	)
	97															97						97
	436															436						436
	(48	)								138						90						90

	548			10,355			1,729			1,963			(221	)		14,622			(1,092	)		13,530

	53,426			51,918			4,738			(487	)		(663	)		126,408			1,481			127,889

117

(continued from previous pages)

Financial Statements

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Changes in Equity and Comprehensive Income

Preferred stock

Common stock

(in millions, except shares)

Shares

Amount

Shares

Amount

Balance December 31, 2010

10,185,303

8,689

5,262,283,228

8,787

Balance January 1, 2011

10,185,303

8,689

5,262,283,228

8,787

Comprehensive income:

Net income

Other comprehensive income, net of tax:

Translation adjustments

Net unrealized losses on securities available for sale

Net unrealized losses on derivatives and hedging activities

Defined benefit plans adjustment

Total comprehensive income

Noncontrolling interests

Common stock issued

52,906,564

Common stock repurchased (1)

(85,779,031

)

Preferred stock issued to ESOP

1,200,000

1,200

Preferred stock released by ESOP

Preferred stock converted to common shares

(959,623

)

(959

)

33,200,875

Common stock warrants repurchased

Preferred stock issued

25,010

2,501

Common stock dividends

Preferred stock dividends

Tax benefit upon exercise of stock options

Stock incentive compensation expense

Net change in deferred compensation and related plans

Net change

265,387

2,742

328,408

144

Balance December 31, 2011

10,450,690

11,431

5,262,611,636

8,931

(1)	Includes $150 million private forward repurchase contract. See Note 1 (Summary of Significant Accounting Policies) for additional information.

The accompanying notes are an integral part of these statements.

118

Wells Fargo stockholders’ equity

Additional

paid-in

capital

Retained

earnings

Cumulative

other

comprehensive

income

Treasury

stock

Unearned

ESOP

Total

Wells Fargo

stockholders’

equity

Noncontrolling

interests

Total

equity

53,426

51,918

4,738

(487

)

(663

)

126,408

1,481

127,889

53,426

51,918

4,738

(487

)

(663

)

126,408

1,481

127,889

15,869

342

16,211

(22

)

(22

)

(24

)

(653

)

(653

)

(10

)

(663

)

(249

)

(249

)

(249

)

(607

)

(607

)

(607

)

14,338

330

14,668

(37

)

(37

)

(365

)

(402

)

1,208

1,296

(150

)

(2,266

)

(2,416

)

(2,416

)

102

(1,302

)

–

(80

)

1,039

959

903

–

)

2,501

(2,558

)

(2,537

)

(2,537

)

(844

)

(844

)

(844

)

529

(41

)

(32

)

(32

)

2,531

12,467

(1,531

)

(2,257

)

(263

)

13,833

(35

)

13,798

55,957

64,385

3,207

(2,744

)

(926

)

140,241

1,446

141,687

119

Financial Statements

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Cash Flows



	Year ended December 31,

(in millions)	2011			2010			2009

Cash flows from operating activities:
Net income before noncontrolling interests	$	16,211			12,663			12,667
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		7,899			15,753			21,668
Changes in fair value of MSRs, MHFS and LHFS carried at fair value		(295	)		(1,025	)		(20	)
Depreciation and amortization		2,208			1,924			2,841
Other net losses (gains)		3,273			1,345			(3,867	)
Preferred stock released by ESOP		959			796			106
Stock incentive compensation expense		529			436			245
Excess tax benefits related to stock option payments		(79	)		(98	)		(18	)
Originations of MHFS		(345,099	)		(370,175	)		(414,299	)
Proceeds from sales of and principal collected on mortgages originated for sale		298,524			355,325			399,261
Originations of LHFS		(5	)		(4,596	)		(10,800	)
Proceeds from sales of and principal collected on LHFS		11,833			17,828			20,276
Purchases of LHFS		(11,723	)		(7,470	)		(8,614	)
Net change in:
Trading assets		35,149			12,356			13,983
Deferred income taxes		3,573			4,287			9,453
Accrued interest receivable		(401	)		1,051			(293	)
Accrued interest payable		(362	)		(268	)		(1,028	)
Other assets, net		(11,529	)		(19,631	)		(15,018	)
Other accrued expenses and liabilities, net		3,000			(1,729	)		2,070

Net cash provided by operating activities		13,665			18,772			28,613

Cash flows from investing activities:
Net change in:
Federal funds sold, securities purchased under resale agreements and other short-term investments		36,270			(39,752	)		8,548
Securities available for sale:
Sales proceeds		23,062			8,668			53,038
Prepayments and maturities		52,618			47,919			38,811
Purchases		(121,235	)		(53,466	)		(95,285	)
Loans:
Loans originated by banking subsidiaries, net of principal collected		(35,686	)		15,869			52,240
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries		6,555			6,517			6,162
Purchases (including participations) of loans by banking subsidiaries		(8,878	)		(2,297	)		(3,363	)
Principal collected on nonbank entities’ loans		9,782			15,560			14,428
Loans originated by nonbank entities		(7,522	)		(10,836	)		(9,961	)
Net cash paid for acquisitions		(353	)		(36	)		(138	)
Proceeds from sales of foreclosed assets		10,655			5,444			3,759
Changes in MSRs from purchases and sales		(155	)		(65	)		(10	)
Other, net		(157	)		2,800			3,556

Net cash provided (used) by investing activities		(35,044	)		(3,675	)		71,785

Cash flows from financing activities:
Net change in:
Deposits		72,128			23,924			42,473
Short-term borrowings		(6,231	)		11,308			(69,108	)
Long-term debt:
Proceeds from issuance		11,687			3,489			8,396
Repayment		(50,555	)		(63,317	)		(66,260	)
Preferred stock:
Proceeds from issuance		2,501			–			–
Redeemed		–			–			(25,000	)
Cash dividends paid		(844	)		(737	)		(2,178	)
Common stock:
Proceeds from issuance		1,296			1,375			21,976
Repurchased		(2,416	)		(91	)		(220	)
Cash dividends paid		(2,537	)		(1,045	)		(2,125	)
Common stock warrants repurchased		(2	)		(545	)		–
Excess tax benefits related to stock option payments		79			98			18
Net change in noncontrolling interests:
Purchase of Prudential’s noncontrolling interest		–			–			(4,500	)
Other		(331	)		(592	)		(553	)

Net cash provided (used) by financing activities		24,775			(26,133	)		(97,081	)

Net change in cash and due from banks		3,396			(11,036	)		3,317
Cash and due from banks at beginning of year		16,044			27,080			23,763

Cash and due from banks at end of year	$	19,440			16,044			27,080

Supplemental cash flow disclosures:
Cash paid for interest	$	7,011			8,307			10,978
Cash paid for income taxes		4,875			1,187			3,042

The accompanying notes are an integral part of these statements. See Note 1 for noncash activities.

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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.

Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company is a diversified financial services company. We provide banking, insurance, trust and investments, mortgage banking, investment banking, retail banking, brokerage, and consumer and commercial 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,” 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 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, unemployment, 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 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 allowance for credit losses and purchased credit-impaired (PCI) loans (Note 6), valuations of residential mortgage servicing rights (MSRs) (Notes 8 and 9) and financial instruments (Note 17), liability for mortgage loan repurchase losses (Note 9) and income taxes (Note 21). Actual results could differ from those estimates.

Accounting Standards Adopted in 2011

In first quarter 2011, we adopted certain provisions of Accounting Standards Update (ASU or Update) 2010-6, Improving Disclosures about Fair Value Measurements .

ASU 2010-06 amends the disclosure requirements for fair value measurements. Companies are required to disclose significant transfers in and out of Levels 1 and 2 of the fair value hierarchy. This Update also clarifies that fair value measurement disclosures should be presented for each asset and liability class, which is generally a subset of a line item in the statement of financial position. In the rollforward of Level 3 activity, companies must present information on purchases, sales, issuances, and settlements on a gross basis rather than on a net basis. Companies should also provide information about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring instruments classified as either Level 2 or Level 3. In first quarter 2011, we adopted the

requirement for gross presentation in the Level 3 rollforward with prospective application. The remaining provisions were effective for us in first quarter 2010. Our adoption of this Update did not affect our consolidated financial statement results since it amends only the disclosure requirements for fair value measurements.

In third quarter 2011, we adopted the following new accounting guidance:

•

Certain provisions of ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses ; and

•

ASU 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.

ASU 2010-20 requires enhanced disclosures for the allowance for credit losses and financing receivables, which include certain loans and long-term accounts receivables. Companies are required to disaggregate credit quality information and roll forward the allowance for credit losses by portfolio segment. Companies must also provide supplemental information on the nature and extent of troubled debt restructurings (TDRs) and their effect on the allowance for credit losses. We adopted the new disclosure requirements for TDRs in third quarter 2011 with retrospective application to January 1, 2011. The remaining provisions were effective for us in fourth quarter 2010. Our adoption of this Update did not affect our consolidated financial statement results since it amends only the disclosure requirements for financing receivables and the allowance for credit losses.

ASU 2011-02 provides guidance clarifying under what circumstances a creditor should classify a restructured receivable as a TDR. A receivable is a TDR if both of the following exist: 1) a creditor has granted a concession to the debtor, and 2) the debtor is experiencing financial difficulties. This Update clarifies that a creditor should consider all aspects of a restructuring when evaluating whether it has granted a concession, which include determining whether a debtor can obtain funds from another source at market rates and assessing the value of additional collateral and guarantees obtained at the time of restructuring. This Update also provides factors a creditor should consider when determining if a debtor is experiencing financial difficulties, such as probability of payment default and bankruptcy declarations. This guidance was effective for us in third quarter 2011 with retrospective application to January 1, 2011. Our adoption of this Update did not have a material effect on our consolidated financial statements.

In fourth quarter 2011, we early adopted ASU 2011-08, Testing Goodwill for Impairment .

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Note 1: Summary of Significant Accounting Policies (continued)

ASU 2011-08 provides entities with the option to perform a qualitative assessment of goodwill to test for impairment. If, based on qualitative reviews, a company concludes that more likely than not a reporting unit’s fair value is less than its carrying amount, then the company must complete quantitative steps to determine if there is goodwill impairment. If a company concludes otherwise, quantitative tests are not required. Our adoption of this Update did not affect our consolidated financial statements.

Accounting Standards with Retrospective Application

The following accounting pronouncements have been issued by the FASB but are not yet effective:

•

Accounting Standards Update (ASU or Update) 2011-11, Disclosures about Offsetting Assets and Liabilities;

•

ASU 2011-05, Presentation of Comprehensive Income; and

•

Consolidation

Our consolidated financial statements include the accounts of the Parent and our majority-owned subsidiaries and VIEs (defined below) in which we are the primary beneficiary.

Significant intercompany accounts and transactions are eliminated in consolidation. If we own at least 20% of an entity, we generally account for the investment using the equity method. If we own less than 20% of an entity, we generally carry the investment at cost, except marketable equity securities, which we carry at fair value with changes in fair value included in OCI. Investments accounted for under the equity or cost method are included in other assets.

We are a variable interest holder in certain special-purpose entities (SPEs) in which equity investors do not have the characteristics of a controlling financial interest or where the entity does not have enough equity at risk to finance its activities without additional subordinated financial support from other parties (referred to as VIEs). Our variable interest arises from contractual, ownership or other monetary interests in the entity, which change with fluctuations in the fair value of the entity’s assets. We consolidate a VIE if we are the primary beneficiary, defined as the party that that has both the power to direct the activities that most significantly impact the VIE and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual, ownership or other interest that changes with changes in the fair value of the VIE’s net assets. To determine whether or not a variable interest we hold could potentially be significant to the VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE. We assess whether or not we are the primary beneficiary of a VIE on an on-going basis.

Cash and Due From Banks

Cash and cash equivalents include cash on hand, cash items in transit, and amounts due from the Federal Reserve Bank and other depository institutions.

Trading Assets

Trading assets are primarily securities, including corporate debt, U.S. government agency obligations and other securities that we acquire for short-term appreciation or other trading purposes, and the fair value of derivatives held for customer accommodation purposes or risk mitigation and hedging. Interest-only strips and other retained interests in securitizations that can be contractually prepaid or otherwise settled in a way that the holder would not recover substantially all of its recorded investment are classified as trading assets. Trading assets are carried at fair value, with realized and unrealized gains and losses recorded in noninterest income.

Securities

S ECURITIES AVAILABLE FOR SALE Debt securities that we might not hold until maturity and marketable equity securities are classified as securities available for sale and reported at fair value. Unrealized gains and losses, after applicable taxes, are reported in cumulative OCI. Fair value measurement is based upon quoted prices in active markets, if available. If quoted prices in active markets are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions and market liquidity. See Note 17 for more information on fair value measurement of our securities.

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We conduct OTTI analysis on a quarterly basis or more often if a potential loss-triggering event occurs. The initial indicator of OTTI for both debt and equity securities is a decline in market value below the amount recorded for an investment and the severity and duration of the decline.

For a debt security for which there has been a decline in the fair value below amortized cost basis, we recognize OTTI if we (1) have the intent to sell the security, (2) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, or (3) we do not expect to recover the entire amortized cost basis of the security.

Estimating recovery of the amortized cost basis of a debt security is based upon an assessment of the cash flows expected to be collected. If the cash flows expected to be collected are less than amortized cost, OTTI is considered to have occurred. In performing an assessment of the cash flows expected to be collected, we consider all relevant information including:

•

the length of time and the extent to which the fair value has been less than the amortized cost basis;

•

the historical and implied volatility of the fair value of the security;

•

the cause of the price decline, such as the general level of interest rates or adverse conditions specifically related to the security, an industry or a geographic area;

•

the issuer’s financial condition, near-term prospects and ability to service the debt;

•

the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;

•

for asset-backed securities, the credit performance of the underlying collateral, including delinquency rates, level of non-performing assets, cumulative losses to date, collateral value and the remaining credit enhancement compared with expected credit losses;

•

any change in rating agencies’ credit ratings at evaluation date from acquisition date and any likely imminent action;

•

independent analyst reports and forecasts, sector credit ratings and other independent market data; and

•

recoveries or additional declines in fair value subsequent to the balance sheet date.

If we intend to sell the security, or if it is more likely than not we will be required to sell the security before recovery, an OTTI write-down is recognized in earnings equal to the entire difference between the amortized cost basis and fair value of the security. For debt securities that are considered other-than-temporarily impaired that we do not intend to sell or it is more likely than not that we will not be required to sell before recovery, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in OCI. The measurement of the credit loss component is equal to the difference between the debt security’s cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash

flows is due to factors that are not credit-related and, therefore, are recognized in OCI. We believe that we will fully collect the carrying value of securities on which we have recorded a non-credit-related impairment in OCI.

We hold investments in perpetual preferred securities (PPS) that are structured in equity form, but have many of the characteristics of debt instruments, including periodic cash flows in the form of dividends, call features, ratings that are similar to debt securities and pricing like long-term callable bonds.

Because of the hybrid nature of these securities, we evaluate PPS for OTTI using a model similar to the model we use for debt securities as described above. Among the factors we consider in our evaluation of PPS are whether there is any evidence of deterioration in the credit of the issuer as indicated by a decline in cash flows or a rating agency downgrade to below investment grade and the estimated recovery period. Additionally, in determining if there was evidence of credit deterioration, we evaluate: (1) the severity of decline in market value below cost, (2) the period of time for which the decline in fair value has existed, and (3) the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer. We consider PPS to be other-than-temporarily impaired if cash flows expected to be collected are insufficient to recover our investment or if we no longer believe the security will recover within the estimated recovery period. OTTI write-downs of PPS are recognized in earnings equal to the difference between the cost basis and fair value of the security. Based upon the factors considered in our OTTI evaluation, we believe our investments in PPS currently rated investment grade will be fully realized and, accordingly, have not recognized OTTI on such securities.

For marketable equity securities other than PPS, OTTI evaluations focus on whether evidence exists that supports recovery of the unrealized loss within a timeframe consistent with temporary impairment. This evaluation considers the severity of and length of time fair value is below cost, our intent and ability to hold the security until forecasted recovery of the fair value of the security, and the investee’s financial condition, capital strength, and near-term prospects.

The securities portfolio is an integral part of our asset/liability management process. We manage these investments to provide liquidity, manage interest rate risk and maximize portfolio yield within capital risk limits approved by management and the Board of Directors and monitored by the Corporate Asset/Liability Management Committee (Corporate ALCO). We recognize realized gains and losses on the sale of these securities in noninterest income using the specific identification method.

Unamortized premiums and discounts are recognized in interest income over the contractual life of the security using the interest method. As principal repayments are received on securities (i.e., primarily mortgage-backed securities (MBS)) a proportionate amount of the related premium or discount is recognized in income so that the effective interest rate on the remaining portion of the security continues unchanged.

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Note 1: Summary of Significant Accounting Policies (continued)

NONMARKETABLE EQUITY SECURITIES Nonmarketable equity securities include venture capital equity securities that are not publicly traded and securities acquired for various purposes, such as to meet regulatory requirements (for example, Federal Reserve Bank and Federal Home Loan Bank (FHLB) stock). These securities are accounted for under the cost or equity method and are included in other assets. We review those assets accounted for under the cost or equity method at least quarterly for possible OTTI. Our review typically includes an analysis of the facts and circumstances of each investment, the expectations for the investment’s cash flows and capital needs, the viability of its business model and our exit strategy. We reduce the asset value when we consider declines in value to be other than temporary. We recognize the estimated loss as a loss from equity investments in noninterest income. In addition, we invest in certain equity securities held by our subsidiaries that meet the definition of an investment company (principal investments) and, therefore, are recorded at fair value with realized and unrealized gains and losses included in gains and losses from equity investments in noninterest income.

Securities Purchased and Sold Agreements

Securities purchased under resale agreements and securities sold under repurchase agreements are accounted for as collateralized financing transactions and are recorded at the acquisition or sale price plus accrued interest. It is our policy to take possession of securities purchased under resale agreements, which are primarily U.S. Government and Government agency securities. We monitor the market value of securities purchased and sold, and obtain collateral from or return it to counterparties when appropriate. These financing transactions do not create material credit risk given the collateral provided and the related monitoring process.

Mortgages Held for Sale

Mortgages held for sale (MHFS) include commercial and residential mortgages originated for sale and securitization in the secondary market, which is our principal market, or for sale as whole loans. We elect the fair value option for substantially all residential MHFS (see Note 17). The remaining residential MHFS are held at the lower of cost or market value (LOCOM), and are valued on an aggregate portfolio basis. Commercial MHFS are held at LOCOM and are valued on an individual loan basis.

Gains and losses on MHFS are recorded in mortgage banking noninterest income. Direct loan origination costs and fees for MHFS under fair value option are recognized in mortgage banking noninterest income at origination. For MHFS recorded at LOCOM, loan costs and fees are deferred at origination and are recognized in mortgage banking noninterest income at time of sale. Interest income on MHFS for which the fair value option is elected is calculated based upon the note rate of the loan and is recorded to interest income.

Our lines of business are authorized to originate held-for-investment loans that meet or exceed established loan product profitability criteria, including minimum positive net interest margin spreads in excess of funding costs. When a determination is made at the time of commitment to originate loans as held for investment, it is our intent to hold these loans to maturity or for the “foreseeable future,” subject to periodic

review under our corporate asset/liability management process. In determining the “foreseeable future” for these loans, management considers (1) the current economic environment and market conditions, (2) our business strategy and current business plans, (3) the nature and type of the loan receivable, including its expected life, and (4) our current financial condition and liquidity demands. Consistent with our core banking business of managing the spread between the yield on our assets and the cost of our funds, loans are periodically reevaluated to determine if our minimum net interest margin spreads continue to meet our profitability objectives. If subsequent changes in interest rates significantly impact the ongoing profitability of certain loan products, we may subsequently change our intent to hold these loans, and we would take actions to sell such loans in response to the Corporate ALCO directives to reposition our balance sheet because of the changes in interest rates. These directives identify both the type of loans to be sold and the weighted average coupon rate of such loans no longer meeting our ongoing investment criteria. Upon the issuance of such directives, we immediately transfer these loans to the MHFS portfolio at LOCOM.

Loans Held for Sale

Loans held for sale (LHFS) are carried at LOCOM or at fair value. Generally, consumer loans are valued on an aggregate portfolio basis, and commercial loans are valued on an individual loan basis. Gains and losses on LHFS are recorded in other noninterest income. For LHFS recorded at LOCOM, direct loan origination costs and fees are deferred at origination and are recognized in other noninterest income at time of sale. For loans recorded at fair value, direct loan origination costs and fees are recorded in other noninterest income at origination. The fair value of LHFS is based on what secondary markets are currently offering for portfolios with similar characteristics, and related gains and losses are recorded in noninterest income.

Loans

Loans are reported at their outstanding principal balances net of any unearned income, cumulative charge-offs, unamortized deferred fees and costs on originated loans and unamortized premiums or discounts on purchased loans. PCI loans are reported net of any remaining purchase accounting adjustments. See the “Purchased Credit-Impaired Loans” section in this Note for our accounting policy for PCI loans.

Unearned income, deferred fees and costs, and discounts and premiums are amortized to interest income over the contractual life of the loan using the interest method. Loan commitment fees are generally deferred and amortized into noninterest income on a straight-line basis over the commitment period.

Loans also include direct financing leases that are recorded at the aggregate of minimum lease payments receivable plus the estimated residual value of the leased property, less unearned income. Leveraged leases, which are a form of direct financing leases, are recorded net of related nonrecourse debt. Leasing income is recognized as a constant percentage of outstanding lease financing balances over the lease terms in interest income.

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NONACCRUAL AND PAST DUE LOANS We generally place loans on nonaccrual status when:

•

the full and timely collection of interest or principal becomes uncertain;

•

they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest or principal, unless both well-secured and in the process of collection; or

•

part of the principal balance has been charged off and no restructuring has occurred.

PCI loans are written down at acquisition to fair value using an estimate of cash flows deemed to be collectible. Accordingly, such loans are no longer classified as nonaccrual even though they may be contractually past due because we expect to fully collect the new carrying values of such loans (that is, the new cost basis arising out of purchase accounting).

When we place a loan on nonaccrual status, we reverse the accrued unpaid interest receivable against interest income and amortization of any net deferred fees is suspended. A loan will remain in accruing status provided it is both well-secured and in the process of collection. If the ultimate collectability of a loan is in doubt and the loan is on nonaccrual, the cost recovery method is used and cash collected is applied to first reduce the principal outstanding. Generally, we return a loan to accrual status when all delinquent interest and principal become current under the terms of the loan agreement and collectability of remaining principal and interest is no longer doubtful.

For modified loans, we underwrite at the time of a restructuring to determine if there is sufficient evidence of sustained repayment capacity based on the borrower’s financial strength, including documented income, debt to income ratios and other factors. If the borrower has demonstrated performance under the previous terms and the underwriting process shows the capacity to continue to perform under the restructured terms, the loan will remain in accruing status. When a loan classified as a TDR performs in accordance with its modified terms, the loan either continues to accrue interest (for performing loans) or will return to accrual status after the borrower demonstrates a sustained period of performance (generally six consecutive months of payments, or equivalent, inclusive of consecutive payments made prior to the modification). Loans will be placed on nonaccrual status and a corresponding charge-off is recorded if we believe it is probable that principal and interest contractually due under the modified terms of the agreement will not be collectible.

Generally, consumer loans not secured by real estate or autos are placed on nonaccrual status only when part of the principal has been charged off. Loans are fully charged off or charged down to net realizable value (fair value of collateral less estimated costs to sell) when deemed uncollectible due to bankruptcy or other factors, or when they reach a defined number of days past due based on loan product, industry practice, country, terms and other factors.

Our loans are considered past due when contractually required principal or interest payments have not been made on the due dates.

LOAN CHARGE-OFF POLICIES For commercial loans, we generally fully charge off or charge down to net realizable value for loans secured by collateral when:

•

management judges the loan to be uncollectible;

•

repayment is deemed to be protracted beyond reasonable time frames;

•

the loan has been classified as a loss by either our internal loan review process or our banking regulatory agencies;

•

the customer has filed bankruptcy and the loss becomes evident owing to a lack of assets; or

•

the loan is 180 days past due unless both well-secured and in the process of collection.

For consumer loans, our charge-off policies are as follows:

•

1-4 family first and junior lien mortgages – We generally charge down to net realizable value when the loan is 180 days past due.

•

Auto loans – We generally fully charge off when the loan is 120 days past due.

•

Credit card loans – We generally fully charge off when the loan is 180 days past due.

•

Unsecured loans (closed end) – We generally charge off when the loan is 120 days past due.

•

Unsecured loans (open end) – We generally charge off when the loan is 180 days past due.

•

Other secured loans – We generally fully or partially charge down to net realizable value when the loan is 120 days past due.

IMPAIRED LOANS We consider a loan to be impaired when, based on current information and events, we determine that we will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. Our impaired loans predominantly include loans on nonaccrual status for commercial and industrial, commercial real estate (CRE), foreign loans and any loans modified in a TDR, on both accrual and nonaccrual status.

When we identify a loan as impaired, we measure the impairment based on the present value of expected future cash flows, discounted at the loan’s effective interest rate. When collateral is the sole source of repayment for the loan, we may measure impairment based on the fair value of the collateral. If foreclosure is probable, we use the current fair value of the collateral less estimated selling costs, instead of discounted cash flows.

If we determine that the value of an impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), we recognize impairment. When the value of an impaired loan is calculated by discounting expected cash flows, interest income is recognized using the loan’s effective interest rate over the remaining life of the loan.

TROUBLED DEBT RESTRUCTURINGS (TDR s) In situations where, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to the borrower that we would not otherwise

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Note 1: Summary of Significant Accounting Policies (continued)

consider, the related loan is classified as a TDR. We strive to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before it reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, term extensions, payment forbearance and other actions intended to minimize our economic loss and to avoid foreclosure or repossession of the collateral. For modifications where we forgive principal, the entire amount of such principal forgiveness is immediately charged off. Loans classified as TDRs, including loans in trial payment periods (trial modifications), are considered impaired loans.

PURCHASED CREDIT-IMPAIRED (PCI) LOANS Loans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are accounted for using the measurement provision for PCI loans. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. Some loans that otherwise meet the definition as credit-impaired are specifically excluded from the PCI loan portfolios, such as revolving loans where the borrower still has revolving privileges.

Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status, commercial risk ratings, recent borrower credit scores and recent loan-to-value percentages. Generally, acquired loans that meet our definition for nonaccrual status are considered to be credit-impaired.

Accounting for PCI loans involves estimating fair value, at acquisition, using the principal and interest cash flows expected to be collected discounted at the prevailing market rate of interest. The excess of cash flows expected to be collected over the carrying value (estimated fair value at acquisition date) is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pool of loans, in situations where there is a reasonable expectation about the timing and amount of cash flows to be collected. The difference between contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.

Subsequent to acquisition, we regularly evaluate our estimates of cash flows expected to be collected. If we have probable decreases in cash flows expected to be collected (other than due to decreases in interest rate indices and changes in prepayment assumptions), we charge the provision for credit losses, resulting in an increase to the allowance for loan losses. If we have probable and significant increases in cash flows expected to be collected, we first reverse any previously established allowance for loan losses and then increase interest

income as a prospective yield adjustment over the remaining life of the loan, or pool of loans. Estimates of cash flows are impacted by changes in interest rate indices for variable rate loans and prepayment assumptions, both of which are treated as prospective yield adjustments included in interest income.

Resolutions of loans may include sales of loans to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. For individual PCI loans, gains or losses on sales to third parties are included in noninterest income, and gains or losses as a result of a settlement with the borrower are included in interest income. Our policy is to remove an individual loan from a pool based on comparing the amount received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference for the entire pool. This removal method assumes that the amount received from resolution approximates pool performance expectations. The remaining accretable yield balance is unaffected and any material change in remaining effective yield caused by this removal method is addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full, there is no release of the nonaccretable difference for the pool because there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed TDRs. Modified PCI loans that are accounted for individually are considered TDRs, and removed from PCI accounting if there has been a concession granted in excess of the original nonaccretable difference. We include these TDRs in our impaired loans.

FORECLOSED ASSETS Foreclosed assets obtained through our lending activities primarily include real estate. Generally, loans have been written down to their net realizable value prior to foreclosure. Any further reduction to their net realizable value is recorded with a charge to the allowance for credit losses at foreclosure. We allow up to 90 days after foreclosure to finalize determination of net realizable value. Thereafter, changes in net realizable value are recorded to noninterest expense. The net realizable value of these assets is reviewed and updated periodically depending on the type of property.

ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses (allowance), which consists of the allowance for loan losses and the allowance for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio and unfunded credit commitments at the balance sheet date, excluding loans carried at fair value. It considers both unimpaired and impaired loans and is developed and documented at the loan portfolio segment level – commercial and consumer.

Unimpaired loans are generally evaluated on a collective basis by utilizing risk grades for the commercial loan portfolio segment and loss estimates for pools of loans with similar risk characteristics for the consumer loan portfolio segment. Impaired loans are evaluated on an individual loan basis and predominantly include loans on nonaccrual status for commercial and industrial, commercial real estate, foreign loans

126

and any loans modified in a TDR, on both accrual and nonaccrual status. Commercial and consumer PCI loans may require an allowance subsequent to their acquisition due to probable decreases in expected principal and interest cash flows (other than due to decreases in interest rate indices and changes in prepayment assumptions).

The allowance for each portfolio segment includes an amount for imprecision or uncertainty that may change from period to period. This imprecision amount represents management’s judgment of risks inherent in the evaluation processes and assumptions used in establishing the allowance. While our methodology attributes portions of the allowance to the specific portfolio segments, the entire allowance is available to absorb credit losses inherent in the total loan portfolio and unfunded credit commitments. No single statistic or measurement determines the adequacy of the allowance for credit losses.

Securitizations and Beneficial Interests

In certain asset securitization transactions that meet the applicable criteria to be accounted for as a sale, assets are sold to an entity referred to as an SPE, which then issues beneficial interests in the form of senior and subordinated interests collateralized by the assets. In some cases, we may retain beneficial interests issued by the entity. Additionally, from time to time, we may also re-securitize certain assets in a new securitization transaction.

The assets and liabilities transferred to an SPE are excluded from our consolidated balance sheet if the transfer qualifies as a sale and we are not required to consolidate the SPE.

For transfers of financial assets recorded as sales, we recognize and initially measure at fair value all assets obtained (including beneficial interests) and liabilities incurred. We record a gain or loss in noninterest income for the difference between the carrying amount and the fair value of the assets sold. Fair values are based on quoted market prices, quoted market prices for similar assets, or if market prices are not available, then the fair value is estimated using discounted cash flow analyses with assumptions for credit losses, prepayments and discount rates that are corroborated by and independently verified against market observable data, where possible. Retained interests from securitizations with off-balance sheet entities, including SPEs and VIEs where we are not the primary beneficiary, are classified as available for sale securities, trading account assets or loans, and are accounted for as described herein.

Mortgage Servicing Rights (MSRs)

We recognize the rights to service mortgage loans for others, or MSRs, as assets whether we purchase the MSRs or the MSRs result from a sale or securitization of loans we originate (asset transfers). We initially record all of our MSRs at fair value. Subsequently, residential loan MSRs are carried at either fair value or LOCOM based on our strategy for managing interest rate risk. Currently, substantially all of our residential loan MSRs are carried at fair value. All of our MSRs related to our commercial mortgage loans are subsequently measured at LOCOM.

We base the fair value of MSRs on the present value of estimated future net servicing income cash flows. We estimate future net servicing income cash flows with assumptions that market participants would use to estimate fair value, including estimates of prepayment speeds (including housing price volatility), discount rates, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, ancillary income and late fees. Our valuation approach is independently validated by our internal valuation model validation group and our valuation estimates are periodically benchmarked to independent appraisals.

Changes in the fair value of MSRs occur primarily due to the collection/realization of expected cash flows, as well as changes in valuation inputs and assumptions. For MSRs carried at fair value, changes in fair value are reported in noninterest income in the period in which the change occurs. MSRs subsequently measured at LOCOM are amortized in proportion to, and over the period of, estimated net servicing income. The amortization of MSRs is reported in noninterest income, analyzed monthly and adjusted to reflect changes in prepayment speeds, as well as other factors.

MSRs accounted for at LOCOM are periodically evaluated for impairment based on the fair value of those assets. For purposes of impairment evaluation and measurement, we stratify MSRs based on the predominant risk characteristics of the underlying loans, including investor and product type. If, by individual stratum, the carrying amount of these MSRs exceeds fair value, a valuation reserve is established. The valuation reserve is adjusted as the fair value changes.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization. Capital leases, where we are the lessee, are included in premises and equipment at the capitalized amount less accumulated amortization.

We primarily use the straight-line method of depreciation and amortization. Estimated useful lives range up to 40 years for buildings, up to 10 years for furniture and equipment, and the shorter of the estimated useful life or lease term for leasehold improvements. We amortize capitalized leased assets on a straight-line basis over the lives of the respective leases.

Goodwill and Identifiable Intangible Assets

Goodwill is recorded in business combinations under the purchase method of accounting when the purchase price is higher than the fair value of net assets, including identifiable intangible assets.

We assess goodwill for impairment annually, and more frequently in certain circumstances. We initially perform a qualitative assessment of goodwill to test for impairment. If, based on our qualitative review, we conclude that more likely than not a reporting unit’s fair value is less than its carrying amount, then we complete quantitative steps as described below to determine if there is goodwill impairment. If we conclude that a reporting unit fair value is not less than its carrying amount, quantitative tests are not required. We have determined that our reporting units are one level below the operating segments. We assess goodwill for impairment on a reporting unit level and

127

Note 1: Summary of Significant Accounting Policies (continued)

apply various quantitative valuation methodologies when required to compare the estimated fair value to the carrying value of each reporting unit. Valuation methodologies include discounted cash flow and earnings multiple approaches. If the fair value is less than the carrying amount, an additional test is required to measure the amount of impairment. We recognize impairment losses as a charge to noninterest expense (unless related to discontinued operations) and an adjustment to the carrying value of the goodwill asset. Subsequent reversals of goodwill impairment are prohibited.

We amortize core deposit and other customer relationship intangibles on an accelerated basis over useful lives not exceeding 10 years. We review such intangibles for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated if the sum of undiscounted estimated future net cash flows is less than the carrying value of the asset. Impairment is permanently recognized by writing down the asset to the extent that the carrying value exceeds the estimated fair value.

Operating Lease Assets

Operating lease rental income for leased assets is recognized in other income on a straight-line basis over the lease term. Related depreciation expense is recorded on a straight-line basis over the estimated useful life, considering the estimated residual value of the leased asset. The useful life may be adjusted to the term of the lease depending on our plans for the asset after the lease term. On a periodic basis, leased assets are reviewed for impairment. Impairment loss is recognized if the carrying amount of leased assets exceeds fair value and is not recoverable. The carrying amount of leased assets is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the lease payments and the estimated residual value upon the eventual disposition of the equipment.

Liability for Mortgage Loan Repurchase Losses

We sell residential mortgage loans to various parties, including (1) Freddie Mac and Fannie Mae (government-sponsored entities (GSEs)), which include the mortgage loans in GSE-guaranteed mortgage securitizations, (2) special purpose entities that issue private label MBS, and (3) other financial institutions that purchase mortgage loans for investment or private label securitization. In addition, we pool Federal Housing Administration (FHA)-insured and Department of Veterans Affairs (VA)-guaranteed mortgage loans, which back securities guaranteed by the Government National Mortgage Association (GNMA).

adverse effect on the value of the mortgage loan or to the investors or interests of security holders in the mortgage loan.

We establish mortgage repurchase liabilities related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, whether or not we currently service those loans, based on a combination of factors. Such factors include default expectations, expected investor repurchase demands (influenced by current and expected mortgage loan file requests and mortgage insurance rescissions notices, as well as estimated demand to default and file request relationships) and appeals success rates (where the investor rescinds the demand based on a cure of the defect or acknowledges that the loan satisfies the investor’s applicable representations and warranties), reimbursement by correspondent and other third party originators, and projected loss severity. We establish a liability at the time loans are sold and continually update our liability estimate during their life. Although investors may demand repurchase at any time and there is often a lag from the date of default to the time we receive a repurchase demand, the majority of repurchase demands occur on loans that default in the first 24 to 36 months following origination of the mortgage loan and can vary by investor.

The liability for mortgage loan repurchase losses is included in other liabilities. For additional information on our repurchase liability, see Note 9.

Pension Accounting

We account for our defined benefit pension plans using an actuarial model as more fully discussed in Note 20.

Income Taxes

We file consolidated and separate company federal income tax returns, foreign tax returns and various combined and separate company state tax returns.

We evaluate two components of income tax expense: current and deferred. Current income tax expense approximates taxes to be paid or refunded for the current period and includes income tax expense related to our uncertain tax positions. We determine deferred income taxes using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to management’s judgment that realization is “more likely than not.” Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. Foreign taxes paid are generally applied as credits to reduce federal income taxes payable. We account for interest and penalties as a component of income tax expense.

128

Stock-Based Compensation

We have stock-based employee compensation plans as more fully discussed in Note 19. Our compensation expense includes the associated costs for all share-based awards.

Earnings Per Common Share

We compute earnings per common share by dividing net income (after deducting dividends and related accretion on preferred stock) by the average number of common shares outstanding during the year. We compute diluted earnings per common share by dividing net income (after deducting dividends and related accretion on preferred stock) by the average number of common shares outstanding during the year, plus the effect of common stock equivalents (for example, stock options, restricted share rights, convertible debentures and warrants) that are dilutive.

Derivatives and Hedging Activities

We recognize all derivatives in the balance sheet at fair value. On the date we enter into a derivative contract, we designate the derivative as (1) a hedge of the fair value of a recognized asset or liability, including hedges of foreign currency exposure (“fair value” hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge), or (3) held for trading, customer accommodation or asset/liability risk management purposes, including economic hedges not qualifying for hedge accounting. For a fair value hedge, we record changes in the fair value of the derivative and, to the extent that it is effective, changes in the fair value of the hedged asset or liability attributable to the hedged risk, in current period earnings in the same financial statement category as the hedged item. For a cash flow hedge, we record changes in the fair value of the derivative to the extent that it is effective in OCI, with any ineffectiveness recorded in current period earnings. We subsequently reclassify these changes in fair value to net income in the same period(s) that the hedged transaction affects net income in the same financial statement category as the hedged item. For free-standing derivatives, we report changes in the fair values in current period noninterest income.

For fair value and cash flow hedges qualifying for hedge accounting, we formally document at inception the relationship between hedging instruments and hedged items, our risk management objective, strategy and our evaluation of effectiveness for our hedge transactions. This includes linking all derivatives designated as fair value or cash flow hedges to specific assets and liabilities in the balance sheet or to specific forecasted transactions. Periodically, as required, we also formally assess whether the derivative we designated in each hedging relationship is expected to be and has been highly effective in offsetting changes in fair values or cash flows of the hedged item using the regression analysis method or, in limited cases, the dollar offset method.

We discontinue hedge accounting prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item, (2) a derivative expires or is sold, terminated or exercised, (3) a derivative is de-designated as a hedge, because it is unlikely that a forecasted

transaction will occur, or (4) we elect to discontinue the designation of a derivative as a hedge.

When we discontinue hedge accounting because a derivative 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 components 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 designated (de-designated), the amount reported in OCI up to the date of sale, termination or de-designation continues to be reported in OCI 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 accumulated in OCI 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 instruments that contain an embedded derivative. At inception of the financial instrument, we assess (1) if the economic characteristics 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.

Private Share Repurchases

In December 2011, we entered into a private forward repurchase contract with an unrelated third party. This contract settled for approximately 6 million shares of our common stock in first quarter 2012. We also entered into a similar contract in August 2011, which settled in November 2011 for approximately 6 million shares of our common stock. These contracts met accounting requirements to be treated as permanent equity transactions. We entered into these contracts to complement our open-market common stock repurchase strategies, to allow us to manage our share repurchases in a manner consistent with our 2011 Federal Reserve Board (FRB) Comprehensive Capital Analysis and Review plan (capital plan), and to provide an economic benefit to the Company. In connection with each contract, we paid $150 million to the

129

Note 1: Summary of Significant Accounting Policies (continued)

counterparty, which was recorded in permanent equity and was not subject to re-measurement. These up-front payments received permanent equity treatment in the quarter paid and thus assured appropriate repurchase timing, consistent with our 2011 capital plan which contemplated a fixed dollar amount available per quarter for share repurchases pursuant to FRB supervisory guidance. In return, the counterparty agreed to

deliver a variable number of shares based on a per share discount to the volume-weighted average stock price over the contract period. The counterparty had the right to accelerate settlement with delivery of shares prior to the contractual settlement. There were no scenarios where the contracts would not either physically settle in shares or allow us to choose the settlement method.

SUPPLEMENTAL CASH FLOW INFORMATION Noncash activities are presented below, including information on transfers affecting MHFS, LHFS and MSRs.

Year ended December 31,

(in millions)

2011

2010

2009

Transfers from trading assets to securities available for sale

–

854

Transfers from (to) loans to (from) securities available for sale

2,822

3,476

(258

)

Trading assets retained from securitization of MHFS

61,599

19,815

2,993

Capitalization of MSRs from sale of MHFS

4,089

4,570

6,287

Transfers from MHFS to foreclosed assets

224

262

162

Transfers from (to) loans to (from) MHFS

6,305

230

144

Transfers from (to) loans to (from) LHFS

129

1,313

(111

)

Transfers from loans to foreclosed assets

9,315

8,699

7,604

Changes in consolidations of variable interest entities:

Trading assets

–

155

–

Securities available for sale

(7,590

)

–

Loans

(599

)

26,117

–

Other assets

–

212

–

Short-term borrowings

–

5,127

–

Long-term debt

(628

)

13,613

–

Accrued expenses and other liabilities

–

(32

)

–

Net transfer from additional paid-in capital to noncontrolling interests

–

2,299

Decrease in noncontrolling interests due to deconsolidation of subsidiaries

–

440

–

Transfer from noncontrolling interests to long-term debt

–

345

–

Consolidation of reverse mortgages previously sold:

Loans

5,483

–

Long-term debt

5,425

–

SUBSEQUENT EVENTS We have evaluated the effects of subsequent events that have occurred subsequent to period end December 31, 2011, and there have been no material events that would require recognition in our 2011 consolidated financial statements or disclosure in the Notes to the financial statements, except as discussed in Note 15 (Legal Actions) for the announcement on February 9, 2012, of an agreement with state attorneys and federal agencies regarding mortgage servicing, foreclosures and origination issues.

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Note 2: Business Combinations

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. For information on additional contingent consideration related to acquisitions, which is considered to be a guarantee, see Note 14.

Business combinations completed in 2011, 2010 and 2009 are presented below. At December 31, 2011, we had two acquisitions pending, both of which are expected to close during first quarter 2012 with combined total assets of approximately $835 million.



(in millions)	Date		Assets

2011
CP Equity, LLC, Denver, Colorado		July 1	$	389
Certain assets of Foreign Currency Exchange Corp, Orlando, Florida		August 1		46
LaCrosse Holdings, LLC, Minneapolis, Minnesota		November 30		116
Other (1)		Various		37

			$	588

2010
Certain assets of GMAC Commercial Finance, LLC, New York, New York		April 30	$	430
Other (2)		Various		40

			$	470

2009
Capital TempFunds, Fort Lauderdale, Florida		March 2	$	74
Other (3)		Various		39

			$	113

(1)	Consists of seven acquisitions of insurance brokerage businesses.

(2)	Consists of five acquisitions of insurance brokerage businesses.

(3)	Consists of eight acquisitions of insurance brokerage businesses.

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Note 3: Cash, Loan and Dividend Restrictions

Federal Reserve Board (FRB) regulations require that each of our subsidiary banks maintain reserve balances on deposit with the Federal Reserve Banks. The average required reserve balance was $7.0 billion in 2011 and $6.0 billion in 2010.

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. These transaction amounts may not exceed 10% of the bank’s capital and surplus, which for this purpose represents total capital, as calculated under the risk-based capital (RBC) guidelines, plus the balance of the allowance for credit losses in excess of the amount included in total capital with any single nonbank affiliate and 20% of the bank’s capital and surplus with all its nonbank affiliates. Transactions that are extensions of credit may require collateral to be held to provide added security to the bank. For further discussion of RBC, see Note 26.

Dividends paid by our subsidiary banks are subject to various federal and state regulatory limitations. Dividends that may be paid by a national bank without the express approval of the Office of the Comptroller of the Currency (OCC) are limited to that bank’s retained net profits for the preceding two calendar years plus retained net profits up to the date of any dividend declaration in the current calendar year. Retained net profits, as defined by the OCC, consist of net income less dividends declared during the period.

We also have state-chartered subsidiary banks that are subject to state regulations that limit dividends. Under those provisions, our national and state-chartered subsidiary banks could have declared additional dividends of $0.6 billion at December 31, 2011, without obtaining prior regulatory approval. Our nonbank subsidiaries are also limited by certain federal and

state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. Based on retained earnings at December 31, 2011, our nonbank subsidiaries could have declared additional dividends of $5.7 billion at December 31, 2011, without obtaining prior approval.

The FRB published clarifying supervisory guidance in 2009, SR 09-4 Applying Supervisory Guidance and Regulations on the Payment of Dividends, Stock Redemptions, and Stock Repurchases at Bank Holding Companies, pertaining to FRB’s criteria, assessment and approval process for reductions in capital including the redemption of Troubled Asset Relief Program (TARP) and the payment of dividends. The effect of this guidance is to require the approval of the FRB for the Company to repurchase or redeem common or perpetual preferred stock as well as to increase the per share dividend from its current level of $0.12 per share. In November 2010, the FRB updated the SR 09-4 guidance to require the original 19 Supervisory Capital Assessment Program (SCAP) banks to submit a Capital Plan Review to the FRB no later than January 7, 2011. In December 2011, the FRB finalized rules under 12 CFR Part 225, Regulation Y requiring large bank holding companies (BHCs) to submit capital plans annually and to obtain regulatory approval before making capital distributions including share dividend increases or share repurchases. The rule requires updates to capital plans in the event of material changes in a BHC’s risk profile, including as a result of any significant acquisitions. The Company submitted its board-approved 2012 capital plan to the FRB on January 6, 2012.

Note 4: Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments

The following table provides the detail of federal funds sold, securities purchased under resale agreements, and other short-term investments.



	December 31,

(in millions)	2011		2010

Federal funds sold and securities purchased under resale agreements	$	24,255		24,880
Interest-earning deposits		18,917		53,433
Other short-term investments		1,195		2,324

Total	$	44,367		80,637

We receive collateral from other entities under resale agreements and securities borrowings. For additional information, see Note 14.

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Note 5: Securities Available for Sale

The following table provides the cost and fair value for the major categories of securities available for sale carried at fair value.

There were no securities classified as held to maturity as of the periods presented.



(in millions)	Cost		Gross unrealized gains		Gross unrealized losses			Fair value

December 31, 2011

Securities of U.S. Treasury and federal agencies	$	6,920		59		(11	)		6,968
Securities of U.S. states and political subdivisions		32,307		1,169		(883	)		32,593
Mortgage-backed securities:
Federal agencies		92,279		4,485		(10	)		96,754
Residential		16,997		1,253		(414	)		17,836
Commercial		17,829		1,249		(928	)		18,150

Total mortgage-backed securities		127,105		6,987		(1,352	)		132,740

Corporate debt securities		17,921		769		(286	)		18,404
Collateralized debt obligations (1)		8,650		298		(349	)		8,599
Other (2)		19,739		378		(225	)		19,892

Total debt securities		212,642		9,660		(3,106	)		219,196

Marketable equity securities:
Perpetual preferred securities		2,396		185		(54	)		2,527
Other marketable equity securities		533		366		(9	)		890

Total marketable equity securities		2,929		551		(63	)		3,417

Total (3)	$	215,571		10,211		(3,169	)		222,613


December 31, 2010

Securities of U.S. Treasury and federal agencies	$	1,570		49		(15	)		1,604
Securities of U.S. states and political subdivisions		18,923		568		(837	)		18,654
Mortgage-backed securities:
Federal agencies		78,578		3,555		(96	)		82,037
Residential		18,294		2,398		(489	)		20,203
Commercial		12,990		1,199		(635	)		13,554

Total mortgage-backed securities		109,862		7,152		(1,220	)		115,794

Corporate debt securities		9,015		1,301		(37	)		10,279
Collateralized debt obligations (1)		4,638		369		(229	)		4,778
Other (2)		16,063		576		(283	)		16,356

Total debt securities		160,071		10,015		(2,621	)		167,465

Marketable equity securities:
Perpetual preferred securities		3,671		250		(89	)		3,832
Other marketable equity securities		587		771		(1	)		1,357

Total marketable equity securities		4,258		1,021		(90	)		5,189

Total (3)	$	164,329		11,036		(2,711	)		172,654

(1)	Includes collateralized loan obligations with both a cost basis and fair value of $8.1 billion, at December 31, 2011, and $4.0 billion and $4.2 billion, respectively, at December 31, 2010.

(2)

Included in the “Other” category are asset-backed securities collateralized by auto leases or loans and cash reserves with a cost basis and fair value of $6.7 billion each at December 31, 2011, and $6.2 billion and $6.4 billion, respectively, at December 31, 2010. Also included in the “Other” category are asset-backed securities collateralized by home equity loans with a cost basis and fair value of $846 million and $932 million, respectively, at December 31, 2011, and $927 million and $1.1 billion, respectively, at December 31, 2010. The remaining balances primarily include asset-backed securities collateralized by credit cards and student loans.

(3)	At December 31, 2011 and 2010, we held no securities of any single issuer (excluding the U.S. Treasury and federal agencies) with a book value that exceeded 10% of stockholders’ equity.

133

Note 5: Securities Available for Sale (continued)

Gross Unrealized Losses and Fair Value

The following table shows the gross unrealized losses and fair value of securities in the securities available-for-sale portfolio by length of time that individual securities in each category had been in a continuous loss position. Debt securities on which we

have taken credit-related OTTI write-downs are categorized as being “less than 12 months” or “12 months or more” in a continuous loss position based on the point in time that the fair value declined to below the cost basis and not the period of time since the credit-related OTTI write-down.



