Good morning. My name is Celeste and I will be your conference operator today. At this time I would like to welcome everyone to the Wells Fargo third quarter earnings conference call. (Operator Instructions). I would now like to turn today’s call over to Mr. Jim Rowe, Director of Investor Relations. Please go ahead sir.

Thank you and good morning everyone. Thank you for joining our call today, during which our Chairman and CEO John Stumpf, and CFO Howard Atkins will review third quarter 2010 results and answer your questions. Before we get started, I would like to remind you that our third quarter earnings release and quarterly supplement are available on our website. I’d also like to caution you that we may make forward-looking statements during today’s call and that those forward-looking statements are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings including the Form 8-K filed today and the earnings release and quarterly supplement included as exhibits. In addition, some of the discussion today about the company’s performance will include references to non-GAAP financial measures. Information about those measures including a reconciliation of those measures to GAAP measures can be found in our SEC filings and in the earnings release and quarterly supplement available on our website at wellsfargo.com. I will now turn the call over to Chairman and CEO, John Stumpf.

Thanks, Jim, and thanks to all of you for joining our call and for your interest in our company. The third quarter was the best quarter in our company’s history with record earnings of $3.3 billion, up nine percent from last quarter. The strength of our diversified business model and the power of the Wells Fargo and Wachovia merger are clearly reflected in these results. The Wachovia merger is exceeding all of our expectations, helping us generate more than $21 billion in earnings since the merger. In the third quarter we completed the integration of Wachovia stores in our overlapping states and began the integration in our eastern states, successfully converting 170 banking stores in Alabama, Mississippi and Tennessee. This success paves the way for the rest of the eastern market conversions which will complete next year, giving millions of customer’s access to more products and the largest banking store network in the United States. In addition to the banking stores, we have the revenue synergies we are already realizing from the merger. But let me just say, I’m particularly pleased with the positive results we’ve had in retaining and attracting deposits which are an important contributor to our results. Checking account growth remained strong throughout our company, up a net 7.3 percent with very strong growth across the east including nine percent growth in Florida and 11.2 percent growth in New Jersey as examples. Now, I know we’ve all been hearing in recent months about business practices within our industry. I’m proud of Wells Fargo’s adherence to a culture of doing what’s right for customers, which not incidentally benefits our team members, our communities and our shareholders in the long run. For us, this means doing the hard work early and building processes that adhere to our standards as…

Thank you, John. My remarks this morning will follow the slide presentation included in the quarterly supplement which is available on the Wells Fargo Investor Relations website. I’ve got lots of ground to cover this morning, but there are three – I’m sorry – six key themes that I’d like you to remember in my remarks. First, as John indicated, we had record results in the quarter, best quarter ever, $3.3 billion in profit with earnings per share of $0.60 or up seven percent year over year. Second, the way we grew earnings in the third quarter is the same as we’ve done to produce strong earnings every quarter since the merger; revenue growth in most of our businesses with expenses down. Third, the Wachovia merger is already a big financial success for us with better than expected credit experience, expense savings on track and abundant revenue synergies. Fourth, we had continued improvement during the quarter in credit quality. Charge offs are now some 24 percent below the peak last year, and nine percent down from the second to the third quarter. Fifth, our balance sheet is stronger than ever. We’ve been growing tier one common at a rate about 40 to 50 basis points per quarter organically. Tier one common hit eight percent during the quarter and while the new BASEL III rules are still in process, we expect to be above seven percent tier one common on the proposed BASEL III rules as we understand them within the next few quarters. And then finally, we are confident in our foreclosure and mortgage securitization policies, practices and controls and the adequacy of our repurchases, and I will get to that later on in this presentation. If you look at slide four, which is our earnings trend, as indicated we…

(Operator Instructions). Your first question comes from the line of Matt O’Connor with Deutsche Bank. Matt O’Connor – Deutsche Bank: Hi guys.

Hi, Matt. Matt O’Connor – Deutsche Bank: I think I’ll start with the full mortgage repurchase for a change. I guess the first question is why are you excluding the 2005 vintage? Do you think that’s not going to be a material issue or hasn’t been so far? I think most people are looking at ‘05 through ‘07 vintages and you show ‘06 to ‘07, so just wondering what your thoughts on ‘05 are.

As far as we can tell, to the extent there will be problems we see it on 2006, 2007 through mid-2008 vintages, so we don’t expect any material (inaudible) prior to that. Matt O’Connor – Deutsche Bank: OK. And then separately, the 83 percent of private securitizations that are prime, I assume those are jumbo?

Yes, mostly yes. Matt O’Connor – Deutsche Bank: OK. Do you have any average statistics on the LTD’s and FICO there?

