Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wells Fargo Fourth Quarter Earnings Conference Call. (Operator Instructions) After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) I would now like to turn the call over to Jim Rowe, Director of Investor Relations. Mr. Rowe, you may begin your conference.

Thank you, Regina, and good morning, everyone. Thank you for joining our call today during which our Chairman and CEO, John Stumpf; and our CFO, Tim Sloan, will review fourth quarter and full year results and answer your questions. Before we get started, I would like to remind you that our fourth quarter earnings release and quarterly supplement are available on our website at wellsfargo.com. I’d also like to caution you that we may make forward-looking statements during today’s call that 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 containing our earnings release and quarterly supplement. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures can also be found in our SEC filings, in the earnings release, and in the quarterly supplement available on our website. I will now turn the call over to our Chairman and CEO, John Stumpf.

Thank you, Jim. Happy new year everyone and thanks for joining us today. We’re excited to share our strong results for the quarter and for the year. We just completed our 12th consecutive quarter of EPS growth with record quarterly earnings in the fourth quarter of $5.1 billion, 24% from a year ago. These strong quarterly results are just part of an outstanding year of achievement for Wells Fargo. Let me start by highlighting all that was accomplished during 2012. We earned a record $18.9 billion in 2012, up 19% from 2011, and we also grew earnings per share by 19%. We generated 6% revenue growth and pre-tax pre-provision increased by 13%. We improved our efficiency ratio by 250 basis points to 58.5% for the year. We grew total loans by $30 billion, up 4% while reducing our liquidating portfolio by $18 billion. Our liquidating portfolio is now half the size it was four years ago at the time of the Wachovia merger. We now have over $1 trillion of deposits, up 9% from a year ago. Credit quality continued to improve but charge-offs is down $2.3 billion. We achieved a record retail banking cross-sell of over six products for household. We grew return on assets by 16 basis points and increased return on equity by 102 basis points. We increased capital levels growing our estimated tier 1 common equity under Basel III to 8.18%. We increased our dividend by 83% and repurchased approximately 120 million shares of common stock. In addition to these financial metrics, we also continued to grow organically and through acquisition purchasing loan portfolios and several businesses which not only brought new customers to Wells Fargo but allowed us to better meet the financial needs of all of our customers. The housing market began a steady…

Thanks, John, and good morning, everyone. My remarks will follow the presentation included in the first half of the quarterly supplement, starting on page two, and then John and I will take your questions. As John mentioned, Wells Fargo had a very strong quarter, with record earnings of $5.1 billion, up 24% from year ago. Earnings per share were a record $0.91, up 25% from the fourth quarter of last year. We’ve now achieved 12 consecutive quarters of earnings per share growth and the seven consecutive quarters of record EPS. Total revenue of $21.9 billion was up 7% from year ago. We grew revenue on a year-over-year basis every quarter in 2012. We also generated positive operating leverage. Pre-tax pre-provision profit increased 12% from year ago and we continue to have strong credit performance. We generated strong deposit in loan growth. Our ROA was 1.46%, up 21 basis points from year ago and our ROE was 13.35%, up 138 basis points from year ago. Our capital levels remained strong with our estimated Tier 1 common equity ratio under Basel III growing to 8.18%. As you can see on page three, our fourth quarter results build on the strong performance we achieved throughout the year. As John highlighted and as the charts on this slide demonstrate, we had an outstanding year of growth across a variety of measures. Revenues grew by 6%. Net income grew by 19%. We had solid growth in loans and strong deposit growth. Our ROA was 1.41% for the year and ROE was 12.95%. We are in a much better position today than we were year ago and we look forward to taking advantage of all of the opportunities ahead of us. Our continued strong quarterly and annual performance reflected the benefit of our customer focused business…

(Operator Instructions) Our first question will come from the line of John McDonald with Sanford Bernstein.

Tim, I was wondering on the share count. In 2012 the share count was flat despite about 4 billion of share repurchases. Just kind of wondering what’s the strategy with regard to share count. Is it to just offset, use buyback to offset employee issuance or to really steadily reduce the net shares outstanding?

Well, you’re absolutely right John. This last year in terms of our total purchases that’s what we’re able to accomplish to keep shares about flat. We’re hopeful that over time as we continue to return more capital to shareholders that we will have the ability to increase the amount of shares that we can repurchase. But that’s subject to the capital plan that we just submitted. So over the long-term we would like to do better than what we did this year.

Okay. And in terms of the gross issuance, was there anything unusually high by your issuance this year or was 2012 kind of normal year for employee issuance?

I would say it’s -- it was a relatively normal year. As you know having our team members received some of their compensation based upon on the shares is really important to make sure that the team members and shareholders are very aligned in terms of the long-term growth of the company.