	Less than 12 months					12 months or more					Total

(in millions)	Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value

December 31, 2011

Securities of U.S. Treasury and federal agencies	$	(11	)		5,473		–			–		(11	)		5,473
Securities of U.S. states and political subdivisions		(229	)		8,501		(654	)		4,348		(883	)		12,849
Mortgage-backed securities:
Federal agencies		(7	)		2,392		(3	)		627		(10	)		3,019
Residential		(80	)		3,780		(334	)		3,440		(414	)		7,220
Commercial		(157	)		3,183		(771	)		3,964		(928	)		7,147

Total mortgage-backed securities		(244	)		9,355		(1,108	)		8,031		(1,352	)		17,386

Corporate debt securities		(205	)		8,107		(81	)		167		(286	)		8,274
Collateralized debt obligations		(150	)		4,268		(199	)		613		(349	)		4,881
Other		(55	)		3,002		(170	)		841		(225	)		3,843

Total debt securities		(894	)		38,706		(2,212	)		14,000		(3,106	)		52,706

Marketable equity securities:
Perpetual preferred securities		(13	)		316		(41	)		530		(54	)		846
Other marketable equity securities		(9	)		61		–			–		(9	)		61

Total marketable equity securities		(22	)		377		(41	)		530		(63	)		907

Total	$	(916	)		39,083		(2,253	)		14,530		(3,169	)		53,613


December 31, 2010

Securities of U.S. Treasury and federal agencies	$	(15	)		544		–			–		(15	)		544
Securities of U.S. states and political subdivisions		(322	)		6,242		(515	)		2,720		(837	)		8,962
Mortgage-backed securities:
Federal agencies		(95	)		8,103		(1	)		60		(96	)		8,163
Residential		(35	)		1,023		(454	)		4,440		(489	)		5,463
Commercial		(9	)		441		(626	)		5,141		(635	)		5,582

Total mortgage-backed securities		(139	)		9,567		(1,081	)		9,641		(1,220	)		19,208

Corporate debt securities		(10	)		477		(27	)		157		(37	)		634
Collateralized debt obligations		(13	)		679		(216	)		456		(229	)		1,135
Other		(13	)		1,985		(270	)		757		(283	)		2,742

Total debt securities		(512	)		19,494		(2,109	)		13,731		(2,621	)		33,225

Marketable equity securities:
Perpetual preferred securities		(41	)		962		(48	)		467		(89	)		1,429
Other marketable equity securities		–			–		(1	)		7		(1	)		7

Total marketable equity securities		(41	)		962		(49	)		474		(90	)		1,436

Total	$	(553	)		20,456		(2,158	)		14,205		(2,711	)		34,661

134

We do not have the intent to sell any securities included in the previous table. For debt securities included in the table, we have concluded it is more likely than not that we will not be required to sell prior to recovery of the amortized cost basis. We have assessed each security with gross unrealized losses for credit impairment. For debt securities, we evaluate, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the securities’ amortized cost basis. For equity securities, we consider numerous factors in determining whether impairment exists, including our intent and ability to hold the securities for a period of time sufficient to recover the cost basis of the securities.

See Note 1 – “Securities” for the factors that we consider in our analysis of OTTI for debt and equity securities available for sale.

SECURITIES OF U.S. TREASURY AND FEDERAL AGENCIES AND FEDERAL AGENCY MORTGAGE-BACKED SECURITIES (MBS) The unrealized losses associated with U.S. Treasury and federal agency securities and federal agency MBS are primarily driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided by the U.S. government.

SECURITIES OF U.S. STATES AND POLITICAL SUBDIVISIONS The unrealized losses associated with securities of U.S. states and political subdivisions are primarily driven by changes in interest rates and not due to the credit quality of the securities. Substantially all of these investments are investment grade. The securities were generally underwritten in accordance with our own investment standards prior to the decision to purchase. Some of these securities are guaranteed by a bond insurer, but we did not rely on this guarantee in making our investment decision. These investments will continue to be monitored as part of our ongoing impairment analysis, but are expected to perform, even if the rating agencies reduce the credit rating of the bond insurers. As a result, we expect to recover the entire amortized cost basis of these securities.

RESIDENTIAL AND COMMERCIAL MBS The unrealized losses associated with private residential MBS and commercial MBS are primarily driven by changes in projected collateral losses, credit spreads and interest rates. We assess for credit impairment by estimating the present value of expected cash flows. The key assumptions for determining expected cash flows include default rates, loss severities and prepayment rates. We estimate losses to a security by forecasting the underlying mortgage loans in each transaction. We use forecasted loan performance to project cash flows to the various tranches in the structure. We also consider cash flow forecasts and, as applicable, independent industry analyst reports and forecasts, sector credit ratings, and other independent market data. Based upon our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost basis of these securities.

CORPORATE DEBT SECURITIES The unrealized losses associated with corporate debt securities are primarily related to unsecured debt obligations issued by various corporations. We

evaluate the financial performance of each issuer on a quarterly basis to determine that the issuer can make all contractual principal and interest payments. Based upon this assessment, we expect to recover the entire amortized cost basis of these securities.

COLLATERALIZED DEBT OBLIGATIONS (CDOs) The unrealized losses associated with CDOs relate to securities primarily backed by commercial, residential or other consumer collateral. The unrealized losses are primarily driven by changes in projected collateral losses, credit spreads and interest rates. We assess for credit impairment by estimating the present value of expected cash flows. The key assumptions for determining expected cash flows include default rates, loss severities and prepayment rates. We also consider cash flow forecasts and, as applicable, independent industry analyst reports and forecasts, sector credit ratings, and other independent market data. Based upon our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost basis of these securities.

OTHER DEBT SECURITIES The unrealized losses associated with other debt securities primarily relate to other asset-backed securities. The losses are primarily driven by changes in projected collateral losses, credit spreads and interest rates. We assess for credit impairment by estimating the present value of expected cash flows. The key assumptions for determining expected cash flows include default rates, loss severities and prepayment rates. Based upon our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost basis of these securities.

MARKETABLE EQUITY SECURITIES Our marketable equity securities include investments in perpetual preferred securities, which provide very attractive tax-equivalent yields. We evaluated these hybrid financial instruments with investment-grade ratings for impairment using an evaluation methodology similar to that used for debt securities. Perpetual preferred securities are not considered to be other-than-temporarily impaired if there is no evidence of credit deterioration or investment rating downgrades of any issuers to below investment grade, and we expect to continue to receive full contractual payments. We will continue to evaluate the prospects for these securities for recovery in their market value in accordance with our policy for estimating OTTI. We have recorded impairment write-downs on perpetual preferred securities where there was evidence of credit deterioration.

OTHER SECURITIES AVAILABLE FOR SALE MATTERS The fair values of our investment securities could decline in the future if the underlying performance of the collateral for the residential and commercial MBS or other securities deteriorate and our credit enhancement levels do not provide sufficient protection to our contractual principal and interest. As a result, there is a risk that significant OTTI may occur in the future.

135

Note 5: Securities Available for Sale (continued)

The following table shows the gross unrealized losses and fair value of debt and perpetual preferred securities available for sale by those rated investment grade and those rated less than investment grade, according to their lowest credit rating by Standard & Poor’s Rating Services (S&P) or Moody’s Investors Service (Moody’s). Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, that is those rated BBB- or higher by S&P or Baa3 or higher by Moody’s, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade securities. We have also

included securities not rated by S&P or Moody’s in the table below based on the internal credit grade of the securities (used for credit risk management purposes) equivalent to the credit rating assigned by major credit agencies. The unrealized losses and fair value of unrated securities categorized as investment grade based on internal credit grades were $207 million and $6.2 billion, respectively, at December 31, 2011, and $83 million and $1.3 billion, respectively, at December 31, 2010. If an internal credit grade was not assigned, we categorized the security as non-investment grade.

Investment grade

Non-investment grade

(in millions)

Gross

unrealized

losses

Fair

value

Gross

unrealized

losses

Fair

value

December 31, 2011

Securities of U.S. Treasury and federal agencies

(11)

5,473

–

Securities of U.S. states and political subdivisions

(781)

12,093

(102)

756

Mortgage-backed securities:

Federal agencies

(10)

3,019

–

Residential

(39)

2,503

(375)

4,717

Commercial

(429)

6,273

(499)

874

Total mortgage-backed securities

(478)

11,795

(874)

5,591

Corporate debt securities

(165)

7,156

(121)

1,118

Collateralized debt obligations

(185)

4,597

(164)

284

Other

(186)

3,458

(39)

385

Total debt securities

(1,806)

44,572

(1,300)

8,134

Perpetual preferred securities

(53)

833

(1)

Total

(1,859)

45,405

(1,301)

8,147

December 31, 2010

Securities of U.S. Treasury and federal agencies

(15)

544

–

Securities of U.S. states and political subdivisions

(722)

8,423

(115)

539

Mortgage-backed securities:

Federal agencies

(96)

8,163

–

Residential

(23)

888

(466)

4,575

Commercial

(299)

4,679

(336)

903

Total mortgage-backed securities

(418)

13,730

(802)

5,478

Corporate debt securities

(22)

330

(15)

304

Collateralized debt obligations

(42)

613

(187)

522

Other

(180)

2,510

(103)

232

Total debt securities

(1,399)

26,150

(1,222)

7,075

Perpetual preferred securities

(81)

1,327

(8)

102

Total

(1,480)

27,477

(1,230)

7,177

136

Contractual Maturities

The following table shows the remaining contractual maturities and contractual yields of debt securities available for sale. The remaining contractual principal maturities for MBS do not consider prepayments. Remaining expected maturities will differ

from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.



						Remaining contractual principal maturity

	Total amount		Weighted- average yield			Within one year					After one year through five years					After five years through ten years					After ten years

(in millions)						Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield

December 31, 2011

Securities of U.S. Treasury and federal agencies	$	6,968		0.91	%	$	57		0.48	%	$	6,659		0.84	%	$	194		2.73	%	$	58		3.81	%
Securities of U.S. states and political subdivisions		32,593		4.94			520		3.02			11,679		2.90			2,692		5.31			17,702		6.28
Mortgage-backed securities:
Federal agencies		96,754		4.39			1		6.47			442		4.02			1,399		3.07			94,912		4.42
Residential		17,836		4.51			–		–			–		–			640		1.88			17,196		4.61
Commercial		18,150		5.40			–		–			–		–			87		3.33			18,063		5.41

Total mortgage-backed securities		132,740		4.55			1		6.47			442		4.02			2,126		2.72			130,171		4.58

Corporate debt securities		18,404		4.64			815		5.57			11,022		3.40			4,691		6.67			1,876		6.38
Collateralized debt obligations		8,599		1.10			–		–			540		1.61			6,813		1.00			1,246		1.42
Other		19,892		1.89			506		2.29			12,963		1.75			3,149		2.04			3,274		2.29

Total debt securities at fair value	$	219,196		4.12	%	$	1,899		3.85	%	$	43,305		2.36	%	$	19,665		3.31	%	$	154,327		4.72	%


December 31, 2010

Securities of U.S. Treasury and federal agencies	$	1,604		2.54	%	$	9		5.07	%	$	641		1.72	%	$	852		2.94	%	$	102		4.15	%
Securities of U.S. states and political subdivisions		18,654		5.99			322		3.83			3,210		3.57			1,884		6.13			13,238		6.60
Mortgage-backed securities:
Federal agencies		82,037		5.01			5		6.63			28		6.58			420		5.23			81,584		5.00
Residential		20,203		4.98			–		–			–		–			341		3.20			19,862		5.01
Commercial		13,554		5.39			–		–			1		1.38			215		5.28			13,338		5.39

Total mortgage-backed securities		115,794		5.05			5		6.63			29		6.38			976		4.53			114,784		5.05

Corporate debt securities		10,279		5.94			545		7.82			3,853		6.01			4,817		5.62			1,064		6.21
Collateralized debt obligations		4,778		0.80			–		–			545		0.88			2,581		0.72			1,652		0.90
Other		16,356		2.53			1,588		2.89			7,887		3.00			4,367		2.01			2,514		1.72

Total debt securities at fair value	$	167,465		4.81	%	$	2,469		4.12	%	$	16,165		3.72	%	$	15,477		3.63	%	$	133,354		5.10	%

137

Note 5: Securities Available for Sale (continued)

Realized Gains and Losses

The following table shows the gross realized gains and losses on sales and OTTI write-downs related to the securities available-for-sale portfolio, which includes marketable equity securities, as well as net realized gains and losses on nonmarketable equity securities (see Note 7 – Other Assets).



	Year ended December 31,

(in millions)	2011			2010			2009

Gross realized gains	$	1,305			645			1,601
Gross realized losses		(70	)		(32	)		(160	)
OTTI write-downs		(541	)		(692	)		(1,094	)

Net realized gains (losses) from securities available for sale		694			(79	)		347

Net realized gains (losses) from principal and private equity investments		842			534			(289	)

Net realized gains from debt securities and equity investments	$	1,536			455			58

Other-Than-Temporary Impairment

The following table shows the detail of total OTTI write-downs included in earnings for debt securities and marketable and nonmarketable equity securities.



	Year ended December 31,

(in millions)	2011		2010		2009

OTTI write-downs included in earnings
Debt securities:
U.S. states and political subdivisions	$	2		16		7
Mortgage-backed securities:
Federal agencies (1)		–		267		–
Residential		252		175		595
Commercial		101		120		137
Corporate debt securities		3		10		69
Collateralized debt obligations		1		15		125
Other debt securities		64		69		79

Total debt securities		423		672		1,012

Equity securities:
Marketable equity securities:
Perpetual preferred securities		96		15		50
Other marketable equity securities		22		5		32

Total marketable equity securities		118		20		82

Total securities available for sale		541		692		1,094

Nonmarketable equity securities		170		248		573

Total OTTI write-downs included in earnings	$	711		940		1,667

(1)	For the year ended December 31, 2010, amount represents OTTI recognized on federal agency MBS because we had the intent to sell, of which $252 million related to securities with a fair value of $14.5 billion that were sold subsequent to December 31, 2010.

138

Other-Than-Temporarily Impaired Debt Securities

The following table shows the detail of OTTI write-downs on debt securities available for sale included in earnings and the related changes in OCI for the same securities.



	Year ended December 31,

(in millions)	2011			2010			2009

OTTI on debt securities
Recorded as part of gross realized losses:
Credit-related OTTI	$	422			400			982
Intent-to-sell OTTI (1)		1			272			30

Total recorded as part of gross realized losses		423			672			1,012

Recorded directly to OCI for non-credit-related impairment:
U.S. states and political subdivisions		(1	)		(4	)		3
Residential mortgage-backed securities		(171	)		(326	)		1,124
Commercial mortgage-backed securities		105			138			179
Corporate debt securities		2			(1	)		(2	)
Collateralized debt obligations		4			54			20
Other debt securities		(13	)		(33	)		16

Total recorded directly to OCI for increase (decrease) in non-credit-related impairment (2)		(74	)		(172	)		1,340

Total OTTI losses recorded on debt securities	$	349			500			2,352

(1)	For the year ended December 31, 2010, amount includes $252 million related to securities with a fair value of $14.5 billion that were sold subsequent to December 31, 2010.

(2)

Represents amounts recorded to OCI on debt securities in periods OTTI write-downs have occurred. Changes in fair value in subsequent periods on such securities, to the extent additional credit-related OTTI did not occur, are not reflected in this total. Increases represent OTTI write-downs recorded to OCI on debt securities in the periods non-credit related impairment has occurred. Decreases represent partial recoveries in the fair value of securities due to factors other than credit, where the increase in fair value was not sufficient to recover the full amount of the unrealized loss on such securities.

The following table presents a rollforward of the credit loss component of OTTI recognized in earnings for debt securities we still own (referred to as “credit-impaired” debt securities). The credit loss component of the amortized cost represents the difference between the present value of expected future cash flows discounted using the security’s current effective interest rate and the amortized cost basis of the security prior to considering credit losses. OTTI recognized in earnings for credit-impaired debt securities is presented as additions and is classified into one of two components based upon whether the current period is the first time the debt security was credit-

impaired (initial credit impairment) or if the debt security was previously credit-impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe we will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if we receive or expect to receive cash flows in excess of what we previously expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written down.

Changes in the credit loss component of credit-impaired debt securities that we do not intend to sell were:



	Year ended December 31,

(in millions)	2011			2010			2009

Credit loss component, beginning of year	$	1,043			1,187			471
Additions:
Initial credit impairments		87			122			625
Subsequent credit impairments		335			278			357

Total additions		422			400			982

Reductions:
For securities sold		(160	)		(263	)		(255	)
For securities derecognized due to changes in consolidation status of variable interest entities		(2	)		(242	)		–
Due to change in intent to sell or requirement to sell		–			(2	)		(1	)
For recoveries of previous credit impairments (1)		(31	)		(37	)		(10	)

Total reductions		(193	)		(544	)		(266	)

Credit loss component, end of year	$	1,272			1,043			1,187

(1)	Recoveries of previous credit impairments result from increases in expected cash flows subsequent to credit loss recognition. Such recoveries are reflected prospectively as interest yield adjustments using the effective interest method.

139

Note 5: Securities Available for Sale (continued)

For asset-backed securities (e.g., residential MBS), we estimate expected future cash flows of the security by estimating the expected future cash flows of the underlying collateral and applying those collateral cash flows, together with any credit enhancements such as subordinated interests owned by third parties, to the security. The expected future cash flows of the underlying collateral are determined using the remaining contractual cash flows adjusted for future expected credit losses (which consider current delinquencies and nonperforming assets

(NPAs), future expected default rates and collateral value by vintage and geographic region) and prepayments. The expected cash flows of the security are then discounted at the security’s current effective interest rate to arrive at a present value amount. Total credit impairment losses on residential MBS that we do not intend to sell are shown in the table below. The table also presents a summary of the significant inputs considered in determining the measurement of the credit loss component recognized in earnings for residential MBS.



	Year ended December 31,

($ in millions)	2011			2010		2009

Credit impairment losses on residential MBS
Investment grade	$	5			5		24
Non-investment grade		247			170		567

Total credit impairment losses on residential MBS	$	252			175		591

Significant inputs (non-agency – non-investment grade MBS)
Expected remaining life of loan losses (1):
Range (2)		0-48	%		1-43		0-58
Credit impairment distribution (3):
0 - 10% range		42			52		56
10 - 20% range		18			29		27
20 - 30% range		28			17		12
Greater than 30%		12			2		5
Weighted average (4)		12			9		11
Current subordination levels (5):
Range (2)		0-25			0-25		0-44
Weighted average (4)		4			7		8
Prepayment speed (annual CPR (6)):
Range (2)		3-19			2-27		5-25
Weighted average (4)		11			14		11

(1)	Represents future expected credit losses on underlying pool of loans expressed as a percentage of total current outstanding loan balance.

(2)	Represents the range of inputs/assumptions based upon the individual securities within each category.

(3)

Represents distribution of credit impairment losses recognized in earnings categorized based on range of expected remaining life of loan losses. For example 42% of credit impairment losses recognized in earnings for the year ended December 31, 2011, had expected remaining life of loan loss assumptions of 0 to 10%.

(4)	Calculated by weighting the relevant input/assumption for each individual security by current outstanding amortized cost basis of the security.

(5)	Represents current level of credit protection (subordination) for the securities, expressed as a percentage of total current underlying loan balance.

(6)	Constant prepayment rate.

140

Note 6: Loans and Allowance for Credit Losses

The following table presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include a total net reduction of $9.3 billion and $11.3 billion at December 31, 2011 and 2010, respectively, for unearned income, net deferred loan fees, and unamortized discounts and

premiums. Outstanding balances also include PCI loans net of any remaining purchase accounting adjustments. Information about PCI loans is presented separately in the “Purchased Credit-Impaired Loans” section of this Note.



	December 31,

(in millions)	2011		2010		2009		2008		2007

Commercial:
Commercial and industrial	$	167,216		151,284		158,352		202,469		90,468
Real estate mortgage		105,975		99,435		97,527		94,923		36,747
Real estate construction		19,382		25,333		36,978		42,861		18,854
Lease financing		13,117		13,094		14,210		15,829		6,772
Foreign (1)		39,760		32,912		29,398		33,882		7,441

Total commercial		345,450		322,058		336,465		389,964		160,282

Consumer:
Real estate 1-4 family first mortgage		228,894		230,235		229,536		247,894		71,415
Real estate 1-4 family junior lien mortgage		85,991		96,149		103,708		110,164		75,565
Credit card		22,836		22,260		24,003		23,555		18,762
Other revolving credit and installment		86,460		86,565		89,058		93,253		56,171

Total consumer		424,181		435,209		446,305		474,866		221,913

Total loans	$	769,631		757,267		782,770		864,830		382,195

(1)	Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign if the borrower’s primary address is outside of the United States.

Loan concentrations may exist when there are amounts loaned to borrowers engaged in similar activities or similar types of loans extended to a diverse group of borrowers that would cause them to be similarly impacted by economic or other conditions. At December 31, 2011 and 2010, we did not have concentrations representing 10% or more of our total loan portfolio in domestic commercial and industrial loans and lease financing by industry or CRE loans (real estate mortgage and real estate construction) by state or property type. Our real estate 1-4 family mortgage loans to borrowers in the state of California represented approximately 13% of total loans at December 31, 2011 and 14% at December 31, 2010. For both periods, 3% of the amount were PCI loans. These loans are generally diversified among the larger metropolitan areas in California, with no single area consisting of more than 3% of total loans. We continuously monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family mortgage portfolio as part of our credit risk management process.

Some of our real estate 1-4 family first and junior lien mortgage loans include an interest-only feature as part of the loan terms. These interest-only loans were approximately 21% of total loans at December 31, 2011 and 25% at December 31, 2010. Substantially all of these interest-only loans at origination were considered to be prime or near prime. We do not offer option adjustable-rate mortgage (ARM) products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans.

The following table summarizes the proceeds paid or received for purchases and sales of loans and transfers from (to) mortgages/loans held for sale at lower of cost or market. This loan activity primarily includes purchases or sales of commercial loan participation interests, whereby we receive or transfer a portion of a loan after origination. The table excludes PCI loans and loans recorded at fair value, including loans originated for sale because their loan activity normally does not impact the allowance for credit losses.

141

Note 6: Loans and Allowance for Credit Losses (continued)



	2011									2010

(in millions)	Commercial			Consumer			Total			Commercial			Consumer			Total

Year ended December 31,
Purchases (1)	$	7,078			284			7,362			2,135			162			2,297
Sales		(4,705	)		(1,018	)		(5,723	)		(5,930	)		(553	)		(6,483	)
Transfers from/(to) MHFS/LHFS (1)		(164	)		(75	)		(239	)		(1,461	)		(82	)		(1,543	)

(1)	The “Purchases” and “Transfers (from)/to MHFS/LHFS” categories exclude activity in government insured/guaranteed loans where Wells Fargo acts as servicer. On a net basis, this activity was $10.4 billion and $7.0 billion for the year ended December 31, 2011 and 2010, respectively.

Commitments to Lend

A commitment to extend credit is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specified purpose. These commitments have fixed expiration dates and generally require a fee. When we make such a commitment, we have credit risk. The liquidity requirements or credit risk will be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being used. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas that must be met before we are required to fund the commitment. Also, in some cases we participate a portion of our commitment to others in an arrangement that reduces our contractual commitment amount. We use the same credit policies in extending credit for unfunded commitments and letters of credit that we use in making loans. See Note 14 for information on standby letters of credit.

In addition, we manage the potential risk in credit commitments by limiting the total amount of arrangements, both by individual customer and in total, by monitoring the size and maturity structure of these portfolios and by applying the same credit standards for all of our credit activities.

For certain extensions of credit, we may require collateral, based on our assessment of a customer’s credit risk. We hold various types of collateral, including accounts receivable, inventory, land, buildings, equipment, autos, financial instruments, income-producing commercial properties and residential real estate. Collateral requirements for each customer may vary according to the specific credit underwriting, terms and structure of loans funded immediately or under a commitment to fund at a later date.

The contractual amount of our unfunded credit commitments, net of participations and net of all standby and commercial letters of credit issued under the terms of these commitments, is summarized by portfolio segment and class of financing receivable in the following table:



	December 31,

(in millions)	2011		2010

Commercial:
Commercial and industrial	$	201,061		185,947
Real estate mortgage		5,419		4,596
Real estate construction		7,347		5,698
Foreign		6,083		7,775

Total commercial		219,910		204,016

Consumer:
Real estate 1-4 family first mortgage		37,185		36,562
Real estate 1-4 family junior lien mortgage		55,207		58,618
Credit card		65,111		62,019
Other revolving credit and installment		17,617		18,458

Total consumer		175,120		175,657

Total unfunded credit commitments	$	395,030		379,673

142

Allowance for Credit Losses (ACL)

The ACL is management’s estimate of credit losses inherent in the loan portfolio, including unfunded credit commitments, at the balance sheet date. We have an established process to determine the adequacy of the allowance for credit losses that assesses the losses inherent in our portfolio and related unfunded credit commitments. While we attribute portions of the allowance to specific portfolio segments, the entire allowance is available to absorb credit losses inherent in the total loan portfolio and unfunded credit commitments.

Our process involves procedures to appropriately consider the unique risk characteristics of our commercial and consumer loan portfolio segments. For each portfolio segment, losses are estimated collectively for groups of loans with similar characteristics, individually or pooled for impaired loans or, for PCI loans, based on the changes in cash flows expected to be collected.

Our allowance levels are influenced by loan volumes, loan grade migration or delinquency status, historic loss experience influencing loss factors, and other conditions influencing loss expectations, such as economic conditions.

COMMERCIAL PORTFOLIO SEGMENT ACL METHODOLOGY Generally, commercial loans are assessed for estimated losses by grading each loan using various risk factors as identified through periodic reviews. We apply historic grade-specific loss factors to the aggregation of each funded grade pool. These historic loss factors are also used to estimate losses for unfunded credit commitments. In the development of our statistically derived loan grade loss factors, we observe historical losses over a relevant period for each loan grade. These loss estimates are adjusted as appropriate based on additional analysis of long-term average loss experience compared to previously forecasted losses, external loss data or other risks identified from current economic conditions and credit quality trends.

The allowance also includes an amount for the estimated impairment on nonaccrual commercial loans and commercial loans modified in a TDR, whether on accrual or nonaccrual status.

CONSUMER PORTFOLIO SEGMENT ACL METHODOLOGY For consumer loans, not identified as a TDR, we determine the allowance predominantly on a collective basis utilizing forecasted losses to represent our best estimate of inherent loss. We pool loans, generally by product types with similar risk characteristics, such as residential real estate mortgages and credit cards. As appropriate and to achieve greater accuracy, we may further stratify selected portfolios by sub-product, origination channel, vintage, loss type, geographic location and other predictive characteristics. Models designed for each pool are utilized to develop the loss estimates. We use assumptions for these pools in our forecast models, such as historic delinquency and default, loss severity, home price trends, unemployment trends, and other key economic variables that may influence the frequency and severity of losses in the pool.

In determining the appropriate allowance attributable to our residential mortgage portfolio, we incorporate the default rates and high severity of loss for junior lien mortgages behind

delinquent first lien mortgages into our loss forecasting calculations. In addition, the loss rates we use in determining our allowance include the impact of our established loan modification programs. When modifications occur or are probable to occur, our allowance considers the impact of these modifications, taking into consideration the associated credit cost, including re-defaults of modified loans and projected loss severity. Accordingly, the loss content associated with the effects of existing and probable loan modifications and junior lien mortgages behind delinquent first lien mortgages has been captured in our allowance methodology.

We separately estimate impairment for consumer loans that have been modified in a TDR (including trial modifications), whether on accrual or nonaccrual status.

Impaired loans, which predominantly include nonaccrual commercial loans and any loans that have been modified in a TDR, have an estimated allowance calculated as the difference, if any, between the impaired value of the loan and the recorded investment in the loan. The impaired value of the loan is generally calculated as the present value of expected future cash flows from principal and interest which incorporates expected lifetime losses, discounted at the loan’s effective interest rate. The allowance for a non-impaired loan is based solely on principal losses without consideration for timing of those losses. The allowance for an impaired loan that was modified in a TDR may be lower than the previously established allowance for that loan due to benefits received through modification, such as lower probability of default and/or severity of loss, and the impact of prior charge-offs or charge-offs at the time of the modification that may reduce or eliminate the need for an allowance.

143

Note 6: Loans and Allowance for Credit Losses (continued)

The allowance for credit losses consists of the allowance for loan losses and the allowance for unfunded credit commitments. Changes in the allowance for credit losses were:



	Year ended December 31,

(in millions)	2011			2010			2009			2008			2007

Balance, beginning of year	$	23,463			25,031			21,711			5,518			3,964
Provision for credit losses		7,899			15,753			21,668			15,979			4,939
Interest income on certain impaired loans (1)		(332	)		(266	)		–			–			–
Loan charge-offs:
Commercial:
Commercial and industrial		(1,598	)		(2,775	)		(3,365	)		(1,653	)		(629	)
Real estate mortgage		(636	)		(1,151	)		(670	)		(29	)		(6	)
Real estate construction		(351	)		(1,189	)		(1,063	)		(178	)		(14	)
Lease financing		(38	)		(120	)		(229	)		(65	)		(33	)
Foreign		(173	)		(198	)		(237	)		(245	)		(265	)

Total commercial		(2,796	)		(5,433	)		(5,564	)		(2,170	)		(947	)

Consumer:
Real estate 1-4 family first mortgage		(3,883	)		(4,900	)		(3,318	)		(540	)		(109	)
Real estate 1-4 family junior lien mortgage		(3,763	)		(4,934	)		(4,812	)		(2,204	)		(648	)
Credit card		(1,449	)		(2,396	)		(2,708	)		(1,563	)		(832	)
Other revolving credit and installment		(1,724	)		(2,437	)		(3,423	)		(2,300	)		(1,913	)

Total consumer		(10,819	)		(14,667	)		(14,261	)		(6,607	)		(3,502	)

Total loan charge-offs		(13,615	)		(20,100	)		(19,825	)		(8,777	)		(4,449	)

Loan recoveries:
Commercial:
Commercial and industrial		419			427			254			114			119
Real estate mortgage		143			68			33			5			8
Real estate construction		146			110			16			3			2
Lease financing		24			20			20			13			17
Foreign		45			53			40			49			65

Total commercial		777			678			363			184			211

Consumer:
Real estate 1-4 family first mortgage		405			522			185			37			22
Real estate 1-4 family junior lien mortgage		218			211			174			89			53
Credit card		251			218			180			147			120
Other revolving credit and installment		665			718			755			481			504

Total consumer		1,539			1,669			1,294			754			699

Total loan recoveries		2,316			2,347			1,657			938			910

Net loan charge-offs (2)		(11,299	)		(17,753	)		(18,168	)		(7,839	)		(3,539	)

Allowances related to business combinations/other (3)		(63	)		698			(180	)		8,053			154

Balance, end of year	$	19,668			23,463			25,031			21,711			5,518

Components:
Allowance for loan losses	$	19,372			23,022			24,516			21,013			5,307
Allowance for unfunded credit commitments		296			441			515			698			211

Allowance for credit losses (4)	$	19,668			23,463			25,031			21,711			5,518

Net loan charge-offs as a percentage of average total loans (2)		1.49	%		2.30			2.21			1.97			1.03
Allowance for loan losses as a percentage of total loans (4)		2.52			3.04			3.13			2.43			1.39
Allowance for credit losses as a percentage of total loans (4)		2.56			3.10			3.20			2.51			1.44

(1)	Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income.

(2)	For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates.

(3)	Includes $693 million for the year ended December 31, 2010, related to the adoption of consolidation accounting guidance on January 1, 2010.

(4)	The allowance for credit losses includes $231 million, $298 million and $333 million at December 31, 2011, 2010 and 2009, respectively, related to PCI loans acquired from Wachovia. Loans acquired from Wachovia are included in total loans net of related purchase accounting net write-downs.

144

The following table summarizes the activity in the allowance for credit losses by our commercial and consumer portfolio segments.



	2011									2010

(in millions)	Commercial			Consumer			Total			Commercial			Consumer			Total

Year ended December 31,
Balance, beginning of year	$	8,169			15,294			23,463			8,141			16,890			25,031
Provision for credit losses		365			7,534			7,899			4,913			10,840			15,753
Interest income on certain impaired loans		(161	)		(171	)		(332	)		(139	)		(127	)		(266	)
Loan charge-offs		(2,796	)		(10,819	)		(13,615	)		(5,433	)		(14,667	)		(20,100	)
Loan recoveries		777			1,539			2,316			678			1,669			2,347

Net loan charge-offs		(2,019	)		(9,280	)		(11,299	)		(4,755	)		(12,998	)		(17,753	)

Allowance related to business combinations/other		4			(67	)		(63	)		9			689			698

Balance, end of year	$	6,358			13,310			19,668			8,169			15,294			23,463

The following table disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology.



	Allowance for credit losses						Recorded investment in loans

(in millions)	Commercial		Consumer		Total		Commercial		Consumer		Total

December 31, 2011
Collectively evaluated (1)	$	4,060		8,699		12,759		328,117		376,785		704,902
Individually evaluated (2)		2,133		4,545		6,678		10,566		17,444		28,010
PCI (3)		165		66		231		6,767		29,952		36,719

Total	$	6,358		13,310		19,668		345,450		424,181		769,631

December 31, 2010
Collectively evaluated (1)	$	5,424		11,539		16,963		302,392		387,707		690,099
Individually evaluated (2)		2,479		3,723		6,202		11,731		14,007		25,738
PCI (3)		266		32		298		7,935		33,495		41,430

Total	$	8,169		15,294		23,463		322,058		435,209		757,267

(1)	Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.

(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.

(3)	Represents the allowance and related loan carrying value determined in accordance with ASC 310-30 , Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP 03-3) and pursuant to amendments by ASU 2010-20 regarding allowance for PCI loans.

Credit Quality

We monitor credit quality as indicated by evaluating various attributes and utilize such information in our evaluation of the adequacy of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. See the “Purchased Credit-Impaired Loans” section of this Note for credit quality information on our PCI portfolio.

The majority of credit quality indicators are based on December 31, 2011 information, with the exception of updated FICO and updated loan-to-value (LTV)/combined LTV (CLTV), which are obtained at least quarterly. Generally, these indicators are updated in the second month of each quarter, with updates no older than September 30, 2011.

COMMERCIAL CREDIT QUALITY INDICATORS In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized

category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.

The following table provides a breakdown of outstanding commercial loans by risk category. Both the CRE mortgage and construction criticized totals are relatively high as a result of the current conditions in the real estate market. Of the $29.3 billion in criticized CRE loans, $6.0 billion has been placed on nonaccrual status and written down to net realizable value. CRE loans have a high level of monitoring in place to manage these assets and mitigate any loss exposure.

145

Note 6: Loans and Allowance for Credit Losses (continued)

(in millions)

Commercial
and

industrial

Real
estate
mortgage

Real

estate
construction

Lease
financing

Foreign

Total

December 31, 2011

By risk category:

Pass

144,980

80,215

10,865

12,455

36,567

285,082

Criticized

21,837

22,490

6,772

662

1,840

53,601

Total commercial loans (excluding PCI)

166,817

102,705

17,637

13,117

38,407

338,683

Total commercial PCI loans (carrying value)

399

3,270

1,745

–

1,353

6,767

Total commercial loans

167,216

105,975

19,382

13,117

39,760

345,450

December 31, 2010

By risk category:

Pass

126,058

70,597

11,256

12,411

30,341

250,663

Criticized

24,508

25,983

11,128

683

1,158

63,460

Total commercial loans (excluding PCI)

150,566

96,580

22,384

13,094

31,499

314,123

Total commercial PCI loans (carrying value)

718

2,855

2,949

–

1,413

7,935

Total commercial loans

151,284

99,435

25,333

13,094

32,912

322,058

The following table provides past due information for

commercial loans, which we monitor as part of our credit risk

management practices.



(in millions)	Commercial and industrial		Real estate mortgage		Real estate construction		Lease financing		Foreign		Total

December 31, 2011
By delinquency status:
Current-29 DPD and still accruing	$	163,583		97,410		15,471		12,934		38,122		327,520
30-89 DPD and still accruing		939		954		187		130		232		2,442
90+ DPD and still accruing		153		256		89		–		6		504
Nonaccrual loans		2,142		4,085		1,890		53		47		8,217

Total commercial loans (excluding PCI)		166,817		102,705		17,637		13,117		38,407		338,683
Total commercial PCI loans (carrying value)		399		3,270		1,745		–		1,353		6,767

Total commercial loans	$	167,216		105,975		19,382		13,117		39,760		345,450

December 31, 2010
By delinquency status:
Current-29 DPD and still accruing	$	146,135		90,233		19,005		12,927		31,350		299,650
30-89 DPD and still accruing		910		1,016		510		59		–		2,495
90+ DPD and still accruing		308		104		193		–		22		627
Nonaccrual loans		3,213		5,227		2,676		108		127		11,351

Total commercial loans (excluding PCI)		150,566		96,580		22,384		13,094		31,499		314,123
Total commercial PCI loans (carrying value)		718		2,855		2,949		–		1,413		7,935

Total commercial loans	$	151,284		99,435		25,333		13,094		32,912		322,058

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present respective unique risks. Loan delinquency, FICO credit scores and LTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the adequacy of the allowance for credit losses for the consumer portfolio segment.

The majority of our loss estimation techniques used for the allowance for credit losses rely on delinquency matrix models or

delinquency roll rate models. Therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses.

146

The following table provides the outstanding balances of our consumer portfolio by delinquency status.

(in millions)

Real estate
1-4 family
first

mortgage

Real estate
1-4 family
junior lien
mortgage

Credit
card

Other
revolving
credit and
installment

Total

December 31, 2011

By delinquency status:

Current-29 DPD

156,985

83,033

22,125

69,712

331,855

30-59 DPD

4,075

786

211

963

6,035

60-89 DPD

2,012

501

154

275

2,942

90-119 DPD

1,152

382

135

127

1,796

120-179 DPD

1,704

537

211

2,485

180+ DPD

6,665

546

–

7,215

Government insured/guaranteed loans (1)

26,555

–

15,346

41,901

Total consumer loans (excluding PCI)

199,148

85,785

22,836

86,460

394,229

Total consumer PCI loans (carrying value)

29,746

206

–

29,952

Total consumer loans

228,894

85,991

22,836

86,460

424,181

December 31, 2010 (2)

By delinquency status:

Current-29 DPD

164,558

92,512

21,276

67,129

345,475

30-59 DPD

4,516

917

262

1,261

6,956

60-89 DPD

2,173

608

207

376

3,364

90-119 DPD

1,399

476

190

171

2,236

120-179 DPD

2,080

764

324

3,226

180+ DPD

6,750

622

117

7,490

Government insured/guaranteed loans (1)

15,514

–

17,453

32,967

Total consumer loans (excluding PCI)

196,990

95,899

22,260

86,565

401,714

Total consumer PCI loans (carrying value)

33,245

250

–

33,495

Total consumer loans

230,235

96,149

22,260

86,565

435,209

(1)

Represents loans whose repayments are insured by the FHA or guaranteed by the VA and student loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP). In 2011, we consolidated $5.6 billion of previously sold FHA insured real estate 1-4 family reverse mortgages.

(2)	Amounts at December 31, 2010, have been revised to conform to the current separate presentation of government insured/guaranteed loans.

Of the $11.5 billion of loans that are 90 days or more past due at December 31, 2011, $1.5 billion was accruing, compared with $13.0 billion past due and $2.0 billion accruing at December 31, 2010.

Real estate 1-4 family first mortgage loans 180 days or more past due totaled $6.7 billion, or 3.3%, of total first mortgages (excluding PCI), at December 31, 2011, compared with $6.8 billion, or 3.4%, at December 31, 2010. The aging of the delinquent real estate 1-4 family first mortgage loans is a result of the prolonged foreclosure process and our effort to help customers stay in their homes through various loan modification programs, as loans continue to age until these processes are complete.

The following table provides a breakdown of our consumer portfolio by updated FICO. We obtain FICO scores at loan origination and the scores are updated at least quarterly. FICO is not available for certain loan types. In addition, FICO may not be obtained if we deem it unnecessary due to strong collateral and other borrower attributes, primarily securities-based margin loans of $5.0 billion and $4.1 billion at December 31, 2011 and 2010, respectively. The majority of our portfolio is underwritten with a FICO score of 680 and above.

147

Note 6: Loans and Allowance for Credit Losses (continued)

(in millions)

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Credit
card

Other
revolving
credit and
installment

Total

December 31, 2011

By updated FICO:

< 600

21,604

7,428

2,323

8,921

40,276

600-639

10,978

4,086

1,787

6,222

23,073

640-679

15,563

7,187

3,383

9,350

35,483

680-719

23,622

12,497

4,697

10,465

51,281

720-759

27,417

17,574

4,760

9,936

59,687

760-799

47,337

24,979

3,517

11,163

86,996

800+

21,381

10,247

1,969

5,674

39,271

No FICO available

4,691

1,787

400

4,393

11,271

FICO not required

–

4,990

Government insured/guaranteed loans (1)

26,555

–

15,346

41,901

Total consumer loans (excluding PCI)

199,148

85,785

22,836

86,460

394,229

Total consumer PCI loans (carrying value)

29,746

206

–

29,952

Total consumer loans

228,894

85,991

22,836

86,460

424,181

December 31, 2010 (2)

By updated FICO:

< 600

26,013

9,126

2,872

10,806

48,817

600-639

11,105

4,457

1,826

5,965

23,353

640-679

16,202

7,678

3,305

8,344

35,529

680-719

25,549

13,759

4,522

9,480

53,310

720-759

29,443

20,334

4,441

8,808

63,026

760-799

47,250

27,222

3,215

9,357

87,044

800+

19,719

10,607

1,794

4,692

36,812

No FICO available

6,195

2,716

285

7,528

16,724

FICO not required

–

4,132

Government insured/guaranteed loans (1)

15,514

–

17,453

32,967

Total consumer loans (excluding PCI)

196,990

95,899

22,260

86,565

401,714

Total consumer PCI loans (carrying value)

33,245

250

–

33,495

Total consumer loans

230,235

96,149

22,260

86,565

435,209

(1)

Represents loans whose repayments are insured by the FHA or guaranteed by the VA and student loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under FFELP. In 2011, we consolidated $5.6 billion of previously sold FHA insured real estate 1-4 family reverse mortgages.

(2)	Amounts at December 31, 2010, have been revised to conform to the current separate presentation of government insured/guaranteed loans.

LTV refers to the ratio comparing the loan’s balance to the property’s collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties as the AVM values have proven less accurate for these properties.

The following table shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. In recent years, the residential real estate markets have experienced significant declines in property

values and several markets, particularly California and Florida have experienced declines that turned out to be more significant than the national decline. These trends are considered in the way that we monitor credit risk and establish our allowance for credit losses. LTV does not necessarily reflect the likelihood of performance of a given loan, but does provide an indication of collateral value. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV primarily due to industry data availability and portfolios acquired from or serviced by other institutions.

148



	December 31, 2011						December 31, 2010 (1)

(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV		Total		Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV		Total

By LTV/CLTV:
0-60%	$	46,476		12,694		59,170		47,808		14,814		62,622
60.01-80%		46,831		15,722		62,553		42,542		17,744		60,286
80.01-100%		36,764		20,290		57,054		39,497		24,255		63,752
100.01-120% (2)		21,116		15,829		36,945		24,147		17,887		42,034
> 120% (2)		18,608		18,626		37,234		24,243		18,628		42,871
No LTV/CLTV available		2,798		2,624		5,422		3,239		2,571		5,810
Government insured/guaranteed loans (3)		26,555		–		26,555		15,514		–		15,514

Total consumer loans (excluding PCI)		199,148		85,785		284,933		196,990		95,899		292,889
Total consumer PCI loans (carrying value)		29,746		206		29,952		33,245		250		33,495

Total consumer loans	$	228,894		85,991		314,885		230,235		96,149		326,384

(1)	Amounts at December 31, 2010, have been revised to conform to the current separate presentation of government insured/guaranteed loans.

(2)	Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.

(3)	Represents loans whose repayments are insured by the FHA or guaranteed by the VA. In 2011, we consolidated $5.6 billion of previously sold FHA insured real estate 1-4 family reverse mortgages.

NONACCRUAL LOANS The following table provides loans on nonaccrual status. PCI loans are excluded from this table due to the existence of the accretable yield.



	December 31,

(in millions)	2011		2010

Commercial:
Commercial and industrial	$	2,142		3,213
Real estate mortgage		4,085		5,227
Real estate construction		1,890		2,676
Lease financing		53		108
Foreign		47		127

Total commercial (1)		8,217		11,351

Consumer:
Real estate 1-4 family first mortgage (2)		10,913		12,289
Real estate 1-4 family junior lien mortgage		1,975		2,302
Other revolving credit and installment		199		300

Total consumer		13,087		14,891

Total nonaccrual loans (excluding PCI)	$	21,304		26,242

(1)	Includes LHFS of $25 million and $3 million at December 31, 2011 and 2010, respectively.

(2)	Includes MHFS of $301 million and $426 million at December 31, 2011 and 2010, respectively.

149

Note 6: Loans and Allowance for Credit Losses (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due as to interest or principal are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $8.7 billion at December 31, 2011, and $11.6 billion at December 31, 2010, are excluded from this disclosure even though they are 90 days or more contractually past due. These PCI loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments. Loans 90 days or more past due and still accruing whose repayments are insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $20.5 billion at December 31, 2011, up from $15.8 billion at December 31, 2010, due primarily to growth in the FHA/VA portfolio over the past two years and the subsequent seasoning of those loans.

The following table shows non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.



	December 31,

(in millions)	2011		2010

Loan 90 days or more past due and still accruing:
Total (excluding PCI):	$	22,569		18,488
Less: FHA insured/VA guaranteed (1)		19,240		14,733
Less: Student loans guaranteed under the FFELP (2)		1,281		1,106

Total, not government insured/guaranteed	$	2,048		2,649

By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	153		308
Real estate mortgage		256		104
Real estate construction		89		193
Foreign		6		22

Total commercial		504		627

Consumer:
Real estate 1-4 family first mortgage (3)		781		941
Real estate 1-4 family junior lien mortgage (3)		279		366
Credit card		346		516
Other revolving credit and installment		138		199

Total consumer		1,544		2,022

Total, not government insured/guaranteed	$	2,048		2,649

(1)	Represents loans whose repayments are insured by the FHA or guaranteed by the VA.

(2)	Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP.

(3)	Includes mortgage held for sale 90 days or more past due and still accruing.

150

IMPAIRED LOANS The table below summarizes key information for impaired loans. Our impaired loans predominately include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans may have estimated loss which is included in the allowance for credit losses. Impaired loans exclude PCI loans. Upon our adoption of ASU No. 2011-02 in third quarter 2011, we identified commercial loans that were not previously included as impaired loans, which totaled $685 million with an associated allowance for credit losses of $54 million. The allowance for credit losses associated with these

loans would have been measured under a collectively evaluated basis prior to adoption, but is now estimated on an individually evaluated basis. Our consumer loans were not impacted by the adoption of ASU No. 2011-02. Additionally, based on clarifying guidance from the Securities and Exchange Commission (SEC) received in December 2011, we now classify trial modifications as TDRs at the beginning of the trial period. The table below includes trial modifications that totaled $651 million at December 31, 2011. See the “Loans” section in Note 1 for our policies on impaired loans and PCI loans.



			Recorded investment

(in millions)	Unpaid principal balance		Impaired loans		Impaired loans with related allowance for credit losses		Related allowance for credit losses

December 31, 2011
Commercial:
Commercial and industrial	$	7,191		3,072		3,018		501
Real estate mortgage		7,490		5,114		4,637		1,133
Real estate construction		4,733		2,281		2,281		470
Lease financing		127		68		68		21
Foreign		185		31		31		8

Total commercial		19,726		10,566		10,035		2,133

Consumer:
Real estate 1-4 family first mortgage		16,494		14,486		13,909		3,380
Real estate 1-4 family junior lien mortgage		2,232		2,079		2,079		784
Credit card		593		593		593		339
Other revolving credit and installment		287		286		274		42

Total consumer		19,606		17,444		16,855		4,545

Total impaired loans (excluding PCI)	$	39,332		28,010		26,890		6,678

December 31, 2010
Commercial:
Commercial and industrial	$	8,190		3,600		3,276		607
Real estate mortgage		7,439		5,239		5,163		1,282
Real estate construction		4,676		2,786		2,786		548
Lease financing		149		91		91		34
Foreign		215		15		15		8

Total commercial		20,669		11,731		11,331		2,479

Consumer:
Real estate 1-4 family first mortgage		12,834		11,603		11,603		2,754
Real estate 1-4 family junior lien mortgage		1,759		1,626		1,626		578
Credit card		548		548		548		333
Other revolving credit and installment		231		230		230		58

Total consumer		15,372		14,007		14,007		3,723

Total impaired loans (excluding PCI)	$	36,041		25,738		25,338		6,202

151

Note 6: Loans and Allowance for Credit Losses (continued)

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $3.8 billion and $1.2 billion at December 31, 2011 and 2010, respectively. A significant portion of these commitments relate to commercial and industrial loans, which, at the time of modification, had an amount of availability to the borrower that continues under the modified terms of the TDR. These TDRs

totaled $1.8 billion and $345 million at December 31, 2011 and 2010, respectively.

The following table provides the average recorded investment in impaired loans and the amount of interest income recognized for the full year on impaired loans after impairment by portfolio segment and class.



	Year ended December 31,

	2011				2010

(in millions)	Average recorded investment		Recognized interest income		Average recorded investment		Recognized interest income

Commercial:
Commercial and industrial	$	3,282		105		4,098		64
Real estate mortgage		5,308		80		4,598		41
Real estate construction		2,481		70		3,203		28
Lease financing		80		–		166		–
Foreign		29		–		47		–

Total commercial		11,180		255		12,112		133

Consumer:
Real estate 1-4 family first mortgage		13,592		700		9,221		494
Real estate 1-4 family junior lien mortgage		1,962		76		1,443		55
Credit card		594		21		360		13
Other revolving credit and installment		270		27		132		3

Total consumer		16,418		824		11,156		565

Total impaired loans	$	27,598		1,079		23,268		698

The following table presents the average recorded investment in impaired loans and interest income recognized on impaired loans after impairment.



	Year ended December 31,

(in millions)	2011		2010		2009

Average recorded investment in impaired loans	$	27,598		23,268		10,557

Interest income:
Cash basis of accounting	$	180		250		130
Other (1)		899		448		102

Total interest income	$	1,079		698		232

(1)

Includes interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans. See footnote 1 to the table of changes in the allowance for credit losses.

152

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR. We

do not consider any loans modified through a loan resolution such as foreclosure or short sale to be a TDR. The following table summarizes how our loans were modified as TDRs in 2011, including the financial effects of the modifications.



	Primary modification type (1)								Financial effects of modifications

(in millions)	Principal (2)		Interest rate reduction		Other interest rate concessions (3)		Total		Charge- offs (4)		Weighted average interest rate reduction			Recorded investment related to interest rate reduction

Year ended December 31, 2011
Commercial:
Commercial and industrial	$	166		64		2,412		2,642		84		3.13	%	$	69
Real estate mortgage		113		146		1,894		2,153		24		1.46			160
Real estate construction		29		114		421		564		26		0.81			125
Lease financing		–		–		57		57		–		–			–
Foreign		–		–		22		22		–		–			–

Total commercial		308		324		4,806		5,438		134		1.55			354

Consumer:
Real estate 1-4 family first mortgage		1,629		1,908		934		4,471		293		3.27			3,322
Real estate 1-4 family junior lien mortgage		98		559		197		854		28		4.34			654
Credit card		–		336		–		336		2		10.77			260
Other revolving credit and installment		74		119		7		200		24		6.36			181
Trial modifications (5)		–		–		651		651		–		–			–

Total consumer		1,801		2,922		1,789		6,512		347		4.00			4,417

Total	$	2,109		3,246		6,595		11,950		481		3.82	%	$	4,771

(1)	Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs with multiple types of concessions are presented only once in the table in the first category type based on the order presented.

(2)

Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.