We’ll get back to you on that. I don’t have those on the top of my heard. Matt O’Connor – Deutsche Bank: And just separately, like when I step back and reading all these headlines that are impacting the mortgage business in one way or another, I guess the thing that jumps out to me is the servicing business really hasn’t been priced for what we’re seeing right now, and maybe the cost to you of a purchase is a little bit less, but for some other competitors it seems like it’s going to be a pretty high cost. So how do you think about just pricing, I guess on the origination side as well as on the servicing side for your current production and going forward?

Well Matt, we’re always looking as we’re looking at this business, first it costs more money, but if you look at, I can’t remember what slide it was, I think it was 28, that tells a pretty big story there about the quality of our portfolio and that is reflective of the success we’re having in that portfolio and the profitability of that portfolio. Matt O’Connor – Deutsche Bank: OK. I guess what I’m getting at is the servicing fees that you get as an industry I think are relatively modest, probably to what your costs are either to modify some of these loans, obviously the foreclosure process. I just feel like that’s going to be a much bigger burden for the business going forward, and it might make sense to re-pricing some of that business right now.

The industry might do that and of course we look at that, but clearly for the eight percent that’s past due, and those are, that’s expensive. There’s no question about that, but you’ve got to look at a portfolio from a portfolio perspective, and if the industry reacts to it, if this is a prolonged issue, I’m sure that new servicing might be considered differently. Matt O’Connor – Deutsche Bank: OK. Thank you very much.

Your next question comes from the line of John McDonald with Sanford Bernstein. John McDonald – Sanford Bernstein: Hi, good morning. Question for Howard. On the interest margin, obviously lots of puts and takes go into interest income and the margin. Could you talk about some of the offsets that you might have to run off higher yielding assets to a low persists, Howard?

Well one of the costs is that our security portfolio is a pretty long duration portfolio, so keep that in mind. The main one would be, as I mentioned before, the growth in share in checking accounts. We are growing checking accounts in our company at a very high rate of growth, reflecting again, more and more customers doing business with us, and that’s zero cost money. So the more rapidly we can grow checking accounts apart from all of the other franchise benefits of doing that is that the margin does help that interest margin. John McDonald – Sanford Bernstein: And while you do have some high yielding securities, it also seems like you have some liquidity in very low yielding stuff in terms of dry powder for the future. Is that still true?

That’s very much true. Depending on how you define liquidity, we have as much $100 billion of potential investment power on the balance sheet. Now of course, we would hope that that gets used by loan demand picking up, and we’ve already seen activity both in the second quarter, now in the third quarter as well. So that will be our wish that that’s how the liquidity gets used up so we can serve our customers that way. But if rates pick up at some point, we have significant capacity to build the balance sheet.

But John, I’d also add to that, here comes into the play the beauty of this operating model. I mean, we have a diversity of geography, a diversity of businesses, a diversity of industry and about half of our revenue comes from fee for services, the other half from the margin. When one horse has a headwind, the other one has a tailwind, and pulls a little harder, and while these are not perfect offsets, if we continue to serve customers and customers like doing business with us, it’s a privilege to serve them and in these markets we’re outgrowing, like Howard said on the checking account side, we’re outgrowing, you know there’s now 11 percent growth in checking account in New Jersey. We’re taking share. And no question there’s some headwinds if rates stay low, but that’s why you hear a lot of; everybody in the industry’s talking about cross sell. We’ve been talking about it for 20 years. John McDonald – Sanford Bernstein: And is the spread on the warehouse comparable to overall margin on the company Howard, currently?

Well you know the warehouse loans to the extent that we’re writing mortgages at 4.5 percent plus, you know yield is getting higher than the margin. John McDonald – Sanford Bernstein: OK. And just a question on the mortgage applications very high this quarter. Is that typically a pretty good pull through to next quarter’s originations that you would take?

Yes, you could assume that the pipeline was up substantially during the third quarter which does bode well for fourth quarter originations, and then in addition as I mentioned earlier, so far in the fourth quarter, we’ve continued to see very strong application volumes. John McDonald – Sanford Bernstein: And the final thing was just two more questions on the mortgage. The origination gains were very high this quarter. It looks like they begin on (inaudible) margin. Can you talk about origination margins and also just a little detail on servicing and why the hedging column was down and if you changed the strategy there?

You know origination margins in the industry remain relatively wide, which is what you would expect given the demand for mortgages being as substantial as it is. On the servicing side, the main subtle difference in terms of the hedge between the third quarter and prior quarters as you would expect, as mortgage rates continue to come down a lot, the natural business edge if you will, the origination side of the business acts a little bit better as a natural hedge to the overall mortgage company. So the size of the hedge, the financial hedge if you will in relationship to the overall servicing and overall business was a little bit less in the third quarter than it would have been in prior quarters, and that’s one of the reasons the hedge itself was down. John McDonald – Sanford Bernstein: OK. Thank you.