And then on expenses, should the look-back expenses start to come out immediately beginning in the first-quarter, those are gone?

I wouldn’t assume that they would be completely gone in the first quarter. There’s going to be some clean up this month and maybe trailing into next. They will clearly come down materially, I don’t know what the exact number is going to be. They will be completely out of the run rate in the second quarter.

And on the mortgage side, as originations come down if that happens in 2013, how quickly can the mortgage expenses come out?

We’ve got some good track record in doing that and our mortgage folks have seen cycles before. You saw what we were able to accomplish in 2011 in the second quarter and then also in 2010. There is a bit of a lag, so I would say there’s about 60 to 90 day lag, so call it a one quarter lag but we can move pretty quickly.

Okay and then one thing on the margin, on the five basis point of pressure that you attributed to rates and spreads coming out. Should we assume that, that pace continues for that piece? There’s obviously moving parts in the net interest margin but for that piece of it does that hold at that kind of five basis point pressure?

John, I wish I could give you a guarantee of what specifically the impact will be. It does seem to have moderated a bit but it’s really a function of all the mix of loan growth and also of securities purchasers. But it seems like it’s moderating a bit.

And remember John, we’ve been pretty thoughtful about reinvesting but we saw some opportunities late in the year that is still shuttling. And we also saw great loan growth in the fourth quarter. So all those things have an impact.

And those MBS balances you mentioned may gain towards the end of the fourth and into the first quarter. Tim, those are funded with the cash balances, right? They’re only earning about 25 basis points a year, increasing the yield there, right?

That’s correct. But it was 16.

Okay. 16 that you’ve done so far.

No, no. I’m talking about 16 basis points.

On the yield. Okay.

In terms of deposit cost.

Yeah.

Got it. Okay. Great. Thank you very much.

Thank you, John.

Your next question will come from the line of Erika Penala of Bank of America/Merrill Lynch. Erika Penala - Bank of America/Merrill Lynch: Good morning.

Hi Erika. Erika Penala - Bank of America/Merrill Lynch: Hi. My first question is on the excess liquidity. I guess, from the first part, of the $27 billion in average growth escrow that you saw this quarter, how much of that do you think is sticky and if you think most of that is sticky, I appreciate the commentary you made about, if loan growth continues at this pace, you can absorb some of that liquidity but that still leaves you with some excess. Could you give us a sense of what your deployment strategy is going to be for the next year?

Erika, you raised a really good point and that is we did see very outsized deposit growth and the fact of the matter is that a good portion of that deposit growth came toward the end of the quarter. And whenever that happens, we want to be careful to watch that deposit growth overtime to make sure that we do think it is sticky. What’s interesting is that notwithstanding that we’ve had periods like this over the last couple of years, one in point would be the third quarter of 2011. But that deposit growth has been maintained here. So we’re optimistic that we can maintain a good portion of that deposit growth. My guess is we probably -- it maybe difficult to maintain all of it. And so it creates a real opportunity for us because the way that we think about deposit growth is not just to fund our loan growth or fund investments. It’s broadening the relationships and bringing new relationships into the company and so that gives us an opportunity not only to invest and increase, spread income over time but to be able to broaden those relationships so that we can grow fee income, which is really what you saw this quarter. We saw broad-based fee growth and the way that we think about that fee growth this quarter is reflective of all the deposit growth that we’ve had over the last couple of years, which has been pretty exciting.

Let me add to that Erika, first of all we feel no urgency to have to put something to work that might not be economic for us. We had excess liquidity last summer. And today MBSes are 30, 40, 50 basis points richer or higher yield. And as Tim mentioned, virtually all these deposits are part of our relationships. We’re here to serve customers and these deposits, I think, we’re moving share today. And this is going to benefit this company for years and years and years to come and a lot of that revenue does sharpen the non-interest income side. If you think back four years ago, we had about $650 billion of non-CD deposits in this company. Today we have $950 billion. I mean, yeah there has been periods of faster growth, slow growth but we’re moving share and I can be happy about this. Erika Penala - Bank of America/Merrill Lynch: Understood. And my second question, if I could, is a follow-up to John’s. Again, we appreciate the comment on the first quarter with regards to the seasonality in pay as well as some of the $125 million is still going to linger in the run rate. But if we think about the second quarter, and I take $12.9 billion that you posted, take out IFR settlement of $644 million, the charitable contribution of $250 million and take out $125 million. Is $11.8 billion a good sort of run rate based for your second quarter. Obviously, there are moving parts. You mentioned the mortgage production-related expenses and investment in the franchise. But is $11.8 billion a good starting point for the second quarter?