(3)

Other interest rate concessions include loans modified to an interest rate that is not commensurate with the credit risk, even though the rate may have been increased. These modifications would include renewals, term extensions, and other interest adjustments, but exclude modifications that also forgive principal and/or reduce the interest rate.

(4)

Charge-offs include write-downs of the investment in the loan in the period of modification. In some cases, the amount of charge-offs will differ from the modification terms if the loan has already been charged down based on our policies. Modifications resulted in forgiving principal (actual, contingent or deferred) of $577 million in 2011.

(5)

Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified.

153

Note 6: Loans and Allowance for Credit Losses (continued)

The previous table presents information on all loan modifications classified as TDRs. We may require some borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to terms of a planned permanent modification, to determine if they can perform according to those terms. Based on clarifying guidance from the SEC in December 2011, these arrangements represent trial modifications, which we classify and account for as TDRs. The trial period terms are developed in accordance with our proprietary programs or the U.S. Treasury’s Making Homes Affordable programs for real estate 1-4 family first lien (i.e. Home Affordable Modification Program – HAMP) and junior lien (i.e. Second Lien Modification Program – 2MP) mortgage loans. At December 31, 2011, we had $421 million, $46 million, and $184 million of loans in a trial modification period under HAMP, 2MP, and proprietary programs, respectively. While loans are in trial payment programs their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms. The planned modifications for these arrangements predominantly involve interest rate reductions or other interest rate concessions. At December 31, 2011, trial modifications with a recorded investment of $310 million were accruing loans and $341 million were nonaccruing loans. Our recent experience is that most of the mortgages that enter a trial payment period program are successful in completing the program requirements and are then permanently modified at the end of the trial period. As previously discussed, our allowance process considers the impact of those modifications that are probable to occur including the associated credit cost and related re-default risk.

The table below summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.



	Year ended December 31, 2011

(in millions)	Recorded investment of defaults

Commercial:
Commercial and industrial	$	216
Real estate mortgage		331
Real estate construction		69
Lease financing		1
Foreign		1

Total commercial		618

Consumer:
Real estate 1-4 family first mortgage		1,110
Real estate 1-4 family junior lien mortgage		137
Credit card		156
Other revolving credit and installment		113

Total consumer		1,516

Total	$	2,134

154

Purchased Credit-Impaired Loans

Substantially all of our PCI loans were acquired from Wachovia on December 31, 2008. The following table presents PCI loans net of any remaining purchase accounting adjustments.



			December 31,

(in millions)	2011		2010		2009		2008

Commercial:
Commercial and industrial	$	399		718		1,911		4,580
Real estate mortgage		3,270		2,855		4,137		5,803
Real estate construction		1,745		2,949		5,207		6,462
Foreign		1,353		1,413		1,733		1,859

Total commercial		6,767		7,935		12,988		18,704

Consumer:
Real estate 1-4 family first mortgage		29,746		33,245		38,386		39,214
Real estate 1-4 family junior lien mortgage		206		250		331		728
Other revolving credit and installment		–		–		–		151

Total consumer		29,952		33,495		38,717		40,093

Total PCI loans (carrying value)	$	36,719		41,430		51,705		58,797

Total PCI loans (unpaid principal balance)	$	55,312		64,331		83,615		98,182

ACCRETABLE YIELD The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pools of loans. The accretable yield is affected by:

•

Changes in interest rate indices for variable rate PCI loans – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;

•

Changes in prepayment assumptions – Prepayments affect the estimated life of PCI loans which may change the

amount of interest income, and possibly principal, expected to be collected; and

•

Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The change in the accretable yield related to PCI loans is presented in the following table.



	Year ended December 31,

(in millions)	2011			2010			2009

Total, beginning of year	$	16,714			14,559			10,447
Addition of accretable yield due to acquisitions		128			–			–
Accretion into interest income (1)		(2,206	)		(2,392	)		(2,601	)
Accretion into noninterest income due to sales (2)		(189	)		(43	)		(5	)
Reclassification from nonaccretable difference for loans with improving credit-related cash flows		373			3,399			441
Changes in expected cash flows that do not affect nonaccretable difference (3)		1,141			1,191			6,277

Total, end of year	$	15,961			16,714			14,559

(1)	Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.

(2)	Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.

(3)	Represents changes in cash flows expected to be collected due to changes in interest rates on variable rate PCI loans, changes in prepayment assumptions and the impact of modifications.

155

Note 6: Loans and Allowance for Credit Losses (continued)

PCI ALLOWANCE Based on our regular evaluation of estimates of cash flows expected to be collected, we may establish an allowance for a PCI loan or pool of loans, with a

charge to income through the provision for losses. The following table summarizes the changes in allowance for PCI loan losses.



(in millions)	Commercial			Pick-a-Pay		Other consumer			Total

Balance, December 31, 2008	$	–			–		–			–
Provision for losses due to credit deterioration		850			–		3			853
Charge-offs		(520	)		–		–			(520	)

Balance, December 31, 2009		330			–		3			333
Provision for losses due to credit deterioration		712			–		59			771
Charge-offs		(776	)		–		(30	)		(806	)

Balance, December 31, 2010		266			–		32			298
Provision for losses due to credit deterioration		106			–		54			160
Charge-offs		(207	)		–		(20	)		(227	)

Balance, December 31, 2011	$	165			–		66			231

COMMERCIAL PCI CREDIT QUALITY INDICATORS The following table provides a breakdown of commercial PCI loans by risk category.

(in millions)

Commercial
and
industrial

Real
estate
mortgage

Real

estate

construction

Foreign

Total

December 31, 2011

By risk category:

Pass

191

640

321

–

1,152

Criticized

208

2,630

1,424

1,353

5,615

Total commercial PCI loans

399

3,270

1,745

1,353

6,767

December 31, 2010

By risk category:

Pass

214

352

128

210

904

Criticized

504

2,503

2,821

1,203

7,031

Total commercial PCI loans

718

2,855

2,949

1,413

7,935

156

The following table provides past due information for commercial PCI loans.



(in millions)	Commercial and industrial		Real estate mortgage		Real estate construction		Foreign		Total

December 31, 2011
By delinquency status:
Current-29 DPD and still accruing	$	359		2,867		1,206		1,178		5,610
30-89 DPD and still accruing		22		178		72		–		272
90+ DPD and still accruing		18		225		467		175		885

Total commercial PCI loans	$	399		3,270		1,745		1,353		6,767

December 31, 2010
By delinquency status:
Current-29 DPD and still accruing	$	612		2,295		1,395		1,209		5,511
30-89 DPD and still accruing		22		113		178		–		313
90+ DPD and still accruing		84		447		1,376		204		2,111

Total commercial PCI loans	$	718		2,855		2,949		1,413		7,935

CONSUMER PCI CREDIT QUALITY INDICATORS Our consumer PCI loans were aggregated into several pools of loans at acquisition. Below, we have provided credit quality indicators based on the unpaid principal balance (adjusted for write-downs) of the individual loans included in the pool, but

we have not allocated the remaining purchase accounting adjustments, which were established at a pool level. The following table provides the delinquency status of consumer PCI loans.



	December 31, 2011						December 31, 2010

(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage		Total		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage		Total

By delinquency status:
Current-29 DPD	$	25,693		268		25,961		29,297		436		29,733
30-59 DPD		3,272		20		3,292		3,586		30		3,616
60-89 DPD		1,433		9		1,442		1,364		17		1,381
90-119 DPD		791		8		799		881		13		894
120-179 DPD		1,169		10		1,179		1,346		19		1,365
180+ DPD		5,921		150		6,071		7,214		220		7,434

Total consumer PCI loans (adjusted unpaid principal balance)	$	38,279		465		38,744		43,688		735		44,423

Total consumer PCI loans (carrying value)	$	29,746		206		29,952		33,245		250		33,495

157

Note 6: Loans and Allowance for Credit Losses (continued)

The following table provides FICO scores for consumer PCI loans.



	December 31, 2011						December 31, 2010

(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage		Total		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage		Total

By FICO:
< 600	$	17,169		210		17,379		22,334		363		22,697
600-639		7,489		83		7,572		7,563		109		7,672
640-679		6,646		89		6,735		6,185		96		6,281
680-719		3,698		47		3,745		3,949		60		4,009
720-759		1,875		14		1,889		2,057		17		2,074
760-799		903		6		909		1,087		7		1,094
800+		215		2		217		232		2		234
No FICO available		284		14		298		281		81		362

Total consumer PCI loans (adjusted unpaid principal balance)	$	38,279		465		38,744		43,688		735		44,423

Total consumer PCI loans (carrying value)	$	29,746		206		29,952		33,245		250		33,495

The following table shows the distribution of consumer PCI loans by LTV for real estate 1-4 family first mortgages and by CLTV for real estate 1-4 family junior lien mortgages.



	December 31, 2011						December 31, 2010

(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV		Total		Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV		Total

By LTV/CLTV:
0-60%	$	1,243		25		1,268		1,653		43		1,696
60.01-80%		3,806		49		3,855		5,513		42		5,555
80.01-100%		9,341		63		9,404		11,861		89		11,950
100.01-120% (1)		9,471		79		9,550		9,525		116		9,641
> 120% (1)		14,318		246		14,564		15,047		314		15,361
No LTV/CLTV available		100		3		103		89		131		220

Total consumer PCI loans (adjusted unpaid principal balance)	$	38,279		465		38,744		43,688		735		44,423

Total consumer PCI loans (carrying value)	$	29,746		206		29,952		33,245		250		33,495

(1)	Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.

158

Note 7: Premises, Equipment, Lease Commitments and Other Assets



	December 31,
(in millions)		2011	2010

Land	$	1,825	1,825
Buildings		7,441	7,440
Furniture and equipment		7,195	6,689
Leasehold improvements		1,725	1,683
Premises and equipment leased under capital leases		147	148

Total premises and equipment		18,333	17,785
Less: Accumulated depreciation and amortization		8,802	8,141

Net book value, premises and equipment	$	9,531	9,644

Depreciation and amortization expense for premises and equipment was $1.4 billion, $1.5 billion and $1.3 billion in 2011, 2010 and 2009, respectively.

Dispositions of premises and equipment, included in noninterest expense, resulted in net losses of $17 million, $115 million and $22 million in 2011, 2010 and 2009, respectively.

We have obligations under a number of noncancelable operating leases for premises and equipment. The terms of these leases are predominantly up to 15 years, with the longest up to 94 years, and many provide for periodic adjustment of rentals based on changes in various economic indicators. Some leases also include a renewal option. The following table provides the future minimum payments under capital leases and noncancelable operating leases, net of sublease rentals, with terms greater than one year as of December 31, 2011.



(in millions)	Operating leases		Capital leases

Year ended December 31,
2012	$	1,319		54
2013		1,216		55
2014		1,075		3
2015		872		3
2016		717		3
Thereafter		3,239		17

Total minimum lease payments	$	8,438		135

Executory costs			$	(9	)
Amounts representing interest				(10	)

Present value of net minimum lease payments			$	116

Operating lease rental expense (predominantly for premises), net of rental income, was $1.2 billion, $1.3 billion and $1.4 billion in 2011, 2010 and 2009, respectively.

The components of other assets were:



		December 31,
(in millions)		2011	2010

Nonmarketable equity investments:
Cost method:
Private equity investments	$	3,444	3,240
Federal bank stock		4,617	5,254

Total cost method		8,061	8,494
LIHTC investments - equity method (1)		4,077	3,611
All other equity method		4,434	4,013
Principal investments (2)		236	305

Total nonmarketable equity investments		16,808	16,423
Corporate/bank-owned life insurance		20,146	19,845
Accounts receivable		25,939	23,763
Interest receivable		5,296	4,895
Core deposit intangibles		7,311	8,904
Customer relationship and other amortized intangibles		1,639	1,847
Foreclosed assets:
GNMA (3)		1,319	1,479
Other		3,342	4,530
Operating lease assets		1,825	1,873
Due from customers on acceptances		225	229
Other		17,172	15,993

Total other assets	$	101,022	99,781

(1)	Represents low income housing tax credit investments.

(2)	Principal investments are recorded at fair value with realized and unrealized gains (losses) included in net gains (losses) from equity investments in the income statement.

(3)	These are foreclosed real estate securing FHA insured and VA guaranteed loans. Both principal and interest for these loans secured by the foreclosed real estate are collectible because they are insured/guaranteed.

Income related to nonmarketable equity investments was:



	Year ended December 31,
(in millions)		2011		2010		2009

Net gains (losses) from:
Private equity investments	$	813		492		(368	)
Principal investments		29		42		79
All other nonmarketable equity investments		(298	)	(188	)	(234	)

Total	$	544		346		(523	)

159

Note 8: Securitizations and Variable Interest Entities

Involvement with SPEs

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts or partnerships that are established for a limited purpose. Historically, the majority of SPEs were formed in connection with securitization transactions. In a securitization transaction, assets from our balance sheet are transferred to an SPE, which then issues to investors various forms of interests in those assets and may also enter into derivative transactions. In a securitization transaction, we typically receive cash and/or other interests in an SPE as proceeds for the assets we transfer. Also, in certain transactions, we may retain the right to service the transferred receivables and to repurchase those receivables from the SPE if the outstanding balance of the receivables falls to a level where the cost exceeds the benefits of servicing such receivables. In addition, we may purchase the right to service loans in an SPE that were transferred to the SPE by a third party.

In connection with our securitization activities, we have various forms of ongoing involvement with SPEs, which may include:

•

underwriting securities issued by SPEs and subsequently making markets in those securities;

•

providing liquidity facilities to support short-term obligations of SPEs issued to third party investors;

•

providing credit enhancement on securities issued by SPEs or market value guarantees of assets held by SPEs through the use of letters of credit, financial guarantees, credit default swaps and total return swaps;

•

entering into other derivative contracts with SPEs;

•

holding senior or subordinated interests in SPEs;

•

acting as servicer or investment manager for SPEs; and

•

providing administrative or trustee services to SPEs.

SPEs are generally considered variable interest entities (VIEs). A VIE is an entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the ability to control the entity’s activities. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual, ownership or other interest that changes with changes in the fair value of the VIE’s net assets. To determine whether or not a variable interest we hold could potentially be significant to the VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE. We assess whether or not we are the primary beneficiary of a VIE on an on-going basis.

We have segregated our involvement with VIEs between those VIEs which we consolidate, those which we do not consolidate and transfers of financial assets that are accounted for as secured borrowings. Secured borrowings are transactions involving transfers of our financial assets to third parties that are accounted for as financings with the assets pledged as collateral. Accordingly, the transferred assets remain recognized on our balance sheet. Subsequent tables within this Note further segregate these transactions by structure type.

160

The classifications of assets and liabilities in our balance sheet associated with our transactions with VIEs follow:



(in millions)	VIEs that we do not consolidate		VIEs that we consolidate			Transfers that we account for as secured borrowings		Total

December 31, 2011
Cash	$	—		321			11		332
Trading assets		3,723		293			30		4,046
Securities available for sale (1)		21,708		3,332			11,671		36,711
Mortgages held for sale		—		444			—		444
Loans		11,404		11,967			7,181		30,552
Mortgage servicing rights		12,080		—			—		12,080
Other assets		4,494		1,858			137		6,489

Total assets	$	53,409		18,215			19,030		90,654

Short-term borrowings		—		3,450	(3)		10,682		14,132
Accrued expenses and other liabilities		3,350		1,138	(3)		121		4,609
Long-term debt		—		4,932	(3)		6,686		11,618

Total liabilities		3,350		9,520			17,489		30,359

Noncontrolling interests		—		61			—		61

Net assets	$	50,059		8,634			1,541		60,234

December 31, 2010
Cash	$	—		200			398		598
Trading assets		5,351		143			32		5,526
Securities available for sale (1)		24,001		2,159			7,834		33,994
Mortgages held for sale (2)		—		634			—		634
Loans		12,401		16,708			1,613		30,722
Mortgage servicing rights		13,261		—			—		13,261
Other assets (2)		3,783		2,071			90		5,944

Total assets		58,797		21,915			9,967		90,679

Short-term borrowings		—		3,636	(3)		7,773		11,409
Accrued expenses and other liabilities (2)		3,514		743	(3)		14		4,271
Long-term debt		—		8,377	(3)		1,700		10,077

Total liabilities		3,514		12,756			9,487		25,757

Noncontrolling interests (2)		—		94			—		94

Net assets	$	55,283		9,065			480		64,828

(1)	Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and GNMA.

(2)	“VIEs that we consolidate” has been revised to correct previously reported amounts.

(3)

Includes the following VIE liabilities at December 31, 2011, and December 31, 2010, respectively, with recourse to the general credit of Wells Fargo: Short-term borrowings, $3.4 billion and $3.6 billion; Accrued expenses and other liabilities, $963 million and $645 million; and Long-term debt, $30 million and $53 million.

Transactions with Unconsolidated VIEs

Our transactions with VIEs include securitizations of residential mortgage loans, CRE loans, student loans and auto loans and leases; investment and financing activities involving CDOs backed by asset-backed and CRE securities, collateralized loan obligations (CLOs) backed by corporate loans, and other types of structured financing. We have various forms of involvement with VIEs, including holding senior or subordinated interests, entering into liquidity arrangements, credit default swaps and other derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet primarily in trading assets, securities available for sale, loans, MSRs, other assets and other liabilities, as appropriate.

The following tables provide a summary of unconsolidated VIEs with which we have significant continuing involvement, but we are not the primary beneficiary. We do not consider our continuing involvement in an unconsolidated VIE to be significant when it relates to third-party sponsored VIEs for which we were not the transferor or if we were the sponsor but do not have any other significant continuing involvement.

Significant continuing involvement includes transactions where we were the sponsor or transferor and have other significant forms of involvement. Sponsorship includes transactions with unconsolidated VIEs where we solely or materially participated in the initial design or structuring of the entity or marketing of the transaction to investors. When we transfer assets to a VIE and account for the transfer as a sale, we are considered the transferor. We consider investments in securities held outside of trading, loans, guarantees, liquidity

161

Note 8: Securitizations and Variable Interest Entities (continued)

agreements, written options and servicing of collateral to be other forms of involvement that may be significant. We have excluded certain transactions with unconsolidated VIEs from the balances presented in the table below where we have determined

that our continuing involvement is not significant due to the temporary nature and size of our variable interests, because we were not the transferor or because we were not involved in the design or operations of the unconsolidated VIEs.

(in millions)

Total
VIE

assets

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Net
assets

December 31, 2011

Carrying value - asset (liability)

Residential mortgage loan securitizations:

Conforming

1,135,629

4,682

11,070

–

(975

)

14,777

Other/nonconforming

61,461

2,460

353

(48

)

2,766

Commercial mortgage loan securitizations

179,007

7,063

623

349

–

8,035

Collateralized debt obligations:

Debt securities

11,240

1,107

–

193

–

1,300

Loans (2)

9,757

9,511

–

9,511

Asset-based finance structures

9,606

6,942

–

(130

)

–

6,812

Tax credit structures

19,257

4,119

–

(1,439

)

2,680

Collateralized loan obligations

12,191

2,019

–

2,059

Investment funds

6,318

–

Other (3)

18,717

1,896

190

)

2,119

Total

1,463,183

39,799

12,080

643

(2,463

)

50,059

Maximum exposure to loss

Residential mortgage loan securitizations:

Conforming

4,682

11,070

–

3,657

19,409

Other/nonconforming

2,460

353

295

3,109

Commercial mortgage loan securitizations

7,063

623

538

–

8,224

Collateralized debt obligations:

Debt securities

1,107

–

874

–

1,981

Loans (2)

9,511

–

9,511

Asset-based finance structures

6,942

–

130

1,504

8,576

Tax credit structures

4,119

–

4,119

Collateralized loan obligations

2,019

–

523

2,583

Investment funds

–

Other (3)

1,896

903

150

2,983

Total

39,799

12,080

2,487

6,170

60,536

(continued on following page)

162

(continued from previous page)



(in millions)	Total VIE assets		Debt and equity interests (1)		Servicing assets		Derivatives			Other commitments and guarantees			Net assets

December 31, 2010
			Carrying value - asset (liability)

Residential mortgage loan securitizations:
Conforming	$	1,068,737		5,527		12,115		–			(928	)		16,714
Other/nonconforming		76,304		2,997		495		6			(107	)		3,391
Commercial mortgage loan securitizations		190,377		5,506		608		261			–			6,375
Collateralized debt obligations:
Debt securities		20,046		1,436		–		844			–			2,280
Loans (2)		9,970		9,689		–		–			–			9,689
Asset-based finance structures		12,055		6,556		–		(118	)		–			6,438
Tax credit structures		20,981		3,614		–		–			(1,129	)		2,485
Collateralized loan obligations		13,196		2,804		–		56			–			2,860
Investment funds		10,522		1,416		–		–			–			1,416
Other (3)		20,031		3,221		43		377			(6	)		3,635

Total	$	1,442,219		42,766		13,261		1,426			(2,170	)		55,283

			Maximum exposure to loss

Residential mortgage loan securitizations:
Conforming			$	5,527		12,115		–			4,248			21,890
Other/nonconforming				2,997		495		6			233			3,731
Commercial mortgage loan securitizations				5,506		608		488			–			6,602
Collateralized debt obligations:
Debt securities				1,436		–		2,850			7			4,293
Loans (2)				9,689		–		–			–			9,689
Asset-based finance structures				6,556		–		118			2,175			8,849
Tax credit structures				3,614		–		–			1			3,615
Collateralized loan obligations				2,804		–		56			519			3,379
Investment funds				1,416		–		–			87			1,503
Other (3)				3,221		43		916			162			4,342

Total			$	42,766		13,261		4,434			7,432			67,893

(1)	Includes total equity interests of $460 million and $316 million at December 31, 2011, and December 31, 2010, respectively. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.

(2)

Represents senior loans to trusts that are collateralized by asset-backed securities. The trusts invest primarily in senior tranches from a diversified pool of primarily U.S. asset securitizations, of which all are current, and over 88% were rated as investment grade by the primary rating agencies at December 31, 2011. These senior loans were acquired in the Wachovia business combination and are accounted for at amortized cost as initially determined under purchase accounting and are subject to the Company’s allowance and credit charge-off policies.

(3)	Includes structured financing, student loan securitizations, auto loan and lease securitizations and credit-linked note structures. Also contains investments in auction rate securities (ARS) issued by VIEs that we do not sponsor and, accordingly, are unable to obtain the total assets of the entity.

163

Note 8: Securitizations and Variable Interest Entities (continued)

In the two preceding tables, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” from our involvement with off-balance sheet entities, which is a required disclosure under GAAP, is determined as the carrying value of our involvement with off-balance sheet (unconsolidated) VIEs plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this required disclosure is not an indication of expected loss.

RESIDENTIAL MORTGAGE LOANS Residential mortgage loan securitizations are financed through the issuance of fixed- or floating-rate-asset-backed-securities, which are collateralized by the loans transferred to a VIE. We typically transfer loans we originated to these VIEs, account for the transfers as sales, retain the right to service the loans and may hold other beneficial interests issued by the VIEs. We also may be exposed to limited liability related to recourse agreements and repurchase agreements we make to our issuers and purchasers, which are included in other commitments and guarantees. In certain instances, we may service residential mortgage loan securitizations structured by third parties whose loans we did not originate or transfer. Our residential mortgage loan securitizations consist of conforming and nonconforming securitizations.

Conforming residential mortgage loan securitizations are those that are guaranteed by GSEs, including GNMA. We do not consolidate our conforming residential mortgage loan securitizations because we do not have power over the VIEs.

The loans sold to the VIEs in nonconforming residential mortgage loan securitizations are those that do not qualify for a GSE guarantee. We may hold variable interests issued by the VIEs, primarily in the form of senior securities. We do not consolidate the nonconforming residential mortgage loan securitizations included in the table because we either do not hold any variable interests, hold variable interests that we do not consider potentially significant or are not the primary servicer for a majority of the VIE assets.

Other commitments and guarantees include amounts related to loans sold that we may be required to repurchase, or otherwise indemnify or reimburse the investor or insurer for losses incurred, due to material breach of contractual representations and warranties. The maximum exposure to loss for material breach of contractual representations and warranties represents a stressed case estimate we utilize for

determining stressed case regulatory capital needs and is considered to be a remote scenario.

COMMERCIAL MORTGAGE LOAN SECURITIZATIONS Commercial mortgage loan securitizations are financed through the issuance of fixed- or floating-rate-asset-backed-securities, which are collateralized by the loans transferred to the VIE. In a typical securitization, we may transfer loans we originate to these VIEs, account for the transfers as sales, retain the right to service the loans and may hold other beneficial interests issued by the VIEs. In certain instances, we may service commercial mortgage loan securitizations structured by third parties whose loans we did not originate or transfer. We typically serve as primary or master servicer of these VIEs. The primary or master servicer in a commercial mortgage loan securitization typically cannot make the most significant decisions impacting the performance of the VIE and therefore does not have power over the VIE. We do not consolidate the commercial mortgage loan securitizations included in the disclosure because we either do not have power or do not have a variable interest that could potentially be significant to the VIE.

COLLATERALIZED DEBT OBLIGATIONS (CDOs) A CDO is a securitization where an SPE purchases a pool of assets consisting of asset-backed securities and issues multiple tranches of equity or notes to investors. In some transactions, a portion of the assets are obtained synthetically through the use of derivatives such as credit default swaps or total return swaps.

Prior to 2008, we engaged in the structuring of CDOs on behalf of third party asset managers who would select and manage the assets for the CDO. Typically, the asset manager has some discretion to manage the sale of assets of, or derivatives used by the CDO, which generally gives the asset manager the power over the CDO. We have not structured these types of transactions since the credit market disruption began in late 2007.

In addition to our role as arranger we may have other forms of involvement with these transactions, including transactions established prior to 2008. Such involvement may include acting as liquidity provider, derivative counterparty, secondary market maker or investor. For certain transactions, we may also act as the collateral manager or servicer. We receive fees in connection with our role as collateral manager or servicer.

We assess whether we are the primary beneficiary of CDOs based on our role in the transaction in combination with the variable interests we hold. Subsequently, we monitor our ongoing involvement in these transactions to determine if the nature of our involvement has changed. We are not the primary beneficiary of these transactions in most cases because we do not act as the collateral manager or servicer, which generally denotes power. In cases where we are the collateral manager or servicer, we are not the primary beneficiary because we do not hold interests that could potentially be significant to the VIE.

In 2011, we incurred a $377 million loss on trading derivatives related to certain CDOs. The loss was associated with the resolution of a legacy Wachovia position that settled during the year.

164

COLLATERALIZED LOAN OBLIGATIONS (CLOs) A CLO is a securitization where an SPE purchases a pool of assets consisting of loans and issues multiple tranches of equity or notes to investors. Generally, CLOs are structured on behalf of a third party asset manager that typically selects and manages the assets for the term of the CLO. Typically, the asset manager has the power over the significant decisions of the VIE through its discretion to manage the assets of the CLO. We assess whether we are the primary beneficiary of CLOs based on our role in the transaction and the variable interests we hold. In most cases, we are not the primary beneficiary of these transactions because we do not have the power to manage the collateral in the VIE.

In addition to our role as arranger, we may have other forms of involvement with these transactions. Such involvement may include acting as underwriter, derivative counterparty, secondary market maker or investor. For certain transactions, we may also act as the servicer, for which we receive fees in connection with that role. We also earn fees for arranging these transactions and distributing the securities.

ASSET-BASED FINANCE STRUCTURES We engage in various forms of structured finance arrangements with VIEs that are collateralized by various asset classes including energy contracts, auto and other transportation leases, intellectual property, equipment and general corporate credit. We typically provide senior financing, and may act as an interest rate swap or commodity derivative counterparty when necessary. In most cases, we are not the primary beneficiary of these structures because we do not have power over the significant activities of the VIEs involved in these transactions.

For example, we have investments in asset-backed securities that are collateralized by auto leases or loans and cash reserves. These fixed-rate and variable-rate securities have been structured as single-tranche, fully amortizing, unrated bonds that are equivalent to investment-grade securities due to their significant overcollateralization. The securities are issued by VIEs that have been formed by third party auto financing institutions primarily because they require a source of liquidity to fund ongoing vehicle sales operations. The third party auto financing institutions manage the collateral in the VIEs, which is indicative of power in these transactions and we therefore do not consolidate these VIEs.

TAX CREDIT STRUCTURES We co-sponsor and make investments in affordable housing and sustainable energy projects that are designed to generate a return primarily through the realization of federal tax credits. In some instances, our investments in these structures may require that we fund future capital commitments at the discretion of the project sponsors. While the size of our investment in a single entity may at times exceed 50% of the outstanding equity interests, we do not consolidate these structures due to the project sponsor’s ability to manage the projects, which is indicative of power in these transactions.

INVESTMENT FUNDS We do not consolidate the investment funds because we do not absorb the majority of the expected

future variability associated with the funds’ assets, including variability associated with credit, interest rate and liquidity risks.

During 2011, we redeemed a $1.4 billion interest in an unconsolidated investment fund managed by one of our majority owned subsidiaries. Upon redemption we placed the assets received into new investment fund VIEs. We consolidated these new VIEs because we have discretion over the management of the assets and are the sole investor in these funds. At December 31, 2010, we had investments of $1.4 billion and lending arrangements of $14 million with this fund.

OTHER TRANSACTIONS WITH VIEs In 2008, legacy Wachovia reached an agreement to purchase at par auction rate securities (ARS) that were sold to third-party investors by certain of its subsidiaries. ARS are debt instruments with long-term maturities, but which re-price more frequently, and preferred equities with no maturity. We purchased all outstanding ARS that were issued by VIEs and subject to the agreement. At December 31, 2011, we held in our securities available-for-sale portfolio $643 million of ARS issued by VIEs redeemed pursuant to this agreement, compared with $1.6 billion at December 31, 2010.

In 2009, we reached agreements to purchase additional ARS from eligible investors who bought ARS through one of our broker-dealer subsidiaries. We purchased all outstanding ARS that were issued by VIEs and subject to the agreement. As of December 31, 2011, we held in our securities available-for-sale portfolio $624 million of ARS issued by VIEs redeemed pursuant to this agreement, compared with $901 million at December 31, 2010.

We do not consolidate the VIEs that issued the ARS because we do not have power over the activities of the VIEs.

TRUST PREFERRED SECURITIES In addition to the involvements disclosed in the preceding table, through the issuance of trust preferred securities we had junior subordinated debt financing with a carrying value of $7.6 billion at December 31, 2011, and $19.3 billion at December 31, 2010, and $2.5 billion of preferred stock at December 31, 2011. In these transactions, VIEs that we wholly own issue debt securities or preferred equity to third party investors. All of the proceeds of the issuance are invested in debt securities or preferred equity that we issue to the VIEs. The VIEs’ operations and cash flows relate only to the issuance, administration and repayment of the securities held by third parties. We do not consolidate these VIEs because the sole assets of the VIEs are receivables from us. This is the case even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs and may have the right to redeem the third party securities under certain circumstances. We report the debt securities issued to the VIEs as long-term junior subordinated debt and the preferred equity securities issued to the VIEs as preferred stock in our consolidated balance sheet.

In 2011, we redeemed $9.2 billion of trust preferred securities that will no longer count as Tier 1 capital under the Dodd-Frank Act and the Basel Committee guidelines known as the Basel III standards.

165

Note 8: Securitizations and Variable Interest Entities (continued)

Securitization Activity Related to Unconsolidated VIEs

We use VIEs to securitize consumer and CRE loans and other types of financial assets, including student loans and auto loans. We typically retain the servicing rights from these sales and may continue to hold other beneficial interests in the VIEs. We may also provide liquidity to investors in the beneficial interests and credit enhancements in the form of standby letters of credit. Through these securitizations we may be exposed to liability

under limited amounts of recourse as well as standard representations and warranties we make to purchasers and issuers.

In 2011, 2010, and 2009, we recognized net gains of $112 million, $27 million, and $1 million, respectively, from transfers accounted for as sales of financial assets in securitizations. Additionally, we had the following cash flows with our securitization trusts that were involved in transfers accounted for as sales.



	Year ended December 31,

	2011				2010				2009

(in millions)	Mortgage loans		Other financial assets		Mortgage loans		Other financial assets		Mortgage loans		Other financial assets

Sales proceeds from securitizations (1)	$	337,357		–		374,488		–		394,632		–
Servicing fees		4,401		11		4,316		34		4,283		42
Other interests held		1,779		263		1,786		442		3,757		310
Purchases of delinquent assets		9		–		25		–		45		–
Net servicing advances		29		–		49		–		257		–

(1)	Represents cash flow data for all loans securitized in the period presented.

Sales with continuing involvement during 2011 and 2010 predominantly related to conforming residential mortgage securitizations. During 2011 and 2010, we transferred $329.1 billion and $379.0 billion, respectively, in fair value of conforming residential mortgages to unconsolidated VIEs and recorded the transfers as sales. These transfers did not result in a gain or loss because the loans are already carried at fair value. In connection with these transfers, in 2011 we recorded a $4.0 billion servicing asset, measured at fair value using a Level 3 measurement technique, and a $101 million liability for probable repurchase losses. In 2010, we recorded a $4.5 billion servicing asset, with $4.1 billion recorded at fair value as Level 3 and the remaining $400 million recorded as amortized mortgage servicing rights. We also recorded a $144 million repurchase liability in 2010.

We used the following key weighted-average assumptions to measure mortgage servicing assets at the date of securitization:



	Mortgage servicing rights

	2011			2010

Prepayment speed (annual CPR (1))		12.8	%		13.5
Life (in years)		5.9			5.4
Discount rate		7.7	%		8.0

(1)	Constant prepayment rate.

166

Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2011, for residential and commercial mortgage servicing rights, and other interests held related primarily to residential mortgage loan securitizations are presented in the following table. “Other interests held” exclude residential mortgage-backed securities retained in securitizations issued through GSEs, such as FNMA, FHLMC and GNMA, because these securities have a remote risk of credit loss due to the GSE

guarantee. These securities also have economic characteristics similar to GSE mortgage-backed securities that we purchase, which are not included in the table. Subordinated interests include only those bonds whose credit rating was below AAA by a major rating agency at issuance. Senior interests include only those bonds whose credit rating was AAA by a major rating agency at issuance. The information presented excludes trading positions held in inventory.



				Other interests held

(in millions)	Mortgage servicing rights			Interest- only strips		Subordinated bonds			Senior bonds

Fair value of interests held at December 31, 2011	$	14,359			230		45			321
Expected weighted-average life (in years)		5.0			4.6		6.1			5.6

Prepayment speed assumption (annual CPR)		13.7	%		10.7		6.9			13.9
Decrease in fair value from:
10% adverse change	$	913			6		–			2
25% adverse change		2,151			15		1			4

Discount rate assumption		6.9	%		15.6		11.9			7.1
Decrease in fair value from:
100 basis point increase	$	613			6		2			12
200 basis point increase		1,171			12		4			24

Credit loss assumption							0.5	%		4.5
Decrease in fair value from:
10% higher losses						$	–			1
25% higher losses							–			2

Fair value of interests held at December 31, 2010	$	16,279			226		47			441
Expected weighted-average life (in years)		5.2			5.2		8.3			4.5

Prepayment speed assumption (annual CPR)		12.6	%		11.4		4.8			18.1
Decrease in fair value from:
10% adverse change	$	844			7		–			2
25% adverse change		1,992			16		–			6

Discount rate assumption		8.1	%		17.8		10.2			6.8
Decrease in fair value from:
100 basis point increase	$	777			6		3			14
200 basis point increase		1,487			13		6			27

Credit loss assumption							0.7	%		3.7
Decrease in fair value from:
10% higher losses						$	–			1
25% higher losses							–			3

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others (for example, changes in prepayment speed estimates could result in changes in the credit losses), which might magnify or counteract the sensitivities.

167

Note 8: Securitizations and Variable Interest Entities (continued)

The following table presents information about the principal balances of off-balance sheet securitized loans, including residential mortgages sold to FNMA, FHLMC, GNMA and securitizations where servicing is our only form of continuing involvement. Delinquent loans include loans 90 days or more past due and still accruing interest as well as nonaccrual loans. In securitizations where servicing is our only form of continuing

involvement, we would only experience a loss if required to repurchase a delinquent loan due to a breach in representations and warranties associated with our loan sale or servicing contracts. Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information.

Net charge-offs

Total loans

Delinquent loans

Year ended

December 31,

(in millions)

2011

2010

2011

2010

2011

2010

Commercial:

Commercial and industrial

–

Real estate mortgage

137,121

144,655

(1)

11,142

9,174

(1)

569

738

(1)

Total commercial

137,121

144,656

11,142

9,174

569

738

Consumer:

Real estate 1-4 family first mortgage

1,171,666

1,090,755

24,235

25,067

(2)

1,506

1,408

Real estate 1-4 family junior lien mortgage

–

Other revolving credit and installment

2,271

2,454

131

102

–

Total consumer

1,173,939

1,093,210

24,366

25,169

1,522

1,408

Total off-balance sheet securitized loans

1,311,060

1,237,866

35,508

34,343

2,091

2,146

(1)	Balances have been revised to correct previously reported amounts.

(2)	Balances have been revised to conform with current period presentation of including loans sold to FNMA, GNMA, and FHLMC.

168

Transactions with Consolidated VIEs and Secured Borrowings

The following table presents a summary of transfers of financial assets accounted for as secured borrowings and involvements with consolidated VIEs. “Consolidated assets” are presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments, and therefore in

some instances will differ from “Total VIE assets.” For VIEs that obtain exposure synthetically through derivative instruments, the remaining notional amount of the derivative is included in “Total VIE assets.” On the consolidated balance sheet, we separately disclose the consolidated assets of certain VIEs that can only be used to settle the liabilities of those VIEs.



			Carrying value

(in millions)	Total VIE assets		Consolidated assets		Third party liabilities			Noncontrolling interests			Net assets

December 31, 2011

Secured borrowings:
Municipal tender option bond securitizations	$	14,168		11,748		(10,689	)		–			1,059
Auto loan securitizations		–		–		–			–			–
Commercial real estate loans		1,168		1,168		(1,041	)		–			127
Residential mortgage securitizations (1)		5,705		6,114		(5,759	)		–			355

Total secured borrowings		21,041		19,030		(17,489	)		–			1,541

Consolidated VIEs:
Nonconforming residential mortgage loan securitizations		11,375		10,244		(4,514	)		–			5,730
Multi-seller commercial paper conduit		2,860		2,860		(2,935	)		–			(75	)
Auto loan securitizations		163		163		(143	)		–			20
Structured asset finance		124		124		(16	)		–			108
Investment funds		2,012		2,012		(22	)		–			1,990
Other		3,432		2,812		(1,890	)		(61)			861

Total consolidated VIEs		19,966		18,215		(9,520	)		(61	)		8,634

Total secured borrowings and consolidated VIEs	$	41,007		37,245		(27,009	)		(61	)		10,175

December 31, 2010

Secured borrowings:
Municipal tender option bond securitizations	$	10,687		7,874		(7,779	)		–			95
Auto loan securitizations		154		154		–			–			154
Commercial real estate loans		1,321		1,321		(1,272	)		–			49
Residential mortgage securitizations		700		618		(436	)		–			182

Total secured borrowings		12,862		9,967		(9,487	)		–			480

Consolidated VIEs:
Nonconforming residential mortgage loan securitizations		14,518		13,529		(6,723	)		–			6,806
Multi-seller commercial paper conduit		3,197		3,197		(3,279	)		–			(82	)
Auto loan securitizations		1,010		1,010		(955	)		–			55
Structured asset finance		146		146		(21	)		(11)			114
Investment funds		1,197		1,197		(54	)		(14)			1,129
Other (2)		2,938		2,836		(1,724	)		(69)			1,043

Total consolidated VIEs		23,006		21,915		(12,756	)		(94	)		9,065

Total secured borrowings and consolidated VIEs	$	35,868		31,882		(22,243	)		(94	)		9,545

(1)	Includes $5.6 billion of reverse mortgage loans that were previously accounted for as a sale to a GNMA securitization program.

(2)	Revised to correct previously reported amounts.

In addition to the transactions included in the table above, at December 31, 2011, we had issued approximately $6.0 billion of private placement debt financing through a consolidated VIE. The issuance is classified as long-term debt in our consolidated financial statements. At December 31, 2011, we had pledged approximately $6.2 billion in loans (principal and interest eligible to be capitalized), $316 million in securities available for sale and $154 million in cash and cash equivalents to collateralize the VIE’s borrowings. Such assets were not

transferred to the VIE and accordingly we have excluded the VIE from the previous table.

We have raised financing through the securitization of certain financial assets in transactions with VIEs accounted for as secured borrowings. We also consolidate VIEs where we are the primary beneficiary. In certain transactions other than the multi-seller commercial paper conduit, we provide contractual support in the form of limited recourse and liquidity to facilitate the remarketing of short-term securities issued to third party

169

Note 8: Securitizations and Variable Interest Entities (continued)

investors. Other than this limited contractual support, the assets of the VIEs are the sole source of repayment of the securities held by third parties. The liquidity support we provide to the multi-seller commercial paper conduit ensures timely repayment of commercial paper issued by the conduit and is described further below.

NONCONFORMING RESIDENTIAL MORTGAGE LOAN SECURITIZATIONS We have consolidated certain of our nonconforming residential mortgage loan securitizations in accordance with consolidation accounting guidance. We have determined we are the primary beneficiary of these securitizations because we have the power to direct the most significant activities of the entity through our role as primary servicer and also hold variable interests that we have determined to be significant. The nature of our variable interests in these entities may include beneficial interests issued by the VIE, mortgage servicing rights and recourse or repurchase reserve liabilities. The beneficial interests issued by the VIE that we hold include either subordinate or senior securities held in an amount that we consider potentially significant.

MULTI-SELLER COMMERCIAL PAPER CONDUIT We administer a multi-seller asset-based commercial paper conduit that finances certain client transactions. This conduit is a bankruptcy remote entity that makes loans to, or purchases certificated interests, generally from SPEs, established by our clients (sellers) and which are secured by pools of financial assets. The conduit funds itself through the issuance of highly rated commercial paper to third party investors. The primary source of repayment of the commercial paper is the cash flows from the conduit’s assets or the re-issuance of commercial paper upon maturity. The conduit’s assets are structured with deal-specific credit enhancements generally in the form of overcollateralization provided by the seller, but may also include subordinated interests, cash reserve accounts, third party credit support facilities and excess spread capture. The timely repayment of the commercial paper is further supported by asset-specific liquidity facilities in the form of liquidity asset purchase agreements that we provide. Each facility is equal to 102% of the conduit’s funding commitment to a client. The aggregate amount of liquidity must be equal to or greater than all the commercial paper issued by the conduit. At the discretion of the administrator, we may be required to purchase assets from the conduit at par value plus accrued interest or discount on the related commercial paper, including situations where the conduit is unable to issue commercial paper. Par value may be different from fair value.

We receive fees in connection with our role as administrator and liquidity provider. We may also receive fees related to the structuring of the conduit’s transactions. In 2010, the conduit terminated its subordinated note to a third party investor and repaid all amounts due under the terms of the note agreement. We are the primary beneficiary of the conduit because we have power over the significant activities of the conduit and have a significant variable interest due to our liquidity arrangement.

INVESTMENT FUNDS We have consolidated certain of our investment funds where we manage the assets of the fund and our interests absorb a majority of the funds’ variability. In 2011, we redeemed our interest in an unconsolidated investment fund and placed the assets received upon redemption into new VIEs. We consolidate these VIEs because we have discretion over the management of the assets and are the sole investor in these funds.

170

Note 9: Mortgage Banking Activities

Mortgage banking activities, included in the Community Banking and Wholesale Banking operating segments, consist of residential and commercial mortgage loan origination, sale activity and servicing.

We apply fair value method to substantially all of our residential MSRs and apply the amortization method to all commercial and some residential MSRs. The changes in MSRs measured using the fair value method were:



	Year ended December 31,

(in millions)	2011			2010			2009

Fair value, beginning of year	$	14,467			16,004			14,714
Adjustments from adoption of consolidation accounting guidance		–			(118	)		–
Acquired from Wachovia (1)		–			–			34
Servicing from securitizations or asset transfers		3,957			4,092			6,226

Net additions		3,957			3,974			6,260

Changes in fair value:
Due to changes in valuation model inputs or assumptions (2)		(3,680	)		(2,957	)		(1,534	)
Other changes in fair value (3)		(2,141	)		(2,554	)		(3,436	)

Total changes in fair value		(5,821	)		(5,511	)		(4,970	)

Fair value, end of year	$	12,603			14,467			16,004

(1)	The 2009 amount reflects refinements to initial December 31, 2008, Wachovia purchase accounting adjustments.

(2)	Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates, and costs to service, including delinquency and foreclosure costs.

(3)	Represents changes due to collection/realization of expected cash flows over time.

The changes in amortized MSRs were:



	Year ended December 31,

(in millions)	2011			2010			2009

Balance, beginning of year	$	1,422			1,119			1,446
Adjustments from adoption of consolidation accounting guidance		–			(5	)		–
Purchases		155			58			11
Acquired from Wachovia (1)		–			–			(135	)
Servicing from securitizations or asset transfers		132			478			61
Amortization		(264	)		(228	)		(264	)

Balance, end of year (2)		1,445			1,422			1,119

Valuation allowance:
Balance, beginning of year		(3	)		–			–
Provision for MSRs in excess of fair value		(34	)		(3	)		–

Balance, end of year (3)		(37	)		(3	)		–

Amortized MSRs, net	$	1,408			1,419			1,119

Fair value of amortized MSRs:
Beginning of year	$	1,812			1,261			1,555
End of year (4)		1,756			1,812			1,261

(1)	The 2009 amount reflects refinements to initial December 31, 2008, Wachovia purchase accounting adjustments.

(2)

Includes $350 million and $400 million in residential amortized MSRs at December 31, 2011 and 2010, respectively. The 2009 balance is all commercial amortized MSRs. For the years ended December 31, 2011 and 2010, the residential MSR amortization was $(50) million and $(5) million, respectively. Effective January 1, 2012, the amortized residential MSR portfolio will be transferred to MSRs carried at fair value.

(3)

Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) and non-agency. There was no valuation allowance recorded for the periods presented on the commercial amortized MSRs. Residential amortized MSRs are evaluated for impairment purposes by the following risk strata: Mortgages sold to GSEs (FHLMC and FNMA) and mortgages sold to GNMA, each by interest rate stratifications. A valuation allowance of $37 million and $3 million was recorded on the residential amortized MSRs for the years ended December 31, 2011 and 2010, respectively.

(4)	Includes fair value of $316 million and $441 million in residential amortized MSRs and $1,440 million and $1,371 million in commercial amortized MSRs at December 31, 2011 and 2010, respectively.

171

Note 9: Mortgage Banking Activities (continued)

We present the components of our managed servicing portfolio in the following table at unpaid principal balance for

loans serviced and subserviced for others and at book value for owned loans serviced.



	December 31,

(in billions)	2011			2010

Residential mortgage servicing:
Serviced for others	$	1,456			1,429
Owned loans serviced		358			371
Subservicing		8			9

Total residential servicing		1,822			1,809

Commercial mortgage servicing:
Serviced for others		398			408
Owned loans serviced		106			99
Subservicing		14			13

Total commercial servicing		518			520

Total managed servicing portfolio	$	2,340			2,329

Total serviced for others	$	1,854			1,837
Ratio of MSRs to related loans serviced for others		0.76	%		0.86

The components of mortgage banking noninterest income were:



	Year ended December 31,

(in millions)	2011			2010			2009

Servicing income, net:
Servicing fees:
Contractually specified servicing fees	$	4,611			4,566			4,473
Late charges		298			360			330
Ancillary fees		354			434			287
Unreimbursed direct servicing costs (1)		(1,119	)		(763	)		(914	)

Net servicing fees		4,144			4,597			4,176
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)		(3,680	)		(2,957	)		(1,534	)
Other changes in fair value (3)		(2,141	)		(2,554	)		(3,436	)

Total changes in fair value of MSRs carried at fair value		(5,821	)		(5,511	)		(4,970	)
Amortization		(264	)		(228	)		(264	)
Provision for MSRs in excess of fair value		(34	)		(3	)		–
Net derivative gains from economic hedges (4)		5,241			4,485			6,849

Total servicing income, net		3,266			3,340			5,791
Net gains on mortgage loan origination/sales activities		4,566			6,397			6,237

Total mortgage banking noninterest income	$	7,832			9,737			12,028

Market-related valuation changes to MSRs, net of hedge results (2) + (4)	$	1,561			1,528			5,315

(1)	Primarily associated with foreclosure expenses and other interest costs.

(2)	Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates and costs to service, including delinquency and foreclosure costs.

(3)	Represents changes due to collection/realization of expected cash flows over time.

(4)	Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. See Note 16 – Free-Standing Derivatives for additional discussion and detail.

172

The following table summarizes the changes in our liability for mortgage loan repurchase losses. This liability is in “Accrued expenses and other liabilities” in our consolidated financial statements and the provision for repurchase losses reduces net gains on mortgage loan origination/sales activities. Because the level of mortgage loan repurchase losses depends upon economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loans, the level of the liability for mortgage loan repurchase losses is difficult to estimate and requires considerable management judgment. We maintain regular contact with the GSEs and other significant investors to monitor and address their repurchase demand practices and concerns. Because of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses in excess of our recorded liability was $2.1 billion at December 31, 2011, and was determined based upon modifying the assumptions utilized in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.



	Year ended December 31,

(in millions)	2011			2010			2009

Balance, beginning of year	$	1,289			1,033			589
Wachovia acquisition (1)		–			–			31
Provision for repurchase losses:
Loan sales		101			144			302
Change in estimate (2)		1,184			1,474			625

Total additions		1,285			1,618			958
Losses		(1,248	)		(1,362	)		(514	)

Balance, end of year	$	1,326			1,289			1,033

(1)	The 2009 amount is refinement to initial December 31, 2008, Wachovia purchase accounting adjustments.

(2)	Results from such factors as credit deterioration, changes in investor demand and mortgage insurer practices, and changes in the financial stability of correspondent lenders.

173

Note 10: Intangible Assets

The gross carrying value of intangible assets and accumulated amortization was:



	December 31,

	2011							2010

(in millions)	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value

Amortized intangible assets (1):
MSRs (2)	$	2,383		(975	)		1,408		2,131		(712	)		1,419
Core deposit intangibles		15,079		(7,768	)		7,311		15,133		(6,229	)		8,904
Customer relationship and other intangibles		3,158		(1,519	)		1,639		3,077		(1,230	)		1,847

Total amortized intangible assets	$	20,620		(10,262	)		10,358		20,341		(8,171	)		12,170

Unamortized intangible assets:
MSRs (carried at fair value) (2)	$	12,603							14,467
Goodwill		25,115							24,770
Trademark		14							14

(1)	Excludes fully amortized intangible assets.

(2)	See Note 9 for additional information on MSRs.

We based our projections of amortization expense shown below on existing asset balances at December 31, 2011, with the exception of a portfolio of MSRs with a net carrying value of $313 million. Effective January 1, 2012, this portfolio of MSRs

will be transferring to MSRs carried at fair value. Future amortization expense may vary from these projections.

The following table provides the current year and estimated future amortization expense for amortized intangible assets.