Your next question comes from the line of Betsy Graseck with Morgan Stanley. Betsy Graseck – Morgan Stanley: Hi. Thanks. Good morning.

Good morning, Betsy. Betsy Graseck – Morgan Stanley: So just to return the size of your hedge comes down so less earnings but you’re gaining on sales higher so it’s kind of a wash at least.

Well that’s why we’ve always said we have a balanced mortgage business so, a good example. Betsy Graseck – Morgan Stanley: Right. Couple of other questions. One is on the BASEL III, and you laid out you know where you would be point in time in 3Q based on what you know today. I’m wondering if you’re thinking about any kind of mitigation as you move forward or should we just take that you know, effective RWA and keep that cost in the model?

There may be small things we do, but we have a much better situation here as I mentioned than the other big banks which is why we don’t really have to do a lot of mitigation. You know some of the other banks are going to on-boarding hundreds of billions worth of RWA, and as I say, we’re just not in many of those businesses or as exposed to any other business as some of the others. And frankly, it’s a good thing that we don’t have to make adjustments here because to the extent in my view, you have to make adjustments or take mitigating action that winds up in the end with less earnings for those companies that have to take mitigating action. So we think we’re in good shape here. As I said, we’re at roughly 6.9 as of the third quarter. I don’t want to make a prediction. I sort of gave a general statement about being over seven percent “in the next couple of quarter”. You can see how rapidly our capital has been growing per quarter, you know 30, 40 50 basis points, so it wouldn’t take that many quarters to get over seven percent. We’re already at 6.9, but again, we don’t know how these final rules are going to shake out and what the ultimate interpretations will be on some of these things. Betsy Graseck – Morgan Stanley: And some people have been asking about the MSR as a percentage of total above the current standard, but are you thinking of it in terms of how it factors into BASEL III over time and (inaudible) 24 with 20 percent?

You know the MSR valuation is at a cyclical low point right now and yes, that may be things down the road on the MSR that we can think about doing that would mitigate some of the volatility if you will that gets created in the capital ratios just from that asset. But that’s something that the industry is going to be taking a look at because as you know, we all have an MSR asset. But what I can tell you is right now, that’s not a big deal for us. Betsy Graseck – Morgan Stanley: Right. I realize that. And mitigating, you’re talking about different ways of accounting for it or...?

There’s different kind of actions you can have on accounting. You know, the institutional arrangements in the marketplace may get modified, so we’ll have to see how this shakes out. Betsy Graseck – Morgan Stanley: OK. And then lastly on the dividend, how are you thinking about the payout ratio?

Well first of all Betsy, we’re eager to return more of our capital back to our shareholders. They’ve been very patient, and you know, we historically paid in that 35 percent to 40 percent range, give or take. We’ll have to see how we – appropriate level. Betsy Graseck – Morgan Stanley: OK, yeah because it looks like your earnings have been improving and consistently improving so I’m just wondering what the trigger point is. Is it the systemic risk buffer getting decided?

Well things are becoming clearer you know, but there’s more clarity this quarter than it was last quarter, so we’re getting closer to that point, but I can’t – I don’t know if I can add anything to it other than we want to get there as soon as all parties line up. Betsy Graseck – Morgan Stanley: Thanks very much.

Your next question comes from the line of Joe Morford with RBC Capital Markets. Joe Morford – RBC Capital Markets: Thanks. Good morning everyone.

Hi Joe. Joe Morford – RBC Capital Markets: Just a couple of things. I guess first you talked about the commitments for commercial real estate lending in the wholesale business up 44 percent sequentially. I just wondered if you could talk a little bit more about the opportunities you’re seeing there and how the appetite for growing that portfolio and just some of the risks and returns for that business.

Well, we’ve had a long history in that business. We like that business. If you look at legacy Wells, we’ve had people that have done that business for a long period of time very successfully, and frankly, quite successfully during this downturn. Secondly, we’re putting more feet on the street not only in the commercial area but in our business banking area and so we are, and we’re making lots of investments in relationships with companies. So you know, as others, smaller players and other players are internally focused, looking at managing their balance sheet or managing problem assets, we’re finding lots of opportunity to engage with existing customers and new clients about that business, and business in general. So that’s not new to us. This business is not new to us, and I should also tell you Joe, I think you also noticed about our business, some of our strongest cross sell is actually in the wholesale side of the business. So this is not just about capturing a loan. This is about winning a new relationship or further developing existing relationships, so the loan isn’t the end all. It’s relationship. So when you think of profitability, you’ve got to think of it in more holistically. Joe Morford – RBC Capital Markets: OK. Makes sense. And then, Howard I guess you touched on this a little bit, but I guess if you could update us a bit on the trends in the CNI and middle market portfolios just in terms of customer demand or line utilization levels and also what kind of competitive dynamics you see now in terms of pricing pressures and maybe terms.