Erika, the math that you just did is reasonable. However, I don’t know what our expense run rate is going to be in the second quarter. What I do know is that we’re going to continue to focus on reducing expenses and improving our expense efficiency ratio. If revenues are up, I would expect expenses to be a little bit higher and that’s a good thing. As long as we’re delivering those, our revenues at a reasonable return and seeing an improvement in the expense efficiency ratio. But again we’ve been very clear we still believe that our expenses are too high. But we’re focused on improving the expense efficiency ratio as opposed to providing the target in terms of the hard dollar costs in any quarter.

Tim is absolutely right. We’re not going to be slavish any absolute number. But as Tim mentioned the take-away tooth burns. Expenses are still too high. We’re focused on that. And I would love to see expenses go up if it’s appended to increased revenues.

Your next question will come from the line of Moshe Orenbuch with Credit Suisse.

On the servicing side of the house if people are generally somewhat concerned about volatility in the -- on the origination income. But I noticed that your annual kind of servicing fees for kind of clipping the coupons are close to $1 billion and yet your net income -- your net revenue that your report is about $250 million, it was $200 million last quarter. So all the market value and hedging costs, are that number in between, can you talk a little bit what could -- might get so that you could report kind of a cleaner number there? What has to happen in terms of the level of refis, is it a change in rates because you’ve got -- you’ve had a backup in rates in the last few weeks. So just talk about that a little bit?

Sure, Moshe. That’s a good question. I think when you look at the results in 2012 you saw a number of things that occurred in terms of the servicing income. I think one, which we called out is just the higher level of unreimbursed expenses related to lengthening the foreclosure timelines and foreclosure costs. As we talked about we will review those as being environmental which is why we called them out. I can’t promise you how quickly they will come down but our guess is they will come down and there will be less -- over time there’ll be less of an impact on the value of servicing. The other phenomena that you saw and it occurred to a greater extent in the first quarter and into to a lesser extent this quarter was our assumptions around the discount rate. We had a discount rate change in the first quarter, we had a small discount rate change related to access servicing in the fourth quarter that impacted the number by about $53 million. And again we’re hopeful that we don’t see those kinds of discount changes over time.

Just kind of on a unrelated topic, you mentioned the growth of deposits you are seeing and service charges, has there been any kind of pricing either from you and your competitors, pricing changes in the service charge area that are worth noting?

One of the initiatives that we have had over the last year is to simplify our checking account -- accounts and also to make sure that we were being paid appropriately for the services that we provide. So we’ve repriced the checking account base this year in the company and that’s been an initiative in our retail banking group and notwithstanding that they’ve been able to grow deposits and over the year grow accounts.

There’s not much change in the competitive landscape.

Your next question will come from the line of Ed Najarian with ISI Group.

So I guess my margin questions were sort of asked already but one more quick question. You outlined that you had $11.9 billion of unrealized gains in the securities portfolio. Now that we’re in a Basel III world and that accounting has capital on a B3 basis. Is there any desire or anything being done to try to protect that against a rising rate environment or how do you think about that in terms of capital and the desire to protect it?

Well, it’s two ways to think about it. It’s a good question and of course you know how much we enjoyed talking about the NIM. So any additional questions are terrific. But the way that we think about it is that we look at the underlying risk return for any security and we do that every day for our entire portfolio. And so you really need to start looking at that on a security by security basis. And there are certainly days when we look at some of our investments and we decide that it makes sense to go ahead and sell. But remember that we think about that -- the -- that portfolio, the AFS portfolio as a longer term investment portfolio. So you don’t really see a lot of sales, it tends to be a little bit of the exception, because again we’ve invested those for the long-term. I think in terms of the potential capital impact, you’re absolutely right, it does take, it is going to be a potential impact and that’s one of the reasons why we think it’s prudent to have a cushion in addition to the minimum 8% Tier 1 common equity under Basel III estimates that we’ve talked about now since Investor Day. And we’re making a lot of progress in terms of growing our Tier 1 common equity 8.18%, so we are going to be at 9%, hopefully in the next year or so. But again that’s another reason to have a question. But I wouldn’t look to us try to monetize that $11.9 billion, because we think we’re getting the good risk return on the spread income for those investments.

And you wouldn’t do anything necessarily from a hedging standpoint above and beyond what you’ve historically done to try to protect that?

No. I don’t I think that that would make sense because and what you’d have is you have an asset that’s generating income that’s not mark-to-market and versus hedge that’s potentially marked. And that creates a mismatch in, the industry that’s created problems and that’s just not how we think about it.

And as a -- as if rates do backed up, there is a whole bunch of other things that happen with the company, I mean, actually earnings increased with your margin. So it might not be quarter-to-quarter and that’s why Tim about, that’s why we are going to an extra buffer, but if rates back up that would be a good thing for us. We love that.