(in millions)	Amortized MSRs		Core deposit intangibles		Customer relationship and other intangibles		Total

Year ended December 31, 2011 (actual)	$	264		1,594		294		2,152

Estimate for year ended December 31,
2012	$	226		1,396		283		1,905
2013		194		1,241		260		1,695
2014		165		1,113		245		1,523
2015		149		1,022		221		1,392
2016		110		919		209		1,238

174

Note 10: Intangible Assets (continued)

For our goodwill impairment analysis, we allocate all of the goodwill to the individual operating segments. We identify reporting units that are one level below an operating segment (referred to as a component), and distinguish these reporting units based on how the segments and components are managed, taking into consideration the economic characteristics, nature of the products and customers of the components. We allocate

goodwill to reporting units based on relative fair value, using certain performance metrics. See Note 24 for further information on management reporting.

The following table shows the allocation of goodwill to our operating segments for purposes of goodwill impairment testing. The reduction in 2010 was predominately due to reversals of excess exit reserves.



(in millions)	Community Banking			Wholesale Banking			Wealth, Brokerage and Retirement			Consolidated Company

December 31, 2009	$	17,974			6,465			373			24,812
Goodwill from business combinations, net		(52	)		10			–			(42	)

December 31, 2010		17,922			6,475			373			24,770
Reduction in goodwill related to divested businesses		–			(9	)		(2	)		(11	)
Goodwill from business combinations		2			354			–			356

December 31, 2011	$	17,924			6,820			371			25,115

Note 11: Deposits

Time certificates of deposit (CDs) and other time deposits issued by domestic offices totaled $76.5 billion and $90.6 billion at December 31, 2011 and 2010, respectively. Substantially all of these deposits were interest bearing. The contractual maturities of these deposits follow.



(in millions)	December 31, 2011

2012	$	31,675
2013		21,479
2014		5,447
2015		8,538
2016		5,964
Thereafter		3,427

Total	$	76,530

Of these deposits, the amount of time deposits with a denomination of $100,000 or more was $25.1 billion and $33.9 billion at December 31, 2011 and 2010, respectively. The contractual maturities of these deposits follow.



(in millions)	December 31, 2011

Three months or less	$	3,427
After three months through six months		2,828
After six months through twelve months		3,034
After twelve months		15,804

Total	$	25,093

Time CDs and other time deposits issued by foreign offices with a denomination of $100,000 or more were $13.6 billion and $16.7 billion at December 31, 2011 and 2010, respectively.

Demand deposit overdrafts of $649 million and $557 million were included as loan balances at December 31, 2011 and 2010, respectively.

175

Note 12: Short-Term Borrowings

The table below shows selected information for short-term borrowings, which generally mature in less than 30 days.



	2011					2010					2009

(in millions)	Amount		Rate			Amount		Rate			Amount		Rate

As of December 31,
Commercial paper and other short-term borrowings	$	18,053		0.19	%	$	17,454		0.26	%	$	12,950		0.39	%
Federal funds purchased and securities sold under agreements to repurchase		31,038		0.05			37,947		0.15			26,016		0.08

Total	$	49,091		0.10		$	55,401		0.19		$	38,966		0.18

Year ended December 31,
Average daily balance
Commercial paper and other short-term borrowings	$	17,393		0.33		$	16,330		0.31		$	27,793		0.43
Federal funds purchased and securities sold under agreements to repurchase		34,388		0.11			30,494		0.18			24,179		0.46

Total	$	51,781		0.18		$	46,824		0.22		$	51,972		0.44

Maximum month-end balance
Commercial paper and other short-term borrowings (1)	$	18,234		N/A		$	17,646		N/A		$	62,871		N/A
Federal funds purchased and securities sold under agreements to repurchase (2)		37,509		N/A			37,947		N/A			30,608		N/A

N/A – Not Applicable

(1)	Highest month-end balance in each of the last three years was April 2011, March 2010 and February 2009.

(2)	Highest month-end balance in each of the last three years was March 2011, December 2010 and February 2009.

176

Note 13: Long-Term Debt

As a part of our overall interest rate risk management strategy, we often use derivatives to manage interest rate risk. As a result, much of the long-term debt presented below is hedged in a fair value or cash flow hedge relationship. See Note 16 for further information on qualifying hedge contracts.

Following is a summary of our long-term debt, reflecting unamortized debt discounts and premiums, and purchase accounting adjustments for debt assumed in the Wachovia acquisition, where applicable:



					December 31,

					2011		2010

(in millions)	Maturity date(s)		Stated interest rate(s)

Wells Fargo & Company (Parent only)
Senior
Fixed-rate notes (1)		2012-2035		2.125-6.75%	$	38,002		40,630
Floating-rate notes (1)		2012-2048		Varies		17,872		26,750
Market-linked notes and other (2)		2012-2041		Varies		1,359		545

Total senior debt – Parent						57,233		67,925

Subordinated
Fixed-rate notes		2012-2035		4.375-7.574%		12,041		12,370
Floating-rate notes		2015-2016		Varies		1,141		1,118

Total subordinated debt – Parent						13,182		13,488

Junior subordinated
Fixed-rate notes – hybrid trust securities		2029-2068		5.625-7.95%		6,951		11,257
Floating-rate notes		2027		Varies		247		289
FixFloat notes – income trust securities						–		6,786

Total junior subordinated debt – Parent (3)						7,198		18,332

Total long-term debt – Parent						77,613		99,745

Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior
Fixed-rate notes		2013		6.00%		1,326		2,185
Floating-rate notes		2038-2040		Varies		72		4,186
Fixed-rate advances – Federal Home Loan Bank (FHLB)		2012-2031		2.30-8.45%		500		812
Floating-rate advances – FHLB		2012-2013		Varies		2,101		7,103
Market-linked notes and other (2)		2012-2016		Varies		238		229
Capital leases (Note 7)		2012-2025		Varies		116		26

Total senior debt – Bank						4,353		14,541

Subordinated
Fixed-rate notes		2013-2038		4.75-7.74%		15,882		16,520
Floating-rate notes		2014-2017		Varies		1,976		1,945

Total subordinated debt – Bank						17,858		18,465

Junior subordinated
Fixed-rate notes						–		317
Floating-rate notes		2027		Varies		286		278

Total junior subordinated debt - Bank (3)						286		595

Long-term debt issued by VIE – Fixed rate		2014-2038		0.00-7.00%		2,103		3,751
Long-term debt issued by VIE – Floating rate		2014-2050		Varies		2,748		4,053
Mortgage notes and other debt		2012-2056		Varies		14,854		8,639

Total long-term debt - Bank						42,202		50,044

(continued on following page)

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					December 31,

					2011		2010

(in millions)	Maturity date(s)		Stated interest rate(s)

Other consolidated subsidiaries
Senior
Fixed-rate notes		2012-2016		3.70-6.125%		5,154		6,147
FixFloat notes		2020		6.795% through 2015, varies		20		20

Total senior debt – Other consolidated subsidiaries						5,174		6,167

Junior subordinated
Fixed-rate notes						–		10
Floating-rate notes		2027		0.928%		155		239
FixFloat notes						–		78

Total junior subordinated debt – Other consolidated subsidiaries (3)						155		327

Long-term debt issued by VIE – Fixed rate		2012-2020		5.16-6.88%		81		84
Long-term debt issued by VIE – Floating rate						–		489
Mortgage notes and other debt of subsidiaries		2013-2018		Varies		129		127

Total long-term debt – Other consolidated subsidiaries						5,539		7,194

Total long-term debt					$	125,354		156,983

(1)

On March 30, 2009, Wells Fargo issued $1.75 billion of 2.125% fixed senior unsecured notes and $1.75 billion of floating senior unsecured notes both maturing on June 15, 2012. These notes are guaranteed under the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program (TLGP) and are backed by the full faith and credit of the United States.

(2)

Primarily consists of long-term notes where the performance of the note is linked to an embedded equity, commodity, or currency index, or basket of indices accounted for separately from the note as a free-standing derivative. For information on embedded derivatives, see Note 16 – Free-standing derivatives.

(3)	Represents junior subordinated debentures held by unconsolidated wholly owned trusts formed for the sole purpose of issuing trust preferred securities. See Note 8 for additional information on our trust preferred security structures.

We participated in the FDIC’s Temporary Liquidity Guarantee Program (TLGP). The TLGP had two components: the Debt Guarantee Program, which provided a temporary guarantee of newly issued senior unsecured debt issued by eligible entities; and the Transaction Account Guarantee Program, which provided a temporary unlimited guarantee of funds in noninterest-bearing transaction accounts at FDIC-insured institutions. We opted out of the TLGP effective January 1, 2010.

The aggregate annual maturities of long-term debt obligations (based on final maturity dates) as of December 31, 2011, are presented in the following table.



(in millions)	Parent		Company

2012	$	15,443		18,605
2013		10,023		14,290
2014		7,791		10,790
2015		3,753		8,949
2016		13,302		17,740
Thereafter		27,301		54,980

Total	$	77,613		125,354

The interest rates on floating-rate notes are determined periodically by formulas based on certain money market rates, subject, on certain notes, to minimum or maximum interest rates.

As part of our long-term and short-term borrowing arrangements, we are subject to various financial and operational covenants. Some of the agreements under which debt has been issued have provisions that may limit the merger or sale of certain subsidiary banks and the issuance of capital stock or convertible securities by certain subsidiary banks. At December 31, 2011, we were in compliance with all the covenants.

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Note 14: Guarantees, Pledged Assets and Collateral

written put options, recourse obligations, residual value guarantees, and contingent consideration. The following table shows carrying value, maximum exposure to loss on our guarantees and the amount with a higher risk of performance.



	December 31,

	2011						2010

(in millions)	Carrying value		Maximum exposure to loss		Non- investment grade		Carrying value		Maximum exposure to loss		Non- investment grade

Standby letters of credit	$	85		41,171		22,259		142		42,159		19,596
Securities lending and other indemnifications (1)		–		669		62		45		13,645		3,993
Liquidity agreements (2)		–		2		2		–		49		1
Written put options (2)(3)		1,469		8,224		2,466		747		8,134		2,615
Loans and MHFS sold with recourse		102		5,784		3,850		119		5,474		3,564
Residual value guarantees		8		197		–		8		197		–
Contingent consideration		31		98		97		23		118		116
Other guarantees		6		552		4		–		73		–

Total guarantees	$	1,701		56,697		28,740		1,084		69,849		29,885

(1)	We commenced divestiture of our securities lending business in the latter half of 2011.

(2)	Certain of these agreements included in this table are related to off-balance sheet entities and, accordingly, are also disclosed in Note 8.

(3)	Written put options, which are in the form of derivatives, are also included in the derivative disclosures in Note 16.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Non-investment grade represents those guarantees on which we have a higher risk of being required to perform under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. These credit policies are further described in Note 6.

Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is its extremely remote possibility, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value, which is either fair value for derivative related products or the allowance for lending related commitments, is more representative of our exposure to loss than maximum exposure to loss.

STANDBY LETTERS OF CREDIT We issue standby letters of credit, which include performance and financial guarantees, for customers in connection with contracts between our customers and third parties. Standby letters of credit are agreements where we are obligated to make payment to a third party on behalf of a customer in the event the customer fails to meet their contractual obligations. We consider the credit risk in standby

letters of credit and commercial and similar letters of credit in determining the allowance for credit losses.

SECURITIES LENDING AND OTHER INDEMNIFICATIONS As a securities lending agent, we lend securities from participating institutional clients’ portfolios to third-party borrowers. We indemnify our clients against default by the borrower in returning these lent securities. This indemnity is supported by collateral received from the borrowers. Collateral is generally in the form of cash or highly liquid securities that are marked to market daily. There was $687 million at December 31, 2011, and $14.0 billion at December 31, 2010, in collateral supporting loaned securities with values of $669 million and $13.6 billion, respectively.

We enter into other types of indemnification agreements in the ordinary course of business under which we agree to indemnify third parties against any damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with us. These relationships or transactions include those arising from service as a director or officer of the Company, underwriting agreements relating to our securities, acquisition agreements and various other business transactions or arrangements. Because the extent of our obligations under these agreements depends entirely upon the occurrence of future events, we are unable to determine our potential future liability under these agreements. We do, however, record a liability for residential mortgage loans that we may have to repurchase pursuant to various representations and warranties. See Note 1 and Note 9 for additional information on the liability for mortgage loan repurchase losses.

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LIQUIDITY AGREEMENTS We provide liquidity facilities on all commercial paper issued by the conduit we administer. We also provide liquidity to certain off-balance sheet entities that hold securitized fixed-rate municipal bonds and consumer or commercial assets that are partially funded with the issuance of money market and other short-term notes. See Note 8 for additional information on these arrangements.

WRITTEN PUT OPTIONS Written put options are contracts that give the counterparty the right to sell to us an underlying instrument held by the counterparty at a specified price, and include options, floors, caps and credit default swaps. These written put option contracts generally permit net settlement. While these derivative transactions expose us to risk in the event the option is exercised, we manage this risk by entering into offsetting trades or by taking short positions in the underlying instrument. We offset substantially all put options written to customers with purchased options. Additionally, for certain of these contracts, we require the counterparty to pledge the underlying instrument as collateral for the transaction. Our ultimate obligation under written put options is based on future market conditions and is only quantifiable at settlement. See Note 8 for additional information regarding transactions with VIEs and Note 16 for additional information regarding written derivative contracts.

LOANS AND MHFS SOLD WITH RECOURSE In certain loan sales or securitizations, we provide recourse to the buyer whereby we are required to indemnify the buyer for any loss on the loan up to par value plus accrued interest. We provide recourse, predominantly to the GSEs, on loans sold under various programs and arrangements. Primarily all of these programs and arrangements require that we share in the loans’ credit exposure for their remaining life by providing recourse to the GSE, up to 33.33% of actual losses incurred on a pro-rata basis, in the event of borrower default. Under the remaining recourse programs and arrangements, if certain events occur within a specified period of time from transfer date, we have to provide limited recourse to the buyer to indemnify them for losses incurred for the remaining life of the loans. The maximum exposure to loss reported in the accompanying table represents the outstanding principal balance of the loans sold or securitized that are subject to recourse provisions or the maximum losses per the contractual agreements. However, we believe the likelihood of loss of the entire balance due to these recourse agreements is remote and amounts paid can be recovered in whole or in part from the sale of collateral. In 2011, we repurchased $38 million of loans associated with these agreements. We also provide representation and warranty guarantees on loans sold under the various recourse programs and arrangements. Our loss exposure relative to these guarantees is separately considered and provided for, as necessary, in determination of our liability for loan repurchases due to breaches of representations and warranties. See Note 9 for additional information on the liability for mortgage loan repurchase losses.

RESIDUAL VALUE GUARANTEES We have provided residual value guarantees as part of certain leasing transactions of corporate assets. At December 31, 2011, the only remaining residual value guarantee is related to a leasing transaction on

certain corporate buildings. The lessors in these leases are generally large financial institutions or their leasing subsidiaries. These guarantees protect the lessor from loss on sale of the related asset at the end of the lease term. To the extent that a sale of the leased assets results in proceeds less than a stated percent (generally 80% to 89%) of the asset’s cost, we would be required to reimburse the lessor under our guarantee.

CONTINGENT CONSIDERATION In connection with certain brokerage, asset management, insurance agency and other acquisitions we have made, the terms of the acquisition agreements provide for deferred payments or additional consideration, based on certain performance targets.

We have entered into various contingent performance guarantees through credit risk participation arrangements. Under these agreements, if a customer defaults on its obligation to perform under certain credit agreements with third parties, we will be required to make payments to the third parties.

Pledged Assets and Collateral

As part of our liquidity management strategy, we pledge assets to secure trust and public deposits, borrowings from the FHLB and FRB and for other purposes as required or permitted by law. The following table provides pledged loans and securities available for sale where the secured party does not have the right to sell or repledge the collateral. At December 31, 2011 and 2010, we did not pledge any loans or securities available for sale where the secured party has the right to sell or repledge the collateral. The table excludes pledged assets related to VIEs, which can only be used to settle the liabilities of those entities. See Note 8 for additional information on consolidated VIE assets.



(in millions)	Dec. 31, 2011		Dec. 31, 2010

Securities available for sale	$	80,540		94,212
Loans		317,742		312,602

Total	$	398,282		406,814

We also pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. The types of collateral we pledge include securities issued by federal agencies, government-sponsored entities (GSEs), and domestic and foreign companies. We pledged $20.8 billion at December 31, 2011, and $27.3 billion at December 31, 2010, under agreements that permit the secured parties to sell or repledge the collateral. Pledged collateral where the secured party cannot sell or repledge was $2.8 billion and $5.9 billion at the same period ends, respectively.

We receive collateral from other entities under resale agreements and securities borrowings. We received $17.8 billion at December 31, 2011, and $22.5 billion at December 31, 2010, for which we have the right to sell or repledge the collateral. These amounts include securities we have sold or repledged to others with a fair value of $16.7 billion at December 31, 2011, and $14.6 billion at December 31, 2010.

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Note 15: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State of Illinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by “reverse redlining” and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois’ complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois’ complaint seeks an injunction against the defendants’ alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 26, 2011, the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo’s motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III of the complaint, which alleged violations of the Illinois Fair Lending Act. The Court denied the remainder of the motion to dismiss.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States

District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation’s debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation . The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members opted out of the settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On June 29, 2010, and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas

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Securities Corp., et al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al. , was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various state law fraud claims and claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases have been brought in state and federal courts. Five of the class actions have been dismissed or otherwise resolved. Of the individual borrower cases, the majority are filed in state courts in California and Ohio. The actions generally claim that Wells Fargo submitted “fraudulent” or “untruthful” affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices or fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On April 13, 2011, Wells Fargo Bank, N.A. entered into a Consent Order with the OCC and Wells Fargo & Company entered into a Consent Order with the Board of Governors of the Federal Reserve System in connection with Wells Fargo’s mortgage foreclosure practices. The Consent Orders require Wells Fargo to develop and implement certain compliance programs and to take other remedial steps, which Wells Fargo is doing. On February 9, 2012, the OCC and Federal Reserve announced that they had also imposed civil money penalties of $83 million and $85 million, respectively, related to the Consent Orders. These penalties will be satisfied through payments made under a separate simultaneous settlement in principle, announced on the same day, among the Department of Justice (DOJ), a task force of Attorneys General from 49 states, other government entities, Wells Fargo and four other mortgage servicers related to mortgage servicing and foreclosure practices. Under the settlement in principle, Wells Fargo agreed to the following commitments, comprised of three components totaling $5.3 billion:

•

Consumer Relief Program For qualified borrowers with financial hardship and a loan owned and serviced by Wells Fargo, a commitment to provide $3.4 billion in aggregate consumer relief and assistance programs, including expanded first and second mortgage modifications that broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and “anti-blight” provisions designed to reduce the impact on communities of vacant properties. As of December 31, 2011, the expected impact of the Consumer Relief Program was covered in our allowance for credit losses and in the nonaccretable difference relating to our purchased credit-impaired residential mortgage portfolio.

•

Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. Wells Fargo has received a Wells notice from SEC staff relating to Wells Fargo’s disclosures in mortgage-backed securities offering documents. Wells Fargo continues to provide information requested by the various agencies in connection with certain investigations.

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Note 15: Legal Actions (continued)

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The DOJ and the SEC, beginning in November 2006, requested information from a number of financial institutions, including Wachovia Bank, N.A.’s municipal derivatives group, with regard to competitive bid practices in the municipal derivative markets. Other state and federal agencies subsequently also began investigations of the same practices. On December 8, 2011, a global resolution of the Wachovia Bank investigations was announced by DOJ, the Internal Revenue Service, the SEC, the OCC and a group of State Attorneys General. The investigations were settled with Wachovia Bank agreeing to pay a total of approximately $148 million in penalties and remediation to the various agencies.

Wachovia Bank, along with a number of other banks and financial services companies, was named as a defendant in a number of substantially identical purported class actions and individual actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject of the government investigations. These cases were either consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if finally approved, will result in Wells Fargo paying the amount of $37 million. The settlement was preliminarily approved on December 27, 2011.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks have appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A. , a case that was not consolidated in the multi-district proceedings, enjoining the Bank’s use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia’s common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia’s exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia’s motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. A fairness hearing on final approval of the settlement is scheduled for June 1, 2012.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia’s issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter was captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation . On March 31, 2011, by the same Decision and Order referenced above, the court also granted in part and denied in part Wachovia’s motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue. Wells Fargo and the plaintiffs agreed to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement was preliminarily approved by the Court on August 9, 2011. The hearing on final approval was held on November 14, 2011, and a judgment approving class action settlements was filed on January 3, 2012.

There are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two of the individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed. On December 22, 2011, the dismissal of th e Rivers v. Wachovia Corporation, et al . case, one of the two South Carolina actions, was affirmed by the U.S. Court of Appeals for the Fourth Circuit.

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OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company’s liability for probable and estimable losses was $1.2 billion as of December 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be

estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.

Note 16: Derivatives

We use derivatives to manage exposure to market risk, interest rate risk, credit risk and foreign currency risk, to generate profits from proprietary trading and to assist customers with their risk management objectives. Derivative transactions are measured in terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which interest and other payments are determined.

Our asset/liability management approach to interest rate, foreign currency and certain other risks includes the use of derivatives. Such derivatives are typically designated as fair value or cash flow hedges, or economic hedge derivatives for those that do not qualify for hedge accounting. This helps minimize significant, unplanned fluctuations in earnings, fair values of assets and liabilities, and cash flows caused by interest rate, foreign currency and other market value volatility. This approach involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates, foreign currency and other exposures do not have a significantly adverse effect on the net interest margin, cash flows and earnings. As a result of fluctuations in these exposures, hedged assets and liabilities will gain or lose market value. In a fair value or economic hedge, the effect of this unrealized gain or loss will generally be offset by the gain or loss on the derivatives linked to the hedged assets and liabilities. In a cash flow hedge, where we manage the variability of cash payments due to interest rate fluctuations by the effective use of derivatives linked to hedged assets and liabilities, the unrealized gain or loss on the derivatives or the hedged asset or liability is generally not reflected in earnings.

We also offer various derivatives, including interest rate, commodity, equity, credit and foreign exchange contracts, to our customers but usually offset our exposure from such contracts by purchasing other financial contracts. The customer accommodations and any offsetting financial contracts are treated as free-standing derivatives. Free-standing derivatives also include derivatives we enter into for risk management that do not otherwise qualify for hedge accounting, including economic hedge derivatives. To a lesser extent, we take positions based on market expectations or to benefit from price differentials between financial instruments and markets. Additionally, free-standing derivatives include embedded derivatives that are required to be accounted for separately from their host contracts.

The following table presents the total notional or contractual amounts and fair values for derivatives designated as qualifying hedge contracts, which are used as asset/liability management hedges, and free-standing derivatives (economic hedges) not designated as hedging instruments that are recorded on the balance sheet in other assets or other liabilities. Customer accommodation, trading and other free-standing derivatives are recorded on the balance sheet at fair value in trading assets or other liabilities.

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Note 16: Derivatives (continued)

December 31, 2011

December 31, 2010

Notional or

contractual
amount

Fair value

Notional or

contractual
amount

Fair value

(in millions)

Asset
derivatives

Liability
derivatives

Asset
derivatives

Liability
derivatives

Derivatives designated as hedging instruments

Interest rate contracts (1)

87,537

8,423

2,769

110,314

7,126

1,614

Foreign exchange contracts

22,269

1,523

572

25,904

1,527

727

Total derivatives designated as qualifying hedging instruments

9,946

3,341

8,653

2,341

Derivatives not designated as hedging instruments

Free-standing derivatives (economic hedges):

Interest rate contracts (2)

377,497

2,318

2,011

408,563

2,898

2,625

Equity contracts

–

176

–

Foreign exchange contracts

5,833

250

5,528

Credit contracts - protection purchased

125

–

396

–

Other derivatives

2,367

–

117

2,538

–

Subtotal

2,571

2,131

3,001

2,759

Customer accommodation, trading and other free-standing derivatives:

Interest rate contracts

2,425,144

81,336

83,834

2,809,387

58,225

59,329

Commodity contracts

77,985

4,351

4,234

83,114

4,133

3,918

Equity contracts

68,778

3,768

3,661

73,278

3,272

3,450

Foreign exchange contracts

140,704

3,151

2,803

110,889

2,800

2,682

Credit contracts - protection sold

38,403

319

5,178

47,699

605

5,826

Credit contracts - protection purchased

36,156

3,254

276

44,776

4,661

588

Other derivatives

–

190

–

Subtotal

96,179

99,986

73,704

75,793

Total derivatives not designated as hedging instruments

98,750

102,117

76,705

78,552

Total derivatives before netting

108,696

105,458

85,358

80,893

Netting (3)

(81,143

)

(89,990

)

(63,469

)

(70,009

)

Total

27,553

15,468

21,889

10,884

(1)	Notional amounts presented exclude $15.5 billion at December 31, 2011, and $20.9 billion at December 31, 2010, of basis swaps that are combined with receive fixed-rate/pay floating-rate swaps and designated as one hedging instrument.

(2)	Includes free-standing derivatives (economic hedges) used to hedge the risk of changes in the fair value of residential MSRs, MHFS, and other interests held.

(3)

Represents netting of derivative asset and liability balances, and related cash collateral, with the same counterparty subject to master netting arrangements. The amount of cash collateral netted against derivative assets and liabilities was $6.6 billion and $15.4 billion, respectively, at December 31, 2011, and $5.5 billion and $12.1 billion, respectively, at December 31, 2010.

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Fair Value Hedges

We use interest rate swaps to convert certain of our fixed-rate long-term debt and CDs to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale debt securities due to changes in interest rates, foreign currency rates, or both. We also use interest rate swaps to hedge against changes in fair value for certain mortgages held for sale. The entire derivative gain or loss is included in the assessment of hedge effectiveness for all fair value hedge relationships, except for those involving foreign-currency denominated securities available for sale and long-term debt hedged with foreign currency forward derivatives for which

the component of the derivative gain or loss related to the changes in the difference between the spot and forward price is excluded from the assessment of hedge effectiveness.

We use statistical regression analysis to assess hedge effectiveness, both at inception of the hedging relationship and on an ongoing basis. The regression analysis involves regressing the periodic change in fair value of the hedging instrument against the periodic changes in fair value of the asset or liability being hedged due to changes in the hedged risk(s). The assessment includes an evaluation of the quantitative measures of the regression results used to validate the conclusion of high effectiveness.

The following table shows the net gains (losses) recognized in the income statement related to derivatives in fair value hedging relationships.



	Interest rate contracts hedging:									Foreign exchange contracts hedging:						Total net gains (losses) on fair value hedges

(in millions)	Securities available for sale			Mortgages held for sale			Long-term debt			Securities available for sale			Long-term debt

Year ended December 31, 2011
Gains (losses) recorded in net interest income	$	(451	)		–			1,659			(11	)		376			1,573


Gains (losses) recorded in noninterest income
Recognized on derivatives		(1,298	)		(21	)		2,796			168			512			2,157
Recognized on hedged item		1,232			17			(2,616	)		(186	)		(445	)		(1,998	)

Recognized on fair value hedges (ineffective portion) (1)	$	(66	)		(4	)		180			(18	)		67			159

Year ended December 31, 2010
Gains (losses) recorded in net interest income	$	(390	)		–			1,755			(4	)		374			1,735


Gains (losses) recorded in noninterest income
Recognized on derivatives		(432	)		–			1,565			269			(1,030	)		372
Recognized on hedged item		469			–			(1,469	)		(270	)		1,007			(263	)

Recognized on fair value hedges (ineffective portion) (1)	$	37			–			96			(1	)		(23	)		109

(1)

Included $53 million and $3 million, respectively, for year ended December 31, 2011 and 2010, of gains (losses) on forward derivatives hedging foreign currency securities available for sale and long-term debt, representing the portion of derivatives gains (losses) excluded from the assessment of hedge effectiveness (time value).

186

Note 16: Derivatives (continued)

Cash Flow Hedges

We hedge floating-rate debt against future interest rate increases by using interest rate swaps, caps, floors and futures to limit variability of cash flows due to changes in the benchmark interest rate. We also use interest rate swaps and floors to hedge the variability in interest payments received on certain floating-rate commercial loans, due to changes in the benchmark interest rate. Gains and losses on derivatives that are reclassified from OCI to interest income and interest expense in the current period are included in the line item in which the hedged item’s effect on earnings is recorded. All parts of gain or loss on these derivatives are included in the assessment of hedge effectiveness. We assess hedge effectiveness using regression analysis, both at inception of the hedging relationship and on an ongoing basis. The regression analysis involves regressing the periodic changes in cash flows of the hedging instrument against the periodic

changes in cash flows of the forecasted transaction being hedged due to changes in the hedged risk(s). The assessment includes an evaluation of the quantitative measures of the regression results used to validate the conclusion of high effectiveness.

Based upon current interest rates, we estimate that $440 million (pre-tax) of deferred net gains on derivatives in OCI at December 31, 2011, will be reclassified into interest income and interest expense during the next twelve months. Future changes to interest rates may significantly change actual amounts reclassified to earnings. We are hedging our exposure to the variability of future cash flows for all forecasted transactions for a maximum of 6 years for both hedges of floating-rate debt and floating-rate commercial loans.

The following table shows the net gains (losses) recognized related to derivatives in cash flow hedging relationships.



	Year ended
	December 31,

(in millions)	2011			2010

Gains (after tax) recognized in OCI on derivatives	$	105			468
Gains (pre tax) reclassified from cumulative OCI into net interest income		571			613
Gains (losses) (pre tax) recognized in noninterest income on derivatives (1)		(5	)		6

(1)	None of the change in value of the derivatives was excluded from the assessment of hedge effectiveness.

Free-Standing Derivatives

We use free-standing derivatives (economic hedges), in addition to debt securities available for sale, to hedge the risk of changes in the fair value of residential MSRs measured at fair value, certain residential MHFS, derivative loan commitments and other interests held. The resulting gain or loss on these economic hedges is reflected in other income.

The derivatives used to hedge these MSRs measured at fair value, which include swaps, swaptions, constant maturity mortgages, forwards, Eurodollar and Treasury futures and options contracts, resulted in net derivative gains of $5.2 billion in 2011 and net derivative gains of $4.5 billion in of 2010, which are included in mortgage banking noninterest income. The aggregate fair value of these derivatives was a net asset of $1.4 billion at December 31, 2011, and a net liability of $943 million at December 31, 2010. Changes in fair value of debt securities available for sale (unrealized gains and losses) are not included in servicing income, but are reported in cumulative OCI (net of tax) or, upon sale, are reported in net gains (losses) on debt securities available for sale.

Interest rate lock commitments for residential mortgage loans that we intend to sell are considered free-standing derivatives. Our interest rate exposure on these derivative loan commitments, as well as substantially all residential MHFS, is hedged with free-standing derivatives (economic hedges) such as swaps, forwards and options, Eurodollar futures and options, and Treasury futures, forwards and options contracts. The commitments, free-standing derivatives and residential MHFS are carried at fair value with changes in fair value included in mortgage banking noninterest income. For the fair value measurement of interest rate lock commitments we include, at inception and during the life of the loan commitment, the

expected net future cash flows related to the associated servicing of the loan. Fair value changes subsequent to inception are based on changes in fair value of the underlying loan resulting from the exercise of the commitment and changes in the probability that the loan will not fund within the terms of the commitment (referred to as a fall-out factor). The value of the underlying loan is affected primarily by changes in interest rates and the passage of time. However, changes in investor demand can also cause changes in the value of the underlying loan value that cannot be hedged. The aggregate fair value of derivative loan commitments in the balance sheet was a net asset of $478 million at December 31, 2011, and a net liability of $271 million at December 31, 2010, and is included in the caption “Interest rate contracts” under “Customer accommodation, trading and other free-standing derivatives” in the first table in this Note.

We also enter into various derivatives primarily to provide derivative products to customers. To a lesser extent, we take positions based on market expectations or to benefit from price differentials between financial instruments and markets. These derivatives are not linked to specific assets and liabilities in the balance sheet or to forecasted transactions in an accounting hedge relationship and, therefore, do not qualify for hedge accounting. We also enter into free-standing derivatives for risk management that do not otherwise qualify for hedge accounting. They are carried at fair value with changes in fair value recorded as other noninterest income.

Free-standing derivatives also include embedded derivatives that are required to be accounted for separately from their host contract. We periodically issue hybrid long-term notes and CDs where the performance of the hybrid instrument notes is linked to an equity, commodity or currency index, or basket of such indices. These notes contain explicit terms that affect some or all

187

of the cash flows or the value of the note in a manner similar to a derivative instrument and therefore are considered to contain an “embedded” derivative instrument. The indices on which the performance of the hybrid instrument is calculated are not clearly and closely related to the host debt instrument. The “embedded” derivative is separated from the host contract and accounted for as a free-standing derivative. Additionally, we may invest in hybrid instruments that contain embedded derivatives,

such as credit derivatives, that are not clearly and closely related to the host contract. In such instances, we either elect fair value option for the hybrid instrument or separate the embedded derivative from the host contract and account for the host contract and derivative separately.

The following table shows the net gains recognized in the income statement related to derivatives not designated as hedging instruments.



	Year ended December 31,

(in millions)	2011			2010

Net gains (losses) recognized on free-standing derivatives (economic hedges):
Interest rate contracts
Recognized in noninterest income:
Mortgage banking (1)	$	246			1,611
Other (2)		(157	)		(22	)
Foreign exchange contracts (2)		70			103
Equity contracts (2)		(5	)		–
Credit contracts (2)		(18	)		(174	)

Subtotal		136			1,518

Net gains (losses) recognized on customer accommodation, trading and other free-standing derivatives:
Interest rate contracts
Recognized in noninterest income:
Mortgage banking (3)		3,594			3,305
Other (4)		298			224
Commodity contracts (4)		124			65
Equity contracts (4)		769			441
Foreign exchange contracts (4)		698			565
Credit contracts (4)		(200	)		(710	)
Other (4)		(5	)		10

Subtotal		5,278			3,900

Net gains recognized related to derivatives not designated as hedging instruments	$	5,414			5,418

(1)	Predominantly mortgage banking noninterest income including gains (losses) on the derivatives used as economic hedges of MSRs measured at fair value, interest rate lock commitments and mortgages held for sale.

(2)	Predominantly included in other noninterest income.

(3)	Predominantly mortgage banking noninterest income including gains (losses) on interest rate lock commitments.

(4)	Predominantly included in net gains from trading activities in noninterest income.

Credit Derivatives

We use credit derivatives primarily to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides an ability to recover a significant portion of any amounts that would be paid under the sold credit derivatives. We would be required to perform under the noted credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.

188

Note 16: Derivatives (continued)

The following table provides details of sold and purchased credit derivatives.



			Notional amount

(in millions)	Fair value liability		Protection sold (A)		Protection sold - non- investment grade		Protection purchased with identical underlyings (B)		Net protection sold (A) - (B)		Other protection purchased		Range of maturities

December 31, 2011
Credit default swaps on:
Corporate bonds	$	1,002		24,634		14,043		13,329		11,305		9,404		2012-2021
Structured products		3,308		4,691		4,300		2,194		2,497		1,335		2016-2056
Credit protection on:
Default swap index		68		3,006		843		2,341		665		912		2012-2017
Commercial mortgage- backed securities index		713		1,357		458		19		1,338		1,403		2049-2052
Asset-backed securities index		76		83		83		8		75		116		2037-2046
Loan deliverable credit default swaps		2		460		453		355		105		251		2012-2016
Other		9		4,172		3,637		126		4,046		4,422		2012-2056

Total credit derivatives	$	5,178		38,403		23,817		18,372		20,031		17,843


December 31, 2010
Credit default swaps on:
Corporate bonds	$	810		30,445		16,360		17,978		12,467		9,440		2011-2020
Structured products		4,145		5,825		5,246		4,948		877		2,482		2016-2056
Credit protection on:
Default swap index		12		2,700		909		2,167		533		1,106		2011-2017
Commercial mortgage-backed securities index		717		1,977		612		924		1,053		779		2049-2052
Asset-backed securities index		128		144		144		46		98		142		2037-2046
Loan deliverable credit default swaps		2		481		456		391		90		261		2011-2014
Other		12		6,127		5,348		41		6,086		2,745		2011-2056

Total credit derivatives	$	5,826		47,699		29,075		26,495		21,204		16,955

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be an extremely remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

189

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt, based on certain major credit rating agencies indicated in the relevant contracts, were to fall below investment grade, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a net liability position was $17.1 billion and $12.6 billion at December 31, 2011 and 2010, respectively, for which we had posted $15.0 billion and $12.0 billion, respectively, in collateral in the normal course of business. If the credit-risk-related contingent features underlying these agreements had been triggered on December 31, 2011 or 2010, we would have been required to post additional collateral of $2.1 billion, or $1.0 billion, respectively, or potentially settle the contract in an amount equal to its fair value.

Counterparty Credit Risk

By using derivatives, we are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet. The amounts reported as a derivative asset are derivative contracts in a gain position, and to the extent subject to master netting arrangements, net of derivatives in a loss position with the same counterparty and cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. To the extent the master netting arrangements and other criteria meet the applicable requirements, derivatives balances and related cash collateral amounts are shown net in the balance sheet. Counterparty credit risk related to derivatives is considered in determining fair value and our assessment of hedge effectiveness.

Note 17: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Trading assets, securities available for sale, derivatives, substantially all prime residential MHFS, certain commercial LHFS, certain loans held for investment, fair value MSRs, principal investments and securities sold but not yet purchased (short sale liabilities) are recorded at fair value on a recurring basis. We generally do not record our issued debt at fair value. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as certain residential and commercial MHFS, certain LHFS, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets.

We adopted new guidance on fair value measurements effective January 1, 2009, which addresses measuring fair value in situations where markets are inactive and transactions are not orderly. This guidance states transaction or quoted prices for assets or liabilities in inactive markets may require adjustment due to the uncertainty of whether the underlying transactions are orderly. Prior to our adoption of the new provisions for measuring fair value, we primarily used unadjusted independent vendor or broker quoted prices to measure fair value for substantially all securities available for sale.

In connection with the change in guidance for fair value measurement, we developed policies and procedures to determine when the level and volume of activity for our assets and liabilities requiring fair value measurements has significantly declined relative to normal conditions. For such items that use price quotes, such as certain security classes within securities available for sale, the degree of market inactivity and distressed transactions was analyzed to determine the appropriate adjustment to the price quotes.

The security classes where we consider the market to be less orderly include primarily non-agency residential MBS. The methodology used to adjust the quotes involved weighting the

price quotes and results of internal pricing techniques such as the net present value of future expected cash flows (with observable inputs, where available) discounted at a rate of return market participants require. The significant inputs utilized in the internal pricing techniques, which were estimated by type of underlying collateral, included credit loss assumptions, estimated prepayment speeds and appropriate discount rates.

The more active and orderly markets for particular security classes were determined to be, the more weighting we assigned to price quotes. The less active and orderly markets were determined to be, the less weighting we assigned to price quotes. We continually assess the level and volume of market activity in our investment security classes in determining adjustments, if any, to price quotes. Given market conditions can change over time, determination of which securities markets are considered active or inactive, and if inactive, the degree to which price quotes require adjustment, can also change.

Fair Value Hierarchy

We group our assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

•

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

•

Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

190

Note 17: Fair Values of Assets and Liabilities (continued)

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. For securities in inactive markets, we use a predetermined percentage to evaluate the impact of fair value adjustments derived from weighting both external and internal indications of value to determine if the instrument is classified as Level 2 or Level 3. Based upon the specific facts and circumstances of each instrument or instrument category, judgments are made regarding the significance of the Level 3 inputs to the instruments’ fair value measurement in its entirety. If Level 3 inputs are considered significant, the instrument is classified as Level 3.

Determination of Fair Value

We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.

In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon our own estimates or combination of our own estimates and independent vendor or broker pricing, and the measurements are often calculated based on current pricing for products we offer or issue, the economic and competitive environment, the characteristics of the asset or liability and other such factors. As with any valuation technique used to estimate fair value, changes in underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. Accordingly, these fair value estimates may not be realized in an actual sale or immediate settlement of the asset or liability.

We incorporate lack of liquidity into our fair value measurement based on the type of asset or liability measured and the valuation methodology used. For example, for certain residential MHFS and certain securities where the significant inputs have become unobservable due to illiquid markets and vendor or broker pricing is not used, we use a discounted cash flow technique to measure fair value. This technique incorporates forecasting of expected cash flows (adjusted for credit loss assumptions and estimated prepayment speeds) discounted at an appropriate market discount rate to reflect the lack of liquidity in the market that a market participant would consider. For other securities where vendor or broker pricing is used, we use either unadjusted broker quotes or vendor prices or vendor or broker prices adjusted by weighting them with internal discounted cash flow techniques to measure fair value. These unadjusted vendor or broker prices inherently reflect any lack of liquidity in the market as the fair value measurement represents an exit price from a market participant viewpoint.

Following are descriptions of the valuation methodologies used for assets and liabilities recorded at fair value on a

recurring or nonrecurring basis and for estimating fair value for financial instruments not recorded at fair value.

Assets

SHORT-TERM FINANCIAL ASSETS Short-term financial assets include cash and due from banks, federal funds sold and securities purchased under resale agreements and due from customers on acceptances. These assets are carried at historical cost. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

TRADING ASSETS (EXCLUDING DERIVATIVES) AND SECURITIES AVAILABLE FOR SALE Trading assets and securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices in active markets, if available. Such instruments are classified within Level 1 of the fair value hierarchy. Examples include exchange-traded equity securities and some highly liquid government securities such as U.S. Treasuries. When instruments are traded in secondary markets and quoted market prices do not exist for such securities, we generally rely on internal valuation techniques or on prices obtained from independent pricing services or brokers (collectively, vendors) or combination thereof.

Trading securities are mostly valued using trader prices that are subject to internal price verification procedures. The majority of fair values derived using internal valuation techniques are verified against multiple pricing sources, including prices obtained from independent vendors. Vendors compile prices from various sources and often apply matrix pricing for similar securities when no price is observable. We review pricing methodologies provided by the vendors in order to determine if observable market information is being used, versus unobservable inputs. When we evaluate the appropriateness of an internal trader price compared with vendor prices, our considerations include the range and quality of vendor prices. Vendor prices are used to ensure the reasonableness of a trader price; however valuing financial instruments involves judgments acquired from knowledge of a particular market and is not perfunctory. If a trader asserts that a vendor price is not reflective of market value, justification for using the trader price, including recent sales activity where possible, must be provided to and approved by the appropriate levels of management.

Similarly, while securities available for sale traded in secondary markets are typically valued using unadjusted vendor prices or vendor prices adjusted by weighting them with internal discounted cash flow techniques, these prices are reviewed and, if deemed inappropriate by a trader who has the most knowledge of a particular market, can be adjusted. Securities measured with these internal valuation techniques are generally classified as Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models, discounted cash flow analyses using significant inputs observable in the market where available or combination of multiple valuation techniques. Examples include certain residential and commercial MBS, municipal bonds, U.S. government and agency MBS, and corporate debt securities.

191

Security fair value measurements using significant inputs that are unobservable in the market due to limited activity or a less liquid market are classified as Level 3 in the fair value hierarchy. Such measurements include securities valued using internal models or a combination of multiple valuation techniques such as weighting of internal models and vendor or broker pricing, where the unobservable inputs are significant to the overall fair value measurement. Securities classified as Level 3 include certain residential and commercial MBS, asset-backed securities collateralized by auto leases or loans and cash reserves, CDOs and CLOs, and certain residual and retained interests in residential mortgage loan securitizations. CDOs are valued using the prices of similar instruments, the pricing of completed or pending third party transactions or the pricing of the underlying collateral within the CDO. Where vendor or broker prices are not readily available, management’s best estimate is used.

MORTGAGES HELD FOR SALE (MHFS) We carry substantially all of our residential MHFS portfolio at fair value. Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. As necessary, these prices are adjusted for typical securitization activities, including servicing value, portfolio composition, market conditions and liquidity. Most of our MHFS are classified as Level 2. For the portion where market pricing data is not available, we use a discounted cash flow model to estimate fair value and, accordingly, classify as Level 3.

LOANS HELD FOR SALE (LHFS) LHFS are carried at the lower of cost or market value, or at fair value. The fair value of LHFS is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, we classify those loans subjected to nonrecurring fair value adjustments as Level 2.

LOANS For the carrying value of loans, including PCI loans, see Note 1. Although most loans are not recorded at fair value on a recurring basis, reverse mortgages, which were previously sold under a GNMA securitization program and were consolidated during fourth quarter 2011, are held at fair value on a recurring basis. In addition, we record nonrecurring fair value adjustments to loans to reflect partial write-downs that are based on the observable market price of the loan or current appraised value of the collateral.

We provide fair value estimates in this disclosure for loans that are not recorded at fair value on a recurring or nonrecurring basis. Those estimates differentiate loans based on their financial characteristics, such as product classification, loan category, pricing features and remaining maturity. Prepayment and credit loss estimates are evaluated by product and loan rate.

The fair value of commercial loans is calculated by discounting contractual cash flows, adjusted for credit loss estimates, using discount rates that reflect our current pricing for loans with similar characteristics and remaining maturity.

For real estate 1-4 family first and junior lien mortgages, fair value is calculated by discounting contractual cash flows, adjusted for prepayment and credit loss estimates, using discount rates based on current industry pricing (where readily available) or our own estimate of an appropriate risk-adjusted discount rate for loans of similar size, type, remaining maturity and repricing characteristics.

The carrying value of credit card loans, which is adjusted for estimates of credit losses inherent in the portfolio at the balance sheet date, is reported as a reasonable estimate of fair value.

For all other consumer loans, the fair value is generally calculated by discounting the contractual cash flows, adjusted for prepayment and credit loss estimates, based on the current rates we offer for loans with similar characteristics.

Loan commitments, standby letters of credit and commercial and similar letters of credit generate ongoing fees at our current pricing levels, which are recognized over the term of the commitment period. In situations where the credit quality of the counterparty to a commitment has declined, we record an allowance. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the related allowance. Certain letters of credit that are hedged with derivative instruments are carried at fair value in trading assets or liabilities. For those letters of credit fair value is calculated based on readily quotable credit default spreads, using a market risk credit default swap model.

DERIVATIVES Quoted market prices are available and used for our exchange-traded derivatives, such as certain interest rate futures and option contracts, which we classify as Level 1. However, substantially all of our derivatives are traded in over-the-counter (OTC) markets where quoted market prices are not always readily available. Therefore we value most OTC derivatives using internal valuation techniques. Valuation techniques and inputs to internally-developed models depend on the type of derivative and nature of the underlying rate, price or index upon which the derivative’s value is based. Key inputs can include yield curves, credit curves, foreign-exchange rates, prepayment rates, volatility measurements and correlation of such inputs. Where model inputs can be observed in a liquid market and the model does not require significant judgment, such derivatives are typically classified as Level 2 of the fair value hierarchy. Examples of derivatives classified as Level 2 include generic interest rate swaps, foreign currency swaps, commodity swaps, and certain option and forward contracts. When instruments are traded in less liquid markets and significant inputs are unobservable, such derivatives are classified as Level 3. Examples of derivatives classified as Level 3 include complex and highly structured derivatives, certain credit default swaps, interest rate lock commitments written for our residential mortgage loans that we intend to sell and long dated equity options where volatility is not observable. Additionally, significant judgments are required when classifying financial instruments within the fair value hierarchy, particularly between Level 2 and 3, as is the case for certain derivatives.

192

Note 17: Fair Values of Assets and Liabilities (continued)

MORTGAGE SERVICING RIGHTS (MSRS) AND CERTAIN OTHER INTERESTS HELD IN SECURITIZATIONS MSRs and certain other interests held in securitizations (e.g., interest-only strips) do not trade in an active market with readily observable prices. Accordingly, we determine the fair value of MSRs using a valuation model that calculates the present value of estimated future net servicing income cash flows. The model incorporates assumptions that market participants use in estimating future net servicing income cash flows, including estimates of prepayment speeds (including housing price volatility), discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, ancillary income and late fees. Commercial MSRs and certain residential MSRs are carried at lower of cost or market value, and therefore can be subject to fair value measurements on a nonrecurring basis. Changes in the fair value of MSRs occur primarily due to the collection/realization of expected cash flows, as well as changes in valuation inputs and assumptions. For other interests held in securitizations (such as interest-only strips) we use a valuation model that calculates the present value of estimated future cash flows. The model incorporates our own estimates of assumptions market participants use in determining the fair value, including estimates of prepayment speeds, discount rates, defaults and contractual fee income. Interest-only strips are recorded as trading assets. Our valuation approach is validated by our internal valuation model validation group and our valuation estimates are periodically benchmarked to independent appraisals. Fair value measurements of our MSRs and interest-only strips use significant unobservable inputs and, accordingly, we classify as Level 3.

FORECLOSED ASSETS Foreclosed assets are carried at net realizable value, which represents fair value less estimated costs to sell. Fair value is generally based upon independent market prices or appraised values of the collateral and, accordingly, we classify foreclosed assets as Level 2.

NONMARKETABLE EQUITY INVESTMENTS Nonmarketable equity investments are generally recorded under the cost or equity method of accounting. There are generally restrictions on the sale and/or liquidation of these investments, including federal bank stock. Federal bank stock carrying value approximates fair value. We use facts and circumstances available to estimate the fair value of our nonmarketable equity investments. We typically consider our access to and need for capital (including recent or projected financing activity), qualitative assessments of the viability of the investee, evaluation of the financial statements of the investee and prospects for its future. Public equity investments are valued using quoted market prices and discounts are only applied when there are trading restrictions that are an attribute of the investment. We estimate the fair value of investments in non-public securities using metrics such as security prices of comparable public companies, acquisition prices for similar companies and original investment purchase price multiples, while also incorporating a portfolio company’s financial performance and specific factors. For investments in private equity funds, we use the NAV provided by the fund sponsor as an appropriate measure of fair

value. In some cases, such NAVs require adjustments based on certain unobservable inputs.

Liabilities

DEPOSIT LIABILITIES Deposit liabilities are carried at historical cost. The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking, and market rate and other savings, is equal to the amount payable on demand at the measurement date. The fair value of other time deposits is calculated based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for like wholesale deposits with similar remaining maturities.

SHORT-TERM FINANCIAL LIABILITIES Short-term financial liabilities are carried at historical cost and include federal funds purchased and securities sold under repurchase agreements, commercial paper and other short-term borrowings. The carrying amount is a reasonable estimate of fair value because of the relatively short time between the origination of the instrument and its expected realization.

OTHER LIABILITIES Other liabilities recorded at fair value on a recurring basis, excluding derivative liabilities (see the “Derivatives” section for derivative liabilities), includes primarily short sale liabilities. Short sale liabilities are classified as either Level 1 or Level 2, generally dependent upon whether the underlying securities have readily obtainable quoted prices in active exchange markets.

LONG-TERM DEBT Long-term debt is generally carried at amortized cost. For disclosure, we are required to estimate the fair value of long-term debt. Generally, the discounted cash flow method is used to estimate the fair value of our long-term debt. Contractual cash flows are discounted using rates currently offered for new notes with similar remaining maturities and, as such, these discount rates include our current spread levels.