The, as I mentioned, we’ve been very aggressive on the commitment side, so the lines and commitments have been growing. But to be fair, the actual line utilization remains low. It hasn’t gotten much lower, but sort of relatively flat the last quarter or two, but still is at a relatively low levels. You know we like this business. It’s a bread and butter business for us. We did see some pickup in activity in the quarter, and I guess the other thing I’d mention, we’ve talked about this in the past. When demand generally does come back in CNI, we should be the primary beneficiary of that, because we have all the other business with many of these clients, so in terms of cash management and all the other products and services, this is very similar to the experience we had back in 2002 when (inaudible) we gained a fairly significant amount of market share during that period but we’re not at that point yet. You know pricing is still appropriate as far as we can tell for the risks. We’re not doing anything on terms to give away the business, so we’d like to see more business there, but at our terms and pricing. Joe Morford – RBC Capital Markets: OK. That’s very helpful. Thanks so much.

Your next question comes from the line of Mike Mayo with Calyon. Mike Mayo – Calyon: Just a follow up, so what’s the percentage of the loan utilization? I just use that as a measure for how much loan demand there is and what’s your feeling about loan demand.

Well you know on balance Mike, and again you’re talking about composition of portfolios, roughly in the low 30’s on commercial line utilization and that’s been relatively consistent for a couple of quarters now. And again as we say, we’re seeing somewhat increased activity, but you know, it’s not as robust as we would like to see it be, and as I said, we think we’re picking up market share because we’ve got so many relationships and all the other cross sell. So we’ll just have to see when demand comes back.

Mike, I think one of the things, one of the keys is our increase in commitments is much greater than what’s happening in the portfolio, the outstandings. So we’re making investments today, spending money today to win new clients, service existing clients that we’re not seeing the benefit of yet. So when this thing does turn around, we will get a boost. It will be like a springboard, and we’re willing to make those investments because those are good long term relationships for new customers who really value a company who’s going to stick by them.

And then of course we get the fee income on the commitments, so the loan fees have been strong as we have been as I said, very successful in growing commitments. Mike Mayo – Calyon: And then on slide 23 you showed non-accrual loans stabilizing, but there was an uptick in both consumer and commercial non-accruals in terms of the inflows from the second to the third quarter. Not much, but it’s a little bit of an uptick. Is that just timing or is that just the economy kind of slowing down a little bit.

You know we had one, as I mentioned earlier, the first mortgages on the consumer side which could be more seasonal, just you know one quarter to the next. All of the consumer portfolios were flat to down. And then on the commercial side it was largely a relatively small number of large corporate loans that went non-accrual and most of the other commercial portfolios actually saw declines in inflows. Mike Mayo – Calyon: One of the questions I’m just really trying to get to, from your perspective since you’re across the country now, is the economy getting worse, a lot worse? Do we need to QE2? What’s your read from the bottom up perspective?

Well you know Mike, I travel like probably a lot of others, a lot, and I’m in a lot of different geographies. And I think it depends a bit on the type of business you’re in, but in a general statement, many businesses are doing quite well. I mean, I don’t know what the last number is, but there’s more than $1 trillion of liquidity that’s on corporate balance sheets, small business, medium sized businesses, large businesses that’s sitting in our banks and other banks, and I don’t know that I have a view on QE2 or whatever or other stimuli and so forth. But I think that the primary factor, when you talk to businesses, when they talk about their issues, it’s not that they can’t get a loan. That’s a bit of an urban myth. In fact, we have our teams marching double time looking for lending opportunities. In more cases than not, it’s a bunch of factors. You know, consumers are deleveraging, being more secular in what they spend. All these different reform measures and so forth cause uncertainty. So there’s just a variety of things and I don’t know that one part of the country is favored versus another. Some States have more foreclosures issues and higher unemployment. So we deal with unemployment as low as in the high four’s, low five’s in the middle part of the country to over 12 here in California. So we see a lot of different situations. I don’t think there’s any way of categorizing one versus the other. Mike Mayo – Calyon: All right. Thank you.