Right. Right.

… for the right reason, because economy is getting better and so forth.

Okay. And then just one quick follow-up, I take it from your answers to John and Erika’s questions that, you’re not feeling any special urgency to get the excess liquidity here reinvested. It sounds like, when you talked about some additional security -- securities purchases in the beginning of this quarter, but it sounds like you’re going to take your time and sort of judge your rate environment, and invest that excess liquidity more over time than right away, is that the way to think about it?

That’s absolutely right. It gives us great flexibility in terms of running the company, so you’re spot on.

That’s right, Ed. We think that’s a real benefit of the company.

Okay. All right. Great. Thanks guy. Appreciate it.

Thanks Ed.

Your next question will come from the line of Joe Morford with RBC Capital Markets.

Thanks. Good morning, guys.

Hi, Joe.

Hi, Joe.

The C&I growth was much stronger in the fourth quarter, so it looks like the fiscal cliff concerns really didn’t dampen customer demand much. What were some of the key drivers to the increased volumes this quarter, was there any increased line utilization and just how do you feel about the outlook for C&I growth in the year ahead?

Yeah. Joe, just a quick answer on line utilization, it was up slightly, but it wasn’t a primary driver. Actually was kind of interesting because the fiscal cliff negotiations and the potential for increases and changes in tax rates actually had slightly positive effect on loan growth in the fourth quarter, particularly toward -- on the commercial side and particularly toward the end of the quarter, so there was some amount of growth related to some of our customers taking actions and so on and so forth. But when you look at the growth within Wholesale Banking, it was pretty broad based. Our middle market lending business grew, our commercial real estate business grew, corporate banking grew, asset-backed finance grew. So we were very pleased with the performance and again, it just creates an opportunity to broaden relationships particularly with new customers. But it was very broad based and I would say that fiscal cliff was a net positive to loan growth.

Okay. So it sounds like you feel pretty good about the sustainability of this momentum going forward there?

Well, there is going to -- there’s always some seasonality, I should have mentioned that, I apologize. There is some seasonality, there could be -- we could see a bit of that fall off in the first quarter if that was primarily related to the fiscal cliff. But we feel confident that we can continue to grow our loans in Wholesale. As we mentioned we have been able to do that for a number of quarters and we’ve been able to do that for a number of quarters in many of the Wholesale Businesses.

Okay. Then my other question was just, if you could just talk little bit more about your reaction to the new qualified mortgage rules announced yesterday by the CFPB and just how might that effect your origination volumes going forward?

Yeah. Joe, I -- as I mentioned in my comments, I think that CFPB found the right balance and listened to a variety of constituencies or people who they employ. And I think regarding the QM, it’s going to provide -- it provides its broad, it provides clarity and I think it’s going to help more Americans get more credit and that’s good for housing, good for America. Well, let’s step back a second. That’s not the old issue that you need to be sold for. We still have the GACs out there. We have FHA seminar issues. We have the QRM that need to be decided. You have issues around states of their own things, new services. There is a whole bunch of other things going on here but this is a positive move.

Your next question will come from the line of Betsy Graseck with Morgan Stanley.

A couple questions, one on the purchase reserves and one just general. So on the purchase reserves I know you indicated that you’re making a reserve for old vintages. And we hear from other institutions they’re just making the reserve for vintages that have been requested by the agencies. So I am wondering if you have been requested by more vintages than you’re hearing your peers are or if you’re just taking current requests and applying it to everything that you’ve got?

A good question particularly with a lot of the noise in the market. Our reserving process is the same as it’s always been. There is really nothing new this quarter relative to any other quarter and that is we reserve for all probable and current future demands from all vintages, all vintages. It’s based on all the conversations we have, all the documents we receive. So it really hasn’t changed, we take into consideration any of the conversations we’ve had with the agencies and we feel very good about the reserve that we have today

And you are making some increase to the reserve even today, so conversations obviously change over time and you just take those conversations reflect against vintages. Is that fair?

That’s correct, Betsy. That’s absolutely right.

And then secondly on just the loan loss reserves we had some commentary from FASB about proposal for moving to life of loan reserving. And I guess I am not sure I am understanding your first take on that, how you think that would impact your reserve process and the levels and if you could tie it into your comment do you think that the reserving -- the reserve release is likely to slow in ‘13 versus ‘12?