193

Fair Value Measurements from Independent Brokers or Independent Third Party Pricing Services

For certain assets and liabilities, we obtain fair value measurements from independent brokers or independent third party pricing services and record the unadjusted fair value in our

financial statements. The detail by level is shown in the table below. Fair value measurements obtained from independent brokers or independent third party pricing services that we have adjusted to determine the fair value recorded in our financial statements are not included in the following table.

Independent brokers

Third party pricing services

(in millions)

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

December 31, 2011

Trading assets (excluding derivatives)

–

446

1,086

1,564

–

Securities available for sale:

Securities of U.S. Treasury and federal agencies

–

868

5,748

–

Securities of U.S. states and political subdivisions

–

21,014

–

Mortgage-backed securities

–

2,342

–

118,107

186

Other debt securities

–

1,091

8,163

–

26,222

145

Total debt securities

–

3,449

8,206

868

171,091

331

Total marketable equity securities

–

665

Total securities available for sale

–

3,449

8,206

901

171,756

334

Derivatives (trading and other assets)

–

834

–

Loans held for sale

–

Derivatives (liabilities)

–

850

–

Other liabilities

–

249

–

December 31, 2010

Trading assets (excluding derivatives)

–

1,211

2,123

–

Securities available for sale:

Securities of U.S. Treasury and federal agencies

–

936

263

–

Securities of U.S. states and political subdivisions

–

14,055

–

Mortgage-backed securities

–

102,206

169

Other debt securities

–

201

4,133

–

14,376

606

Total debt securities

–

219

4,183

936

130,900

775

Total marketable equity securities

–

201

727

Total securities available for sale

–

219

4,183

1,137

131,627

791

Derivatives (trading and other assets)

–

740

Loans held for sale

–

Derivatives (liabilities)

–

841

–

Other liabilities

–

393

–

194

Note 17: Fair Values of Assets and Liabilities (continued)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The tables below present the balances of assets and liabilities measured at fair value on a recurring basis.

(in millions)

Level 1

Level 2

Level 3

Netting

Total

December 31, 2011

Trading assets (excluding derivatives)

Securities of U.S. Treasury and federal agencies

3,342

3,638

–

6,980

Securities of U.S. states and political subdivisions

–

2,438

–

2,491

Collateralized debt obligations (1)

–

1,582

–

1,582

Corporate debt securities

–

6,479

–

6,576

Mortgage-backed securities

–

34,959

108

–

35,067

Asset-backed securities

–

1,093

190

–

1,283

Equity securities

1,682

172

–

1,858

Total trading securities

5,024

48,779

2,034

–

55,837

Other trading assets

1,847

115

–

2,030

Total trading assets (excluding derivatives)

6,871

48,847

2,149

–

57,867

Securities of U.S. Treasury and federal agencies

869

6,099

–

6,968

Securities of U.S. states and political subdivisions

–

21,077

11,516

–

32,593

Mortgage-backed securities:

Federal agencies

–

96,754

–

96,754

Residential

–

17,775

–

17,836

Commercial

–

17,918

232

–

18,150

Total mortgage-backed securities

–

132,447

293

–

132,740

Corporate debt securities

317

17,792

295

–

18,404

Collateralized debt obligations (2)

–

8,599

–

8,599

Asset-backed securities:

Auto loans and leases

–

6,641

–

6,727

Home equity loans

–

650

282

–

932

Other asset-backed securities

–

8,326

2,863

–

11,189

Total asset-backed securities

–

9,062

9,786

–

18,848

Other debt securities

–

1,044

–

1,044

Total debt securities

1,186

187,521

30,489

–

219,196

Marketable equity securities:

Perpetual preferred securities (3)

552

631

1,344

–

2,527

Other marketable equity securities

814

–

890

Total marketable equity securities

1,366

684

1,367

–

3,417

Total securities available for sale

2,552

188,205

31,856

–

222,613

Mortgages held for sale

–

41,381

3,410

–

44,791

Loans held for sale

–

1,176

–

1,176

Loans

–

5,893

–

5,916

Mortgage servicing rights (residential)

–

12,603

–

12,603

Derivative assets:

Interest rate contracts

–

91,022

1,055

–

92,077

Commodity contracts

–

4,351

–

4,351

Equity contracts

471

2,737

560

–

3,768

Foreign exchange contracts

4,873

–

4,924

Credit contracts

–

2,219

1,357

–

3,576

Other derivative contracts

–

Netting

–

(81,143

)(4)

(81,143

)

Total derivative assets (5)

506

105,202

2,988

(81,143

)

27,553

Other assets

135

244

–

467

Total assets recorded at fair value

10,017

390,839

53,273

(81,143

)

372,986

Derivative liabilities:

Interest rate contracts

)

(88,164

)

(446

)

–

(88,614

)

Commodity contracts

–

(4,234

)

–

(4,234

)

Equity contracts

(229

)

(2,797

)

(635

)

–

(3,661

)

Foreign exchange contracts

(31

)

(3,324

)

(23

)

–

(3,378

)

Credit contracts

–

(2,099

)

(3,355

)

–

(5,454

)

Other derivative contracts

–

(117

)

–

(117

)

Netting

–

89,990

(4)

89,990

Total derivative liabilities (6)

(264

)

(100,618

)

(4,576

)

89,990

(15,468

)

Short sale liabilities:

Securities of U.S. Treasury and federal agencies

(3,820

)

(919

)

–

(4,739

)

Securities of U.S. states and political subdivisions

–

)

–

)

Corporate debt securities

–

(4,112

)

–

(4,112

)

Equity securities

(944

)

(298

)

–

(1,242

)

Other securities

–

(737

)

–

(737

)

Total short sale liabilities

(4,764

)

(6,068

)

–

(10,832

)

Other liabilities

–

(98

)

(44

)

–

(142

)

Total liabilities recorded at fair value

(5,028

)

(106,784

)

(4,620

)

89,990

(26,442

)

(1)	Includes collateralized loan obligations of $583 million that are classified as trading assets.

(2)	Includes collateralized loan obligations of $8.1 billion that are classified as securities available for sale.

(3)	Perpetual preferred securities include ARS and corporate preferred securities. See Note 8 for additional information.

(4)

Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement.

(5)	Derivative assets include contracts qualifying for hedge accounting, economic hedges, and derivatives included in trading assets.

(6)	Derivative liabilities include contracts qualifying for hedge accounting, economic hedges, and derivatives included in trading liabilities.

(continued on following page)

195

(continued from previous page)



(in millions)	Level 1			Level 2			Level 3			Netting			Total

December 31, 2010
Trading assets (excluding derivatives)
Securities of U.S. Treasury and federal agencies	$	1,340			3,335			–			–			4,675
Securities of U.S. states and political subdivisions		–			1,893			5			–			1,898
Collateralized debt obligations (1)		–			–			1,915			–			1,915
Corporate debt securities		–			10,164			166			–			10,330
Mortgage-backed securities		–			9,137			117			–			9,254
Asset-backed securities		–			1,811			366			–			2,177
Equity securities		2,143			625			34			–			2,802

Total trading securities		3,483			26,965			2,603			–			33,051

Other trading assets		816			987			136			–			1,939

Total trading assets (excluding derivatives)		4,299			27,952			2,739			–			34,990

Securities of U.S. Treasury and federal agencies		938			666			–			–			1,604
Securities of U.S. states and political subdivisions		–			14,090			4,564			–			18,654
Mortgage-backed securities:
Federal agencies		–			82,037			–			–			82,037
Residential		–			20,183			20			–			20,203
Commercial		–			13,337			217			–			13,554

Total mortgage-backed securities		–			115,557			237			–			115,794

Corporate debt securities		–			9,846			433			–			10,279
Collateralized debt obligations (2)		–			–			4,778			–			4,778
Asset-backed securities:
Auto loans and leases		–			223			6,133			–			6,356
Home equity loans		–			998			112			–			1,110
Other asset-backed securities		–			5,285			3,150			–			8,435

Total asset-backed securities		–			6,506			9,395			–			15,901

Other debt securities		–			370			85			–			455

Total debt securities		938			147,035			19,492			–			167,465

Marketable equity securities:
Perpetual preferred securities (3)		721			677			2,434			–			3,832
Other marketable equity securities		1,224			101			32			–			1,357

Total marketable equity securities		1,945			778			2,466			–			5,189

Total securities available for sale		2,883			147,813			21,958			–			172,654

Mortgages held for sale		–			44,226			3,305			–			47,531
Loans held for sale		–			873			–			–			873
Loans		–			–			309			–			309
Mortgage servicing rights (residential)		–			–			14,467			–			14,467
Derivative assets:
Interest rate contracts		–			67,380			869			–			68,249
Commodity contracts		–			4,133			–			–			4,133
Equity contracts		511			2,040			721			–			3,272
Foreign exchange contracts		42			4,257			51			–			4,350
Credit contracts		–			2,148			3,198			–			5,346
Other derivative contracts		8			–			–			–			8

Netting		–			–			–			(63,469	)(4)		(63,469	)

Total derivative assets (5)		561			79,958			4,839			(63,469	)		21,889

Other assets		38			45			314			–			397

Total assets recorded at fair value	$	7,781			300,867			47,931			(63,469	)		293,110

Derivative liabilities:
Interest rate contracts	$	(7	)		(62,769	)		(792	)		–			(63,568	)
Commodity contracts		–			(3,917	)		(1	)		–			(3,918	)
Equity contracts		(259	)		(2,291	)		(946	)		–			(3,496	)
Foreign exchange contracts		(69	)		(3,351	)		(42	)		–			(3,462	)
Credit contracts		–			(2,199	)		(4,215	)		–			(6,414	)
Other derivative contracts		–			–			(35	)		–			(35	)

Netting		–			–			–			70,009	(4)		70,009

Total derivative liabilities (6)		(335	)		(74,527	)		(6,031	)		70,009			(10,884	)

Short sale liabilities:
Securities of U.S. Treasury and federal agencies		(2,827	)		(1,129	)		–			–			(3,956	)
Corporate debt securities		–			(3,798	)		–			–			(3,798	)
Equity securities		(1,701	)		(178	)		–			–			(1,879	)
Other securities		–			(347	)		–			–			(347	)

Total short sale liabilities		(4,528	)		(5,452	)		–			–			(9,980	)

Other liabilities		–			(36	)		(344	)		–			(380	)

Total liabilities recorded at fair value	$	(4,863	)		(80,015	)		(6,375	)		70,009			(21,244	)

(1)	Includes collateralized loan obligations of $671 million that are classified as trading assets.

(2)	Includes collateralized loan obligations of $4.2 billion that are classified as securities available for sale.

(3)	Perpetual preferred securities include ARS and corporate preferred securities. See Note 8 for additional information.

(4)

(5)	Derivative assets include contracts qualifying for hedge accounting, economic hedges, and derivatives included in trading assets.

(6)	Derivative liabilities include contracts qualifying for hedge accounting, economic hedges and derivatives included in trading liabilities.

196

Note 17: Fair Values of Assets and Liabilities (continued)

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows.



				Total net gains (losses) included in						Purchases, sales, issuances and settlements, net												Net unrealized gains (losses) included in net income related to assets and liabilities held at period end (1)

(in millions)	Balance, beginning of year			Net income			Other compre- hensive income						Transfers into Level 3			Transfers out of Level 3			Balance, end of year

Year ended December 31, 2011
Trading assets (excluding derivatives):
Securities of U.S. states and political subdivisions	$	5			3			–			12			51			(18	)		53			–
Collateralized debt obligations		1,915			(24	)		–			(297	)		–			(12	)		1,582			1
Corporate debt securities		166			1			–			(70	)		–			–			97			(80	)
Mortgage-backed securities		117			6			–			(36	)		31			(10	)		108			(4	)
Asset-backed securities		366			75			–			(122	)		–			(129	)		190			(2	)
Equity securities		34			(3	)		–			(28	)		1			–			4			72

Total trading securities		2,603			58			–			(541	)		83			(169	)		2,034			(13	)

Other trading assets		136			(21	)		–			2			–			(2	)		115			14

Total trading assets (excluding derivatives)		2,739			37			–			(539	)		83			(171	)		2,149			1	(2)

Securities available for sale:
Securities of U.S. states and political subdivisions		4,564			10			52			6,923			–			(33	)		11,516			9
Mortgage-backed securities:
Residential		20			(9	)		(1	)		(6	)		121			(64	)		61			(8	)
Commercial		217			(44	)		59			2			2			(4	)		232			(56	)

Total mortgage-backed securities		237			(53	)		58			(4	)		123			(68	)		293			(64	)

Corporate debt securities		433			150			(112	)		(185	)		41			(32	)		295			(3	)
Collateralized debt obligations		4,778			290			(202	)		3,725			8			–			8,599			–
Asset-backed securities:
Auto loans and leases		6,133			4			(27	)		531			–			–			6,641			–
Home equity loans		112			(3	)		(18	)		40			221			(70	)		282			(25	)
Other asset-backed securities		3,150			10			13			181			107			(598	)		2,863			(7	)

Total asset-backed securities		9,395			11			(32	)		752			328			(668	)		9,786			(32	)

Other debt securities		85			–			–			(85	)		–			–			–			–

Total debt securities		19,492			408			(236	)		11,126			500			(801	)		30,489			(90	) (3)

Marketable equity securities:
Perpetual preferred securities		2,434			160			(7	)		(1,243	)		2			(2	)		1,344			(53	)
Other marketable equity securities		32			–			1			(10	)		–			–			23			–

Total marketable equity securities		2,466			160			(6	)		(1,253	)		2			(2	)		1,367			(53	)(4)

Total securities available for sale		21,958			568			(242	)		9,873			502			(803	)		31,856			(143	)

Mortgages held for sale		3,305			44			–			(104	)		492			(327	)		3,410			43	(5)
Loans		309			13			–			(299	)		–			–			23			–	(5)
Mortgage servicing rights		14,467			(5,821	)		–			3,957			–			–			12,603			(3,680	) (5)
Net derivative assets and liabilities:
Interest rate contracts		77			4,051			–			(3,414	)		(1	)		(104	)		609			309
Commodity contracts		(1	)		2			–			(9	)		(3	)		11			–			1
Equity contracts		(225	)		126			–			28			(6	)		2			(75	)		55
Foreign exchange contracts		9			(8	)		–			(6	)		1			(3	)		(7	)		(19	)
Credit contracts		(1,017	)		(856	)		–			(123	)		–			(2	)		(1,998	)		50
Other derivative contracts		(35	)		(82	)		–			–			–			–			(117	)		–

Total derivative contracts		(1,192	)		3,233			–			(3,524	)		(9	)		(96	)		(1,588	)		396	(6)

Other assets		314			12			–			(82	)		–			–			244			3	(2)
Short sale liabilities		–			–			–			–			–			–			–			–	(2)
Other liabilities (excluding derivatives)		(344	)		(8	)		–			308			–			–			(44	)		–	(5)

(1)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.

(2)	Included in trading activities and other noninterest income in the income statement.

(3)	Included in debt securities available for sale in the income statement.

(4)	Included in equity investments in the income statement.

(5)	Included in mortgage banking and other noninterest income in the income statement.

(6)	Included in mortgage banking, trading activities and other noninterest income in the income statement.

(continued on following page)

197

(continued from previous page)

The following table presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2011.

(in millions)

Purchases

Sales

Issuances

Settlements

Net

Year ended December 31, 2011

Trading assets (excluding derivatives):

Securities of U.S. states and political subdivisions

313

(199

)

–

(102

)

Collateralized debt obligations

1,054

(1,310

)

–

(41

)

(297

)

Corporate debt securities

(150

)

–

(70

)

Mortgage-backed securities

759

(790

)

–

)

(36

)

Asset-backed securities

516

(585

)

–

(53

)

(122

)

Equity securities

(22

)

–

(12

)

(28

)

Total trading securities

2,728

(3,056

)

–

(213

)

(541

)

Other trading assets

–

Total trading assets (excluding derivatives)

2,728

(3,056

)

(213

)

(539

)

Securities available for sale:

Securities of U.S. states and political subdivisions

4,280

)

4,723

(2,076

)

6,923

Mortgage-backed securities:

Residential

–

)

Commercial

–

(19

)

Total mortgage-backed securities

–

(28

)

Corporate debt securities

(208

)

(72

)

(185

)

Collateralized debt obligations

4,805

(36

)

–

(1,044

)

3,725

Asset-backed securities:

Auto loans and leases

5,918

–

333

(5,720

)

531

Home equity loans

–

)

Other asset-backed securities

1,428

(456

)

1,395

(2,186

)

181

Total asset-backed securities

7,390

(456

)

1,728

(7,910

)

752

Other debt securities

–

(85

)

–

(85

)

Total debt securities

16,593

(789

)

6,452

(11,130

)

11,126

Marketable equity securities:

Perpetual preferred securities

(13

)

–

(1,231

)

(1,243

)

Other marketable equity securities

(12

)

–

)

(10

)

Total marketable equity securities

(25

)

–

(1,232

)

(1,253

)

Total securities available for sale

16,597

(814

)

6,452

(12,362

)

9,873

Mortgages held for sale

576

(21

)

–

(659

)

(104

)

Loans

(309

)

–

(13

)

(299

)

Mortgage servicing rights

–

4,011

(54

)

3,957

Net derivative assets and liabilities:

Interest rate contracts

)

–

(3,419

)

(3,414

)

Commodity contracts

(17

)

–

)

Equity contracts

123

(255

)

–

160

Foreign exchange contracts

)

–

)

Credit contracts

)

–

(126

)

(123

)

Other derivative contracts

–

Total derivative contracts

146

(280

)

–

(3,390

)

(3,524

)

Other assets

)

–

(91

)

(82

)

Short sale liabilities

(125

)

124

–

Other liabilities (excluding derivatives)

(10

)

–

317

308

198

Note 17: Fair Values of Assets and Liabilities (continued)



				Total net gains (losses) included in						Purchases, sales, issuances and settlements, net												Net unrealized gains (losses) included in net income related to assets and liabilities held at period end (1)

(in millions)	Balance, beginning of year			Net income			Other compre- hensive income						Transfers into Level 3			Transfers out of Level 3			Balance, end of year

Year ended December 31, 2010
Trading assets (excluding derivatives):
Securities of U.S. states and political subdivisions	$	5			2			–			(11	)		9			–			5			1
Collateralized debt obligations		1,133			418			–			364			–			–			1,915			11
Corporate debt securities		223			9			–			67			9			(142	)		166			16
Mortgage-backed securities		146			(7	)		–			101			–			(123	)		117			(17	)
Asset-backed securities		497			80			–			(141	)		1			(71	)		366			67
Equity securities		36			1			–			(5	)		2			–			34			(2	)

Total trading securities		2,040			503			–			375			21			(336	)		2,603			76

Other trading assets		271			(35	)		–			(19	)		–			(81	)		136			10

Total trading assets (excluding derivatives)		2,311			468			–			356			21			(417	)		2,739			86	(2)

Securities available for sale:
Securities of U.S. states and political subdivisions		818			12			63			3,485			192			(6	)		4,564			4
Mortgage-backed securities:
Residential		1,084			7			(21	)		(48	)		274			(1,276	)		20			(8	)
Commercial		1,799			(28	)		404			(10	)		227			(2,175	)		217			(5	)

Total mortgage-backed securities		2,883			(21	)		383			(58	)		501			(3,451	)		237			(13	)

Corporate debt securities		367			7			68			(113	)		259			(155	)		433			–
Collateralized debt obligations		3,725			210			96			959			–			(212	)		4,778			(14	)
Asset-backed securities:
Auto loans and leases		8,525			1			(246	)		(2,403	)		256			–			6,133			–
Home equity loans		1,677			1			40			48			113			(1,767	)		112			(5	)
Other asset-backed securities		2,308			51			(19	)		903			1,057			(1,150	)		3,150			(12	)

Total asset-backed securities		12,510			53			(225	)		(1,452	)		1,426			(2,917	)		9,395			(17	)

Other debt securities		77			(15	)		11			12			–			–			85			–

Total debt securities		20,380			246			396			2,833			2,378			(6,741	)		19,492			(40	)(3)

Marketable equity securities:
Perpetual preferred securities		2,305			100			(31	)		6			80			(26	)		2,434			–
Other marketable equity securities		88			–			5			(21	)		14			(54	)		32			–

Total marketable equity securities		2,393			100			(26	)		(15	)		94			(80	)		2,466			–	(4)

Total securities available for sale		22,773			346			370			2,818			2,472			(6,821	)		21,958			(40	)

Mortgages held for sale		3,523			43			–			(253	)		380			(388	)		3,305			39	(5)
Loans		–			55			–			(112	)		1,035			(669	)		309			55	(5)
Mortgage servicing rights		16,004			(5,511	)		–			4,092			–			(118	)		14,467			(2,957	)(5)
Net derivative assets and liabilities:
Interest rate contracts		(114	)		3,514			–			(3,482	)		159			–			77			(266	)
Commodity contracts		–			(1	)		–			–			–			–			(1	)		(1	)
Equity contracts		(344	)		(104	)		–			169			–			54			(225	)		(19	)
Foreign exchange contracts		(1	)		21			–			(11	)		–			–			9			–
Credit contracts		(330	)		(675	)		–			(18	)		6			–			(1,017	)		(644	)
Other derivative contracts		(43	)		4			–			4			–			–			(35	)		–

Total derivative contracts		(832	)		2,759			–			(3,338	)		165			54			(1,192	)		(930	)(6)

Other assets		1,373			29			–			(103	)		4			(989	)		314			(38	)(2)
Short sale liabilities (corporate debt securities)		(26	)		(2	)		–			(37	)		–			65			–			–	(2)
Other liabilities (excluding derivatives)		(10	)		(55	)		–			94			(1,038	)		665			(344	)		(58	)(5)

(1)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.

(2)	Included in trading activities and other noninterest income in the income statement.

(3)	Included in debt securities available for sale in the income statement.

(4)	Included in equity investments in the income statement.

(5)	Included in mortgage banking and other noninterest income in the income statement.

(6)	Included in mortgage banking, trading activities and other noninterest income in the income statement.

(continued on following page)

199

(continued from previous page)



				Total net gains (losses) included in						Purchases, sales, issuances and settlements, net			Net transfers into and/ or out of Level 3						Net unrealized gains (losses) included in net income related to assets and liabilities held at period end (1)

(in millions)	Balance, beginning of year			Net income			Other compre- hensive income									Balance, end of year

Year ended December 31, 2009
Trading assets (excluding derivatives)	$	3,495			202			2			(1,749	)		361			2,311			276	(2)
Securities available for sale:
Securities of U.S. states and political subdivisions		903			23			–			25			(133	)		818			(8	)
Mortgage-backed securities:
Federal agencies		4			–			–			–			(4	)		–			–
Residential		3,510			(74	)		1,092			(759	)		(2,685	)		1,084			(227	)
Commercial		286			(220	)		894			41			798			1,799			(112	)

Total mortgage-backed securities		3,800			(294	)		1,986			(718	)		(1,891	)		2,883			(339	)

Corporate debt securities		282			3			61			(7	)		28			367			–
Collateralized debt obligations		2,083			125			577			623			317			3,725			(84	)
Other		12,799			136			1,368			584			(2,300	)		12,587			(94	)

Total debt securities		19,867			(7	)		3,992			507			(3,979	)		20,380			(525	)(3)

Marketable equity securities:
Perpetual preferred securities		2,775			104			144			(723	)		5			2,305			(1	)
Other marketable equity securities		50			–			(2	)		63			(23	)		88			–

Total marketable equity securities		2,825			104			142			(660	)		(18	)		2,393			(1	)(4)

Total securities available for sale	$	22,692			97			4,134			(153	)		(3,997	)		22,773			(526	)

Mortgages held for sale	$	4,718			(96	)		–			(921	)		(178	)		3,523			(109	)(5)
Mortgage servicing rights		14,714			(4,970	)		–			6,260			–			16,004			(1,534	)(5)
Net derivative assets and liabilities		37			1,439			–			(2,291	)		(17	)		(832	)		(799	)(6)
Other assets (excluding derivatives)		1,231			10			–			132			–			1,373			12	(2)
Liabilities (excluding derivatives)		(16	)		(11	)		–			1			(10	)		(36	)		14	(5)

(1)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.

(2)	Included in trading activities and other noninterest income in the income statement.

(3)	Included in debt securities available for sale in the income statement.

(4)	Included in equity investments in the income statement.

(5)	Included in mortgage banking and other noninterest income in the income statement.

(6)	Included in mortgage banking, trading activities and other noninterest income in the income statement.

200

Note 17: Fair Values of Assets and Liabilities (continued)

Changes in Fair Value Levels

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.

We evaluate the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. For the year ended December 31, 2011, we transferred $709 million of other trading assets from Level 2 to Level 1 due to use of more observable market data. We transferred $801 million of debt securities available for sale from Level 3 to Level 2 due to an increase in the volume of trading activity for certain securities, which resulted in increased occurrences of observable market prices. We also transferred $502 million of securities available for sale from Level 2 to Level 3 primarily due to a decrease in liquidity for certain asset-backed securities.

Significant changes to Level 3 assets for the year ended December 31, 2010 are described as follows:

•

We adopted new consolidation accounting guidance which impacted Level 3 balances for certain financial instruments. Reductions in Level 3 balances, which represent derecognition of existing investments in newly consolidated VIEs, are reflected as transfers out for the following categories: trading assets, $276 million; securities available for sale, $1.9 billion; and mortgage servicing rights, $118

million. Increases in Level 3 balances, which represent newly consolidated VIE assets, are reflected as transfers in for the following categories: securities available for sale, $829 million; loans, $366 million; and long-term debt, $359 million.

•

We transferred $4.9 billion of securities available for sale from Level 3 to Level 2 due to an increase in the volume of trading activity for certain mortgage-backed and other asset-backed securities, which resulted in increased occurrences of observable market prices. We also transferred $1.7 billion of debt securities available for sale from Level 2 to Level 3, primarily due to a decrease in liquidity for certain asset-backed securities.

For the year ended December 31, 2009, we transferred $4.0 billion of debt securities available for sale from Level 3 to Level 2 due to increased trading activity.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of LOCOM accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis in 2011 and 2010 that were still held in the balance sheet at each respective year end, the following table provides the fair value hierarchy and the carrying value of the related individual assets or portfolios at year end.

Carrying value at year end

(in millions)

Level 1

Level 2

Level 3

Total

December 31, 2011

Mortgages held for sale (1)

–

1,019

1,166

2,185

Loans held for sale

–

Loans :

Commercial

–

1,501

1,514

Consumer

–

4,163

4,167

Total loans (2)

–

5,664

5,681

Mortgage servicing rights (amortized)

–

293

Other assets (3)

–

537

604

December 31, 2010

Mortgages held for sale (1)

–

2,000

891

2,891

Loans held for sale

–

352

–

352

Loans:

Commercial

–

2,480

2,547

Consumer

–

5,870

5,888

Total loans (2)

–

8,350

8,435

Mortgage servicing rights (amortized)

–

104

Other assets (3)

–

765

847

(1)	Predominantly real estate 1-4 family first mortgage loans measured at LOCOM.

(2)	Represents carrying value of loans for which adjustments are based on the appraised value of the collateral.

(3)	Includes the fair value of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

201

The following table presents the increase (decrease) in value of certain assets that are measured at fair value on a nonrecurring basis for which a fair value adjustment has been included in the income statement.



(in millions)

Year ended December 31, 2011
Mortgages held for sale	$	29
Loans held for sale		22
Loans:
Commercial		(1,043	)
Consumer		(4,905	)

Total loans (1)		(5,948	)

Mortgage servicing rights (amortized)		(34	)
Other assets (2)		(256	)

Total	$	(6,187	)

Year ended December 31, 2010
Mortgages held for sale	$	(20	)
Loans held for sale		(1	)
Loans:
Commercial		(1,306	)
Consumer		(6,881	)

Total loans (1)		(8,187	)

Mortgage servicing rights (amortized)		(3	)
Other assets (2)		(301	)

Total	$	(8,512	)

(1)	Represents write-downs of loans based on the appraised value of the collateral.

(2)	Includes the losses on foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

202

Note 17: Fair Values of Assets and Liabilities (continued)

Alternative Investments

The following table summarizes our investments in various types of funds, which are included in trading assets, securities available for sale and other assets. We use the funds’ net asset

values (NAVs) per share as a practical expedient to measure fair value on recurring and nonrecurring bases. The fair values presented in the table are based upon the funds’ NAVs or an equivalent measure.

(in millions)

Fair
value

Unfunded
commitments

Redemption
frequency

Redemption
notice
period

December 31, 2011

Offshore funds

352

–

Daily – Annually

1 – 180 days

Funds of funds

–

Quarterly

90 days

Hedge funds

–

Daily – Annually

5 – 95 days

Private equity funds

976

240

N/A

Venture capital funds

N/A

Total

1,434

268

December 31, 2010

Offshore funds

1,665

–

Daily – Annually

1 – 180 days

Funds of funds

–

Monthly – Quarterly

10 – 90 days

Hedge funds

–

Monthly – Annually

30 – 120 days

Private equity funds

1,830

669

N/A

Venture capital funds

N/A

Total

3,669

705

N/A – Not applicable

Offshore funds primarily invest in investment grade European fixed-income securities. Redemption restrictions are in place for investments with a fair value of $200 million and $74 million at December 31, 2011 and 2010, respectively, due to lock-up provisions that will remain in effect until October 2015.

Private equity funds invest in equity and debt securities issued by private and publicly-held companies in connection with leveraged buyouts, recapitalizations and expansion opportunities. Substantially all of these investments do not allow redemptions. Alternatively, we receive distributions as the underlying assets of the funds liquidate, which we expect to occur over the next nine years.

Venture capital funds invest in domestic and foreign companies in a variety of industries, including information technology, financial services and healthcare. These investments can never be redeemed with the funds. Instead, we receive distributions as the underlying assets of the fund liquidate, which we expect to occur over the next six years.

Fair Value Option

Upon the acquisition of Wachovia, we elected to measure at fair value certain portfolios of LHFS that may be economically hedged with derivative instruments. In addition, we elected to measure at fair value certain letters of credit that are hedged with derivative instruments to better reflect the economics of the transactions. These letters of credit are included in trading account assets or liabilities.

Upon the adoption of new consolidation guidance on January 1, 2010, we elected to measure at fair value the eligible assets (loans) and liabilities (long-term debt) of certain nonconforming mortgage loan securitization VIEs. We elected the fair value option for such newly consolidated VIEs to continue fair value accounting as our interests prior to consolidation were predominantly carried at fair value with changes in fair value recognized in earnings. Upon clarifying guidance from the SEC during fourth quarter 2011, we consolidated reverse mortgage loans previously sold under a GNMA securitization program. We had initially elected fair value option on these loans prior to sale, and, as such, they were consolidated under fair value option.

The following table reflects the differences between fair value carrying amount of certain assets and liabilities for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

203



	December 31, 2011							December 31, 2010

(in millions)	Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal			Fair value carrying amount		Aggregate unpaid principal		Fair value carrying amount less aggregate unpaid principal

Mortgages held for sale:
Total loans	$	44,791		43,687		1,104	(1)		47,531		47,818		(287	)(1)
Nonaccrual loans		265		584		(319	)		325		662		(337	)
Loans 90 days or more past due and still accruing		44		56		(12	)		38		47		(9	)
Loans held for sale:
Total loans		1,176		1,216		(40	)		873		897		(24	)
Nonaccrual loans		25		39		(14	)		1		7		(6	)
Loans:
Total loans		5,916		5,441		475			309		348		(39	)
Nonaccrual loans		32		32		–			13		16		(3	)
Loans 90 days or more past due and still accruing		–		–		–			2		2		–
Long-term debt		–		–		–			306		353		(47	)

(1)	The difference between fair value carrying amount and aggregate unpaid principal includes changes in fair value recorded at and subsequent to funding, gains and losses on the related loan commitment prior to funding, and premiums on acquired loans.

The assets accounted for under the fair value option are initially measured at fair value. Gains and losses from initial measurement and subsequent changes in fair value are recognized in earnings. The changes in fair value related to

initial measurement and subsequent changes in fair value included in earnings for these assets measured at fair value are shown, by income statement line item, below.

2011

2010

2009

(in millions)

Mortgage
banking
noninterest
income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Mortgage
banking
noninterest
income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Mortgage
banking
noninterest
income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Year ended December 31,

Mortgages held for sale

6,084

–

6,512

–

4,891

–

Loans held for sale

–

Loans

–

Long-term debt

(11

)

–

(48

)

–

Other interests held

–

(25

)

–

(13

)

–

117

–

The following table shows the estimated gains and losses from earnings attributable to instrument-specific credit risk related to assets accounted for under the fair value option.



	Year ended Dec. 31,

(in millions)	2011			2010			2009

Gains (losses) attributable to instrument-specific credit risk:
Mortgages held for sale	$	(144	)		(28	)		(277	)
Loans held for sale		32			24			63

Total	$	(112	)		(4	)		(214	)

For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. In recent years

spreads have been significantly affected by the lack of liquidity in the secondary market for mortgage loans. For nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk.

204

Note 17: Fair Values of Assets and Liabilities (continued)

Disclosures about Fair Value of Financial Instruments

The table below is a summary of fair value estimates for financial instruments, excluding short-term financial assets and liabilities because carrying amounts approximate fair value, and excluding financial instruments recorded at fair value on a recurring basis. The carrying amounts in the following table are recorded in the balance sheet under the indicated captions.

We have not included assets and liabilities that are not financial instruments in our disclosure, such as the value of the long-term relationships with our deposit, credit card and trust customers, amortized MSRs, premises and equipment, goodwill and other intangibles, deferred taxes and other liabilities. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

December 31,

2011

2010

(in millions)

Carrying
amount

Estimated
fair value

Carrying
amount

Estimated
fair value

Financial assets

Mortgages held for sale (1)

3,566

4,232

4,234

Loans held for sale (2)

162

176

417

441

Loans, net (3)

731,308

723,867

721,016

710,147

Nonmarketable equity investments (cost method)

8,061

8,490

8,494

8,814

Financial liabilities

Deposits

920,070

921,803

847,942

849,642

Long-term debt (4)

125,238

126,484

156,651

159,996

(3)

(1)	Balance excludes MHFS for which the fair value option was elected.

(2)	Balance excludes LHFS for which the fair value option was elected.

(3)	Loans exclude balances for which the fair value option was elected. At December 31, 2010, long-term debt excludes balances for which the fair value option was elected. Loans exclude lease financing with a carrying amount of $13.1 billion at both December 31, 2011 and 2010, respectively.

(4)	The carrying amount and fair value exclude obligations under capital leases of $116 million and $26 million at December 31, 2011 and 2010, respectively.

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in the table above. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the related allowance. This amounted to $495 million and $673 million at December 31, 2011 and 2010, respectively.

205

Note 18: Preferred Stock

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under this authorization. If issued, preference shares would be limited to one vote per share. Our total issued and outstanding

preferred stock includes Dividend Equalization Preferred (DEP) shares and Series I, J, K and L, which are presented in the following two tables, and Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock, which is presented in the table on the following page.

December 31,

2011

2010

Liquidation
preference
per share

Shares
authorized
and designated

Liquidation
preference
per share

Shares
authorized
and designated

DEP Shares

Dividend Equalization Preferred Shares

97,000

97,000

Series A

Non-Cumulative Perpetual Preferred Stock

–

100,000

25,001

Series B

Non-Cumulative Perpetual Preferred Stock

–

100,000

17,501

Series G

7.25% Class A Preferred Stock

15,000

50,000

15,000

50,000

Series H

Floating Class A Preferred Stock

20,000

50,000

20,000

50,000

Series I

5.80% Fixed to Floating Class A Preferred Stock

100,000

25,010

100,000

25,010

Series J

8.00% Non-Cumulative Perpetual Class A Preferred Stock

1,000

2,300,000

1,000

2,300,000

Series K

7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock

1,000

3,500,000

1,000

3,500,000

Series L

7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock

1,000

4,025,000

1,000

4,025,000

Total

10,047,010

10,089,512

December 31, 2011

December 31, 2010

(in millions, except shares)

Shares
issued and
outstanding

Par value

Carrying
value

Discount

Shares
issued and
outstanding

Par value

Carrying
value

Discount

DEP Shares

Dividend Equalization Preferred Shares

96,546

–

96,546

–

Series I (1)

5.80% Fixed to Floating Class A Preferred Stock

25,010

2,501

–

Series J (1)

8.00% Non-Cumulative Perpetual Class A Preferred Stock

2,150,375

2,150

1,995

155

2,150,375

2,150

1,995

155

Series K (1)

7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock

3,352,000

3,352

2,876

476

3,352,000

3,352

2,876

476

Series L (1)

7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock

3,968,000

3,968

3,200

768

3,968,000

3,968

3,200

768

Total

9,591,931

11,971

10,572

1,399

9,566,921

9,470

8,071

1,399

(1)	Preferred shares qualify as Tier 1 capital.

206

In March 2011, the Company issued Series I preferred stock (25,010 shares with a par value of $2.5 billion) to an unconsolidated wholly-owned trust. We have the option to redeem this Series I Preferred Stock at any time, in whole or in part, at a redemption price equal to $100,000 per share.

In 2011, we redeemed $9.2 billion of trust preferred securities of which $5.8 billion settled in October 2011. Prior to the October 2011 redemption, we had a commitment to issue Series A preferred stock ($2.5 billion) and Series B preferred stock ($1.8 billion) to unconsolidated wholly-owned trusts. Effective with the redemption, the commitment has been eliminated. See Note 8 for additional information on our trust preferred securities. We do not have a commitment to issue Series G or H preferred stock.

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK All shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.



	Shares issued and outstanding December 31,				Carrying value December 31,						Adjustable dividend rate

(in millions, except shares)	2011		2010		2011			2010			Minimum			Maximum

ESOP Preferred Stock
$1,000 liquidation preference per share
2011		370,280		–	$	370			–			9.00	%		10.00
2010		231,361		287,161		232			287			9.50			10.50
2008		89,154		104,854		89			105			10.50			11.50
2007		68,414		82,994		69			83			10.75			11.75
2006		46,112		58,632		46			59			10.75			11.75
2005		30,092		40,892		30			41			9.75			10.75
2004		17,115		26,815		17			27			8.50			9.50
2003		6,231		13,591		6			13			8.50			9.50
2002		–		3,443		–			3			10.50			11.50

Total ESOP Preferred Stock (1)		858,759		618,382	$	859			618

Unearned ESOP shares (2)					$	(926	)		(663	)

(1)	At December 31, 2011 and December 31, 2010, additional paid-in capital included $67 million and $45 million, respectively, related to preferred stock.

(2)	We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

207

Note 19: Common Stock and Stock Plans

Common Stock

The following table presents our reserved, issued and authorized shares of common stock at December 31, 2011.



	Number of shares

Dividend reinvestment and common stock purchase plans		6,916,421
Director plans		921,682
Stock plans (1)		746,119,381
Convertible securities and warrants		105,014,977

Total shares reserved		858,972,461
Shares issued		5,358,522,061
Shares not reserved		2,782,505,478

Total shares authorized		9,000,000,000

(1)	Includes employee options, restricted shares and restricted share rights, 401(k), profit sharing and compensation deferral plans.

At December 31, 2011, we have warrants outstanding and exercisable to purchase 39,179,509 shares of our common stock with an exercise price of $34.01 per share, expiring on October 28, 2018. In 2011 we purchased 264,972 of these warrants. These warrants were issued in connection with our participation in the TARP CPP.

Dividend Reinvestment and Common Stock Purchase Plans

Participants in our dividend reinvestment and common stock direct purchase plans may purchase shares of our common stock at fair market value under the terms of the plan.

Employee Stock Plans

We offer stock based employee compensation plans as described below. We measure the cost of employee services received in exchange for an award of equity instruments, such as stock options, restricted share rights (RSRs) or performance shares, based on the fair value of the award on the grant date. The cost is normally recognized in our income statement over the vesting period of the award; awards with graded vesting are expensed on a straight line method. Awards that continue to vest after retirement are expensed over the shorter of the period of time between the grant date and the final vesting period or between the grant date and when a team member becomes retirement eligible; awards to team members who are retirement eligible at the grant date are subject to immediate expensing upon grant.

LONG-TERM INCENTIVE COMPENSATION PLANS

Our Long-Term Incentive Compensation Plan (LTICP) provides for awards of incentive and nonqualified stock options, stock appreciation rights, restricted shares, RSRs, performance share awards and stock awards without restrictions.

During 2011 and 2010 we granted RSRs and performance shares as our primary long-term incentive awards instead of stock options. Holders of RSRs are entitled to the related shares of common stock at no cost generally over three to five years after the RSRs were granted. Holders of RSRs may be entitled to receive additional RSRs (dividend equivalents) or cash payments

equal to the cash dividends that would have been paid had the RSRs been issued and outstanding shares of common stock. RSRs granted as dividend equivalents are subject to the same vesting schedule and conditions as the underlying RSRs. RSRs generally continue to vest after retirement according to the original vesting schedule. Except in limited circumstances, RSRs are cancelled when employment ends.

Holders of each vested performance share are entitled to the related shares of common stock at no cost. Performance shares continue to vest after retirement according to the original vesting schedule subject to satisfying the performance criteria and other vesting conditions.

Stock options must have an exercise price at or above fair market value (as defined in the plan) of the stock at the date of grant (except for substitute or replacement options granted in connection with mergers or other acquisitions) and a term of no more than 10 years. Except for options granted in 2004 and 2005, which generally vested in full upon grant, options generally become exercisable over three years beginning on the first anniversary of the date of grant. Except as otherwise permitted under the plan, if employment is ended for reasons other than retirement, permanent disability or death, the option exercise period is reduced or the options are cancelled.

Options granted prior to 2004 may include the right to acquire a “reload” stock option. If an option contains the reload feature and if a participant pays all or part of the exercise price of the option with shares of stock purchased in the market or held by the participant for at least six months and, in either case, not used in a similar transaction in the last six months, upon exercise of the option, the participant is granted a new option to purchase at the fair market value of the stock as of the date of the reload, the number of shares of stock equal to the sum of the number of shares used in payment of the exercise price and a number of shares with respect to related statutory minimum withholding taxes. Reload grants are fully vested upon grant and are expensed immediately.

Compensation expense for RSRs and performance shares is based on the quoted market price of the related stock at the grant date. Stock option expense is based on the fair value of the awards at the date of grant. The following table summarizes the major components of stock incentive compensation expense and the related recognized tax benefit.



	Year ended December 31,

(in millions)	2011		2010		2009

RSRs	$	338		252		3
Performance shares		128		66		21
Stock options		63		118		221

Total stock incentive compensation expense	$	529		436		245

Related recognized tax benefit	$	200		165		92

208

Note 19: Common Stock and Stock Plans (continued)

A portion of annual bonus awards recognized during 2009 that are normally paid in cash was paid in our common stock as part of our agreement with the U.S. Treasury to repay our participation in the TARP CPP. The fair value of the stock that was issued was $94 million and there were no vesting conditions or other restrictions on the stock. No annual bonus awards recognized after 2009 were paid in common stock.

During 2009 the Board of Directors approved salary increases for certain executive officers that were paid, after taxes and other withholdings, in our common stock. In 2010 and 2009, respectively, 62,630 shares and 244,689 shares were issued for salary increases at an average fair value of $27.44 and $27.77, respectively. There are no restrictions on these shares because we repaid the TARP CPP investment in Wells Fargo in December 2009. No salary increases were paid in common stock after March 2010.

For various acquisitions and mergers, we converted employee and director stock options of acquired or merged companies into stock options to purchase our common stock based on the terms of the original stock option plan and the agreed-upon exchange ratio. In addition, we converted restricted stock awards into awards that entitle holders to our stock after the vesting conditions are met. Holders receive cash dividends on outstanding awards if provided in the original award.

The total number of shares of common stock available for grant under the plans at December 31, 2011, was 157 million.

PARTNERSHARES PLAN In 1996, we adopted the PartnerShares ^® Stock Option Plan, a broad-based employee stock option plan. It covers full- and part-time employees who generally were not included in the LTICP described above. No options have been granted under the plan since 2002, and as a result of action taken by the Board of Directors on January 22, 2008, no future awards will be granted under the plan. All of our PartnerShares Plan grants were fully vested as of December 31, 2007.

Director Awards

Under the LTICP, we grant common stock and options to purchase common stock to non-employee directors elected or re-elected at the annual meeting of stockholders and prorated awards to directors who join the Board at any other time. The stock award vests immediately. Options granted to directors can be exercised after twelve months through the tenth anniversary of the grant date. Options granted prior to 2005 may include the right to acquire a “reload” stock option.

Restricted Share Rights

A summary of the status of our RSRs and restricted share awards at December 31, 2011, and changes during 2011 is in the following table:



	Number			Weighted- average grant date fair value

Nonvested at January 1, 2011		23,036,722		$	26.98
Granted		18,836,636			31.02
Vested		(1,426,158	)		28.55
Canceled or forfeited		(1,167,071	)		28.52

Nonvested at December 31, 2011		39,280,129			28.81

The weighted-average grant date fair value of RSRs granted during 2010 and 2009 was $27.29 and $19.04, respectively.

At December 31, 2011, there was $561 million of total unrecognized compensation cost related to nonvested RSRs. The cost is expected to be recognized over a weighted-average period of 3.6 years. The total fair value of RSRs that vested during 2011, 2010 and 2009 was $41 million, $15 million and $2 million, respectively.

Performance Share Awards

Holders of performance share awards are entitled to the related shares of common stock at no cost subject to the Company’s achievement of specified performance criteria over a three-year period ending December 31, 2013, June 30, 2013, and December 31, 2012. Performance share awards are granted at a target number; based on the Company’s performance, the number of awards that vest can be adjusted downward to zero and upward to a maximum of either 125% or 150% of target.

A summary of the status of our performance awards at December 31, 2011, and changes during 2011 is in the following table, based on the target amount of awards:



	Number			Weighted- average grant date fair value

Nonvested at January 1, 2011		2,564,584		$	27.32
Granted		3,853,274			31.26
Canceled or forfeited		(12,893	)		31.33

Nonvested at December 31, 2011		6,404,965			29.68

The weighted-average grant date fair value of performance awards granted during 2010 and 2009 was $27.46 and $27.09, respectively.

At December 31, 2011, there was $45 million of total unrecognized compensation cost related to nonvested performance awards. The cost is expected to be recognized over a weighted-average period of 2 years. As of December 31, 2011, no performance shares were vested.

209

Stock Options

The table below summarizes stock option activity and related information for the stock plans. Options assumed in mergers are included in the activity and related information for Incentive

Compensation Plans if originally issued under an employee plan, and in the activity and related information for Director Awards if originally issued under a director plan.



	Number			Weighted- average exercise price		Weighted- average remaining contractual term (in yrs.)		Aggregate intrinsic value (in millions)

Incentive compensation plans
Options outstanding as of December 31, 2010		306,770,791		$	38.11
Granted		953,308			30.62
Canceled or forfeited		(11,457,278	)		73.47
Exercised		(24,968,218	)		21.28

Options outstanding as of December 31, 2011		271,298,603			38.14		4.3	$	890

As of December 31, 2011:
Options exercisable and expected to be exercisable		271,298,603			38.14		4.3		890
Options exercisable		245,592,111			40.70		4.1		529
*PartnerShares* Plan
Options outstanding as of December 31, 2010		8,474,545			25.21
Canceled or forfeited		(137,253	)		24.94
Exercised		(859,820	)		24.85

Options outstanding as of December 31, 2011		7,477,472			25.25		0.2		17

As of December 31, 2011:
Options exercisable		7,477,472			25.25		0.2		17
Director awards
Options outstanding as of December 31, 2010		797,864			29.10
Granted		21,940			28.68
Canceled or forfeited		(32,412	)		29.12
Exercised		(65,960	)		23.90

Options outstanding as of December 31, 2011		721,432			29.56		3.6		1

As of December 31, 2011:
Options exercisable		721,432			29.56		3.6		1

As of December 31, 2011, there was $8 million of unrecognized compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 0.3 years. The total intrinsic value of options exercised during 2011, 2010 and 2009 was $246 million, $298 million and $50 million, respectively.

Cash received from the exercise of stock options for 2011, 2010 and 2009 was $554 million, $687 million and $153 million, respectively.

We do not have a specific policy on repurchasing shares to satisfy share option exercises. Rather, we have a general policy on repurchasing shares to meet common stock issuance requirements for our benefit plans (including share option exercises), conversion of our convertible securities, acquisitions and other corporate purposes. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for acquisitions and employee benefit plans, market conditions (including the trading price of our stock), and regulatory and legal considerations. These factors can change at any time, and there can be no assurance as to the number of shares we will repurchase or when we will repurchase them.

The fair value of each option award granted on or after January 1, 2006, is estimated using a Black-Scholes valuation model. The expected term of non-reload options granted is generally based on the historical exercise behavior of full-term options. Our expected volatilities are based on a combination of the historical volatility of our common stock and implied volatilities for traded options on our common stock. The risk-free rate is based on the U.S. Treasury zero-coupon yield curve in effect at the time of grant. Both expected volatility and the risk-free rates are based on a period commensurate with our expected term. Beginning in 2009, the expected dividend is based on a fixed dividend amount. We changed our method of estimating the expected dividend assumption from a yield approach to a fixed amount due to our participation in the TARP CPP during 2009, which restricted us from increasing our dividend without approval from the U.S. Treasury; although we repaid TARP in 2009, federal approval continues to be required before we can increase our dividend. A dividend yield approach models a constant dividend yield, which was considered inappropriate given the restriction on our ability to increase dividends. See Note 3 for additional information.

210

Note 19: Common Stock and Stock Plans (continued)

The following table presents the weighted-average per share fair value of options granted and the assumptions used, based on a Black-Scholes option valuation model. Substantially all of the options granted in 2011 and 2010 resulted from the reload feature.



	Year ended December 31,

	2011			2010		2009

Per share fair value of options granted	$	3.78			6.11		3.29
Expected volatility		32.7	%		44.3		53.9
Expected dividends	$	0.32			0.20		0.33
Expected term (in years)		1.0			1.3		4.5
Risk-free interest rate		0.2	%		0.6		1.8

Employee Stock Ownership Plan

The Wells Fargo & Company 401(k) Plan (401(k) Plan) is a defined contribution plan with an Employee Stock Ownership Plan (ESOP) feature. Effective December 31, 2009, the Wachovia Savings Plan, which also had an ESOP feature, merged into the 401(k) Plan, and all of its shares of our common stock were transferred to the 401(k) Plan. The ESOP feature enables the 401(k) Plan to borrow money to purchase our preferred or

common stock. From 1994 through 2011, with the exception of 2009, we loaned money to the 401(k) Plan to purchase shares of our ESOP Preferred Stock. As our employer contributions are made to the 401(k) Plan and are used by the Plan to make ESOP loan payments, the ESOP Preferred Stock in the 401(k) Plan is released and converted into our common shares. Dividends on the common shares allocated as a result of the release and conversion of the ESOP Preferred Stock reduce retained earnings and the shares are considered outstanding for computing earnings per share. Dividends on the unallocated ESOP Preferred Stock do not reduce retained earnings, and the shares are not considered to be common stock equivalents for computing earnings per share. Loan principal and interest payments are made from our employer contributions to the 401(k) Plan, along with dividends paid on the ESOP Preferred Stock. With each principal and interest payment, a portion of the ESOP Preferred Stock is released and converted to common shares, which are allocated to the 401(k) Plan participants and invested in the 401(k) Plan’s ESOP Fund.