Your next question comes from the line of Nancy Bush with NAB Research. Nancy Bush – NAB Research: A couple of things here. Howard, you’ve got more unrealized bond gains than I guess just about anybody in the industry. Would you give us your thoughts about harvesting some of these as we go down the road possibly toward higher rates someday? You know, how do you think about that and what makes that determination.

A couple of things, Nancy. Yes, we do have a substantial amount of unrealized bond gains and it actually went up in the third quarter but if we do come to the point where we believe that rates are likely to go up, one of the things we can consider doing to manage against that would be just to sell assets. You know if you remember, back in 2003/2004, that’s exactly what we did. But the way we did it back then was to sell our lowest yielding assets, not our highest yielding assets. So again, the framework here is not take the gain for the sake of taking the gain and not looking to maximize the upfront gain but to clear the way if you will for repositioning the portfolio when rates go up, and do so by selling the lowest yielders. And we may have other assets on the balance sheet that we’d consider doing so other than the securities portfolio. But the good news is, when we come to that point the likeliness is that we don’t have anything in the portfolio that’s at a loss right now to speak of. If we take that action, it would result in a gain. Nancy Bush – NAB Research: Secondly, you mentioned about the, on the 13 basis point impact on NIM sequentially, I think you mentioned the shedding of some strategic run off portfolios etc. Would you just speak to whether you’re beginning to see substantial run off from Wells Fargo Financial and the discontinued lines there and how you see that impacting margin over the next year or so.

Well, that is a portfolio, the debt consolidation portfolio from Financial is included now in the so-called non-strategic grouping and again, my general comment is, as those loans continue to – you know we continue to grind down that portfolio and the other portfolios, we know we’re giving up some margin by doing so, but of course we’re also paving the way for less risk and lower potential charge offs down the road So you know, net net, it’s a benefit to either risk or earnings or both even though it may not be a benefit to the margin. Nancy Bush – NAB Research: John, I’ve just got one quick question for you. I know you went through your thoughts about foreclosure and the fact that you have been very careful etc., etc., but there have been a couple of instances detailed in the press of Wells Fargo robo signing, etc., and there is a great deal of speculation that you know, at some point you guys are going to cave and we’re going to find out all this bad stuff about your foreclosures. Could you just comment on that? Was this robo signing incident an isolated one or you know, could you just talk about that?

Yeah, you might be talking about the one that was in the press regarding Washington State and in that case, the judge actually found in our favor and that we had done things properly. I think the key issue is what Howard covered on page 26, and I don’t know if it could say it any better than that. I don’t know how other companies do it, but in our company our process has the affidavit signer, reviewer are the same team member, and we believe these issues, they’re properly notarized. And if we find an error, we’ll fix it. You know, humans do make errors, but that’s what our process. One reviewer, one signer, same person. Nancy Bush – NAB Research: OK. Thank you very much.

Your next question comes from the line of Chris Nastasio [ph] with Stifel Nicolaus. Chris Nastasio [ph] – Stifel Nicolaus: Good morning all.

Hi Chris. Chris Nastasio [ph] – Stifel Nicolaus: Howard, I’m going to follow up on Nancy’s question. She actually stole it from me if you will. What is the actual gains in the third quarter in the unrealized gains and securities portfolio?

$9 billion pre-tax. Chris Nastasio [ph] – Stifel Nicolaus: And a follow up, an unrelated follow up. Can you remind me when do we see the half a billion dollars of M&A expense that’s related to the merger related charges for Wachovia. When does that start to wane on a quarterly basis?

Good question. We are obviously coming up on two-thirds done with the integration process. Many of the branch related systems have now been converted. We have done the overlapping states on the branch side. We’re really now coming up to the big crunch if you will from an expense point of view and a process point of view in converting all of the non-overlapping states on the east coast up into the northeast. So it’s going to be another couple of quarters. In fact, we may actually have higher merger integration expenses in the fourth quarter and the first couple of quarters in 2011 before this trails off during the course of 2011.

Chris, we’re still looking at finishing this, substantially be finished by the end of 2011. Chris Nastasio [ph] – Stifel Nicolaus: Great. Thank you for the color.

Your next question comes from the line of Moshe Orenbuch with Credit Suisse. Moshe Orenbuch – Credit Suisse: Great, thanks. You talked a fair amount about the checking account growth. Could you describe the process like what you’re selling against and what you’re seeing competitors make changes in order to offset the loss of overdraft fee revenues?