Let me take the last part of your question first. The primary driver in terms of why we think the reserve release will probably slow this year is that we’re seeing a -- while we continue to see improvement and reduction in loan losses is improving at a slower rate than it was a year ago and two years ago, still seeing improvement. That’s great. In addition we’re seeing a growth in the loan portfolio. So we think we’re going to see reserve releases but the expectations that it will be a little bit less than what we saw or it will be less than what we saw in ‘13. In terms of the Fed’s discussions again that’s a real work in progress right now. It’s something that is probably going to take a few years to determine -- it will probably increase our reserving level, it will probably be more of a one-time increase, and then you’ll see reserve on a current basis probably come down. But again I don’t want to speculate too much on that because it’s still a work in process, but I think it would be -- likely to be one-time reset for the industry and then the new world will potentially be lower reserves on a current basis.

Are there any loan categories today that you are doing a form of life of loan reserving or would all -- your loan category need to be --

No, for us it would impact all of the loan categories.

Your next question will come from the line of Paul Miller with FBR.

Did I hear you correctly when you were going through the balance sheet growth that you’re not going to grow your residential portfolio anymore, did I hear that correctly?

Yes and no, let me clarify, Paul. What we -- we’ve been very clear to call out the amount of first conforming first mortgage production that we otherwise would sell in a quarter and we did $9.8 billion of that in the third quarter and then we had $9.7 billion of that in the fourth quarter and then there will be another $2 billion to $3 billion from fourth quarter production that will close in January. Okay. That’s conforming first mortgage production. But what we will continue to do is we will continue to hold all of our non-conforming or jumbo mortgage production on balance sheet and I think our growth in the fourth quarter was about $4 billion. And we like that business, such a great business for us.

And of the $125 billion, just to clarify that you produced in the quarter, does that $9.7 billion come out of that $125 billion and you sold roughly $115 billion. Is that correct?

No. That doesn’t. The $125 billion is what we sold.

Okay. So you produced close to $135 billion to $140 billion?

No, no. I’m sorry, Paul. I misspoke. I apologize. The 125 billion includes the $9.7 billion.

So we’re trying to create -- okay, so we’re trying to back into a gain on sale margin. We should back out that 9.7 billion?

That’s correct.

Okay. And then you talked about that, that about $9 billion of the decline in the pipeline was from exiting the brokerage channel. Have you made any other -- did you tighten up the corresponding channel at all as that? I know you said you’re not going to expand the channel anymore. Have you tightened it up?

No. And again it was $8 billion of production that we had in the wholesale channel in the third quarter that we didn’t have in the fourth quarter because we exited that channel by the end of the third quarter. But the corresponded channels still a very important part of our origination that we did not tighten up underwriting standards for the corresponded channel.

Okay. And the pipeline channel was down roughly 20%. Was that also due to the exit of the brokerage channel?

By a small amount, yeah. I would just describe the decline in the pipeline as much seasonal as anything else. It’s still -- and we ended the quarter with one of the strongest pipelines that we’ve ever had in our history. So we’re very excited in terms of how we’re entering the first quarter.

And then just to clarifying other comment. You did say that you expect production in the first quarter to be greater than the fourth quarter for mortgage production?

No. Not necessarily.

Okay. I’m not going to ask you then?

Yeah. No, no not necessarily. Just we start the quarter with a higher pipeline then we did a year ago.

Okay. I understood.

But Paul, we’re still excited about the mortgage business. We still think it’s lots of opportunity there?

And then, I don’t know if you guys -- can you guys make any comments about the gain on sale margins. Is the profitability in mortgage banking holding up despite the fact that we’re seeing rates go up 10, 20 basis points last week or so two weeks ago?

Yeah. It has. In fact, our gain on sale in the fourth quarter was 2.56% versus 2.21% in the third quarter. So they were up in the quarter. Again these are very high levels. We’re very pleased to have these gains but they -- and so because they are high, the likelihood is they could come down a bit. But it’s a very, very good business right now.

Well, I was wondering -- I mean, as of today, we got two weeks under our belt and we’ve seen the -- because of the fiscal cliff, the fiscal cliff agreement that came out that they backed, the 10 years backed up that 20 basis points. But ongoing operability in these mortgages are still -- haven’t really backed of at all for the first couple of weeks of the year.

Yeah. A fair question. I haven’t looked over the last couple of weeks in terms of what the profitability -- last week, what the probability in terms of loans we brought in, in the last week. But it’s profitable right now.

Okay. Hey guys. Thank you very -- go ahead. Thank you.

However, the volumes of the spring season typically the better sell season, so your purchase money, there is still lot of activity in the mortgage business.

Okay. Hey, guys. Thank you very much.

Thank you.

Thank you.

Your next question will come from the line of Matt O’Connor with Deutsche Bank. Matt O’Connor - Deutsche Bank: Good morning.

Hey, Matt. Matt O’Connor - Deutsche Bank: Two unrelated questions. First, when we look at your wholesale borrowings, so I just confess, I’m thinking about short-term borrowings, long-term debt, foreign deposits, things like that. I mean, I realize some or little bit longer term than others. I’m curious why we haven’t seen those buckets come down when you’ve had all the strong deposit growth?