The balance of common stock held in the ESOP fund, the dividends on allocated shares of common stock and unreleased ESOP Preferred Stock paid to the 401(k) Plan and the fair value of unreleased ESOP Preferred Stock were:

		$000,000,000		$000,000,000		$000,000,000

	Shares outstanding December 31,

(in millions, except shares)	2011		2010		2009

Allocated shares (common)		131,046,406		118,901,327		110,157,999
Unreleased shares (preferred)		858,759		618,382		414,019
Unreleased shares (common)		–		–		203,755
Fair value of unreleased ESOP Preferred shares	$	859		618		414
Fair value of unreleased ESOP Common shares		–		–		5

		$000,000,000,0		$000,000,000,0		$000,000,000,0
	Dividends paid Year ended December 31,

	2011		2010		2009

Allocated shares (common)	$	60		23		45
Unreleased shares (preferred)		95		76		51

Deferred Compensation Plan for Independent Sales Agents

WF Deferred Compensation Holdings, Inc. is a wholly-owned subsidiary of the Parent formed solely to sponsor a deferred compensation plan for independent sales agents who provide investment, financial and other qualifying services for or with respect to participating affiliates.

The Nonqualified Deferred Compensation Plan for Independent Contractors, which became effective January 1, 2002, allows participants to defer all or part of their eligible compensation payable to them by a participating affiliate. The Parent has fully and unconditionally guaranteed the deferred compensation obligations of WF Deferred Compensation Holdings, Inc. under the plan.

211

Note 20: Employee Benefits and Other Expenses

Pension and Postretirement Plans

We sponsor a noncontributory qualified defined benefit retirement plan, the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. Benefits accrued under the Cash Balance Plan were frozen effective July 1, 2009.

On April 28, 2009, the Board of Directors approved amendments to freeze the benefits earned under the Wells Fargo qualified and supplemental Cash Balance Plans and the Wachovia Corporation Pension Plan, a cash balance plan that covered eligible employees of the legacy Wachovia Corporation, and to merge the Wachovia Pension Plan into the qualified Cash Balance Plan. These actions became effective on July 1, 2009.

Prior to July 1, 2009, eligible employees’ cash balance plan accounts were allocated a compensation credit based on a percentage of their qualifying compensation. The compensation credit percentage was based on age and years of credited service. The freeze discontinues the allocation of compensation credit for services after June 30, 2009. Investment credits continue to be allocated to participants based on their accumulated balances. Employees become vested in their Cash Balance Plan accounts after completing three years of vesting service.

Freezing and merging the above plans effective July 1, 2009, resulted in a re-measurement of the pension obligations and plan assets as of April 30, 2009. As a result of freezing our pension plans, we revised our amortization life for actuarial gains and losses from 5 years to 13 years to reflect the estimated

average remaining participation period. These actions lowered pension cost by approximately $500 million for 2009, including $67 million of one-time curtailment gains.

We did not make a contribution to our Cash Balance Plan in 2011. We do not expect that we will be required to make a contribution to the Cash Balance Plan in 2012; however, this is dependent on the finalization of the actuarial valuation. Our decision of whether to make a contribution in 2012 will be based on various factors including the actual investment performance of plan assets during 2012. Given these uncertainties, we cannot estimate at this time the amount, if any, that we will contribute in 2012 to the Cash Balance Plan. For the nonqualified pension plans and postretirement benefit plans, there is no minimum required contribution beyond the amount needed to fund benefit payments; we may contribute more to our postretirement benefit plans dependent on various factors.

We provide health care and life insurance benefits for certain retired employees and reserve the right to terminate, modify or amend any of the benefits at any time.

The information set forth in the following tables is based on current actuarial reports using the measurement date of December 31 for our pension and postretirement benefit plans.

The changes in the projected benefit obligation of pension benefits and the accumulated benefit obligation of other benefits and the fair value of plan assets, the funded status and the amounts recognized in the balance sheet were:



	December 31,

	2011									2010

	Pension benefits									Pension benefits

(in millions)	Qualified			Non- qualified			Other benefits			Qualified			Non- qualified			Other benefits

Change in benefit obligation:
Benefit obligation at beginning of year	$	10,337			693			1,398			10,038			681			1,401
Service cost		6			1			13			5			–			13
Interest cost		520			34			71			554			37			78
Plan participants’ contributions		–			–			88			–			–			74
Actuarial loss (gain)		501			33			(105	)		386			46			(5	)
Benefits paid		(726	)		(70	)		(161	)		(652	)		(71	)		(147	)
Curtailment		(3	)		–			–			–			–			–
Amendments		–			–			–			2			–			–
Liability transfer		–			–			–			–			–			(17	)
Foreign exchange impact		(1	)		–			–			4			–			1

Benefit obligation at end of year		10,634			691			1,304			10,337			693			1,398

Change in plan assets:
Fair value of plan assets at beginning of year		9,639			–			697			9,112			–			376
Actual return on plan assets		139			–			10			1,163			–			33
Employer contribution		10			70			6			12			71			361
Plan participants’ contributions		–			–			88			–			–			74
Benefits paid		(726	)		(70	)		(161	)		(652	)		(71	)		(147	)
Foreign exchange impact		(1	)		–			–			4			–			–

Fair value of plan assets at end of year		9,061			–			640			9,639			–			697

Funded status at end of year	$	(1,573	)		(691	)		(664	)		(698	)		(693	)		(701	)

Amounts recognized in the balance sheet at end of year:
Liabilities	$	(1,573	)		(691	)		(664	)		(698	)		(693	)		(701	)

212

Note 20: Employee Benefits and Other Expenses (continued)

The accumulated benefit obligation for the defined benefit pension plans was $11.3 billion and $11.0 billion at December 31, 2011 and 2010, respectively.

The following table provides information for pension plans with benefit obligations in excess of plan assets.



	December 31,

(in millions)	2011		2010

Projected benefit obligation	$	11,325		11,030
Accumulated benefit obligation		11,321		11,019
Fair value of plan assets		9,061		9,639

The components of net periodic benefit cost were:



	Year ended December 31,

	2011									2010									2009

	Pension benefits									Pension benefits									Pension benefits

(in millions)	Qualified			Non- qualified			Other benefits			Qualified			Non- qualified			Other benefits			Qualified			Non- qualified			Other benefits

Service cost	$	6			1			13			5			–			13			210			8			13
Interest cost		520			34			71			554			37			78			595			43			83
Expected return on plan assets		(759	)		–			(41	)		(717	)		–			(29	)		(643	)		–			(29	)
Amortization of net actuarial loss		86			6			–			105			3			1			194			2			3
Amortization of prior service cost		–			–			(3	)		–			–			(4	)		–			(1	)		(3	)
Settlement Loss		4			3			–			–			–			–			–			–			–
Curtailment loss (gain)		–			–			–			3			–			(4	)		(32	)		(33	)		–

Net periodic benefit cost		(143	)		44			40			(50	)		40			55			324			19			67

Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)		1,120			33			(74	)		(59	)		46			(9	)		(346	)		25			99
Amortization of net actuarial loss		(86	)		(6	)		–			(105	)		(3	)		(1	)		(194	)		(2	)		(3	)
Prior service cost		–			–			–			2			–			–			–			–			–
Amortization of prior service cost		–			–			3			–			–			4			–			1			3
Settlement		(4	)		(3	)		–			–			–			–			–			–			–
Curtailment		(3	)		–			–			(3	)		–			4			32			33			–
Net gain on amendment		–			–			–			–			–			–			–			–			(54	)
Translation adjustments		(1	)		–			–			–			–			–			3			–			2

Total recognized in other comprehensive income		1,026			24			(71	)		(165	)		43			(2	)		(505	)		57			47

Total recognized in net periodic benefit cost and other comprehensive income	$	883			68			(31	)		(215	)		83			53			(181	)		76			114

213

Amounts recognized in accumulated OCI (pre tax) consist of:

December 31,

2011

2010

Pension benefits

Pension benefits

(in millions)

Qualified

Non-
qualified

Other
benefits

Qualified

Non-
qualified

Other
benefits

Net actuarial loss

2,699

137

1,672

113

135

Net prior service credit

–

(27

)

–

(30

)

Net transition obligation

–

Translation adjustments

–

Total

2,699

137

1,673

113

106

We generally amortize net actuarial gain or loss in excess of a 5% corridor from accumulated OCI into net periodic pension cost over the estimated average remaining participation period. The net actuarial loss for the defined benefit pension plans and other post retirement plans that will be amortized from accumulated OCI into net periodic benefit cost in 2012 is $141 million. The net prior service credit for the other post retirement plans that will be amortized from accumulated OCI into net periodic benefit cost in 2012 is $2 million.

Plan Assumptions

For the years ended December 31, 2011 and 2010, the weighted-average discount rate used to determine the projected benefit obligation for pension benefits (qualified and nonqualified) was 5.00% and 5.25%, respectively, and for other postretirement benefits was 4.75% and 5.25%, respectively. We use a consistent methodology to determine the discount rate that is based on an established yield curve methodology. This methodology incorporates a broad group of top quartile Aa bonds consisting of approximately 250-275 bonds. The discount rate is determined by matching this yield curve with the timing and amounts of the expected benefit payments for our plans.

The weighted-average assumptions used to determine the net periodic benefit cost were:

December 31,

2011

2010

2009

Pension
benefits (1)

Other
benefits

Pension
benefits (1)

Other
benefits

Pension
benefits (1)

Other
benefits

Discount rate (2)

5.25

5.75

7.42

6.75

Expected return on plan assets

8.25

6.00

8.25

8.75

Rate of compensation increase

–

4.0

–

(1)	Includes both qualified and nonqualified pension benefits.

(2)	Due to the freeze of the Wells Fargo qualified and supplemental Cash Balance Plans and the Wachovia Corporation Pension Plan, the discount rate for the 2009 pension benefits was the weighted average of 6.75% from January through April and 7.75% from May through December.

Our determination of the reasonableness of our expected long-term rate of return on plan assets is highly quantitative by nature. We evaluate the current asset allocations and expected returns under two sets of conditions: projected returns using several forward-looking capital market assumptions, and historical returns for the main asset classes dating back to 1970 or the earliest period for which historical data was readily available for the asset classes included. Using long term historical data allows us to capture multiple economic environments, which we believe is relevant when using historical returns. We place greater emphasis on the forward-looking return and risk assumptions than on historical results. We use the resulting projections to derive a base line expected rate of return and risk level for the Cash Balance Plans’ prescribed asset mix.

We evaluate the portfolio based on: (1) the established target asset allocations over short term (one-year) and longer term (ten-year) investment horizons, and (2) the range of potential

outcomes over these horizons within specific standard deviations. We perform the above analyses to assess the reasonableness of our expected long-term rate of return on plan assets. We consider the expected rate of return to be a long-term average view of expected returns. The expected rate of return would be assessed for significant long-term changes in economic conditions or in planned portfolio composition.

To account for postretirement health care plans we use health care cost trend rates to recognize the effect of expected changes in future health care costs due to medical inflation, utilization changes, new technology, regulatory requirements and Medicare cost shifting. In determining the end of year benefit obligation we assume average annual increases of approximately 7.75% for health care costs in 2012. This rate is assumed to trend down 0.25% per year until the trend rate reaches an ultimate rate of 5.0% in 2023. The 2011 periodic benefit cost was determined using initial annual trend rates of 8.0%. These rates were assumed to decrease 0.25% per year

214

Note 20: Employee Benefits and Other Expenses (continued)

until they reached ultimate rates of 5.0% in 2023. Increasing the assumed health care trend by one percentage point in each year would increase the benefit obligation as of December 31, 2011, by $63 million and the total of the interest cost and service cost components of the net periodic benefit cost for 2011 by $3 million. Decreasing the assumed health care trend by one percentage point in each year would decrease the benefit obligation as of December 31, 2011, by $56 million and the total of the interest cost and service cost components of the net periodic benefit cost for 2011 by $3 million.

Investment Strategy and Asset Allocation

We seek to achieve the expected long-term rate of return with a prudent level of risk given the benefit obligations of the pension plans and their funded status. Our overall investment strategy is designed to provide our Cash Balance Plan with a balance of long-term growth opportunities and short-term benefit strategies while ensuring that risk is mitigated through diversification across numerous asset classes and various investment strategies. We target the asset allocation for our Cash Balance Plan at a target mix range of 35-55% equities, 35-55% fixed income, and approximately 10% in real estate, venture capital, private equity and other investments. The Employee Benefit Review Committee (EBRC), which includes several members of senior management, formally reviews the investment risk and performance of our Cash Balance Plan on a quarterly basis. Annual Plan liability analysis and periodic asset/liability evaluations are also conducted.

The investment strategy for assets held in the Retiree Medical Plan Voluntary Employees’ Beneficiary Association (VEBA) trust is established separately from the strategy for the assets in the Cash Balance Plan. The general target asset mix is 20-40% equities and 60-80% fixed income. In addition, the strategy for the VEBA trust assets considers the effect of income taxes by utilizing a combination of variable annuity and low turnover investment strategies. Members of the EBRC formally review the investment risk and performance of these assets on a quarterly basis.

Projected Benefit Payments

Future benefits that we expect to pay under the pension and other benefit plans are presented in the following table. Other benefits payments are expected to be reduced by prescription drug subsidies from the federal government provided by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.



	Pension benefits				Other benefits

(in millions)	Qualified		Non- qualified		Future benefits		Subsidy receipts

Year ended December 31,
2012	$	788		73		102		14
2013		768		70		105		14
2014		749		67		107		15
2015		746		63		110		10
2016		742		63		111		10
2017-2021		3,455		286		548		49

215

Fair Value of Plan Assets

The following table presents the balances of pension plan assets and other benefit plan assets measured at fair value. Other benefit plan assets include assets held in a 401(h) trust, which

are invested using the same asset allocation targets as the Cash Balance Plan, and assets held in a VEBA trust. See Note 17 for fair value hierarchy level definitions.



	Carrying value at year end

	Pension plan assets									Other benefits plan assets

(in millions)	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

December 31, 2011
Cash and cash equivalents	$	–		432		–		432			180		33		–		213
Long duration fixed income (1)		376		2,229		1		2,606			13		74		–		87
Intermediate (core) fixed income (2)		88		380		6		474			4		60		–		64
High-yield fixed income		10		366		1		377			–		12		–		12
International fixed income		147		184		–		331			5		6		–		11
Domestic large-cap stocks (3)		1,163		600		2		1,765			39		31		–		70
Domestic mid-cap stocks		364		183		–		547			12		21		–		33
Domestic small-cap stocks (4)		281		10		–		291			9		17		–		26
International stocks (5)		570		349		1		920			19		40		–		59
Emerging market stocks		–		574		–		574			–		19		–		19
Real estate/timber (6)		102		–		355		457			3		–		12		15
Multi-strategy hedge funds (7)		–		–		251		251			–		–		8		8
Private equity		–		–		129		129			–		–		4		4
Other		–		29		46		75			1		1		23		25

Total plan investments	$	3,101		5,336		792		9,229			285		314		47		646

Payable upon return of securities loaned								(145	)								(5	)
Net receivables (payables)								(23	)								(1	)

Total plan assets							$	9,061									640

December 31, 2010
Cash and cash equivalents	$	47		488		–		535			220		34		–		254
Intermediate (core) fixed income (2)		297		1,964		10		2,271			10		109		–		119
High-yield fixed income		1		406		1		408			–		14		–		14
International fixed income		–		263		–		263			–		8		–		8
Specialty fixed income		–		95		–		95			–		3		–		3
Domestic large-cap stocks (3)		1,323		867		4		2,194			43		40		–		83
Domestic mid-cap stocks		263		129		–		392			9		20		–		29
Domestic small-cap stocks (4)		851		37		–		888			28		20		–		48
International stocks (5)		948		403		6		1,357			31		46		–		77
Emerging market stocks		–		700		–		700			–		23		–		23
Real estate/timber (6)		105		–		360		465			3		–		12		15
Multi-strategy hedge funds (7)		–		–		313		313			–		–		10		10
Private equity		–		–		112		112			–		–		4		4
Other		–		31		41		72			1		1		22		24

Total plan investments	$	3,835		5,383		847		10,065			345		318		48		711

Payable upon return of securities loaned								(145	)								(5	)
Net receivables (payables)								(281	)								(9	)

Total plan assets							$	9,639									697

(1)

This category includes a diversified mix of assets which are being managed in accordance with a duration target of approximately 10 years and an emphasis on corporate credit bonds combined with investments in U.S. Treasury securities and other U.S. agency and non-agency bonds. Investments in this category were made beginning in 2011.

(2)	This category includes assets that are primarily intermediate duration, investment grade bonds held in investment strategies benchmarked to the Barclays Capital U.S. Aggregate Bond Index. Includes U.S. Treasury securities, agency and non-agency asset-backed bonds and corporate bonds.

(3)

This category covers a broad range of investment styles, both active and passive approaches, as well as style characteristics of value, core and growth emphasized strategies. Assets in this category are currently diversified across nine unique investment strategies. For December 31, 2011 and 2010, respectively, approximately 34% and 33% of the assets within this category are passively managed to popular mainstream market indexes including the Standard & Poor’s 500 Index; excluding the allocation to the S&P 500 Index strategy, no single investment manager represents more than 2.5% of total plan assets.

(4)

This category consists of a highly diversified combination of four distinct investment management strategies with no single strategy representing more than 2% of total plan assets. Allocations in this category are primarily spread across actively managed approaches with distinct value and growth emphasized approaches in fairly equal proportions.

(5)	This category includes assets diversified across eight unique investment strategies providing exposure to companies based primarily in developed market, non-U.S. countries with no single strategy representing more than 2.5% of total plan assets.

(6)	This category primarily includes investments in private and public real estate, as well as timber specific limited partnerships; real estate holdings are diversified by geographic location and sector (e.g., retail, office, apartments).

(7)	This category consists of several investment strategies diversified over 30 hedge fund managers. Single manager allocation exposure is limited to 0.15% (15 basis points) of total plan assets.

216

Note 20: Employee Benefits and Other Expenses (continued)

The changes in Level 3 pension plan and other benefit plan assets measured at fair value are summarized as follows:



	Balance beginning of year		Gains (losses)						Purchases, sales, issuances and settlements (net)			Transfers into Level 3		Balance end of year

(in millions)			Realized			Unrealized (1)

Year ended December 31, 2011
Pension plan assets
Long duration fixed income	$	–		–			–			1			–		1
Intermediate (core) fixed income		10		–			1			(5	)		–		6
High-yield fixed income		1		–			–			–			–		1
Domestic large-cap stocks		4		–			(1	)		(1	)		–		2
International stocks		6		–			(1	)		(4	)		–		1
Real estate/timber		360		10			22			(37	)		–		355
Multi-strategy hedge funds		313		5			(3	)		(64	)		–		251
Private equity		112		1			16			–			–		129
Other		41		4			–			1			–		46

	$	847		20			34			(109	)		–		792

Other benefits plan assets
Real estate/timber	$	12		–			–			–			–		12
Multi-strategy hedge funds		10		–			–			(2	)		–		8
Private equity		4		–			–			–			–		4
Other		22		–			–			1			–		23

	$	48		–			–			(1	)		–		47

Year ended December 31, 2010
Pension plan assets
Intermediate (core) fixed income	$	9		–			2			(3	)		2		10
High-yield fixed income		–		–			–			1			–		1
Domestic large-cap stocks		5		–			1			(2	)		–		4
International stocks		1		–			2			3			–		6
Real estate/timber		353		(6	)		8			5			–		360
Multi-strategy hedge funds		339		6			12			(44	)		–		313
Private equity		83		1			10			18			–		112
Other		46		9			(1	)		(13	)		–		41

	$	836		10			34			(35	)		2		847

Other benefits plan assets
Real estate/timber	$	4		(7	)		10			5			–		12
Multi-strategy hedge funds		5		(1	)		(3	)		9			–		10
Private equity		2		–			1			1			–		4
Other		21		(1	)		–			2			–		22

	$	32		(9	)		8			17			–		48

(1)	All unrealized gains (losses) relate to instruments held at period end.

VALUATION METHODOLOGIES Following is a description of the valuation methodologies used for assets measured at fair value.

Cash and Cash Equivalents – includes highly liquid government securities such as U.S. Treasuries. Also includes investments in collective investment funds valued at fair value based upon the quoted market values of the underlying net assets. The unit price is quoted on a private market that is not active; however, the unit price is based on underlying investments traded on an active market. Investments in registered investment companies are valued at the NAV of shares held at year end.

Long Duration, Intermediate (Core), High-Yield, International and Specialty Fixed Income – includes investments traded on the secondary markets; prices are measured by using quoted market prices for similar securities, pricing models, discounted cash flow analyses using significant inputs observable in the

market where available or combination of multiple valuation techniques. Also includes investments in registered investment companies, collective investment funds and government securities described above.

Domestic, International and Emerging Market Stocks – investments in exchange-traded equity securities are valued at quoted market values. Also includes investments in registered investment companies and collective investment funds described above.

Real Estate and Timber – the fair value of real estate and timber is estimated based primarily on appraisals prepared by third-party appraisers. Market values are estimates and the actual market price of the real estate can only be determined by negotiation between independent third parties in a sales transaction. Also includes investments in exchange-traded equity securities described above.

217

Multi-Strategy Hedge Funds and Private Equity – the fair values of hedge funds are valued based on the proportionate share of the underlying net assets of the investment funds that comprise the fund, based on valuations supplied by the underlying investment funds. Investments in private equity funds are valued at the NAV provided by the fund sponsor. Market values are estimates and the actual market price of the investments can only be determined by negotiation between independent third parties in a sales transaction.

Other – the fair values of miscellaneous investments are valued at the NAV provided by the fund sponsor. Market values are estimates and the actual market price of the investments can only be determined by negotiation between independent third parties in a sales transaction. Also includes insurance contracts that are generally stated at cash surrender value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Defined Contribution Retirement Plans

We sponsor a defined contribution retirement plan named the Wells Fargo & Company 401(k) Plan (401(k) Plan). The Wachovia Savings Plan was acquired December 31, 2008, and merged with the 401(k) Plan effective December 31, 2009. We also sponsored a frozen defined contribution plan, the A.G. Edwards, Inc. Retirement & Profit Sharing Plan (“AGE Plan”), which resulted from a company acquired by Wachovia. The AGE Plan merged with the 401(k) Plan on July 1, 2011. Under the 401(k) Plan, after one month of service, eligible employees may contribute up to 50% of their certified compensation, although there may be a lower limit for certain highly compensated employees in order to maintain the qualified status of the 401(k) Plan. Eligible employees who complete one year of service are eligible for company matching contributions, which are generally dollar for dollar up to 6% of an employee’s certified compensation. Effective January 1, 2010, previous and future matching contributions are 100% vested for active participants.

In 2009, the 401(k) Plan was amended to permit us to make discretionary profit sharing contributions. Based on 2011, 2010 and 2009 earnings, we committed to make a contribution in shares of common stock to eligible employees’ 401(k) Plan accounts equaling 2% of certified compensation for 2011 and 2010, and 1% of certified compensation for 2009, respectively, which resulted in recognizing $311 million, $316 million and $150 million of defined contribution retirement plan expense recorded in 2011, 2010 and 2009, respectively. Total defined contribution retirement plan expenses were $1,104 million,

$1,092 million and $862 million in 2011, 2010 and 2009, respectively.

Other Expenses

Expenses exceeding 1% of total interest income and noninterest income in any of the years presented that are not otherwise shown separately in the financial statements or Notes to Financial Statements were:



	Year ended December 31,

(in millions)	2011		2010		2009

Outside professional services	$	2,692		2,370		1,982
Contract services		1,407		1,642		1,088
Foreclosed assets		1,354		1,537		1,071
Operating losses		1,261		1,258		875
Outside data processing		935		1,046		1,027
Postage, stationery and supplies		942		944		933
Insurance		515		464		845

218

Note 21: Income Taxes

The components of income tax expense were:



	Year ended December 31,


(in millions)		2011	2010	2009

Current:
Federal	$	3,352	1,425	(3,952	)
State and local		468	548	(334	)
Foreign		52	78	164

Total current		3,872	2,051	(4,122	)

Deferred:
Federal		3,088	4,060	8,709
State and local		471	211	794
Foreign		14	16	(50	)

Total deferred		3,573	4,287	9,453

Total	$	7,445	6,338	5,331

The tax effects of our temporary differences that gave rise to significant portions of these deferred tax assets and liabilities are presented in the following table.



	December 31,

(in millions)		2011		2010

Deferred tax assets
Allowance for loan losses	$	6,955		8,157
Deferred compensation and employee benefits		4,115		3,473
Accrued expenses		1,598		1,989
PCI loans		3,851		4,933
Basis difference in investments		2,104		2,598
Net operating loss and tax credit carry forwards		1,701		1,514
Other		402		1,891

Total deferred tax assets		20,726		24,555

Deferred tax assets valuation allowance		(918	)	(711	)


Deferred tax liabilities
Mortgage servicing rights		(7,388	)	(8,020	)
Leasing		(4,344	)	(3,703	)
Mark to market, net		(4,027	)	(5,161	)
Intangible assets		(2,608	)	(3,322	)
Net unrealized gains on securities available for sale		(2,619	)	(3,243	)
Other		(3,736	)	(2,875	)

Total deferred tax liabilities		(24,722	)	(26,324	)

Net deferred tax asset (liability)	$	(4,914	)	(2,480	)

Deferred taxes related to net unrealized gains (losses) on securities available for sale, net unrealized gains (losses) on derivatives, foreign currency translation, and employee benefit plan adjustments are recorded in cumulative OCI (see Note 23). These associated adjustments increased OCI by $1.1 billion in 2011.

We have determined that a valuation allowance is required for 2011 in the amount of $918 million primarily attributable to

deferred tax assets in various state and foreign jurisdictions where we believe it is more likely than not that these deferred tax assets will not be realized. In these jurisdictions, carry back limitations, lack of sources of taxable income, and tax planning strategy limitations contributed to our conclusion that the deferred tax assets would not be realizable. We have concluded that it is more likely than not that the remaining deferred tax assets will be realized based on our history of earnings, sources of taxable income in carry back periods, and our ability to implement tax planning strategies.

At December 31, 2011, we had net operating loss and credit carry forwards with related deferred tax assets of $1.6 billion and $81 million, respectively. If these carry forwards are not utilized, they will expire in varying amounts through 2031.

At December 31, 2011, we had undistributed foreign earnings of $1.2 billion related to foreign subsidiaries. We intend to reinvest these earnings indefinitely outside the U.S. and accordingly have not provided $339 million of income tax liability on these earnings.

The following table reconciles the statutory federal income tax expense and rate to the effective income tax expense and rate. Effective January 1, 2009, we adopted new accounting guidance that changed the way noncontrolling interests are presented in the income statement such that the consolidated income statement includes amounts from both Wells Fargo interests and the noncontrolling interests. As a result, our effective tax rate is calculated by dividing income tax expense by income before income tax expense less the net income from noncontrolling interests.

219



	December 31,

	2011						2010						2009

(in millions)	Amount			Rate			Amount			Rate			Amount			Rate

Statutory federal income tax expense and rate	$	8,160			35.0	%	$	6,545			35.0	%	$	6,162			35.0	%
Change in tax rate resulting from:
State and local taxes on income, net of federal income tax benefit		730			3.1			586			3.1			468			2.7
Tax-exempt interest		(334	)		(1.4	)		(283	)		(1.5	)		(260	)		(1.5	)
Excludable dividends		(247	)		(1.1	)		(258	)		(1.3	)		(253	)		(1.4	)
Tax credits		(735	)		(3.2	)		(577	)		(3.1	)		(533	)		(3.0	)
Life insurance		(222	)		(1.0	)		(223	)		(1.2	)		(257	)		(1.5	)
Leveraged lease tax expense		272			1.2			461			2.5			400			2.3
Other (1)		(179	)		(0.7	)		87			0.4			(396	)		(2.3	)

Effective income tax expense and rate	$	7,445			31.9	%	$	6,338			33.9	%	$	5,331			30.3	%

(1)	Includes other deductible dividends of $(57) million for 2011, $(33) million for 2010, and $(29) million for 2009.

The effective tax rate for 2011 decreased primarily due to tax benefits from the realization for tax purposes of a previously written down investment, a decrease in tax expense associated with leveraged leases, as well as tax benefits related to charitable donations of appreciated securities.

The change in unrecognized tax benefits follows:



	Year ended December 31,

(in millions)	2011			2010

Balance at beginning of year	$	5,500			4,921
Additions:
For tax positions related to the current year		279			579
For tax positions related to prior years		255			301
Reductions:
For tax positions related to prior years		(358	)		(111	)
Lapse of statute of limitations		(75	)		(148	)
Settlements with tax authorities		(596	)		(42	)

Balance at end of year	$	5,005			5,500

Of the $5.0 billion of unrecognized tax benefits at December 31, 2011, approximately $3.3 billion would, if recognized, affect the effective tax rate. The remaining $1.7 billion of unrecognized tax benefits relates to income tax positions on temporary differences.

We recognize interest and penalties as a component of income tax expense. As of December 31, 2011 and 2010, we have accrued approximately $871 million and $870 million for the payment of interest and penalties, respectively. We recognized in income tax expense in 2011 and 2010, interest and penalties of $32 million and $45 million, respectively.

We are subject to U.S. federal income tax as well as income tax in numerous state and foreign jurisdictions. With few exceptions, Wells Fargo and its subsidiaries are not subject to federal, state, local and foreign income tax examinations for taxable years prior to 2007; and Wachovia Corporation and its subsidiaries are not subject to federal, state, local and foreign income tax examinations for taxable years prior to 2006.

We are routinely examined by tax authorities in various jurisdictions. The IRS is currently examining the 2007 through 2010 consolidated federal income tax returns of Wells Fargo &

Company and its subsidiaries. We are also litigating or appealing various issues related to our prior IRS examinations for the periods 1999 and 2003 through 2006. For Wachovia’s 2003 through 2008 tax years, we are appealing various issues related to their IRS examinations. We have paid the IRS the contested income tax associated with these issues and refund claims have been filed for the respective years. In addition, we are currently subject to examination by various state, local and foreign taxing authorities. While it is possible that one or more of these examinations may be resolved within the next twelve months, we do not anticipate that there will be a significant impact to our unrecognized tax benefits as a result of these examinations.

During 2010, we filed a Notice of Appeal to the U.S. Court of Appeals for the Federal Circuit in connection with the adverse judgment of the U.S. Court of Federal Claims related to certain leveraged lease transactions that we entered into between 1997 and 2002. On April 15, 2011, the Federal Circuit affirmed the decision of the Court of Federal Claims. There was no adverse financial statement impact resulting from the Federal Circuit’s decision.

On September 30, 2011, we received an adverse decision from the U.S. District Court for the District of Minnesota in WFC Holdings Corp. v. United States, a case involving a lease restructuring transaction. There was no adverse financial statement impact from the decision. On December 1, 2011, we filed a Notice of Appeal to the U.S. Court of Appeals for the Eighth Circuit.

We estimate that our unrecognized tax benefits will not change significantly during the next 12 months.

220

Note 22: Earnings Per Common Share

The table below shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.



	Year ended December 31,

(in millions, except per share amounts)	2011		2010		2009

Wells Fargo net income	$	15,869		12,362		12,275
Less: Preferred stock dividends and other (1)		844		730		4,285

Wells Fargo net income applicable to common stock (numerator)	$	15,025		11,632		7,990

Earnings per common share
Average common shares outstanding (denominator)		5,278.1		5,226.8		4,545.2
Per share	$	2.85		2.23		1.76

Diluted earnings per common share
Average common shares outstanding		5,278.1		5,226.8		4,545.2
Add: Stock Options		24.2		28.3		17.2
Restricted share rights		21.1		8.0		0.3

Diluted average common shares outstanding (denominator)		5,323.4		5,263.1		4,562.7

Per share	$	2.82		2.21		1.75

(1)

Includes Series J, K and L preferred stock dividends of $844 million, $737 million and $804 million for the year ended 2011, 2010 and 2009, respectively. Also includes $3.5 billion in 2009, for Series D Preferred Stock, which was redeemed in 2009. In conjunction with the redemption, we accelerated accretion of the remaining discount of $1.9 billion.

The following table presents the outstanding options and warrants to purchase shares of common stock that were anti-dilutive (the exercise price was higher than the weighted-average market price), and therefore not included in the calculation of diluted earnings per common share.



	Weighted-average shares

	Year ended December 31,

(in millions)	2011		2010		2009

Options		198.8		212.1		247.2
Warrants		39.4		66.9		110.3

221

Note 23: Other Comprehensive Income

The components of other comprehensive income (OCI) and the related tax effects were:



	Year ended December 31,

	2011									2010									2009

(in millions)	Before tax			Tax effect			Net of tax			Before tax			Tax effect			Net of tax			Before tax			Tax effect			Net of tax

Translation adjustments	$	(35	)		13			(22	)		71			(26	)		45			118			(45	)		73

Securities available for sale:
Net unrealized gains (losses) arising during the year		(578	)		359			(219	)		2,611			(1,134	)		1,477			15,998			(5,972	)		10,026
Reclassification of (gains) losses included in net income		(696	)		262			(434	)		77			(29	)		48			(349	)		129			(220	)

Net unrealized gains (losses) arising during the year		(1,274	)		621			(653	)		2,688			(1,163	)		1,525			15,649			(5,843	)		9,806

Derivatives and hedging activities:
Net unrealized gains arising during the year		190			(85	)		105			750			(282	)		468			193			(86	)		107
Reclassification of net gains on cash flow hedges included in net income		(571	)		217			(354	)		(613	)		234			(379	)		(531	)		203			(328	)

Net unrealized gains (losses) arising during the year		(381	)		132			(249	)		137			(48	)		89			(338	)		117			(221	)

Defined benefit pension plans:
Net actuarial gains (losses)		(1,079	)		411			(668	)		20			(9	)		11			222			(73	)		149
Amortization of net actuarial loss and prior service cost included in net income		99			(38	)		61			104			(45	)		59			184			(60	)		124

Net gains (losses) arising during the year		(980	)		373			(607	)		124			(54	)		70			406			(133	)		273

Other comprehensive income	$	(2,670	)		1,139			(1,531	)		3,020			(1,291	)		1,729			15,835			(5,904	)		9,931

Cumulative OCI balances were:



(in millions)	Translation adjustments			Securities available for sale			Derivatives and hedging activities			Defined benefit pension plans			Cumulative other compre- hensive income

Balance, December 31, 2008	$	(6	)		(6,212	)		871			(1,522	)		(6,869	)
Cumulative effect from change in accounting for other-than-temporary impairment on debt securities		–			(53	)		–			–			(53	)
Net change		73			9,806			(221	)		273			9,931

Balance, December 31, 2009		67			3,541			650			(1,249	)		3,009
Net change		45			1,525			89			70			1,729

Balance, December 31, 2010		112			5,066			739			(1,179	)		4,738
Net change		(22	)		(653	)		(249	)		(607	)		(1,531	)

Balance, December 31, 2011	$	90			4,413			490			(1,786	)		3,207

222

Note 24: Operating Segments

We have three operating segments for management reporting: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. The results for these operating segments are based on our management accounting process, for which there is no comprehensive, authoritative guidance equivalent to GAAP for financial accounting. The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with similar information for other financial services companies. We define our operating segments by product type and customer segment. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. In first quarter 2010, we conformed certain funding and allocation methodologies of legacy Wachovia to those of Wells Fargo; in addition, integration expense related to mergers other than the Wachovia merger is now included in segment results. In fourth quarter 2010, we aligned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. In first quarter 2011, we realigned a private equity business into Wholesale Banking from Community Banking. The prior periods have been revised to reflect these changes.

Community Banking offers a complete line of diversified financial products and services to consumers and small businesses with annual sales generally up to $20 million in which the owner generally is the financial decision maker. Community Banking also offers investment management and other services to retail customers and securities brokerage through affiliates. These products and services include the Wells Fargo Advantage Funds ^SM , a family of mutual funds. Loan products include lines of credit, auto floor plan lines, equity lines and loans, equipment and transportation loans, education loans, origination and purchase of residential mortgage loans and servicing of mortgage loans and credit cards. Other credit products and financial services available to small businesses and their owners include equipment leases, real estate and other commercial financing, Small Business Administration financing, venture capital financing, cash management, payroll services, retirement plans, Health Savings Accounts, credit cards, and merchant payment processing. Community Banking also purchases sales finance contracts from retail merchants throughout the United States and retail installment contracts from auto dealers in the United States and Puerto Rico. Consumer and business deposit products include checking accounts, savings deposits, market rate accounts, Individual Retirement Accounts, time deposits, global remittance and debit cards.

Community Banking serves customers through a complete range of channels, including traditional banking stores, in-store banking centers, business centers, ATMs, Online and Mobile Banking, and Wells Fargo Customer Connection, a 24-hours a day, seven days a week telephone service.

Wholesale Banking provides financial solutions to businesses across the United States with annual sales generally in excess of $20 million and to financial institutions globally. Wholesale Banking provides a complete line of commercial, corporate, capital markets, cash management and real estate banking products and services. These include traditional commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection services, foreign exchange services, treasury management, investment management, institutional fixed-income sales, interest rate, commodity and equity risk management, online/electronic products such as the Commercial Electronic Office ^® ( CEO ^® ) portal, insurance, corporate trust fiduciary and agency services, and investment banking services. Wholesale Banking manages customer investments through institutional separate accounts and mutual funds, including the Wells Fargo Advantage Funds and Wells Capital Management. Wholesale Banking also supports the CRE market with products and services such as construction loans for commercial and residential development, land acquisition and development loans, secured and unsecured lines of credit, interim financing arrangements for completed structures, rehabilitation loans, affordable housing loans and letters of credit, permanent loans for securitization, CRE loan servicing and real estate and mortgage brokerage services.

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client’s needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and trust. Family Wealth (to be rebranded as Abbot Downing, a Wells Fargo Business, in April 2012) meets the unique needs of ultra high net worth customers. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses, retail retirement solutions for individuals, and reinsurance services for the life insurance industry.

Other includes corporate items (such as integration expenses related to the Wachovia merger) not specific to a business segment and elimination of certain items that are included in more than one business segment.

223



(income/expense in millions, average balances in billions)	Community Banking		Wholesale Banking			Wealth, Brokerage and Retirement		Other (1)			Consolidated Company

2011
Net interest income (2)	$	29,580		11,714			2,855		(1,386	)		42,763
Provision (reversal of provision) for credit losses		8,001		(109	)		170		(163	)		7,899
Noninterest income		21,124		9,952			9,333		(2,224	)		38,185
Noninterest expense		29,234		11,194			9,935		(970	)		49,393

Income (loss) before income tax expense (benefit)		13,469		10,581			2,083		(2,477	)		23,656
Income tax expense (benefit)		4,072		3,525			789		(941	)		7,445

Net income (loss) before noncontrolling interests		9,397		7,056			1,294		(1,536	)		16,211
Less: Net income from noncontrolling interests		317		19			6		–			342

Net income (loss) (3)	$	9,080		7,037			1,288		(1,536	)		15,869

2010
Net interest income (2)	$	31,885		11,474			2,707		(1,309	)		44,757
Provision for credit losses		13,807		1,920			334		(308	)		15,753
Noninterest income		22,604		10,951			9,023		(2,125	)		40,453
Noninterest expense		30,071		11,269			9,768		(652	)		50,456

Income (loss) before income tax expense (benefit)		10,611		9,236			1,628		(2,474	)		19,001
Income tax expense (benefit)		3,347		3,315			616		(940	)		6,338

Net income (loss) before noncontrolling interests		7,264		5,921			1,012		(1,534	)		12,663
Less: Net income from noncontrolling interests		274		20			7		–			301

Net income (loss) (3)	$	6,990		5,901			1,005		(1,534	)		12,362

2009
Net interest income (2)	$	34,795		10,222			2,407		(1,100	)		46,324
Provision for credit losses		17,866		3,648			460		(306	)		21,668
Noninterest income		25,651		10,411			8,358		(2,058	)		42,362
Noninterest expense		29,928		10,799			9,426		(1,133	)		49,020

Income (loss) before income tax expense (benefit)		12,652		6,186			879		(1,719	)		17,998
Income tax expense (benefit)		3,443		2,217			324		(653	)		5,331

Net income (loss) before noncontrolling interests		9,209		3,969			555		(1,066	)		12,667
Less: Net income from noncontrolling interests		331		35			26		–			392

Net income (loss) (3)	$	8,878		3,934			529		(1,066	)		12,275

2011
Average loans	$	498.1		249.1			43.0		(33.1	)		757.1
Average assets		755.7		428.1			152.2		(65.7	)		1,270.3
Average core deposits		556.2		202.1			130.4		(62.0	)		826.7
2010
Average loans	$	530.1		230.5			43.0		(33.0	)		770.6
Average assets		772.4		373.8			139.3		(58.6	)		1,226.9
Average core deposits		536.4		170.0			121.2		(55.6	)		772.0

(1)	Includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing services and products for wealth management customers provided in Community Banking stores.

(2)

Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.

(3)	Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement segments and Wells Fargo net income for the consolidated company.

224

Note 25: Condensed Consolidating Financial Statements

Following are the condensed consolidating financial statements of the Parent and Wells Fargo Financial, Inc. and its owned subsidiaries (WFFI). In 2002, the Parent issued a full and unconditional guarantee of all outstanding term debt securities and commercial paper of WFFI. WFFI ceased filing periodic reports under the Securities Exchange Act of 1934 and is no

longer a separately rated company. The Parent also guaranteed all outstanding term debt securities of Wells Fargo Canada Corporation (WFCC), WFFI’s wholly owned Canadian subsidiary. WFCC has continued to issue term debt securities and commercial paper in Canada, unconditionally guaranteed by the Parent.

Condensed Consolidating Statement of Income

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries

Eliminations

Consolidated
Company

Year ended December 31, 2011

Dividends from subsidiaries:

Bank

11,546

–

(11,546

)

–

Nonbank

140

–

(140

)

–

Interest income from loans

–

2,157

35,367

(277

)

37,247

Interest income from subsidiaries

914

–

(914

)

–

Other interest income

242

109

11,814

–

12,165

Total interest income

12,842

2,266

47,181

(12,877

)

49,412

Deposits

–

2,275

–

2,275

Short-term borrowings

209

487

(678

)

Long-term debt

2,469

552

1,470

(513

)

3,978

Other interest expense

–

308

–

316

Total interest expense

2,686

614

4,540

(1,191

)

6,649

Net interest income

10,156

1,652

42,641

(11,686

)

42,763

Provision for credit losses

–

1,181

6,718

–

7,899

Net interest income after provision for credit losses

10,156

471

35,923

(11,686

)

34,864

Noninterest income

Fee income – nonaffiliates

–

110

23,320

–

23,430

Other

460

187

14,739

(631

)

14,755

Total noninterest income

460

297

38,059

(631

)

38,185

Noninterest expense

Salaries and benefits

(60

)

27,632

–

27,667

Other

137

652

21,568

(631

)

21,726

Total noninterest expense

747

49,200

(631

)

49,393

Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries

10,539

24,782

(11,686

)

23,656

Income tax expense (benefit)

(584

)

8,001

–

7,445

Equity in undistributed income of subsidiaries

4,746

–

(4,746

)

–

Net income (loss) before noncontrolling interests

15,869

)

16,781

(16,432

)

16,211

Less: Net income from noncontrolling interests

–

342

–

342

Parent, WFFI, Other and Wells Fargo net income (loss)

15,869

)

16,439

(16,432

)

15,869

225

Condensed Consolidating Statements of Income



(in millions)	Parent			WFFI			Other consolidating subsidiaries		Eliminations			Consolidated Company

Year ended December 31, 2010
Dividends from subsidiaries:
Bank	$	12,896			–			–		(12,896	)		–
Nonbank		21			–			–		(21	)		–
Interest income from loans		–			2,674			37,404		(318	)		39,760
Interest income from subsidiaries		1,375			–			14		(1,389	)		–
Other interest income		304			116			12,616		–			13,036

Total interest income		14,596			2,790			50,034		(14,624	)		52,796

Deposits		–			–			2,832		–			2,832
Short-term borrowings		277			46			586		(817	)		92
Long-term debt		2,910			963			1,905		(890	)		4,888
Other interest expense		2			–			225		–			227

Total interest expense		3,189			1,009			5,548		(1,707	)		8,039

Net interest income		11,407			1,781			44,486		(12,917	)		44,757
Provision for credit losses		–			1,064			14,689		–			15,753

Net interest income after provision for credit losses		11,407			717			29,797		(12,917	)		29,004

Noninterest income
Fee income – nonaffiliates		–			107			23,385		–			23,492
Other		363			145			17,111		(658	)		16,961

Total noninterest income		363			252			40,496		(658	)		40,453

Noninterest expense
Salaries and benefits		143			150			26,919		–			27,212
Other		1,192			632			22,078		(658	)		23,244

Total noninterest expense		1,335			782			48,997		(658	)		50,456

Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries		10,435			187			21,296		(12,917	)		19,001
Income tax expense (benefit)		(749	)		62			7,025		–			6,338
Equity in undistributed income of subsidiaries		1,178			–			–		(1,178	)		–

Net income (loss) before noncontrolling interests		12,362			125			14,271		(14,095	)		12,663
Less: Net income from noncontrolling interests		–			–			301		–			301

Parent, WFFI, Other and Wells Fargo net income (loss)	$	12,362			125			13,970		(14,095	)		12,362

Year ended December 31, 2009
Dividends from subsidiaries:
Bank	$	6,974			–			–		(6,974	)		–
Nonbank		528			–			–		(528	)		–
Interest income from loans		–			3,467			38,140		(18	)		41,589
Interest income from subsidiaries		2,126			–			–		(2,126	)		–
Other interest income		424			111			14,150		–			14,685

Total interest income		10,052			3,578			52,290		(9,646	)		56,274

Deposits		–			–			3,774		–			3,774
Short-term borrowings		174			38			782		(772	)		222
Long-term debt		3,391			1,305			2,458		(1,372	)		5,782
Other interest expense		–			–			172		–			172

Total interest expense		3,565			1,343			7,186		(2,144	)		9,950

Net interest income		6,487			2,235			45,104		(7,502	)		46,324
Provision for credit losses		–			1,901			19,767		–			21,668

Net interest income after provision for credit losses		6,487			334			25,337		(7,502	)		24,656

Noninterest income
Fee income – nonaffiliates		–			148			22,815		–			22,963
Other		738			169			19,135		(643	)		19,399

Total noninterest income		738			317			41,950		(643	)		42,362

Noninterest expense
Salaries and benefits		320			129			26,018		–			26,467
Other		521			711			21,964		(643	)		22,553

Total noninterest expense		841			840			47,982		(643	)		49,020

Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries		6,384			(189	)		19,305		(7,502	)		17,998
Income tax expense (benefit)		(164	)		(86	)		5,581		–			5,331
Equity in undistributed income of subsidiaries		5,727			–			–		(5,727	)		–

Net income (loss) before noncontrolling interests		12,275			(103	)		13,724		(13,229	)		12,667
Less: Net income from noncontrolling interests		–			1			391		–			392

Parent, WFFI, Other and Wells Fargo net income (loss)	$	12,275			(104	)		13,333		(13,229	)		12,275

226

Note 25: Condensed Consolidating Financial Statements (continued)

Condensed Consolidating Balance Sheets



(in millions)	Parent		WFFI			Other consolidating subsidiaries			Eliminations			Consolidated Company

December 31, 2011
Assets
Cash and cash equivalents due from:
Subsidiary banks	$	19,312		211			–			(19,523	)		–
Nonaffiliates		30		355			63,422			–			63,807
Securities available for sale		7,427		1,670			213,516			–			222,613
Mortgages and loans held for sale		–		–			49,695			–			49,695
Loans		6		26,735			759,794			(16,904	)		769,631
Loans to subsidiaries:
Bank		3,885		–			–			(3,885	)		–
Nonbank		46,987		–			–			(46,987	)		–
Allowance for loan losses		–		(1,775	)		(17,597	)		–			(19,372	)

Net loans		50,878		24,960			742,197			(67,776	)		750,259

Investments in subsidiaries:
Bank		135,155		–			–			(135,155	)		–
Nonbank		17,294		–			–			(17,294	)		–
Other assets		7,573		1,255			219,945			(1,280	)		227,493

Total assets	$	237,669		28,451			1,288,775			(241,028	)		1,313,867

Liabilities and equity
Deposits	$	–		–			939,593			(19,523	)		920,070
Short-term borrowings		759		15,503			79,682			(46,853	)		49,091
Accrued expenses and other liabilities		7,052		1,603			70,290			(1,280	)		77,665
Long-term debt		77,613		9,746			46,914			(8,919	)		125,354
Indebtedness to subsidiaries		12,004		–			–			(12,004	)		–

Total liabilities		97,428		26,852			1,136,479			(88,579	)		1,172,180

Parent, WFFI, Other and Wells Fargo stockholders’ equity		140,241		1,599			150,850			(152,449	)		140,241
Noncontrolling interests		–		–			1,446			–			1,446

Total equity		140,241		1,599			152,296			(152,449	)		141,687

Total liabilities and equity	$	237,669		28,451			1,288,775			(241,028	)		1,313,867

December 31, 2010
Assets
Cash and cash equivalents due from:
Subsidiary banks	$	30,240		154			–			(30,394	)		–
Nonaffiliates		9		212			96,460			–			96,681
Securities available for sale		2,368		2,742			167,544			–			172,654
Mortgages and loans held for sale		–		–			53,053			–			53,053
Loans		7		30,329			742,807			(15,876	)		757,267
Loans to subsidiaries:
Bank		3,885		–			–			(3,885	)		–
Nonbank		53,382		–			–			(53,382	)		–
Allowance for loan losses		–		(1,709	)		(21,313	)		–			(23,022	)

Net loans		57,274		28,620			721,494			(73,143	)		734,245

Investments in subsidiaries:
Bank		133,867		–			–			(133,867	)		–
Nonbank		14,904		–			–			(14,904	)		–
Other assets		8,363		1,316			192,821			(1,005	)		201,495

Total assets	$	247,025		33,044			1,231,372			(253,313	)		1,258,128

Liabilities and equity
Deposits	$	–		–			878,336			(30,394	)		847,942
Short-term borrowings		2,412		14,490			86,523			(48,024	)		55,401
Accrued expenses and other liabilities		6,819		1,685			62,414			(1,005	)		69,913
Long-term debt		99,745		15,240			55,476			(13,478	)		156,983
Indebtedness to subsidiaries		11,641		–			–			(11,641	)		–

Total liabilities		120,617		31,415			1,082,749			(104,542	)		1,130,239

Parent, WFFI, Other and Wells Fargo stockholders’ equity		126,408		1,618			147,153			(148,771	)		126,408
Noncontrolling interests		–		11			1,470			–			1,481

Total equity		126,408		1,629			148,623			(148,771	)		127,889

Total liabilities and equity	$	247,025		33,044			1,231,372			(253,313	)		1,258,128

227

Condensed Consolidating Statements of Cash Flows



	Year ended December 31,

	2011												2010

(in millions)	Parent			WFFI			Other consolidating subsidiaries/ eliminations			Consolidated Company			Parent			WFFI			Other consolidating subsidiaries/ eliminations			Consolidated Company

Cash flows from operating activities:
Net cash provided (used) by operating activities	$	15,049			1,563			(2,947	)		13,665			14,180			1,774			2,818			18,772

Cash flows from investing activities:
Securities available for sale:
Sales proceeds		11,459			1,946			9,657			23,062			2,441			796			5,431			8,668
Prepayments and maturities		–			294			52,324			52,618			–			229			47,690			47,919
Purchases		(16,487	)		(1,086	)		(103,662	)		(121,235	)		(119	)		(1,037	)		(52,310	)		(53,466	)
Loans:
Loans originated by banking subsidiaries, net of principal collected		–			(596	)		(35,090	)		(35,686	)		–			(206	)		16,075			15,869
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries		–			–			6,555			6,555			–			–			6,517			6,517
Purchases (including participations) of loans by banking subsidiaries		–			–			(8,878	)		(8,878	)		–			–			(2,297	)		(2,297	)
Principal collected on nonbank entities’ loans		–			9,984			(202	)		9,782			–			10,829			4,731			15,560
Loans originated by nonbank entities		–			(7,520	)		(2	)		(7,522	)		–			(6,336	)		(4,500	)		(10,836	)
Net repayments from (advances to) subsidiaries		1,318			(81	)		(1,237	)		–			(5,485	)		(842	)		6,327			–
Capital notes and term loans made to subsidiaries		(1,340	)		–			1,340			–			–			–			–			–
Principal collected on notes/loans made to subsidiaries		5,779			–			(5,779	)		–			11,282			–			(11,282	)		–
Net decrease (increase) in investment in subsidiaries		(610	)		–			610			–			1,198			–			(1,198	)		–
Net cash paid for acquisitions		–			–			(353	)		(353	)		–			–			(36	)		(36	)
Other, net		230			210			46,173			46,613			15			64			(31,652	)		(31,573	)

Net cash provided (used) by investing activities		349			3,151			(38,544	)		(35,044	)		9,332			3,497			(16,504	)		(3,675	)

Cash flows from financing activities:
Net change in:
Deposits		–			–			72,128			72,128			–			–			23,924			23,924
Short-term borrowings		(242	)		1,013			(7,002	)		(6,231	)		1,860			4,118			5,330			11,308
Long-term debt:
Proceeds from issuance		7,058			513			4,116			11,687			1,789			–			1,700			3,489
Repayment		(31,198	)		(6,029	)		(13,328	)		(50,555	)		(23,281	)		(9,478	)		(30,558	)		(63,317	)
Preferred stock:
Proceeds from issuance		2,501			–			–			2,501			–			–			–			–
Cash dividends paid		(844	)		–			–			(844	)		(737	)		–			–			(737	)
Common stock warrants repurchased		(2	)		–			–			(2	)		(545	)		–			–			(545	)
Common stock:
Proceeds from issuance		1,296			–			–			1,296			1,375			–			–			1,375
Repurchased		(2,416	)		–			–			(2,416	)		(91	)		–			–			(91	)
Cash dividends paid		(2,537	)		–			–			(2,537	)		(1,045	)		–			–			(1,045	)
Excess tax benefits related to stock option payments		79			–			–			79			98			–			–			98
Net change in noncontrolling interests:
Other		–			(11	)		(320	)		(331	)		–			1			(593	)		(592	)

Net cash provided (used) by financing activities		(26,305	)		(4,514	)		55,594			24,775			(20,577	)		(5,359	)		(197	)		(26,133	)

Net change in cash and due from banks		(10,907	)		200			14,103			3,396			2,935			(88	)		(13,883	)		(11,036	)
Cash and due from banks at beginning of year		30,249			366			(14,571	)		16,044			27,314			454			(688	)		27,080

Cash and due from banks at end of year	$	19,342			566			(468	)		19,440			30,249			366			(14,571	)		16,044

228

Note 25: Condensed Consolidating Financial Statements (continued)

Condensed Consolidating Statement of Cash Flows



(in millions)	Parent			WFFI			Other consolidating subsidiaries/ eliminations			Consolidated Company

Year ended December 31,2009
Cash flows from operating activities:
Net cash provided by operating activities	$	7,356			1,655			19,602			28,613

Cash flows from investing activities:
Securities available for sale:
Sales proceeds		1,184			925			50,929			53,038
Prepayments and maturities		–			290			38,521			38,811
Purchases		(463	)		(1,667	)		(93,155	)		(95,285	)
Loans:
Loans originated by banking subsidiaries, net of principal collected		–			(981	)		53,221			52,240
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries		–			–			6,162			6,162
Purchases (including participations) of loans by banking subsidiaries		–			–			(3,363	)		(3,363	)
Principal collected on nonbank entities’ loans		–			11,119			3,309			14,428
Loans originated by nonbank entities		–			(5,523	)		(4,438	)		(9,961	)
Net repayments from (advances to) subsidiaries		11,369			(138	)		(11,231	)		–
Capital notes and term loans made to subsidiaries		(497	)		(1,000	)		1,497			–
Principal collected on notes/loans made to subsidiaries		12,979			–			(12,979	)		–
Net decrease (increase) in investment in subsidiaries		(1,382	)		–			1,382			–
Net cash paid for acquisitions		–			–			(138	)		(138	)
Other, net		22,513			355			(7,015	)		15,853

Net cash provided by investing activities		45,703			3,380			22,702			71,785

Cash flows from financing activities:
Net change in:
Deposits		–			–			42,473			42,473
Short-term borrowings		(19,100	)		2,158			(52,166	)		(69,108	)
Long-term debt:
Proceeds from issuance		8,297			1,347			(1,248	)		8,396
Repayment		(22,931	)		(8,508	)		(34,821	)		(66,260	)
Preferred stock:
Redeemed		(25,000	)		–			–			(25,000	)
Cash dividends paid		(2,178	)		–			–			(2,178	)
Common stock:
Proceeds from issuance		21,976			–			–			21,976
Repurchased		(220	)		–			–			(220	)
Cash dividends paid		(2,125	)		–			–			(2,125	)
Excess tax benefits related to stock option payments		18			–			–			18
Net change in noncontrolling interests:
Purchase of Prudential’s noncontrolling interest		–			–			(4,500	)		(4,500	)
Other		–			(4	)		(549	)		(553	)
Other, net		(140	)		–			140			–

Net cash used by financing activities		(41,403	)		(5,007	)		(50,671	)		(97,081	)

Net change in cash and due from banks		11,656			28			(8,367	)		3,317
Cash and due from banks at beginning of year		15,658			426			7,679			23,763

Cash and due from banks at end of year	$	27,314			454			(688	)		27,080

229

Note 26: Regulatory and Agency Capital Requirements

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal regulatory agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated financial holding company, and the OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A.