Well first of all, customers like to invest with us and it’s our privilege to serve them and we have taken the tack for many years now that we’re going to be, we’re going to serve customers when and how they want to be served. We’re not going to steer somehow to an ATM because it might be cheaper to serve a customer there. We don’t think in those terms. We think in terms of the customer is at the center of what we do. We invest in stores. I think we have the best store network. Stores matter. We think we have the best online offering. Our ATM innovation and the services that we provide there to customers are industry leading. And our phones, we have ways of serving customers there, especially the high value customers in very distinguished and differentiated way. So when you think of those four channels, and mobile, and they behave like a distribution community, you win more business, and I’ve said this many times to many people. I get into the office about 5:30 and by quarter to six, I read the deposit report from the day before, and checking is such a big part of that. You know that we sell about three-fourths, more than two-thirds of our checking accounts through a package, and these are well thought out packaged products to help customers succeed. So as we move forward now and as I mentioned in my comments, regulatory reform will change the way we get paid for, in some way we get paid for our business and this will be a balancing process. We’re going to tighten our belts. We’ll get paid differently in some cases for the products and services. At the end of the day, our goal is right where our vision and values is, helping customers succeed financially and satisfying all their needs. And that strategy is winning in the marketplace because we’re outgrowing the natural growth in those places, and we’re taking share from others. Moshe Orenbuch – Credit Suisse: Ok. A separate question. A bunch of people asked about NSR’s. Could you talk about the outlook for the valuations of NSR’s given that you’re going to be in this low rate environment, but it’s not clear whether the pace of refi’s going to increase? How do you think the NSR valuation, already at a pretty low level tracks as we go forward?

Well, we are carrying now at really historically low levels and it remains to be seen. However the pace of refi’s picks up or not, but you know net net in terms of economics, this kind of refi market helps earnings not hurts earnings with rates being down at this level, even with accelerate refi’s in the marketplace. And secondly, as you may remember, we tend to pick up market share during big refi waves, so this is good for us both in terms of just the economics of what happens in a refi as well as market position. Moshe Orenbuch – Credit Suisse: Great. Thanks.

Your next question comes from the line of Jason Goldberg with Barclay’s Capital. Jason Goldberg – Barclay’s Capital: Thank you. Just looking at the average balance it looks like residential, commercial and CNVS’s. I guess that’s non agency stuff went from an increase on (inaudible) but the balance is unchanged. I’m not sure if that’s tied to changes in accretable yield because maybe you just flushed that out.

We had in the quarter some payoffs of previously impaired CMVS’s so this is stuff that we would have written down that actually improved and that got reflected in the yield in the quarter. Jason Goldberg – Barclay’s Capital: Without the accretable yield impact, either probably absolute or kind of link quarter change, maybe talk about your outlook on a quarter basis and then talk to maybe kind of how you see the whole accretable yield thing playing out going forward.

Well again, we’re not going to give guidance on that, and there’s so many factors as you know that impact the margin. But you the point I made before is that the bulk of the 13 basis point drop was due to the change in loan resolution income that went through the quarter, so we continue to have loan resolution income. It’s just that it was down a $200 million in the quarter, and that really was the main change. Interestingly, if you take that away as I say, even though we had decline in earning assets and loans, our net interest income, if you again put aside the loan resolution part of it, was not really down in the quarter. And again, that comes back to the fact that we’re growing deposits. We may not at the margin right now be earning you know, four percent on every single checking account that we get, but every single checking account that we grow in this company is earning something, and it’s showing up on the margin.

You know another way of saying that Jason is the margin is the result of what we do not the reason of how we do things. I mean, we run the business the way we think is best for our constituents, and it results in a margin. We don’t wake up in the morning and say we have to have a margin of 425 or 450 or four percent or incremental business. We think it’s really the result of. Jason Goldberg – Barclay’s Capital: Got you. And then I guess credit card fees were actually up link quarter despite a lot of banks being down due to the card act. Is anything in particular going on there?

Activity and building the business. You know, as we penetrate our customer base with more cards, especially on the Wachovia side in particular, and as activity grows in the company, you get more fees for it. So that’s a good story because that did offset – you know the growth in that business actually offset the impact of the card act – more than offset it. Jason Goldberg – Barclay’s Capital: Great. Thank you.

Your next question comes from the line of Ron Mago [ph] with GIC. Ron Mago [ph] – GIC: Hi. Thanks. In regard to these deposit fees were down $300 million in the quarter and I’m wondering how much of the Reg E affect has been felt at this point.

I’m sorry; I missed the end of your question, Ron. Ron Mago [ph] – GIC: How much of the Reg E effect has been felt. So in other words, how far down, how much further down do we have to go in deposit service charges?

Well we had, as we quantify the Reg E impact, was 380 in the quarter, so you know 380 down from Reg E and only 300 down in total, so we actually did have some growth. Ron Mago [ph] – GIC: But what percent of the Reg E effect has been felt now was really my question.