Well, remember the strong deposit growth that we had in the fourth quarter was just in the fourth quarter. In fact, in the fourth quarter you saw our long term debt decline a bit and the way that we think about our long term debt levels today is that they are about where they need to be. And so much of what you will see us -- what you saw us do last year is just replacement. We still think it’s appropriate to have a certain level of long term debt, that’s very important in terms of our long term debt ratings. So it’s unlikely you’re going to see a big decline in that this year.

But Matt, if you go back four years ago look at our numbers, I think we had something over $4 billion of short and long-term debt, now it’s down to a combined 180 or something like that. So over time it has come down as we’ve grown deposits. We think some debt to maintain our ratings and support the balance sheet is important. Matt O’Connor - Deutsche Bank: And as you think about the other buckets outside of long-term debt, short-term borrowings, foreign deposits, are those at appropriate levels, I guess I thought that instead of growing the liquidity you would just bring that down (inaudible) just the OpEx or the NIM would it under so much pressure from adding from the Fed fund?

Well, the foreign deposits we have are from customers. So candidly I hope those deposits are going to grow over time. In terms of short-term borrowings you could see a slight decline in our short-term borrowings because of the increase in deposits. Matt O’Connor - Deutsche Bank: But I guess the overall message is like as we think about the liability side of things, there is not a lot of levers to pull from a mix point of view, like you’ve done a lot of what you can do…

Yeah I guess I would say the following. First, we still have about $2 billion, $2.5 billion of troughs that will likely come off the balance sheet this quarter, early second-quarter. And then I do think that if you look at the costs of our long-term debt even as it’s staying -- coming down a little bit but staying the same you’re seeing us make progress in terms of reducing the long-term debt costs just because when you look at the rate environment today versus when we originated some of our long-term debt, it’s just lower today. Matt O’Connor - Deutsche Bank: And then just separate topic, as we think about progression of legacy mortgages it’s a big picture like first you’re dealing -- the industry is dealing with some reserve build and actual charge-offs and there have been a lot of various servicing related agreements with the state attorney general, OCC, the Fed, are we -- it feels like we’re pretty -- and of course with all the put backs on the servicing, it feels like we are pretty far along on the servicing side or is there another round or two like outside of servicing that we should be aware of or will you wrap it up some of these remaining servicing issue, do you think a lot of the legacy mortgage costs go away?

Here’s what I think about that, we went through this country especially with housing industry its really difficult period. You would expect that your litigation costs, all those sort of things will be elevated during that period. You’re right, we put a lot of stuff behind us, some of that is inherent to the business, as the business gets better I’d expect less of that but I’m pleased with how much we’ve gotten through with a lot of that behind us. Matt O’Connor - Deutsche Bank: But I guess just it’s somebody who is not has involved in this, as lot of the folks on the call, well calling and say oh, I thought the bank settled on this last year and obviously it’s different people or different constituencies coming in on the servicing side, whether it’s the actual investors or I guess the politicians or the regulator, are there avenues that any other folks would take like maybe on the origination side or just kind of other skeleton on the closet that we might be seeing?

Well, I mentioned in my comments that we’ve settled the origination and servicing and we [settled lookback], we settled a variety of things. So I can predict what’s all going to come up but I can tell you I am pleased that with this far through the process, we’ve gotten a lot of big things behind us.

And Matt, I would just note that even as we’ve had to be a part of these settlements and they clearly had a financial cost to the company, throughout that entire period we’ve generated record earnings.

12 quarters in a row it’s been a very difficult period of time, that’s just talks about the diversity in earnings power of this company. Matt O’Connor - Deutsche Bank: Yeah. Absolutely. Fair point. And obviously a lot of your expenses relate either you have them lower than some.

And also look at the performance of our portfolio. I mean, 400 basis points better than the average for the industry is and that’s ultimately the opportunity decide on these things in many cases. Matt O’Connor - Deutsche Bank: Okay. Thank you very much.

Thanks, Matt.

Your next question will come from the line of Fred Cannon with KBW.

Hi. Good morning. Thanks so much. Most of my questions have been answered. I just had a couple follow-ups. One on the qualified mortgage, John, you were generally positive about the direction. There has been some concern about the jumbo market and some of the press report has said that the qualified mortgage about 20% of -- more of jumbo loans currently been made might not be able to be made as qualified mortgages. I wonder if you could comments a little more specifically about the jumbo market?

I think it’s early yet to comment, because I’ve not read in detail more of our people had enough time to really understand everything that’s in the CFPB’s Q. But let me just say this about the jumbo market. We loved that business. We’ve been it for a long time. In many cases these are best customers and we do a lot of other things with them. So I doubt at least I’d be surprised, if whatever happened there would have a big negative impact on the jumbo market.