We do not consolidate our wholly-owned trust (the Trust) formed solely to issue trust preferred and preferred purchase securities (the Securities). Securities issued by the Trust includable in Tier 1 capital were $7.5 billion at December 31, 2011. Since December 31, 2010, we have called $9.2 billion of trust preferred securities, and also issued $2.5 billion in Series I Preferred Stock, replacing certain preferred purchase securities reflected in the amount of Securities issued by the Trust includable in Tier 1 capital at December 31, 2010. The Series I

Preferred Stock was included in preferred stock (Note 18), as a separate component of Tier 1 capital. The junior subordinated debentures held by the Trust were included in the Company’s long-term debt.

Certain subsidiaries of the Company are approved seller/servicers, and are therefore required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At December 31, 2011, each seller/servicer met these requirements. Certain broker-dealer subsidiaries of the Company are subject to SEC Rule 15c3-1 (the Net Capital Rule), which requires that we maintain minimum levels of net capital, as defined. At December 31, 2011, each of these subsidiaries met these requirements.

The following table presents regulatory capital information for Wells Fargo & Company and Wells Fargo Bank, N.A.



	Wells Fargo & Company					Wells Fargo Bank, N.A.				Well- capitalized ratios (1)		Minimum capital ratios (1)

	December 31,

(in billions, except ratios)	2011			2010		2011		2010

Regulatory capital:
Tier 1	$	114.0			109.4		92.6		90.2
Total		148.5			147.1		117.9		117.1
Assets:
Risk-weighted	$	1,005.6			980.0		923.2		895.2
Adjusted average (2)		1,262.6			1,189.5		1,115.4		1,057.7
Capital ratios:
Tier 1 capital		11.33	%		11.16		10.03		10.07		6.00		4.00
Total capital		14.76			15.01		12.77		13.09		10.00		8.00
Tier 1 leverage (2)		9.03			9.19		8.30		8.52		5.00		4.00

(1)	As defined by the regulations issued by the Federal Reserve, OCC and FDIC.

(2)

The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations.

230

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Wells Fargo & Company:

We have audited the accompanying consolidated balance sheet of Wells Fargo & Company and Subsidiaries (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of income, changes in equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

In 2010, the Company adopted a new accounting standard related to its involvement with variable interest entities, and in 2009, the Company changed its method of evaluating other than temporary impairment for debt securities.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2012, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

LOGO

San Francisco, California

February 28, 2012

231

Quarterly Financial Data

Condensed Consolidated Statement of Income – Quarterly (Unaudited)



	2011 Quarter ended											2010 Quarter ended

(in millions, except per share amounts)	Dec. 31		Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30			June 30		Mar. 31

Interest income	$	12,378		12,178			12,384			12,472			12,969			13,130			13,472		13,225

Interest expense		1,486		1,636			1,706			1,821			1,906			2,032			2,023		2,078

Net interest income		10,892		10,542			10,678			10,651			11,063			11,098			11,449		11,147
Provision for credit losses		2,040		1,811			1,838			2,210			2,989			3,445			3,989		5,330

Net interest income after provision for credit losses		8,852		8,731			8,840			8,441			8,074			7,653			7,460		5,817

Noninterest income
Service charges on deposit accounts		1,091		1,103			1,074			1,012			1,035			1,132			1,417		1,332
Trust and investment fees		2,658		2,786			2,944			2,916			2,958			2,564			2,743		2,669
Card fees		680		1,013			1,003			957			941			935			911		865
Other fees		1,096		1,085			1,023			989			1,063			1,004			982		941
Mortgage banking		2,364		1,833			1,619			2,016			2,757			2,499			2,011		2,470
Insurance		466		423			568			503			564			397			544		621
Net gains (losses) from trading activities		430		(442	)		414			612			532			470			109		537
Net gains (losses) on debt securities available for sale		48		300			(128	)		(166	)		(268	)		(114	)		30		28
Net gains from equity investments		61		344			724			353			317			131			288		43
Operating leases		60		284			103			77			79			222			329		185
Other		759		357			364			409			453			536			581		610

Total noninterest income		9,713		9,086			9,708			9,678			10,431			9,776			9,945		10,301

Noninterest expense
Salaries		3,706		3,718			3,584			3,454			3,513			3,478			3,564		3,314
Commission and incentive compensation		2,251		2,088			2,171			2,347			2,195			2,280			2,225		1,992
Employee benefits		1,012		780			1,164			1,392			1,192			1,074			1,063		1,322
Equipment		607		516			528			632			813			557			588		678
Net occupancy		759		751			749			752			750			742			742		796
Core deposit and other intangibles		467		466			464			483			549			548			553		549
FDIC and other deposit assessments		314		332			315			305			301			300			295		301
Other		3,392		3,026			3,500			3,368			4,027			3,274			3,716		3,165

Total noninterest expense		12,508		11,677			12,475			12,733			13,340			12,253			12,746		12,117

Income before income tax expense		6,057		6,140			6,073			5,386			5,165			5,176			4,659		4,001
Income tax expense		1,874		1,998			2,001			1,572			1,672			1,751			1,514		1,401

Net income before noncontrolling interests		4,183		4,142			4,072			3,814			3,493			3,425			3,145		2,600
Less: Net income from noncontrolling interests		76		87			124			55			79			86			83		53

Wells Fargo net income	$	4,107		4,055			3,948			3,759			3,414			3,339			3,062		2,547

Less: Preferred stock dividends and accretion and other		219		216			220			189			182			189			184		175

Wells Fargo net income applicable to common stock	$	3,888		3,839			3,728			3,570			3,232			3,150			2,878		2,372

Per share information
Earnings per common share	$	0.74		0.73			0.70			0.68			0.62			0.60			0.55		0.46
Diluted earnings per common share		0.73		0.72			0.70			0.67			0.61			0.60			0.55		0.45
Dividends declared per common share		0.12		0.12			0.12			0.12			0.05			0.05			0.05		0.05
Average common shares outstanding		5,271.9		5,275.5			5,286.5			5,278.8			5,256.2			5,240.1			5,219.7		5,190.4
Diluted average common shares outstanding		5,317.6		5,319.2			5,331.7			5,333.1			5,293.8			5,273.2			5,260.8		5,225.2
Market price per common share (1):
High	$	27.97		29.63			32.63			34.25			31.61			28.77			34.25		31.99
Low		22.61		22.58			25.26			29.82			23.37			23.02			25.52		26.37
Quarter-end		27.56		24.12			28.06			31.71			30.99			25.12			25.60		31.12

(1)	Based on daily prices reported on the New York Stock Exchange Composite Transaction Reporting System.

232

Glossary of Acronyms


ACL		Allowance for credit losses
ALCO		Asset/Liability Management Committee
ARS		Auction rate security
ASU		Accounting Standards Update
ARM		Adjustable-rate mortgage
AVM		Automated valuation model
BCBS		Basel Committee on Bank Supervision
BHC		Bank holding company
CD		Certificate of deposit
CDO		Collateralized debt obligation
CFPB		Consumer Finance Protection Bureau
CLO		Collateralized loan obligation
CLTV		Combined loan-to-value
CPP		Capital Purchase Program
CPR		Constant prepayment rate
CRE		Commercial real estate
DPD		Days past due
ESOP		Employee Stock Ownership Plan
FAS		Statement of Financial Accounting Standards
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
FFELP		Federal Family Education Loan Program
FHA		Federal Housing Administration
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Company
FICO		Fair Isaac Corporation (credit rating)
FNMA		Federal National Mortgage Association
FRB		Board of Governors of the Federal Reserve System
GAAP		Generally accepted accounting principles
GNMA		Government National Mortgage Association
GSE		Government-sponsored entity
G-SIB		Globally systemically important bank
HAMP		Home Affordability Modification Program
HPI		Home Price Index
HUD		Department of Housing and Urban Development


LHFS		Loans held for sale
LIBOR		London Interbank Offered Rate
LOCOM		Lower of cost or market value
LTV		Loan-to-value
MBS		Mortgage-backed security
MERS		Mortgage Electronic Registration Systems, Inc.
MHA		Making Home Affordable programs
MHFS		Mortgages held for sale
MSR		Mortgage servicing right
MTN		Medium-term note
NAV		Net asset value
NPA		Nonperforming asset
OCC		Office of the Comptroller of the Currency
OCI		Other comprehensive income
OTC		Over-the-counter
OTTI		Other-than-temporary impairment
PCI Loans		Purchased credit-impaired loans
PTPP		Pre-tax pre-provision profit
RBC		Risk-based capital
ROA		Wells Fargo net income to average total assets
ROE		Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity
SEC		Securities and Exchange Commission
S&P		Standard & Poor’s
SPE		Special purpose entity
TARP		Troubled Asset Relief Program
TDR		Troubled debt restructuring
VA		Department of Veterans Affairs
VaR		Value-at-risk
VIE		Variable interest entity
WFCC		Wells Fargo Canada Corporation
WFFI		Wells Fargo Financial, Inc. and its wholly-owned subsidiaries

233

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
1005 Corp.		North Carolina
2007 Vento II, LLC		Delaware
360 Mortgage Solutions, LLC		Delaware
425 South Tryon Street, LLC		North Carolina
4400 N. Hanley, LLC		Delaware
A. G. Edwards Technology Partners		Missouri
A.G. Edwards & Sons, LLC		Delaware
A.G. Edwards Capital, Inc.		Delaware
A.G. Edwards Hedging Services, Inc.		Nevada
ABCA, Inc		Florida
ACAS/WCM, LLC		Delaware
ACO Brokerage Holdings Corporation		Delaware
Advance Mortgage		Virginia
AGE Capital Holding, Inc.		Delaware
AILS, Inc.		Delaware
AIReS Mortgage Solutions, LLC		Delaware
Alano Funding, LLC		Delaware
Alces Funding, LLC		Delaware
Alternative Strategies Brokerage Services, Inc.		Delaware
Alternative Strategies Group, Inc.		North Carolina
Alternative Strategies Managed Futures & Commodities Platform, LLC		Delaware
Alternative Strategies Offshore Platform, SPC		UK-Cayman Islands
Alternative Strategies Platform, LLC		Delaware
Alternative Strategies Real Estate Platform, LLC		Delaware
American Capital/Wachovia CDO Investor Fund, L.P.		Delaware
American E & S Insurance Brokers California, Inc.		California
American Mortgage Network, LLC		Delaware
American Securities Company		California
American Securities Company of Missouri		Missouri
American Securities Company of Nevada		Nevada
American Securities Company of Utah		Utah
American Southern Mortgage Services, LLC		Delaware
AmNet Mortgage, LLC		Delaware
Ao Cheng Ltd		British Virgin Islands
Ascent Financial Services, LLC		Delaware
ASGI Agility Income Fund		Delaware
ASGI Aurora Opportunities Fund, LLC		Delaware
ASGI Corbin Multi-Strategy Fund, LLC		Delaware
ASGI Hedged Equities, Accredited, L.P.		Delaware
ASGI Hedged Equities, Super Accredited, L.P.		Delaware
ASGI Managed Futures Legends Fund, LLC		Delaware
ASGI Multi-Strategy Fund II, Super Accredited, L.P.		Delaware
ASGI Multi-Strategy, Accredited, L.P.		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
ASGI Multi-Strategy, Super Accredited, L.P.		Delaware
ASGI Private Equity Fund II, L.P.		Delaware
ASGI Private Equity Fund, L.P.		Delaware
ASGI Private Equity Partners 1999, L.P.		Delaware
ASGI Private Equity Partners 2001, L.P.		Delaware
ASGI Private Equity Partners QP 1999, L.P.		Delaware
ASGI Private Equity Partners QP 2001, L.P.		Delaware
Ashton Woods Mortgage, LLC		Delaware
Aspen Delaware Funding, LLC		Delaware
Asset Management Affiliates, Inc.		Wisconsin
ATC Realty Fifteen, Inc.		California
ATC Realty Nine, Inc.		California
ATC Realty One, LLC		Delaware
ATC Realty Sixteen, Inc.		California
Atlas – OCI Enhanced Loan Income Fund LLC		Delaware
Atlas Capital Funding, Ltd.		UK-Cayman Islands
Atlas Loan Funding (CENT I), LLC		Delaware
Atlas Loan Funding (Hartford), LLC		Delaware
Atlas Loan Funding (Navigator), LLC		Delaware
Atlas Loan Funding 2, LLC		Delaware
Augustus Ventures, L.L.C.		Nevada
Aurora GP Holding, LLC		Delaware
AZ-#3644 Jackson, LLC		Delaware
Azalea Asset Management, Inc.		Delaware
Bacon Housing, L.P.		Virginia
BAFSC/WLC CX HUP I Trust		Delaware
BAFSC/WLC CX HUP II Trust		Delaware
BAFSC/WLC CX HUP, Ltd.		Bermuda
Bankers Funding Company, LLC		Delaware
Bankers Home Loan, LLC		Delaware
Bateman Eichler, Hill Richards Realty Co., Incorporated		California
BEHR Housing Investors 1981-1, L.P.		California
Bergamasco Funding, LLC		Delaware
Berkeley Teen Center Investment Fund, LLC		Delaware
BGMCO PA, Inc.		Pennsylvania
BHS Home Loans, LLC		Delaware
Biscoe Finance, LLC		Delaware
Bitterroot Asset Management, Inc.		Cayman Islands
Blue Spirit Insurance Company		Vermont
BluePoint Holdings Limited		Bermuda
Bowler Housing L.P.		Virginia
Britt/Paulk Insurance Agency, Inc.		Georgia
Brittlebush Financing, LLC		Nevada

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Bryan, Pendleton, Swats & McAllister, LLC		Tennessee
BT Costa Rican Land, Sociedad De Responsabilidad Limitada		Costa Rica
Business Development Corporation of South Carolina		South Carolina
California GP X, LLC		Delaware
California Premiere Lending, LLC		Delaware
Capitol Finance Group, Inc.		North Carolina
Capstone Home Mortgage, LLC		Delaware
Cardinal International Leasing Holding Corp		Delaware
Cardinal International Leasing, LLC		Delaware
Carnation Asset Management, Inc.		Delaware
Carolina Mortgage/CDJ, LLC		Delaware
Castle Pines Capital International LLC		Delaware
Castle Pines Capital LLC		Delaware
Centennial Home Mortgage, LLC		Delaware
Central Fidelity Capital Trust I		Delaware
Central Fidelity Properties, Inc.		Virginia
Centurion Casualty Company		Iowa
Centurion Funding, Inc.		California
Centurion Funding, LLC		Delaware
Centurion Life Insurance Company		Iowa
Century Capital Trust		Delaware
CGT Insurance Company LTD.		Barbados
Charter Holdings, Inc.		Nevada
Chestnut Asset Management, Inc.		Delaware
City First Capital III, LLC		Delaware
City First Capital V, LLC		Delaware
City First Capital XI, LLC		Delaware
City Place Buckhead, LLC		Delaware
CityLife Lending Group, LLC		Delaware
ClearXchange, LLC		Delaware
CMLB 2001, LLC		Delaware
CNB Investment Trust I		Maryland
CNB Investment Trust II		Maryland
Collin Equities, Inc.		Texas
Colorado Capital Management Co, LLC		Delaware
Colorado Mortgage Alliance, LLC		Delaware
Colorado Professionals Mortgage, LLC		Delaware
CoLTS LLC 2005-1		Delaware
CoLTS LLC 2005-2		Delaware
CoLTS LLC 2007-1		Delaware
Congress Financial Capital (US) Corporation		Delaware
Congress Financial Capital Company		Canada-Nova Scotia
Consortium America II, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
CoreStates Capital I		Delaware
CoreStates Capital II		Delaware
CoreStates Capital III		Delaware
CoreStates Holdings, Inc.		Delaware
CP Equity LLC		Delaware
CPC Global LLC		Delaware
Crocker Properties, Inc.		California
CTB Realty Ventures XXI, Inc.		Connecticut
Danube Holdings I C.V.		Netherlands
Danube Holdings III C.V.		Netherlands
DE Capital Mortgage, LLC		Delaware
DFG Holdings, LLC		Delaware
Dial Finance Company, Inc.		Nevada
Diversified Finance Investments, LLC		Delaware
DNA Investments Holdings, LLC		Delaware
Eastdil Secured Broker Services, Inc.		Delaware
Eastdil Secured, L.L.C.		New York
Eaton Mortgage, LLC		Delaware
Eaton Village Associates, Ltd. Co.		New Mexico
ECM Holdings Limited		United Kingdom-England
Edward Jones Mortgage, LLC		Delaware
EnerVest-Wachovia Co-Investment Partnership, L.P.		Delaware
Entrust Mortgage, LLC		Delaware
Epic Funding Corporation		California
Equity Insurance Agency, Inc.		New Jersey
Estates at Dunwoody Park GA, LLC		Delaware
European Credit Fund SICAV II		Luxembourg
European Credit Management Limited		United Kingdom
EVEREN Capital Corporation		Delaware
Everen Leasing, LLC		Delaware
Evergreen Alternative Capital, Inc.		Delaware
Evergreen ECM Holdings B.V.		Netherlands
Evergreen Financing Company, LLC		Delaware
Evergreen Investment Management Trust		Delaware
Evergreen Worldwide U.S. Dollar Fund, Ltd.		UK-Cayman Islands
FA Recruiting Services, LLC		Texas
Falcon Asset Management, Inc.		Delaware
Fannin County Equestrian Community, LLC		Delaware
Farmington, Incorporated		North Carolina
FCB/SC Capital Trust II		Delaware
FCC-PR, Inc		Puerto Rico
FFL Services Corporation		New Jersey
Fidelcor Business Credit Corporation		New York

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
First Allied Home Mortgage, LLC		Delaware
First Clearing, LLC		Delaware
First Commonwealth Home Mortgage, LLC		Delaware
First Community Capital Trust II		Delaware
First Community Capital Trust III		Delaware
First Consumer Services, Inc.		New Jersey
First Fidelity Urban Investment Corporation		New Jersey
First International Advisors, LLC		Delaware
First National Properties, Inc.		South Carolina
First Penco Realty, Inc.		Pennsylvania
First Security Capital I		Delaware
First State Service Corporation		North Carolina
First Union Capital II		Delaware
First Union Community Development Corporation		Virginia
First Union Insurance Group Trust I		Delaware
First Union Rail Corporation		North Carolina
Flagstone Apartment Property, LLC		Delaware
Florida Home Finance Group, LLC		Delaware
FNL Insurance Company, Ltd.		Hawaii
Foothill Group, Inc., The		Delaware
Forum Capital Markets, LLC		Delaware
FPFC Management LLC		New Mexico
Fullerton Towers Holdings, LLC		Delaware
Fulton Homes Mortgage, LLC		Delaware
FUNC Holdings, Inc.		Florida
G/WDC 541 N Fairbanks, LLC		Delaware
Galliard Capital Management, Inc.		Minnesota
GC Finance 2010 LLC		Delaware
General Homes Corp.		Texas
Gibraltar Mortgage Services, LLC		Delaware
Gibraltar Mortgage, LLC		Delaware
Golden Capital Management, LLC		Delaware
Golden Funding Company		Cayman Islands
Golden Pacific Insurance Company		Vermont
Golden West Savings Association Service Co.		California
Goldenrod Asset Management, Inc.		Delaware
Great East Mortgage, LLC		Delaware
Great Plains Insurance Company		Vermont
Greenfield Funding, LLC		Minnesota
GreenPath Funding, LLC		Delaware
Greensboro-Richmond Properties, LLC		Delaware
GS Bridgeport I CDE, LLC		Delaware
GS Private Equity Partners IX ASW Fund, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
HADBO Investments C.V.		Netherlands
Hanover/FUDC Master Limited Partnership		Delaware
Harrier Funding, LLC		Delaware
Haven for Hope Investment Fund, LLC		Delaware
Headhouse Retail Associates, L.P.		Pennsylvania
Heritage Indemnity Company		California
Heritage Mechanical Breakdown Corporation		Delaware
HHC Mezzanine D, LLC		Delaware
Highland Glen, LLC		Delaware
Hokkaido Apartments LLC		Delaware
Home Loan Experts, Inc.		California
Home Services Title Reinsurance Company		Vermont
HomeSale Lending, LLC		Delaware
Homeservices Lending, LLC		Delaware
Horizon Management Services, Inc.		Florida
Iapetus Funding, LLC		Delaware
IBID, Inc.		Delaware
IntraWest Asset Management, Inc.		Delaware
Ironbrand Capital LLC		North Carolina
Island Finance Holding Company, LLC		Cayman Islands
Island Finance Puerto Rico, Inc.		Delaware
Island Finance Sales Finance Corporation		Cayman Islands
Island Finance Sales Finance Trust		Puerto Rico
IWIC Insurance Company		Vermont
JC-Warren MI, LLC		Delaware
JERSEY CENTER/FIDOREO, INC.		New Jersey
Jordan Investments GP		UK-Cayman Islands
Jordan Investments LP		UK-Cayman Islands
JPSD, Inc.		Delaware
Kidron Partners IV, LP		Minnesota
Killdeer Capital Company, LLC		Delaware
LaCrosse Global Fund Services (Asia) Pte. Ltd.		Singapore
LaCrosse Global Fund Services (Ireland) Limited		Ireland
LaCrosse Global Fund Services (Jersey) Limited		Jersey
LaCrosse Global Fund Services (UK) Limited		United Kingdom-England
LaCrosse Global Fund Services LLC		Delaware
LaCrosse Holdings LLC		Delaware
Lake Spivey Senior Living/WDC, LLC		Delaware
Landfill Portfolio, LLC		Delaware
Landmark Equity Partners XIV ASP Fund, LLC		Delaware
Legacy Mortgage		Delaware
LG-354 Lewisville TX, LLC		Delaware
Lincoln Building Corporation		Colorado

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Linear Financial, LP		Delaware
Lordship, LLC		Delaware
MAA/NCF Sub-CDE, LLC		Delaware
Macom Dekalb IL, LLC		Delaware
Macro*World Research Corporation		North Carolina
Marigold International Limited		Cayman Islands
Marina Towers Melbourne, LLC		Delaware
Maryland Housing Equity Fund III Limited Partnership		Maryland
Mastiff Funding, LP		Delaware
McCart Landing Conyers, LLC		Delaware
Meadowmont JV, LLC		Delaware
Meridian Venture Partners		Pennsylvania
Metro Home Mortgage, LLC		Delaware
Metropolitan West Capital Management, LLC		California
Mid-City Community CDE-Operating Fund, LLC		Delaware
Mid-Peninsula Capital, LLC		California
Milford Highlands PA, LLC		Delaware
Military Family Home Loans, LLC		Delaware
Monument Peak, LLC		Delaware
Monument Street Funding, Inc.		California
Monument Street Funding, LLC		Delaware
Monument Street Funding-II, LLC		Delaware
Monument Street Holding LLC		Delaware
Mortgage Services Professionals, LLC		Delaware
MSC Mortgage, LLC		Delaware
Mulberry Asset Management, Inc.		Delaware
MVP Distribution Partners		Pennsylvania
MWI-2002, LLC		Delaware
NB Crossroads XVIII ASP Fund, LLC		Delaware
NCT Exchange, LLC		Delaware
NEC IX, LLC		Delaware
NEC VIII, LLC		Delaware
Neckar Financial, LLC		Delaware
NeighborCare Health Investment Fund, LLC		Delaware
Nelson Capital Management, LLC		Delaware
New England Mortgage Partners, LLC		Delaware
New Markets Investment XIII, LLC		Delaware
NFPS, Inc.		Delaware
North Star Mortgage Guaranty Reinsurance Company		Vermont
Northbrooke Woodstock, LLC		Delaware
Norwest Center, Inc.		Minnesota
Norwest Equity Capital, L.L.C.		Minnesota
Norwest Equity Partners IX, LP		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Norwest Equity Partners V, a Minnesota Limited Partnership		Minnesota
Norwest Equity Partners VI, LP		Minnesota
Norwest Equity Partners VII, LP		Minnesota
Norwest Equity Partners VIII, LP		Delaware
Norwest Financial Canada DE, Inc.		Delaware
Norwest Financial Funding, Inc.		Nevada
Norwest Financial Investment, Inc.		Nevada
Norwest Limited LP, LLLP		Delaware
Norwest Mezzanine Partners I, LP		Minnesota
Norwest Mezzanine Partners II, LP		Delaware
Norwest Mezzanine Partners III, LP		Delaware
Norwest Properties Holding Company		Minnesota
Norwest Venture Advisors Private Limited		Singapore
Norwest Venture Capital Management, Inc.		Minnesota
Norwest Venture Partners Advisory-Mauritius		Mauritius
Norwest Venture Partners Advisory Hong Kong Limited		Hong Kong
Norwest Venture Partners FII Singapore Private Limited		Singapore
Norwest Venture Partners FVCI Singapore Private Limited		Singapore
Norwest Venture Partners FVCI-Mauritius		Mauritius
Norwest Venture Partners IX, LP		Delaware
Norwest Venture Partners Singapore Private Limited		Singapore
Norwest Venture Partners VI, LP		Minnesota
Norwest Venture Partners VI-A, LP		Delaware
Norwest Venture Partners VII, LP		Minnesota
Norwest Venture Partners VII-A FII Mauritius		Mauritius
Norwest Venture Partners VII-A FVCI Mauritius		Mauritius
Norwest Venture Partners VII-A Mauritius		Mauritius
Norwest Venture Partners VII-A, LP		Delaware
Norwest Venture Partners VIII, LP		Delaware
Norwest Venture Partners X-Mauritius		Mauritius
Norwest Venture Partners X FII-Mauritius		Mauritius
Norwest Venture Partners X, LP		Delaware
Norwest Venture Partners XI, LP		Delaware
Norwest Venture Partners-Mauritius		Mauritius
Nucompass Mortgage Services, LLC		Delaware
NVP Associates, LLC		Delaware
NVP Israel Ltd		Israel
NVP Venture Capital India Private Limited		India
Oak Haven Senior Living, LLC		Delaware
Ocean View Holdco, LLC		Delaware
Oilwell Supply, L.P.		Texas
Old Swedish Bank Master Tenant, LLC		Minnesota
OmniPlus Capital Corporation		Tennessee

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
OmniServe of Alabama, L.L.C.		Alabama
Overland Advisors, LLC		Delaware
Overland GP LLC		Delaware
Overland Relative Value Fund LLC		Delaware
Overland Relative Value Fund Ltd.		Cayman Islands
Overland Relative Value Master Fund LP		Cayman Islands
Oxmoor Center, LLC		Delaware
Palo Alto Partners, LLC		Delaware
Pamlico Capital I, L.P.		Delaware
Pamlico Capital II ASP Fund, LLC		Delaware
Pamlico Capital II, L.P.		Delaware
Partnership Investments S.a.r.l.		Luxembourg
PASS Holding LLC		Delaware
Pelican Asset Management, Inc.		Delaware
Peony Asset Management, Inc.		Delaware
Peregrine Capital Management, Inc.		Minnesota
PFC Exchange, LLC		Delaware
Pheasant Asset Management, Inc.		Delaware
PHH Funding, LLC		Delaware
Philadelphia National Limitada		Brazil
Philadelphia National Limited		United Kingdom-England
PHL3, LLC		Delaware
PINTA, LLC		Delaware
Placer Statutory Trust III		Delaware
Placer Statutory Trust IV		Delaware
Pooled Auto Securities Shelf, LLC		Delaware
Preferred Funding S.a.r.l.		Luxembourg
Preferred Investments S.a.r.l.		Luxembourg
Premia Mortgage, LLC		Delaware
Premium Timberland Sales, Inc.		North Carolina
Prime Direct LLC		Delaware
Prime Era Investments Limited		UK-Virgin Islands
Primrose Asset Management, Inc.		Delaware
Private Mortgage Advisors, LLC		Delaware
PRN Holdings, Inc.		Delaware
Prometheus Investment, LLC		North Carolina
PTO Holdings, LLC		Delaware
Pumi Funding, LLC		Delaware
Quail Asset Management, LLC		Delaware
Questpoint L.P., Inc.		Delaware
R.B.C. Corporation		North Carolina
Railway Tenant, LLC		Maryland
Rainier Mortgage, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Real Estate Consultants of the South, Inc.		North Carolina
Real Estate Lenders		Not Required
Real Living Mortgage, LLC		Delaware
Real Sincere Group Limited		UK-Virgin Islands
REDUS Alabama Commercial, LLC		Delaware
REDUS Alabama, LLC		Delaware
REDUS Arizona, LLC		Delaware
REDUS Arlington Ridge FL Land, LLC		Delaware
REDUS Arlington Ridge FL, LLC		Delaware
REDUS Atlanta Club Homes, LLC		Delaware
REDUS Atlanta Housing, LLC		Delaware
REDUS Atlanta Subdivisions, LLC		Delaware
REDUS Beauview Condos, LLC		Delaware
REDUS Brookhaven Plaza, LLC		Delaware
REDUS Bundoran Farms, LLC		Delaware
REDUS CA Properties, LLC		Delaware
REDUS California, LLC		Delaware
REDUS Campanile, LLC		Delaware
REDUS Carlsbad LLC		Delaware
REDUS Charlotte Housing, LLC		Delaware
REDUS Chesapeake Bay Resort MD, LLC		Delaware
REDUS Colorado, LLC		Delaware
REDUS Dallas TX, LLC		Delaware
REDUS DE, LLC		Delaware
REDUS Delaware, LLC		Delaware
REDUS EH, LLC		Delaware
REDUS Emerald Green, LLC		Delaware
REDUS Ferguson, LLC		Delaware
REDUS FL Properties, LLC		Delaware
REDUS Florida Commercial, LLC		Delaware
REDUS Florida Condos, LLC		Delaware
REDUS Florida Housing, LLC		Delaware
REDUS Florida Land, LLC		Delaware
REDUS Frederica Club, LLC		Delaware
REDUS Frederica, LLC		Delaware
REDUS Georgia Commercial, LLC		Delaware
REDUS Greensboro Subdivisions, LLC		Delaware
REDUS HH, LLC		Delaware
REDUS Houston, LLC		Delaware
REDUS Idaho, LLC		Delaware
REDUS IDS, LLC		Delaware
REDUS Illinois, LLC		Delaware
REDUS Indiana, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
REDUS Kentucky, LLC		Delaware
REDUS Las Olas, LLC		Delaware
REDUS MA Commercial, LLC		Delaware
REDUS MA Subdivisions, LLC		Delaware
REDUS McCar Homes, LLC		Delaware
REDUS MD Land, LLC		Delaware
REDUS Michigan, LLC		Delaware
REDUS Mississippi Land, LLC		Delaware
REDUS Missouri, LLC		Delaware
REDUS Montgomery GSA, LLC		Delaware
REDUS Moorabelle, LLC		Delaware
REDUS Nashville Housing, LLC		Delaware
REDUS NC Commercial, LLC		Delaware
REDUS NC Costal, LLC		Delaware
REDUS NC Land, LLC		Delaware
REDUS NC-ALL, LLC		Delaware
REDUS Nevada, LLC		Delaware
REDUS New Hampshire, LLC		Delaware
REDUS New Jersey, LLC		Delaware
REDUS New York, LLC		Delaware
REDUS NH Sewer Co, LLC		Delaware
REDUS NH Water Co, LLC		Delaware
REDUS Ocean Waters, LLC		Delaware
REDUS Ohio, LLC		Delaware
REDUS One Market, LLC		Delaware
REDUS OR Land, LLC		Delaware
REDUS Peninsula Millsboro, LLC		Delaware
REDUS PG, LLC		Delaware
REDUS Properties, Inc.		Delaware
REDUS Raleigh Housing, LLC		Delaware
REDUS RG, LLC		Delaware
REDUS Salina Central Mall KS, LLC		Delaware
REDUS SC Coastal, LLC		Delaware
REDUS SC Housing, LLC		Delaware
REDUS SH ND, LLC		Delaware
REDUS South Carolina, LLC		Delaware
REDUS Sunset Cay, LLC		Delaware
REDUS Texas Land, LLC		Delaware
REDUS TN-ALL, LLC		Delaware
REDUS TRG II, LLC		Delaware
REDUS TRG III, LLC		Delaware
REDUS TRG, LLC		Delaware
REDUS TX Homes, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
REDUS TX Properties, LLC		Delaware
REDUS VA Housing, LLC		Delaware
REDUS Virginia Commercial, LLC		Delaware
REDUS Virginia Subdivisions, LLC		Delaware
REDUS Washington, LLC		Delaware
REDUS Wayne Town, LLC		Delaware
REDUS WLHP, LLC		Delaware
REDUS Woodland, LLC		Delaware
Reliable Finance Holding Company		Puerto Rico
Reliable Finance Holding Company, LLC		Nevada
Reliable Financial Services, Inc.		Puerto Rico
Reliable Insurance Services Corp.		Puerto Rico
Renaissance Finance II, LLC		Delaware
Residential Home Mortgage Investment, L.L.C.		Delaware
Residential Mortgage Division, LLC		Delaware
Response Home Lending, LLC		Delaware
Rhine Investment Holdings, LLC		Delaware
Riggs Rental Exchange, LLC		Delaware
Rigil Funding, LLC		Delaware
Rocky River Project LLC		Delaware
RORI Property Holdings, LLC		Delaware
Ruby Asset Management Inc.		Maryland
Rural Community Insurance Agency, Inc.		Minnesota
Rural Community Insurance Company		Minnesota
RWF Mortgage Company		California
Ryaccom, LLC		Delaware
Ryder Exchange, LLC		Delaware
Sagebrush Asset Management, Inc.		Delaware
Saguaro Asset Management, Inc.		Delaware
Salvo Finance GP		Delaware
Savings Associations Financial Enterprises, Incorporated		District of Columbia
SC Realty, LLC		Delaware
SCG Funding, LLC		Delaware
Select Home Mortgage, LLC		Delaware
Sierra Delaware Funding, LLC		Delaware
Siguler Guff BRIC Opportunities II ASW Fund, LLC		Delaware
Siguler Guff Distressed Real Estate ASP Fund, LLC		Delaware
Silver Asset Management, Inc.		Delaware
Sirius Funding, LLC		Delaware
SoCo Community Development Company, LLC		Alabama
Solution Delivery, LLC		Delaware
Source One Liquidation, LLC		Delaware
Southern Ohio Mortgage, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
SouthTrust Community Reinvestment Company, LLC		Alabama
SouthTrust Mobile Services Funding Corporation		Alabama
Southwest Partners, Inc.		California
Sparta GP Holding REO Corp.		Delaware
Sparta GP Holding, LLC		Delaware
SPFE, Inc.		North Carolina
Spring Cypress Water Supply Corporation		Texas
SR 70 Land Bradenton, LLC		Delaware
SS South Loop, LLC		Delaware
St. Joseph’s Affordable Housing Limited Partnership		Pennsylvania
Stagecoach Wagon Wheel, Inc.		California
Sterling Bradenton, LLC		Delaware
STRATS, LLC		Delaware
Structured Asset Investors, LLC		Delaware
Structured Credit Partners, LLC		Delaware
Structured Principal Strategies Holdings, LLC		Delaware
Structured Principal Strategies, LLC		Delaware
Summit National Mortgage, LLC		Delaware
Summitt PELS Funding, LLC		Delaware
Superior Guaranty Insurance Company		Vermont
SURREY DOWNS/FIDOREO, INC.		New Jersey
Sweetroot Funding, LLC		Cayman Islands
Symbolic Financial, LLC		Delaware
Synthetic Fixed-Income Securities, Inc.		Delaware
TAI Title Trust		Delaware
Tattersall Advisory Group, Inc.		Virginia
Taylor County Land GA, LLC		Delaware
TAYLORR LAKES/FIDOREO, INC.		New Jersey
The Ceres Investment Company		Missouri
The Fairfax Corporation		North Carolina
The Florida Community New Markets Fund II, LLC		Florida
The Preserve Sevierville, LLC		Delaware
The Ridges at Mountain Harbour, LLC		Delaware
The Thirty-Eight Hundred Fund, LLC		Delaware
The Westlake Group Limited		British West Indies
Thirty-Eight Hundred Investments Limited		Cayman Islands
THM Master TE, LLC		Delaware
Thoroughbred Mortgage, LLC		Delaware
Tiberius Ventures, L.L.C.		Nevada
TMS Special Holdings, Inc.		Delaware
TMS Student Holdings, Inc.		Delaware
Topaz Asset Management Inc.		Maryland
Trade School Finance, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Transportation Equipment Advisors, Inc.		Illinois
Triad Apartment Portfolio, LLC		Delaware
TRSTE II, Inc.		Tennessee
TRSTE, Inc.		Virginia
Tryon Management, Inc.		North Carolina
Two APM Plaza, Inc.		Pennsylvania
Tyro Funding, LLC		Delaware
Union Commerce Title Company, LLC		Delaware
Union Hamilton Reinsurance, Ltd.		Bermuda
United Bancorporation of Wyoming Capital Trust III		Delaware
United Bancshares, Inc.		Pennsylvania
United Bank of Philadelphia		Pennsylvania
United California Bank Realty Corporation		California
Universal Master Servicing, LLC		Delaware
Utah Home Mortgage Group, LLC		Delaware
Valley Asset Management, Inc.		Delaware
Vento WF, LLC		Delaware
Veranda Park Orlando, LLC		Delaware
Vermillion Huntersville, LLC		Delaware
Villages at Warner Ranch PUD, LP		Delaware
Violet Asset Management, Inc.		Delaware
Vista Lofts Denver, LLC		Delaware
W.C.A. Service Corporation, Inc.		California
Wachovia Asia Limited		Hong Kong
Wachovia Asset Securitization Issuance II, LLC		Delaware
Wachovia Asset Securitization Issuance, LLC		North Carolina
Wachovia Auto Loan Owner Trust 2006-1		Delaware
Wachovia Auto Loan Owner Trust 2006-2		Delaware
Wachovia Auto Loan Owner Trust 2007-1		Delaware
Wachovia Auto Loan Owner Trust 2008-1		Delaware
Wachovia Auto Owner Trust 2006-A		Delaware
Wachovia Auto Owner Trust 2007-A		Delaware
Wachovia Auto Owner Trust 2008-A		Delaware
Wachovia Capital Investments, Inc.		Georgia
Wachovia Capital Investors, Inc.		North Carolina
Wachovia Capital Partners 1999, LLC		North Carolina
Wachovia Capital Partners 1999-II, LLC		North Carolina
Wachovia Capital Partners 2000, LLC		North Carolina
Wachovia Capital Partners 2001, LLC		North Carolina
Wachovia Capital Partners 2002, LLC		North Carolina
Wachovia Capital Partners 2003, LLC		North Carolina
Wachovia Capital Partners 2004, LLC		North Carolina
Wachovia Capital Partners 2005, LLC		North Carolina