We’re assuming roughly the same kind of number, maybe a little bit higher in the fourth quarter. Ron Mago [ph] – GIC: I’m sorry, same effect, or same level of deposit base?

It could be a bit more because when some of this went into place, it was staggered in during the quarter.

Again, keep in mind Ron; this is before any actions that we may take to offset this in coming quarters in terms of pricing, product changes, so on and so forth. So that’s sort of the gross impact. Ron Mago [ph] – GIC: So in other words, we could see, I just want to be 100 percent clear. We could see the same dollar drop in the fourth quarter from Reg E?

See the same dollar impact, right. So we already had 380 off in the third quarter. You know that might go up a tad in the fourth quarter. Again, I know exactly know yet what the number will be because it will depend a lot of customer experience. But it won’t go down by another 380 in the fourth quarter, right. We already had 380. Ron Mago [ph] – GIC: I’m sorry; I’m really slow on this. So is it the drop that will be the same or the level, the current level that will be the same in the fourth quarter the $1.1 billion.

There may be some additional drop in service charges in the fourth quarter from the third quarter depending upon what customer experience looks like, but it won’t be another $380 million because from the second quarter to the third quarter we had, the third quarter was the first quarter we had the impact. Ron Mago [ph] – GIC: And then in the fourth quarter, by the end of the fourth quarter you should have felt 100 percent of the impact.

Correct. Ron Mago [ph] – GIC: OK. Thanks. And then I have a question about tier one common. You know on the slide on page 25, the reported tier one common ratio was up $0.40 but the pro forma was up $0.70 and I’m wondering if there’s anything special.

Yes. I’m glad you asked that question because given the way BASEL III works, again you have deferred tax assets and other items there, our deferred tax asset position is being realized very quickly because we’re charging off the PCI loan. So the way PCI works is, we already reserved for it two years ago, but as we actually charge off the loans, there’s not accounting impact on earnings, but we get the tax benefit realized right away. So you should expect to see our tier one common on BASEL III basis rise more quickly than our retained earnings would be in tier one common as reported. Ron Mago [ph] – GIC: OK. Thanks. That was my question. And then one last question. You mentioned Howard that the rising commercial non-performers reflected a few large corporate credits, and I guess I was a little surprised at that because Moody’s and so on are reporting much lower corporate defaults and everything so I was wondering if you could elaborate on that point.

You know we have a large corporate portfolio now and from one quarter to the next it goes up, it goes down, lumpy. Ron Mago [ph] – GIC: Was there any concentrations?

No. Ron Mago [ph] – GIC: OK. Thanks very much.

Your next question comes from the line of Fred Cannon with KBW. Fred Cannon – KBW: Thanks. Just a quick follow up on the deposit fee issues. I believe you guys lost a Federal case on high to low regarding debit fees, and I didn’t know a, if you’d been able to get a stay on that issue, and b, if that does hold, and I think it requires you to stop high/low on debit on November 30. Would that, how much would that affect your deposit fee income?

We’re appealing that and I don’t know if there’s anything more to say about that right now. It’s on appeal. Fred Cannon – KBW: OK. Thanks, John. And then on the, I’m just curious regarding the BASEL numbers, Howard, and maybe I missed it. You’re only ten basis points away on the tier one common according to the best guess of calculations. I know it’s preliminary at this point in time. Any guidance where the total tier one with the 8.5 percent requirement would be under BASEL?

Again, you can roughly add the spread on our recorded ratios between the two, so you’ve got some 200 basis points, 200 to 250 basis point spread between tier one common and tier one regulatory in our case. Now there’s some disallowance for trumps [ph], but in the case of our trumps, $19 billion or so of trumps that count against tier one but not tier one common, about $7 billion of the 19 converts to qualifying capital, so we’re down to 11 or 12, which right now would only amount to about 50 basis points or so on the tier one ratio. So again, you can roughly assume 200 to 250 basis point spread between the tier one common and the tier one regulatory. Fred Cannon – KBW: Under BASEL, so you would get credit for the perpetual preferred you have and then the $7 billion of trumps that would convert, is that correct?

Correct. Exactly. Fred Cannon – KBW: Thank you.

Your next question comes from the line of Carol Berger with Soleil Securities. Carol Berger – Soleil Securities: Hi there. Just a little minutia. Last quarter you took about $400 million in litigation reserves, but you didn’t talk about that this quarter. Anything?

No. We’re down from the second quarter and nothing special in this quarter. Carol Berger – Soleil Securities: Thank you.