Okay. One of the 804 pages like, that’s understandable not to get through it, yeah.

More than the 600.

I wonder but John on the expenses and I know you guys are doing, focus on operating leverage. Within your expense controls, I wonder if you could comment about your thoughts about your branch network at this point in time in terms of both -- within kind of thinking about managing expenses about both the numbers of branches, but also the configuration of kind of the footprint of your current branches, especially given and where technology is today?

Sure. Couple of things there, first of all, I think, we have the best team on the plan running our distribution. And I couldn’t be happier about the 6,000 or so stores that we have and stores still today remain incredibly important in the overall distribution community. Even though online, especially tablet, the so called lean-back technology is changing the industry. Most customers choose their first financial services provider based on proximity to where they live and we have a store within 2 miles of half the American population. It’s a huge advantage. But we used to build 5,000 square foot stores with a 10 penny sign. Now we’re building 10 penny stores with a 5,000 square foot sign. It’s more important because if customers come there and then use other technologies, they want to be able to go and say, that’s where my money is, that’s where I can go if there is an issue, that’s where I go if I have a big transaction to do. So, stores still remain an incredibly important part of the ecosystem of delivery. That might change over time and the tablet or the smartphone is changing the way customers do business with us. They are on with us much more. They are learning more and we’re doing, have all kinds of experiments and test going on, paperless stores and more self-service. But and change is not new to us. I mean we’ve been -- we had at one time in this company one service model. It was a stage coach and that went away after a few years and we have tried something else, so this is -- I find this exciting.

So I would be fair to say, John, that, what, the numbers of branches could even drift up from here, but the square footage will probably be coming down?

Yeah. That could be. Actually the most important thing and you probably know this, in distribution is distribution density. People want distribution, where they live, work, recreate, travel and so forth, that is and we are gaining retail share faster today we have in my 35 years or 30 years with the company. So it’s a -- but distribution -- physical distribution remains a critical part of it. But size is the way you staff it, the number of people and all of that sure that needs to evolve. And it is evolving. But we’re not in the camp that you can circulate the greatness.

Your next question will come from the line of Ken Usdin with Jefferies & Company. Ken Usdin - Jefferies & Company: The one further on the environmental expenses, we understand, were the content order -- 125 should be out of the run rate by the second, and Tim, to your point about being 800 million now still on a quarterly run rate. I was just wondering you could kind of give us just a general understand of the rest of it, the 675 that you’re still carrying. What’s the tail-off of that as we go ahead, and the biggest one being -- are we closer to the end of the putback reserve build?

I wish I knew the answer to -- specific answer to the question, Ken, because it’s a real good one. It’s one that we think about a lot around here. Maybe just to give you a sense of some of the magnitude, if you look back in the fourth quarter of 2011 our foreclosed asset expenses were $390 million, they were 221 this quarter that was down from the third-quarter, down from the second-quarter. So you’re seeing those costs, for example, come down quarter by quarter and not necessarily by a lot but that will never go down to zero but certainly we can continue to make progress on that. As it relates to our repurchase reserve build, I think that the biggest mistake anybody in this industry can make is predict when that’s going to end because we just don’t know. We’ve been fortunate over the last that we peaked in the second-quarter and we’ve seen a decline in the third quarter and in the fourth quarter, can’t promise you whether that’s going to continue but at some point we will be through all the vintages we will have all the conversations and will be done. But I don’t know the pace at which that can continue. So I’d love to give you a specific number, but I just don’t know, we just do believe that they’re going to be coming down over time. And that’s what you’ve been seeing over the last few quarters. Ken Usdin - Jefferies & Company: And then my second one is the gain on sale question question again on the mix, it being up 30 basis points or so, how much of that was the market versus how much of that was the channel mix you had because of the lack of the wholesale product in the mix of origination?

Well, clearly some of it was related to channel mix because you think at the margin we didn’t have any wholesale origination versus having more retail. I don’t know what the exact impact that was on the margin, apologize we can follow up with that but the margin was up over 30 basis points quarter to quarter. So it was a combination of both. Ken Usdin - Jefferies & Company: The important thing is that retail generally comes with at a higher margin rate, so we shouldn’t necessarily look at it that is inappropriate, right?

No, I don’t think it’s inappropriate, that’s the gain on sale margin, there’s also higher costs and expenses associated with the two. But it’s a very, very good thing from our perspective. Ken Usdin - Jefferies & Company: My last one is just on the non-controlling interest, it didn’t change on the balance sheet but it was doubled the amount there normally is, it’s actually extra $0.02 that you paid out this quarter. Any color you can provide us on that?