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Capital Partners Secondary Fund I, L.P.		Delaware
Wachovia Capital Partners, Inc.		Virginia
Wachovia Capital Trust I		Delaware
Wachovia Capital Trust II		Delaware
Wachovia Capital Trust III		Delaware
Wachovia Capital Trust IV		Delaware
Wachovia Capital Trust IX		Delaware
Wachovia Capital Trust V		Delaware
Wachovia Capital Trust X		Delaware
Wachovia Century Mill Member, LLC		Delaware
Wachovia Commercial Mortgage Loan Warehouse Corporation		North Carolina
Wachovia Community Development Corporation		North Carolina
Wachovia Community Development Enterprises I, LLC		North Carolina
Wachovia Community Development Enterprises II, LLC		North Carolina
Wachovia Community Development Enterprises III, LLC		North Carolina
Wachovia Community Development Enterprises, LLC		North Carolina
Wachovia CRE CDO 2006-1 Carmel Sands Subsidiary, LLC		Delaware
Wachovia CRE CDO 2006-1 Investor, LLC		Delaware
Wachovia CRE CDO 2006-1, LLC		Delaware
Wachovia CRE CDO 2006-1, Ltd.		UK-Cayman Islands
Wachovia Defeasance 3409 PRIMM III LLC		Delaware
Wachovia Defeasance 601 Valley III, LLC		Delaware
Wachovia Defeasance Alta Mira Shopping Center LLC		Delaware
Wachovia Defeasance BACM 2001-PB1 III LLC		Delaware
Wachovia Defeasance BACM 2001-PB1 LLC		Delaware
Wachovia Defeasance BACM 2002-2 LLC		Delaware
Wachovia Defeasance BACM 2003-1 LLC		Delaware
Wachovia Defeasance BOA-FUNB 2001-3 CAC V-CRIT Portfolio LLC		Delaware
Wachovia Defeasance BOA-FUNB 2001-3 III LLC		Delaware
Wachovia Defeasance BOA-FUNB 2001-3 LLC		Delaware
Wachovia Defeasance BSCMS 1999-C1 II LLC		Delaware
Wachovia Defeasance BSCMS 1999-C1 III LLC		Delaware
Wachovia Defeasance BSCMS 1999-WF2 III LLC		Delaware
Wachovia Defeasance BSCMS 1999-WF2 LLC		Delaware
Wachovia Defeasance BSCMS 2001-TOP2 III LLC		Delaware
Wachovia Defeasance BSCMS 2001-TOP4 III LLC		Delaware
Wachovia Defeasance BSCMS 2002-PBW1 III LLC		Delaware
Wachovia Defeasance BSCMS 2002-PBW1 LLC		Delaware
Wachovia Defeasance BSCMS 2002-TOP6 III LLC		Delaware
Wachovia Defeasance BSCMS 2002-TOP8 III LLC		Delaware
Wachovia Defeasance BSCMS 2003-PWR2 III LLC		Delaware
Wachovia Defeasance BSCMS 2003-TOP10 III LLC		Delaware
Wachovia Defeasance BSCMS 2003-Top10 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance BSCMS 2003-TOP12 III LLC		Delaware
Wachovia Defeasance BSCMS 2003-Top12 LLC		Delaware
Wachovia Defeasance BSCMS 2004-PWR3 III LLC		Delaware
Wachovia Defeasance BSCMS 2004-PWR3 LLC		Delaware
Wachovia Defeasance BSCMS 2004-PWR4 III LLC		Delaware
Wachovia Defeasance BSCMS 2004-TOP16 525 Vine Street LLC		Delaware
Wachovia Defeasance BSCMS 2004-TOP16 III LLC		Delaware
Wachovia Defeasance BSCMS 2005-PWR8 III LLC		Delaware
Wachovia Defeasance BSCMS 2005-TOP18 III LLC		Delaware
Wachovia Defeasance BSCMS 2005-TOP20 III LLC		Delaware
Wachovia Defeasance BSCMS 2006-TOP24 III LLC		Delaware
Wachovia Defeasance CD 2007-CD4 III LLC		Delaware
Wachovia Defeasance Chase 1999-2 II LLC		Delaware
Wachovia Defeasance Chase 1999-2 III LLC		Delaware
Wachovia Defeasance CHASE 2000-1 III LLC		Delaware
Wachovia Defeasance CHASE 2000-2 III LLC		Delaware
Wachovia Defeasance CHASE 2000-3 III LLC		Delaware
Wachovia Defeasance Chase-FUNB 1999-1 II LLC		Delaware
Wachovia Defeasance Chase-FUNB 1999-1 III LLC		Delaware
Wachovia Defeasance Citigroup 2004-C1 CF West Palm LLC		Delaware
Wachovia Defeasance Citigroup 2004-C1 LLC		Delaware
Wachovia Defeasance Citigroup 2004-C1 Seaboard Associates LLC		Delaware
Wachovia Defeasance CITIGROUP 2005-C3 LLC		Delaware
Wachovia Defeasance Citigroup 2006-C5 III LLC		Delaware
Wachovia Defeasance Citigroup 2007-C6 III LLC		Delaware
Wachovia Defeasance CMAC 1999-C1 LLC		Delaware
Wachovia Defeasance CMLB 2001-1 III LLC		Delaware
Wachovia Defeasance CMLB 2001-1 LLC		Delaware
Wachovia Defeasance COMM 2004-LNB2 III LLC		Delaware
Wachovia Defeasance CSFB 1997-C1 LLC		Delaware
Wachovia Defeasance CSFB 1997-C2 LLC		Delaware
Wachovia Defeasance CSFB 1998-C2 II LLC		Delaware
Wachovia Defeasance CSFB 1998-C2 III LLC		Delaware
Wachovia Defeasance CSFB 1998-C2 LLC		Delaware
Wachovia Defeasance CSFB 2001-CK3 III LLC		Delaware
Wachovia Defeasance CSFB 2001-CK3 LLC		Delaware
Wachovia Defeasance CSFB 2001-CKN5 LLC		Delaware
Wachovia Defeasance CSFB 2002-CKP1 LLC		Delaware
Wachovia Defeasance CSFB 2002-CKS4 LLC		Delaware
Wachovia Defeasance CSFB 2002-CP5 LLC		Delaware
Wachovia Defeasance CSFB 2003-C3 LLC		Delaware
Wachovia Defeasance CSFB 2003-C5 LLC		Delaware
Wachovia Defeasance CSFB 2003-CPN1 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance CSFB 2004-C1 LLC		Delaware
Wachovia Defeasance CSFB 2004-C2 LLC		Delaware
Wachovia Defeasance CSFB 2004-C3 III LLC		Delaware
Wachovia Defeasance CSFB 2005-C1 III LLC		Delaware
Wachovia Defeasance CSFB 2005-C2 III LLC		Delaware
Wachovia Defeasance CSFB 2005-C3 III LLC		Delaware
Wachovia Defeasance CSFB 2005-C6 III LLC		Delaware
Wachovia Defeasance CSFB 2005-C6 III-KEYCORP LLC		Delaware
Wachovia Defeasance DLJ 1998-CG1 II LLC		Delaware
Wachovia Defeasance DLJ 1998-CG1 III LLC		Delaware
Wachovia Defeasance DLJ 1999-CG1 II LLC		Delaware
Wachovia Defeasance DLJ 1999-CG1 III LLC		Delaware
Wachovia Defeasance DLJ 1999-CG2 II LLC		Delaware
Wachovia Defeasance DLJ 1999-CG2 III LLC		Delaware
Wachovia Defeasance DLJ 1999-CG2 LLC		Delaware
Wachovia Defeasance DLJ 1999-CG3 II LLC		Delaware
Wachovia Defeasance DLJ 1999-CG3 III LLC		Delaware
Wachovia Defeasance DLJ 1999-CG3 LLC		Delaware
Wachovia Defeasance DLJ 2000-CF1 LLC		Delaware
Wachovia Defeasance DLJ 2000-CKP1 LLC		Delaware
Wachovia Defeasance FUCM 1999-C4 II LLC		Delaware
Wachovia Defeasance FUCM 1999-C4 LLC		Delaware
Wachovia Defeasance FU-LB 1997-C1 LLC		Delaware
Wachovia Defeasance FU-LB 1997-C2 II LLC		Delaware
Wachovia Defeasance FU-LB-BOA 1998-C2 LLC		Delaware
Wachovia Defeasance FUNB 1999-C1 II LLC		Delaware
Wachovia Defeasance FUNB 1999-C1 III LLC		Delaware
Wachovia Defeasance FUNB 1999-C1 LLC		Delaware
Wachovia Defeasance FUNB 1999-C4 III LLC		Delaware
Wachovia Defeasance FUNB 1999-C4 LLC		Delaware
Wachovia Defeasance FUNB 1999-C4 ML Windsor-ML Hammocks LLC		Delaware
Wachovia Defeasance FUNB 2000-C1 III LLC		Delaware
Wachovia Defeasance FUNB 2000-C1 LLC		Delaware
Wachovia Defeasance FUNB 2000-C1 POOL SB LLC		Delaware
Wachovia Defeasance FUNB 2000-C2 II LLC		Delaware
Wachovia Defeasance FUNB 2000-C2 III LLC		Delaware
Wachovia Defeasance FUNB 2000-C2 LLC		Delaware
Wachovia Defeasance FUNB 2000-C2 Phoenix Crowne LLC		Delaware
Wachovia Defeasance FUNB 2001-C2 III LLC		Delaware
Wachovia Defeasance FUNB 2001-C2 LLC		Delaware
Wachovia Defeasance FUNB 2001-C3 CAC II LLC		Delaware
Wachovia Defeasance FUNB 2001-C3 III LLC		Delaware
Wachovia Defeasance FUNB 2001-C3 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance FUNB 2001-C4 CRIT Portfolio LLC		Delaware
Wachovia Defeasance FUNB 2001-C4 CRIT-VA IV LLC		Delaware
Wachovia Defeasance FUNB 2001-C4 III LLC		Delaware
Wachovia Defeasance FUNB 2001-C4 LLC		Delaware
Wachovia Defeasance FUNB 2002-C1 CRIT-VA V LLC		Delaware
Wachovia Defeasance FUNB 2002-C1 III LLC		Delaware
Wachovia Defeasance FUNB 2002-C1 LLC		Delaware
Wachovia Defeasance FUNB 2002-C1 Madison Sixty LLC		Delaware
Wachovia Defeasance FUNB-BOA 2001-C1 (CRIT NC) LLC		Delaware
Wachovia Defeasance FUNB-BOA 2001-C1 (CRIT VA) LLC		Delaware
Wachovia Defeasance FUNB-BOA 2001-C1 II LLC		Delaware
Wachovia Defeasance FUNB-BOA 2001-C1 LLC		Delaware
Wachovia Defeasance FUNB-BOA 2001-C1 POOL SB LLC		Delaware
Wachovia Defeasance FUNB-CHASE 1999-C2 III LLC		Delaware
Wachovia Defeasance FUNB-Chase 1999-C2 LLC		Delaware
Wachovia Defeasance GE 2002-2 183 Madison LLC		Delaware
Wachovia Defeasance GE 2002-2 II LLC		Delaware
Wachovia Defeasance GE 2002-2 LLC		Delaware
Wachovia Defeasance GECCMC 2000-1 III LLC		Delaware
Wachovia Defeasance GECCMC 2000-1 LLC		Delaware
Wachovia Defeasance GECCMC 2001-1 II LLC		Delaware
Wachovia Defeasance GECCMC 2001-1 III LLC		Delaware
Wachovia Defeasance GECCMC 2001-1 LLC		Delaware
Wachovia Defeasance GECCMC 2001-2 II LLC		Delaware
Wachovia Defeasance GECCMC 2001-2 III LLC		Delaware
Wachovia Defeasance GECCMC 2001-2 LLC		Delaware
Wachovia Defeasance GECCMC 2001-3 II LLC		Delaware
Wachovia Defeasance GECCMC 2001-3 III LLC		Delaware
Wachovia Defeasance GECCMC 2001-3 LLC		Delaware
Wachovia Defeasance GECCMC 2002-1 Cameron Crossing LLC		Delaware
Wachovia Defeasance GECCMC 2002-1 Culver Center West LLC		Delaware
Wachovia Defeasance GECCMC 2002-1 III LLC		Delaware
Wachovia Defeasance GECCMC 2002-1 LLC		Delaware
Wachovia Defeasance GECCMC 2002-2 III LLC		Delaware
Wachovia Defeasance GECCMC 2002-2 LLC		Delaware
Wachovia Defeasance GECCMC 2002-2 Wills Group FLP LLC		Delaware
Wachovia Defeasance GECCMC 2002-3 III LLC		Delaware
Wachovia Defeasance GECCMC 2002-3 LLC		Delaware
Wachovia Defeasance GECCMC 2003-C2 Culver Center East LLC		Delaware
Wachovia Defeasance GECCMC 2003-C2 III LLC		Delaware
Wachovia Defeasance GECCMC 2003-C2 LLC		Delaware
Wachovia Defeasance GECCMC 2004-C2 LLC		Delaware
Wachovia Defeasance GECCMC 2004-C2 POOL SB LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance GECCMC 2004-C2 Stefan Associates LLC		Delaware
Wachovia Defeasance GECCMC 2005-C1 PIL I LLC		Delaware
Wachovia Defeasance GECCMC 2006-C1 III LLC		Delaware
Wachovia Defeasance GECC-Subway LLC		Delaware
Wachovia Defeasance GECMC 2003-C1 LLC		Delaware
Wachovia Defeasance GECMC 2004-C2 III LLC		Delaware
Wachovia Defeasance GMAC 1997-C2 LLC		Delaware
Wachovia Defeasance GMAC 1998-C2 LLC		Delaware
Wachovia Defeasance GMAC 1999-C1 LLC		Delaware
Wachovia Defeasance GMAC 1999-C2 LLC		Delaware
Wachovia Defeasance GMAC 2000-C3 LLC		Delaware
Wachovia Defeasance GMAC 2001-C1 LLC		Delaware
Wachovia Defeasance GMAC 2001-C2 LLC		Delaware
Wachovia Defeasance GMAC 2002-C1 LLC		Delaware
Wachovia Defeasance GMAC 2002-C2 LLC		Delaware
Wachovia Defeasance GMAC 2002-C3 LLC		Delaware
Wachovia Defeasance GMAC 2003-C1 LLC		Delaware
Wachovia Defeasance GMAC 2003-C2 LLC		Delaware
Wachovia Defeasance GMACCM 1997-C1 LLC		Delaware
Wachovia Defeasance Greenwich 2002-C1 II LLC		Delaware
Wachovia Defeasance GREENWICH 2002-C1 III LLC		Delaware
Wachovia Defeasance Greenwich 2002-C1 Landmark IV LLC		Delaware
Wachovia Defeasance Greenwich 2002-C1 LLC		Delaware
Wachovia Defeasance Greenwich 2003-C1 LLC		Delaware
Wachovia Defeasance Greenwich 2003-C2 LLC		Delaware
Wachovia Defeasance Greenwich 2004-GG1 III LLC		Delaware
Wachovia Defeasance Greenwich 2004-GG1 LLC		Delaware
Wachovia Defeasance GREENWICH 2005-GG5 III LLC		Delaware
Wachovia Defeasance Greenwich 2007-GG9 III LLC		Delaware
Wachovia Defeasance GS 1998-C1 LLC		Delaware
Wachovia Defeasance GS 2004-C1 LLC		Delaware
Wachovia Defeasance GS 2007-GG10 III LLC		Delaware
Wachovia Defeasance GSMSC II 1999-C1 LLC		Delaware
Wachovia Defeasance GSMSC II 2003-C1 LLC		Delaware
Wachovia Defeasance GSMSC II 2004-GG2 1410 Broadway LLC		Delaware
Wachovia Defeasance GSMSC II 2004-GG2 1441 Broadway LLC		Delaware
Wachovia Defeasance HF 1999-PH1 II LLC		Delaware
Wachovia Defeasance HF 1999-PH1 III LLC		Delaware
Wachovia Defeasance HF 1999-PH1 LLC		Delaware
Wachovia Defeasance HF 2000 PH1 LLC		Delaware
Wachovia Defeasance JPMC 1999-C7 LLC		Delaware
Wachovia Defeasance JPMC 1999-PLSI LLC		Delaware
Wachovia Defeasance JPMC 2000-C10 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance JPMC 2000-C9 LLC		Delaware
Wachovia Defeasance JPMC 2001-C1 III LLC		Delaware
Wachovia Defeasance JPMC 2001-C1 LLC		Delaware
Wachovia Defeasance JPMC 2001-CIBC1 LLC		Delaware
Wachovia Defeasance JPMC 2001-CIBC2 LLC		Delaware
Wachovia Defeasance JPMC 2001-CIBC3 III LLC		Delaware
Wachovia Defeasance JPMC 2001-CIBC3 LLC		Delaware
Wachovia Defeasance JPMC 2002-C1 II LLC		Delaware
Wachovia Defeasance JPMC 2002-C1 III LLC		Delaware
Wachovia Defeasance JPMC 2002-C1 LLC		Delaware
Wachovia Defeasance JPMC 2002-C2 III LLC		Delaware
Wachovia Defeasance JPMC 2002-C2 LLC		Delaware
Wachovia Defeasance JPMC 2002-C3 LLC		Delaware
Wachovia Defeasance JPMC 2002-CIBC4 LLC		Delaware
Wachovia Defeasance JPMC 2002-CIBC5 CP Pembroke Pines LLC		Delaware
Wachovia Defeasance JPMC 2002-CIBC5 III LLC		Delaware
Wachovia Defeasance JPMC 2002-CIBC5 LLC		Delaware
Wachovia Defeasance JPMC 2003-C1 LLC		Delaware
Wachovia Defeasance JPMC 2003-C1BC6 CP Deerfield LLC		Delaware
Wachovia Defeasance JPMC 2003-C1BC6 LLC		Delaware
Wachovia Defeasance JPMC 2003-CIB6 III LLC		Delaware
Wachovia Defeasance JPMC 2003-CIBC7 LLC		Delaware
Wachovia Defeasance JPMC 2003-LN1 III LLC		Delaware
Wachovia Defeasance JPMC 2003-LN1 LLC		Delaware
Wachovia Defeasance JPMC 2003-ML1 III LLC		Delaware
Wachovia Defeasance JPMC 2003-ML1 LLC		Delaware
Wachovia Defeasance JPMC 2003-PM1 Battery Commercial LLC		Delaware
Wachovia Defeasance JPMC 2003-PM1 LLC		Delaware
Wachovia Defeasance JPMC 2004-C2 LLC		Delaware
Wachovia Defeasance JPMC 2004-C3 LLC		Delaware
Wachovia Defeasance JPMC 2004-CIBC10 LLC		Delaware
Wachovia Defeasance JPMC 2004-LN2 III LLC		Delaware
Wachovia Defeasance JPMC 2005-LDP1 LLC		Delaware
Wachovia Defeasance JPMC 2005-LDP2 III LLC		Delaware
Wachovia Defeasance JPMC 2005-LDP2 LLC		Delaware
Wachovia Defeasance JPMC 2006-LDP7 III LLC		Delaware
Wachovia Defeasance JPMC 2007-LDP11 III LLC		Delaware
Wachovia Defeasance LB 1998-C1 LLC		Delaware
Wachovia Defeasance LB 1998-C4 II Ardsey Associates LLC		Delaware
Wachovia Defeasance LB 1998-C4 II LLC		Delaware
Wachovia Defeasance LB 1998-C4 III LLC		Delaware
Wachovia Defeasance LB 1998-C4 LLC		Delaware
Wachovia Defeasance LB 1999-C1 II LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance LB 1999-C1 III LLC		Delaware
Wachovia Defeasance LB 1999-C1 LLC		Delaware
Wachovia Defeasance LB 1999-C2 II LLC		Delaware
Wachovia Defeasance LB 1999-C2 III LLC		Delaware
Wachovia Defeasance LB 1999-C2 LLC		Delaware
Wachovia Defeasance LB UBS 2002-C2 II LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C3 II LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C3 III LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C3 LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C4 II LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C4 LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C5 III LLC		Delaware
Wachovia Defeasance LB-UBS 2000-C5 LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C2 II LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C2 III LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C2 LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C3 1735 North Lynn LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C3 II LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C3 III LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C3 LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C7 II LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C7 III LLC		Delaware
Wachovia Defeasance LB-UBS 2001-C7 LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C1 400 Atlantic LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C1 II LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C1 III LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C1 LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C2 Hibbs/Woodinville LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C2 III LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C2 LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C4 III LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C4 LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C7 II LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C7 III LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C7 Independence Shoppingtown LLC		Delaware
Wachovia Defeasance LB-UBS 2002-C7 LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C1 (Clear) LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C1 Franklin Avenue LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C1 II LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C1 III LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C1 LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C3 III LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C3 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance LB-UBS 2003-C5 III LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C5 LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C7 (Getty) LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C7 LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C8 III LLC		Delaware
Wachovia Defeasance LB-UBS 2003-C8 LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C1 III LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C1 LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C4 III LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C4 LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C6 III LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C6 LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C7 III LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C7 LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C8 III LLC		Delaware
Wachovia Defeasance LB-UBS 2004-C8 LLC		Delaware
Wachovia Defeasance LB-UBS 2005-C2 III LLC		Delaware
Wachovia Defeasance LB-UBS 2005-C3 III LLC		Delaware
Wachovia Defeasance LB-UBS 2005-C5 III LLC		Delaware
Wachovia Defeasance LB-UBS 2005-C7 III LLC		Delaware
Wachovia Defeasance LB-UBS 2005-C7 VR Bayou LLC		Delaware
Wachovia Defeasance LB-UBS 2006-C1 III LLC		Delaware
Wachovia Defeasance LB-UBS 2006-C7 III LLC		Delaware
Wachovia Defeasance LB-UBS 2007-C2 III LLC		Delaware
Wachovia Defeasance LB-UBS 2008-C1 III LLC		Delaware
Wachovia Defeasance Management-KeyCorp LLC		Delaware
Wachovia Defeasance Management-Midland LLC		Delaware
Wachovia Defeasance Management II LLC		Delaware
Wachovia Defeasance Management III LLC		Delaware
Wachovia Defeasance Management LLC		Delaware
Wachovia Defeasance Management-KeyCorp III LLC		Delaware
Wachovia Defeasance Management-Midland III LLC		Delaware
Wachovia Defeasance MCF 1998-MC3 LLC		Delaware
Wachovia Defeasance MLMI 1998-C2 II LLC		Delaware
Wachovia Defeasance MLMI 1998-C2 III LLC		Delaware
Wachovia Defeasance MLMI 1998-C2 LLC		Delaware
Wachovia Defeasance MLMI 1998-C3 LLC		Delaware
Wachovia Defeasance MLMI 2002-MW1 III LLC		Delaware
Wachovia Defeasance MLMI 2002-MW1 LLC		Delaware
Wachovia Defeasance MLMI 2005-CKI1 III LLC		Delaware
Wachovia Defeasance MLMI 2005-CKI1 LLC		Delaware
Wachovia Defeasance MLMI 2005-MCP1 LLC		Delaware
Wachovia Defeasance MLMI 2005-MCP1 PVA III LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance MLMI 2005-MKB2 LLC		Delaware
Wachovia Defeasance MLMT 2004-MKB1 LLC		Delaware
Wachovia Defeasance MSCI 1998-CF1 LLC		Delaware
Wachovia Defeasance MSCI 1998-HF2 LLC		Delaware
Wachovia Defeasance MSCI 1998-WF2 LLC		Delaware
Wachovia Defeasance MSCI 1999-FNV1 LLC		Delaware
Wachovia Defeasance MSCI 1999-LIFE1 LLC		Delaware
Wachovia Defeasance MSCI 1999-RM1 LLC		Delaware
Wachovia Defeasance MSCI 1999-WF1 III LLC		Delaware
Wachovia Defeasance MSCI 1999-WF1 LLC		Delaware
Wachovia Defeasance MSCI 2003-IQ4 LLC		Delaware
Wachovia Defeasance MSCI 2003-IQ5 LLC		Delaware
Wachovia Defeasance MSCI 2003-IQ6 LLC		Delaware
Wachovia Defeasance MSCI 2003-TOP11 III LLC		Delaware
Wachovia Defeasance MSCI 2003-Top11 LLC		Delaware
Wachovia Defeasance MSCI 2004-HQ3 LLC		Delaware
Wachovia Defeasance MSCI 2004-IQ7 III LLC		Delaware
Wachovia Defeasance MSCI 2004-IQ7 LLC		Delaware
Wachovia Defeasance MSCI 2004-Top13 III LLC		Delaware
Wachovia Defeasance MSCI 2004-TOP15 III LLC		Delaware
Wachovia Defeasance MSCI 2004-TOP15 LLC		Delaware
Wachovia Defeasance MSCI 2005-HQ7 III LLC		Delaware
Wachovia Defeasance MSCI 2005-TOP19 LLC		Delaware
Wachovia Defeasance MSCI 2006-HQ8 III LLC		Delaware
Wachovia Defeasance MSCI 2006-IQ11 III LLC		Delaware
Wachovia Defeasance MSDWCI 2000-LIFE III LLC		Delaware
Wachovia Defeasance MSDWCI 2000-LIFE1 LLC		Delaware
Wachovia Defeasance MSDWCI 2000-LIFE2 LLC		Delaware
Wachovia Defeasance MSDWCI 2001-Top3 III LLC		Delaware
Wachovia Defeasance MSDWCI 2001-Top5 III LLC		Delaware
Wachovia Defeasance MSDWCI 2001-Top5 LLC		Delaware
Wachovia Defeasance MSDWCI 2002-TOP7 III LLC		Delaware
Wachovia Defeasance MSDWCI 2002-Top7 LLC		Delaware
Wachovia Defeasance MSDWCI 2003-HQ2 LLC		Delaware
Wachovia Defeasance MSDWCI 2003-TOP9 III LLC		Delaware
Wachovia Defeasance PMAC 1999-C1 LLC		Delaware
Wachovia Defeasance PNCMAC 1999-CM1 LLC		Delaware
Wachovia Defeasance PNCMAC 2000-C1 LLC		Delaware
Wachovia Defeasance PNCMAC 2001-C1 LLC		Delaware
Wachovia Defeasance PSSFC 1998-C1 LLC		Delaware
Wachovia Defeasance PSSFC 1999-NRF1 LLC		Delaware
Wachovia Defeasance PSSFC 2003-PWR1 III LLC		Delaware
Wachovia Defeasance PSSFC 2003-PWR1 LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance PSSFC 2003-PWR1 PAL-MED LLC		Delaware
Wachovia Defeasance River Terrace LLC		Delaware
Wachovia Defeasance SBMS 2000-C1 LLC		Delaware
Wachovia Defeasance SBMS VII 2000-C3 LLC		Delaware
Wachovia Defeasance SBMS VII 2000-C3 Wellington Place LLC		Delaware
Wachovia Defeasance SBMS VII 2001-C1 LLC		Delaware
Wachovia Defeasance SBMS VII 2001-C2 LLC		Delaware
Wachovia Defeasance Wachovia 2002-C1 III LLC		Delaware
Wachovia Defeasance Wachovia 2002-C1 LLC		Delaware
Wachovia Defeasance Wachovia 2002-C2 III LLC		Delaware
Wachovia Defeasance Wachovia 2002-C2 Lawndale Market Place LLC		Delaware
Wachovia Defeasance Wachovia 2002-C2 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C3 Big Trout Lodge LLC		Delaware
Wachovia Defeasance Wachovia 2003-C3 Gaddis LLC		Delaware
Wachovia Defeasance Wachovia 2003-C3 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C3 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C4 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C4 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C5 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C5 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C6 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C6 John & Son's LLC		Delaware
Wachovia Defeasance Wachovia 2003-C6 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C7 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C7 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C8 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C8 LLC		Delaware
Wachovia Defeasance Wachovia 2003-C9 III LLC		Delaware
Wachovia Defeasance Wachovia 2003-C9 LLC		Delaware
Wachovia Defeasance Wachovia 2004-C10 III LLC		Delaware
Wachovia Defeasance Wachovia 2004-C10 LLC		Delaware
Wachovia Defeasance WACHOVIA 2004-C12 III LLC		Delaware
Wachovia Defeasance Wachovia 2004-C12 LLC		Delaware
Wachovia Defeasance Wachovia 2004-C14 Amstar LLC		Delaware
Wachovia Defeasance Wachovia 2004-C14 III LLC		Delaware
Wachovia Defeasance Wachovia 2004-C14 Lenexa LLC		Delaware
Wachovia Defeasance Wachovia 2004-C14 LLC		Delaware
Wachovia Defeasance Wachovia 2004-C15 III LLC		Delaware
Wachovia Defeasance Wachovia 2004-C15 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C16 III LLC		Delaware
Wachovia Defeasance Wachovia 2005-C16 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C17 450 Partners LLC		Delaware
Wachovia Defeasance Wachovia 2005-C17 III LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Defeasance Wachovia 2005-C17 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C18 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C19 III LLC		Delaware
Wachovia Defeasance Wachovia 2005-C20 III LLC		Delaware
Wachovia Defeasance Wachovia 2005-C20 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C21 LLC		Delaware
Wachovia Defeasance Wachovia 2005-C22 III LLC		Delaware
Wachovia Defeasance Wachovia 2006-C23 III LLC		Delaware
Wachovia Defeasance Wachovia 2006-C24 III LLC		Delaware
Wachovia Defeasance Wachovia 2006-C25 III LLC		Delaware
Wachovia Defeasance Wachovia 2006-C29 III LLC		Delaware
Wachovia Defeasance Wachovia 2007-C33 III LLC		Delaware
Wachovia Defeasance WBCMT 2002-C1 III LLC		Delaware
Wachovia Development Corporation		North Carolina
Wachovia Education Loan Funding LLC		Delaware
Wachovia Fixed Income Structured Trading Solutions, LLC		Delaware
Wachovia International Capital Corporation		Georgia
Wachovia International Servicos, LTDA		Brazil
Wachovia Investors, Inc.		North Carolina
Wachovia KW1, LLC		Delaware
Wachovia Mortgage Loan Trust, LLC		Delaware
Wachovia Netherlands Holdings, Inc.		Delaware
Wachovia Ocean View Member, LLC		Delaware
Wachovia Operational Services, LLC		North Carolina
Wachovia Preferred Funding Corp.		Delaware
Wachovia Preferred Funding Holding Corp.		California
Wachovia Preferred Realty, LLC		Delaware
Wachovia Private Capital, Inc.		Pennsylvania
Wachovia Proprietary Equity Trading, LLC		Delaware
Wachovia RE, Inc.		Vermont
Wachovia Real Estate Investment Corp.		Delaware
Wachovia Real Estate Korea, Inc.		Korea
Wachovia Residual Interest Securitization, LLC		Delaware
Wachovia Risk Services, Inc.		Virginia
Wachovia Securities (Uruguay) S.A.		Uruguay
Wachovia Securities Financial Holdings, LLC		Delaware
Wachovia Securities Insurance Agency of Puerto Rico, Inc.		Puerto Rico
Wachovia Securities Servicos e Participacoes (Brasil) LTDA		Brazil
Wachovia Service Corporation		Delaware
Wachovia Settlement Services of AL, LLC		Alabama
Wachovia Settlement Services, LLC		Delaware
Wachovia Student Loan Trust 2005-1		Delaware
Wachovia Student Loan Trust 2006-1		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wachovia Technology Planning & Solutions Private Limited		India
Wachovia Trade Finance Corporation		Delaware
Wapiti Funding, LLC		Delaware
Warranty Solutions Administrative Services, Inc.		Florida
Warranty Solutions Management Corporation		California
Waterside Villages, LLC		Delaware
WBI Holdings I, LLC		Delaware
WBI Holdings II, LLC		Delaware
WBI Holdings III, LLC		Delaware
WBI Holdings IV, LLC		Delaware
WBI Holdings V, LLC		Delaware
WBI Holdings VI, LLC		Delaware
WCI OREO, LLC		Delaware
WCP Compression Holdings, LLC		North Carolina
WCP Compression, LLC		North Carolina
WCP Holdings 2002, LLC		North Carolina
WCP Holdings 2004, LLC		North Carolina
WCP Secondary Fund I GP, LLC		Delaware
WDC 541 N Fairbanks Member, LLC		Delaware
WDC Lake Spivey Member, LLC		Delaware
WDC Triad Member I, LLC		Delaware
WDC Triad Parent, LLC		Delaware
WDC Union Station, LLC		Delaware
WDC Ventures Ltd.		Mauritius
WDS Holdings, Inc.		Delaware
WDS Receivables LLC		Nevada
WDSI, LLC		Delaware
WELF Holding LLC		Delaware
Wells Capital Management Incorporated		California
Wells Fargo Advisors (Argentina) LLC		Delaware
Wells Fargo Advisors (Chile) LLC		Delaware
Wells Fargo Advisors (Montevideo) Usuaria de Zona Franca S.A.		Uruguay
Wells Fargo Advisors Financial Network, LLC		Delaware
Wells Fargo Advisors Insurance Agency, LLC		Virgina
Wells Fargo Advisors, LLC		Delaware
Wells Fargo Affordable Housing Community Development Corporation		North Carolina
Wells Fargo Affordable Housing Corp.		North Carolina
Wells Fargo Alternative Asset Management, LLC		Delaware
Wells Fargo Asia Limited		Hong Kong
Wells Fargo Asset Management Corporation		Minnesota
Wells Fargo Asset Securities Corporation		Delaware
Wells Fargo Auto Finance, LLC.		California
Wells Fargo Auto Receivables, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wells Fargo Bank International		Ireland
Wells Fargo Bank Northwest, National Association		United States
Wells Fargo Bank South Central, National Association		United States
Wells Fargo Bank, Ltd.		California
Wells Fargo Bank, National Association		United States
Wells Fargo Bill Presentment Venture Member, LLC		Delaware
Wells Fargo Business Credit Canada ULC		Canada
Wells Fargo Capital A		Delaware
Wells Fargo Capital B		Delaware
Wells Fargo Capital C		Delaware
Wells Fargo Capital Finance Corporation Canada		Canada-Ontario
Wells Fargo Capital Finance, Inc.		California
Wells Fargo Capital Finance, LLC		Delaware
Wells Fargo Capital Holdings, Inc.		Delaware
Wells Fargo Capital I		Delaware
Wells Fargo Capital II		Delaware
Wells Fargo Capital IV		Delaware
Wells Fargo Capital IX		Delaware
Wells Fargo Capital VII		Delaware
Wells Fargo Capital VIII		Delaware
Wells Fargo Capital X		Delaware
Wells Fargo Capital XI		Delaware
Wells Fargo Capital XII		Delaware
Wells Fargo Cash Centers, Inc.		Nevada
Wells Fargo Cedar Creek, LLC		Delaware
Wells Fargo Central Pacific Holdings, Inc.		California
Wells Fargo CM Funding, LLC		Delaware
Wells Fargo Commercial Mortgage		Delaware
Wells Fargo Commercial Mortgage Securities, Inc.		North Carolina
Wells Fargo Commodities, LLC		Delaware
Wells Fargo Community Development Corporation		Nevada
Wells Fargo Community Development Enterprises, Inc.		Nevada
Wells Fargo Community Investment Holdings, LLC		Delaware
Wells Fargo Container Corp. Ltd.		Bermuda
Wells Fargo Credit Card Funding LLC		Delaware
Wells Fargo Credit Card Master Note Trust		Delaware
Wells Fargo Credit, Inc.		Minnesota
Wells Fargo Delaware Trust Company, National Association		United States
Wells Fargo Distribution Finance, LLC		Delaware
Wells Fargo Energy Capital, Inc.		Texas
Wells Fargo Equipment Finance Company		Canada
Wells Fargo Equipment Finance, Inc.		Minnesota
Wells Fargo Equity Capital, Inc.		California

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wells Fargo Escrow Company, LLC		Iowa
Wells Fargo Exchange Services, Inc.		North Carolina
Wells Fargo Exchange Services, LLC.		Delaware
Wells Fargo Fairway Member, LLC		Delaware
Wells Fargo Financial Acceptance America, Inc.		Pennsylvania
Wells Fargo Financial Acceptance, LLC		Minnesota
Wells Fargo Financial Alabama, Inc.		Alabama
Wells Fargo Financial Alaska, Inc.		Alaska
Wells Fargo Financial America, Inc.		Pennsylvania
Wells Fargo Financial Arizona, Inc.		Arizona
Wells Fargo Financial Arkansas, Inc.		Arkansas
Wells Fargo Financial California, Inc.		Colorado
Wells Fargo Financial Canada Corporation		Canada
Wells Fargo Financial Colorado, Inc.		Colorado
Wells Fargo Financial Connecticut, Inc.		Connecticut
Wells Fargo Financial Corporation Canada		Canada
Wells Fargo Financial Credit Services New York, Inc.		New York
Wells Fargo Financial Delaware, Inc.		Delaware
Wells Fargo Financial Florida, Inc.		Florida
Wells Fargo Financial Funding B.V.		Netherlands
Wells Fargo Financial Georgia, Inc.		Iowa
Wells Fargo Financial Guam, Inc.		Delaware
Wells Fargo Financial Hawaii, Inc.		Hawaii
Wells Fargo Financial Holdings, LLC		Delaware
Wells Fargo Financial Idaho, Inc.		Idaho
Wells Fargo Financial Illinois, Inc.		Iowa
Wells Fargo Financial Indiana, Inc.		Indiana
Wells Fargo Financial Information Services, Inc.		Iowa
Wells Fargo Financial Investment, Inc.		Nevada
Wells Fargo Financial Iowa 1, Inc.		Iowa
Wells Fargo Financial Iowa 3, Inc.		Iowa
Wells Fargo Financial Kansas, Inc.		Kansas
Wells Fargo Financial Kentucky 1, Inc.		Kentucky
Wells Fargo Financial Kentucky, Inc.		Kentucky
Wells Fargo Financial Leasing, Inc.		Iowa
Wells Fargo Financial Louisiana, Inc.		Louisiana
Wells Fargo Financial Maine, Inc.		Maine
Wells Fargo Financial Maryland, Inc.		Maryland
Wells Fargo Financial Massachusetts 1, Inc.		Massachusetts
Wells Fargo Financial Massachusetts, Inc.		Massachusetts
Wells Fargo Financial Michigan, Inc.		Michigan
Wells Fargo Financial Minnesota, Inc.		Minnesota
Wells Fargo Financial Missouri, Inc.		Missouri
Wells Fargo Financial Montana, Inc.		Montana

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wells Fargo Financial National Bank		United States
Wells Fargo Financial Nebraska, Inc.		Nebraska
Wells Fargo Financial Nevada 2, Inc.		Nevada
Wells Fargo Financial Nevada, Inc.		Nevada
Wells Fargo Financial New Hampshire 1, Inc.		New Hampshire
Wells Fargo Financial New Hampshire, Inc.		New Hampshire
Wells Fargo Financial New Jersey, Inc.		New Jersey
Wells Fargo Financial New Mexico, Inc.		New Mexico
Wells Fargo Financial New York, Inc.		New York
Wells Fargo Financial North Carolina 1, Inc.		North Carolina
Wells Fargo Financial North Carolina, Inc.		North Carolina
Wells Fargo Financial North Dakota, Inc.		North Dakota
Wells Fargo Financial Ohio 1, Inc.		New Hampshire
Wells Fargo Financial Ohio, Inc.		Ohio
Wells Fargo Financial Oklahoma, Inc.		Oklahoma
Wells Fargo Financial Oregon, Inc.		Oregon
Wells Fargo Financial Pennsylvania, Inc.		Pennsylvania
Wells Fargo Financial Retail Credit, Inc.		Iowa
Wells Fargo Financial Retail Services Company Canada		Canada
Wells Fargo Financial Rhode Island, Inc.		Rhode Island
Wells Fargo Financial Saipan, Inc.		Delaware
Wells Fargo Financial Services Virginia, Inc.		Virginia
Wells Fargo Financial Services, Inc.		Delaware
Wells Fargo Financial South Carolina, Inc.		South Carolina
Wells Fargo Financial South Dakota, Inc.		South Dakota
Wells Fargo Financial System Florida, Inc.		Florida
Wells Fargo Financial System Minnesota, Inc.		Minnesota
Wells Fargo Financial System Virginia, Inc.		Virginia
Wells Fargo Financial Tennessee 1, LLC		Tennessee
Wells Fargo Financial Tennessee, Inc.		Tennessee
Wells Fargo Financial Texas, Inc.		Texas
Wells Fargo Financial Utah, Inc.		Utah
Wells Fargo Financial Vermont, Inc.		Vermont
Wells Fargo Financial Virginia, Inc.		Virginia
Wells Fargo Financial Washington 1, Inc.		Washington
Wells Fargo Financial Washington, Inc.		Washington
Wells Fargo Financial West Virginia, Inc.		West Virginia
Wells Fargo Financial Wisconsin, Inc.		Wisconsin
Wells Fargo Financial Wyoming, Inc.		Wyoming
Wells Fargo Financial, Inc.		Iowa
Wells Fargo Financing Corporation		California
Wells Fargo Foothill Canada ULC		Canada
Wells Fargo Fund Services, LLC		Delaware
Wells Fargo Funding, Inc.		Minnesota

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
Wells Fargo Funds Distributor, LLC		Delaware
Wells Fargo Funds Management, LLC		Delaware
Wells Fargo Gaming Capital, LLC		Delaware
Wells Fargo Global Broker Network, LLC		Delaware
Wells Fargo Home Mortgage of Hawaii, LLC		Delaware
Wells Fargo Home Mortgage Real Estate Funding 1, Inc.		Delaware
Wells Fargo Housing Advisors, Inc.		California
Wells Fargo India Solutions Private Limited		India
Wells Fargo Institutional Securities, LLC		Delaware
Wells Fargo Insurance Montana, Inc.		Montana
Wells Fargo Insurance Services Investment Advisors, Inc.		North Carolina
Wells Fargo Insurance Services of West Virginia, Inc.		West Virginia
Wells Fargo Insurance Services USA, Inc.		North Carolina
Wells Fargo Insurance, Inc.		Minnesota
Wells Fargo International B.V.		Netherlands
Wells Fargo International Banking Corporation		United States
Wells Fargo International Commercial Services Limited		Hong Kong
Wells Fargo International Inc.		Delaware
Wells Fargo International Services Private Limited		India
Wells Fargo Investment Group, Inc.		Delaware
Wells Fargo Merchant Services, L.LC.		Delaware
Wells Fargo Mortgage Loan Trust II, LLC		Delaware
Wells Fargo Mortgage Loan Trust, LLC		Delaware
Wells Fargo Municipal Capital Strategies, LLC		Delaware
Wells Fargo Philippines Solutions Inc.		Philippines
Wells Fargo Principal Lending, LLC		Delaware
Wells Fargo Private Client Funding, Inc.		Delaware
Wells Fargo Properties, Inc.		Minnesota
Wells Fargo RE, Inc.		New Jersey
Wells Fargo Real Estate Advisors Private Limited		India
Wells Fargo Real Estate Capital Investments, LLC		Delaware
Wells Fargo Real Estate Tax Services, LLC		Delaware
Wells Fargo Regional Community Development Corporation, Inc.		Pennsylvania
Wells Fargo Relative Value Portfolio		Cayman Islands
Wells Fargo Securities (Japan) Co. Ltd.		Japan
Wells Fargo Securities Asia Limited		Hong Kong
Wells Fargo Securities International Limited		United Kingdom-England
Wells Fargo Securities, LLC		Delaware
Wells Fargo Small Business Investment Company, Inc.		California
Wells Fargo Soporte Global Limitada		Chile
Wells Fargo Special Risks, Inc.		Illinois
Wells Fargo Structured Lending, LLC		Delaware
Wells Fargo Student Loans Receivables I, LLC		Delaware
Wells Fargo Trade Capital Services, Inc.		New York
Wells Fargo Trust Corporation Limited		United Kingdom-England
Wells Fargo Ventures, LLC		Delaware
Wells Fargo Wealth Brokerage Insurance Agency, LLC		Virginia
Wells Fargo Wind Holdings, LLC		Delaware

EXHIBIT 21

SUBSIDIARIES OF THE PARENT

The following is a list of the direct and indirect subsidiaries of the Parent as of December 31, 2011:


Subsidiary		Jurisdiction of Incorporation or Organization
WestFin Insurance Agency, Inc.		California
Westlake Insurance Company (Bermuda), Ltd.		Bermuda
Westwood Vistas GP, LLC		Delaware
WF Deferred Compensation Holdings, Inc.		Delaware
WF Investment Holdings, LLC		Delaware
WF PCCP Co-Invest LLC		Delaware
WF Penta Wind, LLC		Delaware
WFC Holdings Corporation		Delaware
WFLC Subsidiary, LLC		Delaware
WFRBD, LLC		Delaware
WFS Mortgage, LLC		Delaware
Wheat First Butcher Singer Private Equity Fund, Limited Partnership		Virginia
Wheels Exchange, LLC		Delaware
Whippet Funding, LLC		Delaware
WIBC Aruba N.V.		Aruba
WIH CDO, LLC		Delaware
WIH Holdings		Mauritius
William Byrd Hotel Associates, L.P.		Virginia
William Pitt Mortgage, LLC		Delaware
Winchester REO, LLC		North Carolina
Wind Joint Venture, LLC		Delaware
WLH 2008-1, LLC		Delaware
World Mortgage Company		Colorado
World Savings, Inc.		California
WPFC Asset Funding LLC		Delaware
WREK Retail I, LLC		Delaware
WS Aftermarket Services Corporation		Delaware
WSH Holdings, LTD.		UK-Cayman Islands
WTC Property Holdings, LLC		Delaware

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Wells Fargo & Company:

We consent to the incorporation by reference in the registration statements noted below on Forms S-3, S-4 and S-8 of Wells Fargo & Company of our reports dated February 28, 2012, with respect to the consolidated balance sheet of Wells Fargo & Company and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, changes in equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2011 and the effectiveness of internal control over financial reporting as of December 31, 2011, which reports appear in the December 31, 2011 Annual Report on Form 10-K of Wells Fargo & Company.

Our report refers to the adoption of a new accounting standard related to the Company’s involvement with variable interest entities in 2010, and the Company’s change in method of evaluating other than temporary impairment for debt securities in 2009.


Registration Statement Number	Form	Description
333-163149	S-3	Wells Fargo Direct Purchase and Dividend Reinvestment Plan
333-178135	S-3	Deferred Compensation Plan for Independent Contractors
333-159738	S-3	Debt Shelf 2009
333-159736	S-3	Universal Shelf 2009
333-121545	S-4/S-8	First Community Capital Corporation
333-107230	S-4/S-8	Pacific Northwest Bancorp
333-142102	S-4/S-8	Placer Sierra Bancshares
333-144455	S-4/S-8	Greater Bay Bancorp
333-154879	S-4/S-8	Wachovia Corporation
333-153922	S-4/S-8	Century Bancshares, Inc.
333-103776	S-8	Long-Term Incentive Compensation Plan
333-128598	S-8	Long-Term Incentive Compensation Plan
333-152415	S-8	Long-Term Incentive Compensation Plan
333-168819	S-8	Long-Term Incentive Compensation Plan
333-103777	S-8	PartnerShares Plan
333-173386	S-8	401(k) Plan
333-149567	S-8	401(k) Plan
333-173387	S-8	Directors Stock Compensation and Deferral Plan
333-105091	S-8	Directors Stock Compensation and Deferral Plan
333-149566	S-8	Directors Stock Compensation and Deferral Plan
333-158711	S-8	Directors Stock Compensation and Deferral Plan
333-176266	S-8	Special Deferral Plan for Select Employees and Special Award Plan
333-142491	S-8	Deferred Compensation Plan
333-164082	S-8	Deferred Compensation Plan
333-158712	S-8	Wells Fargo Stock Purchase Plan
333-161529	S-8	Wachovia Deferred Compensation Obligations

/s/ KPMG LLP

San Francisco, California

February 28, 2012

Exhibit 24

WELLS FARGO & COMPANY

Power of Attorney of Director

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of WELLS FARGO & COMPANY, a Delaware corporation, does hereby make, constitute, and appoint NICHOLAS G. MOORE, a director and Chairman of the Audit and Examination Committee of the Board of Directors, and ENRIQUE HERNANDEZ, JR., a director and member of the Audit and Examination Committee of the Board of Directors, and each or either of them, the undersigned’s true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned’s name, place, and stead, to sign and affix the undersigned’s name as such director of said Company to an Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and all amendments thereto, to be filed by said Company with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and the rules and regulations of said Commission, and to file the same, with all exhibits thereto and other supporting documents, with said Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted.

IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 28th day of February, 2012.

/s/ JOHN D. BAKER II

/s/ ELAINE L. CHAO

/s/ JOHN S. CHEN

/s/ LLOYD H. DEAN

/s/ SUSAN E. ENGEL

/s/ ENRIQUE HERNANDEZ, JR.

/s/ MACKEY J. McDONALD

/s/ CYNTHIA H. MILLIGAN

/s/ NICHOLAS G. MOORE

/s/ FEDERICO F. PEÑA

/s/ PHILIP J. QUIGLEY

/s/ JUDITH M. RUNSTAD

/s/ STEPHEN W. SANGER

/s/ JOHN G. STUMPF

/s/ SUSAN G. SWENSON

Exhibit 31(a)

CERTIFICATION

I, John G. Stumpf, certify that:

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011, of Wells Fargo & Company;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2012

/s/ JOHN G. STUMPF

John G. Stumpf

Chief Executive Officer

Exhibit 31(b)

CERTIFICATION

I, Timothy J. Sloan, certify that:

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011, of Wells Fargo & Company;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2012



/s/ TIMOTHY J. SLOAN
Timothy J. Sloan Chief Financial Officer

Exhibit 32(a)

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Wells Fargo & Company (the “Company”) for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John G. Stumpf, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ JOHN G. STUMPF
John G. Stumpf Chief Executive Officer Wells Fargo & Company February 28, 2012

Exhibit 32(b)

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Wells Fargo & Company (the “Company”) for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy J. Sloan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ TIMOTHY J. SLOAN
Timothy J. Sloan Chief Financial Officer Wells Fargo & Company February 28, 2012

Exhibit 99

Description of Replacement Capital Covenants of

Wells Fargo & Company and Wachovia Corporation

(1) On December 5, 2006, Wells Fargo Capital X issued 5.95% Capital Securities and used the proceeds to purchase from the Parent 5.95% Capital Efficient Notes (the Notes) due 2086 (scheduled maturity 2036). When it issued the Notes, the Parent entered into a Replacement Capital Covenant (the Covenant) in which it agreed for the benefit of the holders of the Parent’s 5.625% Junior Subordinated Debentures due 2034 that it will not repay, redeem or repurchase, and that none of its subsidiaries will purchase, any part of the Notes or the Capital Securities on or before December 1, 2066, unless the repayment, redemption or repurchase is made from the net cash proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set forth in the Covenant. For more information, refer to the Covenant, which was filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed December 5, 2006.

(2) On May 25, 2007, Wells Fargo Capital XI issued 6.25% Enhanced Trust Preferred Securities (Enhanced TruPS ^® ) (the 2007 Capital Securities) and used the proceeds to purchase from the Parent 6.25% Junior Subordinated Deferrable Interest Debentures due 2067 (the 2007 Notes). When it issued the 2007 Notes, the Parent entered into a Replacement Capital Covenant (the 2007 Covenant) in which it agreed for the benefit of the holders of the Parent’s 5.625% Junior Subordinated Debentures due 2034 that it will not repay, redeem or repurchase, and that none of its subsidiaries will purchase, any part of the 2007 Notes or the 2007 Capital Securities on or before June 15, 2057, unless the repayment, redemption or repurchase is made from the net cash proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set forth in the 2007 Covenant. For more information, refer to the 2007 Covenant, which was filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed May 25, 2007.

(3) On March 12, 2008, Wells Fargo Capital XII issued 7.875% Enhanced Trust Preferred Securities (Enhanced TRUPS ^® ) (the 2008 Capital Securities) and used the proceeds to purchase from the Parent 7.875% Junior Subordinated Deferrable Interest Debentures due 2068 (the 2008 Notes). When it issued the 2008 Notes, the Parent entered into a Replacement Capital Covenant (the 2008 Covenant) in which it agreed for the benefit of the holders of the Parent’s 5.375% Notes due 2035 (the Covered Debt) that it will not repay, redeem or repurchase, and that none of its subsidiaries will purchase, any part of the 2008 Notes or the 2008 Capital Securities on or before March 15, 2048, unless the repayment, redemption or repurchase is made from the net cash proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set forth in the 2008 Covenant. For more information, refer to the 2008 Covenant, which was filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed March 12, 2008.

(4) On February 1, 2006, Wachovia Capital Trust III issued 5.80% Fixed-to-Floating Rate Wachovia Income Trust Securities (the First Wachovia Trust Securities) and used the proceeds to purchase from Wachovia Remarketable Junior Subordinated Notes due 2042 (the First Wachovia Notes). In connection with the issuance of the First Wachovia Trust Securities, the Trust and Wachovia entered into a forward stock purchase contract that obligates the Trust to purchase Wachovia’s Non-Cumulative Perpetual Class A Preferred

Stock, Series I (the Series I Preferred Stock) and obligates Wachovia to make payments to the Trust of 0.60% per annum through the stock purchase date, expected to be March 15, 2011 (the Series I Stock Purchase Date). Prior to the Series I Stock Purchase Date, the Trust is required to remarket and sell the First Wachovia Notes to third party investors to generate cash proceeds to satisfy its obligation to purchase the Series I Preferred Stock. When it issued the First Wachovia Notes, Wachovia entered into a Declaration of Covenant (the First Wachovia Covenant) in which it agreed for the benefit of the holders of the Wachovia’s Floating Rate Junior Subordinated deferrable Interest Debentures due January 15, 2027 (the Wachovia Covered Debt) that it will repurchase the First Wachovia Trust Securities or redeem or repurchase shares of the Series I Preferred Stock only if and to the extent that the total redemption or repurchase price is equal to or less than the net cash proceeds of the issuance of certain qualified securities as described in the First Wachovia Covenant. In connection with the Wachovia acquisition, the Parent assumed all of Wachovia’s obligations under the First Wachovia Covenant. For more information, refer to the First Wachovia Covenant, which was filed as Exhibit 99.1 to Wachovia’s Current Report on Form 8-K filed February 1, 2006.

(5) On February 15, 2007, Wachovia Capital Trust IV issued 6.375% Trust Preferred Securities (the Second Wachovia Trust Securities) and used the proceeds to purchase from Wachovia 6.375% Extendible Long Term Subordinated Notes (the Second Wachovia Notes). When it issued the Second Wachovia Notes, Wachovia entered into a Replacement Capital Covenant (the Second Wachovia Covenant) in which it agreed for the benefit of the holders of the Wachovia Covered Debt that it will not repay, redeem or repurchase, and that none of its subsidiaries will purchase, any part of the Second Wachovia Notes or the Second Wachovia Trust Securities on or after the scheduled maturity date of the Second Wachovia Notes and prior to the date that is 20 years prior to the final repayment date of the Second Wachovia Notes, unless the repayment, redemption or repurchase is made from the net cash proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set forth in the Second Wachovia Covenant. In connection with the Wachovia acquisition, the Parent assumed all of Wachovia’s obligations under the Second Wachovia Covenant. For more information, refer to the Second Wachovia Covenant, which was filed as Exhibit 99.1 to Wachovia’s Current Report on Form 8-K filed February 15, 2007.

(6) On May 8, 2007, Wachovia Capital Trust IX issued 6.375% Trust Preferred Securities (the Third Wachovia Trust Securities) and used the proceeds to purchase from Wachovia 6.375% Extendible Long Term Subordinated Notes (the Third Wachovia Notes). When it issued the Third Wachovia Notes, Wachovia entered into a Replacement Capital Covenant (the Third Wachovia Covenant) in which it agreed for the benefit of the holders of the Wachovia Covered Debt that it will not repay, redeem or repurchase, and that none of its subsidiaries will purchase, any part of the Third Wachovia Notes or the Third Wachovia Trust Securities (i) on or after the earlier of the date that is 30 years prior to the final repayment date of the Third Wachovia Notes and the scheduled maturity date of the Third Wachovia Notes and (ii) prior to the later of the date that is 20 years prior to the final repayment date of the Third Wachovia Notes and June 15, 2057, unless the repayment, redemption or repurchase is made from the net cash proceeds of the issuance of certain qualified securities and pursuant to the other terms and conditions set forth in the Third Wachovia Covenant. In connection with the Wachovia acquisition, the Parent assumed all of Wachovia’s obligations under the Third Wachovia Covenant. For more information, refer to the Third Wachovia Covenant, which was filed as Exhibit 99.1 to Wachovia’s Current Report on Form 8-K filed May 8, 2007.