Your next question comes from the line of Paul Miller with FDR Capital Market. Paul Miller – FDR Capital Market: Thank you very much. A question on mortgage banking. Right now you mention that you’re getting four to 4.5 point gross and there’s gain on sale margins, and it’s really been a big surprise for the whole industry how well it’s done, and we’re looking for another strong fourth quarter. How long do you think it can last as rates sitting down here at 2.50? And is this a new change in policy in the industry because it appears that a lot of the big guys control the space, didn’t really expand capacity, and is it just a really good sign for the whole industry in general?

The mortgage earnings are you know, what they are. I’m not quite sure where you’re going with the question. Our margins are very good right now. We’re adding capacity. We’re getting tremendous flows of business. It’s continuing into the fourth quarter, so yes, if rates remain at these kind of levels, I would expect us to continue for at least another couple of quarters.

These are also very good rates for consumers. They’re also big wins. Consumers on average are picking up over 100 basis points reduction on loans, so this is one of these win/wins. Paul Miller – FDR Capital Market: I guess where I’m going with this is, is this a change in overall industry, because at times when we’ve seen rates fall like this, I mean capacity was added so quickly and the gain on sale margins were not sustainable. I mean, I was hoping that these gain on sale margins would be much more sustainable than they were in the past and the lumpiness in the mortgage banking earning may be more smoother.

Well if you think about the past, in the past there was a time when it was very little margin in the prime business because there was outside margins in the subprime business. And like I said, just a couple of seconds ago, Howard said, we’re adding capacity. This is good for consumers. It’s good for the industry. So things change and we’re making a fair return on this, and I don’t know if there’s much more story. We continue to add capacity and adjust as we see business flows. Paul Miller – FDR Capital Market: I guess, I mean can we expect to see these type of margins you think for the next couple quarters then or leave it at that?

We don’t give guidance on that, but you can expect that we will...

If demand remains strong, margins are going to be good, right?

We’re going to serve our customers. Paul Miller – FDR Capital Market: OK. Thank you very much gentlemen.

Your last question will come from the line of Andrew Marcourt with Evercourt [ph] Partners. Andrew Marcourt – Evercourt [ph] Partners: Morning guys.

Morning Andrew. Andrew Marcourt – Evercourt [ph] Partners: I wanted to circle back on the mortgage securitization issue and the repurchase. Can you just give us a sense of where you think we are in the kind claim cycle if you will in terms of how, are we through 50 percent of the amount of claims you expect or 75 percent? How do you think about it?

Well again, as we said earlier, we believe that most of the issues are in those 2006 to 2007 through 2008 vintages, and we’ve been working on those vintages with the agencies for five, six, seven quarters now. I can’t tell you precisely how far through we are with it, but it’s got to be the majority of the vintage that belong to those vintages are already behind us now. And as we indicated earlier, that’s probably one of the reasons why we’re seeing repurchase demand requests actually decline in the last two quarters. Andrew Marcourt – Evercourt [ph] Partners: Any repurchase requests from the private label side?

We had $69 million worth. Very modest. And again, the reason for that, that’s a very small part of our servicing portfolio unlike many of the other big bank peers. We didn’t do a lot of label securities.

It’s a small part and most of that part is private.

And pre 2006 vintages. So we don’t see those being a big issue. Andrew Marcourt – Evercourt [ph] Partners: OK. And then in terms of maybe I missed it. In terms of, you had mentioned at least in the release about the reserves continuing to down. I think you had mentioned any color in terms of the degree how we should think about the pace of that continuing, also maybe the context of MPA’s not going down. How do we think about reserve release going forward?

Well again, we can’t really give you guidance on that. The allowance that we had at the third quarter was adequate for the risks that we see. If you want to think about it may be overly simplistically, our charge offs per quarter are now down $1.3 billion from the peak. So you can do your own math in terms of what that means for an annualized charge off rate and draw some conclusions about where the allowance might go over a period of time if charge offs remain low and continue to go down. Andrew Marcourt – Evercourt [ph] Partners: OK. Thanks. And then the last question is on capital. When in fact did you get the green light to have more flexibility in deploying capital? What would be the kind of top priorities from your perspective?

Well I think John said it before. The dividend is a top priority for us, and that’s important to our shareholders. Our shareholders have been very patient with us, so that will be the first place to go. We have been and will continue to buy back the warrants when it’s economically beneficial for our shareholders for us to do so. We’ll continue to invest in the business. We hopefully will be able to do some opportunistic share repurchase. Another use of capital, you know we talked about the trump securities before. You know we may cull some of those to the extent that we can replace with lower cost senior debt, so there’s lots of ways we can improve earnings for our shareholders by deploying capital going forward. Andrew Marcourt – Evercourt [ph] Partners: Thank you.

Well thanks everybody. We ran a little over time, but it was important and we thank you for our interest in our company and we will see you next quarter at this time. Thank you.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!