That was directly attributable to the gains that we had in the private equity business that we mentioned, so in our equity gains and so that’s really an offset to that. We didn’t necessarily feel like we had to offset that when we called out that impact. But you’re right, that’s actually [de duck] to the net of impact. Ken Usdin - Jefferies & Company: That’s incremental to the number that you showed us in the press release?

Yes, that’s correct. Ken Usdin - Jefferies & Company: The bottom line is that it shouldn’t be at that level going forward because it was specific to the sale of the business.

Correct, unless we have -- if we have more gains -- the gains are a good thing, right but that’s what we would -- that’s correct, it’s d doc to us. Ken Usdin - Jefferies & Company: And then my last tiny one, is just on the -- on the putback question, the reserve addition of the provision was 379, can you tell us what the actual losses were this quarter?

Hold on, I will get that number in a second. It’s in -- $206 million. Ken Usdin - Jefferies & Company: $206 million. Okay. Great. Thanks very much guys appreciate it.

Thank you.

Your next question will come from the line of Chris Kotowski with Oppenheimer.

Good morning.

Hey, Chris.

Hi. Given the Becker Underwood gain this is a good quarter, I ask you about a business you do not get to talk about that often which is the venture capital business. I know it’s been magnificent contributors since the Norwest days, but looking at your disclosures, at year-end, it looked like you had about a $1.4 billion invested in VC fund of various types at September about a $1.3 billion. And you had $1.5 billion of gains there this year and I’m wondering are you still able to invest in that fund in the venture capital business? Are you still making new investments or does the Volcker Rule kind of put this into liquidation mode.

That’s a really good question. I think, our best guess of the impact that we are going to see from the Volcker Rule and again I want to be careful because Volcker Rule has not been finalized yet, is that it would eliminate or/and our ability to invest in a private equity fund or real estate opportunity fund as a limited partner. That seems pretty clear that that business would get eliminated or that activity would get eliminated as part of Volcker. However, we believe that we will continue to be able to invest and we continue to invest today in Norwest Venture Partners and Norwest Equity Partners, which we believe will be allowed under the Volcker Rule.

And those are your investments in those funds are what we see in page -- in your 10-Q, the $854 million and $83 million?

Well, yes, but there’s also still a legacy amount of equity investments that are related to limited partnership investment that we’ve made over time or previously and those are going to come down over time. But again, we believe we will continue to be able to invest in NVP and NEP.

Okay. Excellent. And then lastly, I guess, just not the NIM question, but in net interest income dollars question. And that’s that it seems like since the first quarter of 2011 net interest income has been $10.8 billion plus or minus. I mean, you’ve been holding it steady and loan growth has been like this quarter it was 1.3%. So, you’ve had to run just to keep still and yet you said, you think expect net interest income dollars to start going up. And I guess what gives you the confidence that you know the treadmill that you’re going to be able to run faster than the treadmill in the year ahead?

Well, I think it’s a good analogy. It certainly has been a treadmill because our folks have been working very hard. But I think what gives us confidence is that’s what we did when you compare 2012 to 2011. We grew net interest income dollars in this environment.

Almost $0.5 billion.

Right. And so, we like it to be higher, you bet, we would. But I think we’ve been able accomplish that, not necessarily on a sequential quarter basis each quarter, but year-over-year we’ve been able to accomplish that with the headwinds that we all know we’ve experienced in the net interest margin. So, I guess, we just look at it and say, we hope history repeats itself because we think we can do that.

Our liquidating portfolio, we are getting closer and closer to the end of that because when we wake up in the morning, the first day of the quarter, we know historically $5 billion or $6 billion would shrink on that side, while it was $4.1 billion this last quarter. So we are going to work through that but the investments we are making, some of the on balance sheet, some of the loan growth, all of that helps. And also we have reduced liability cost 2 basis points across the Board. That’s important.

All right. That’s it for me. Thank you.

Thank you.

Next question will come from the line of Mike Mayo with CLSA.

Good morning.

Hey, Mike.

Hey, Mike.

I have questions on the good, the bad and the ugly.

I think you had last time. I think that’s you had. You want to start with ugly first?

Okay. I thought it was. Okay. I don’t want to repeat myself too much. Let’s start with the good. Page 26 of the supplement, the nonaccretable difference, I think the good news is, as you said, housing is doing a little bit better. So why do you still have $7 billion of non-accretable difference or 23% of the unpaid balance. What constraints you from recognizing more of that back to accretable yield?

Well, the analysis that we do is done on a quarterly basis where we look at our expectation related to future loss, we look at the default rates, re-default rates and the like. And we make adjustments over time. You can see in the pages from supplemental we’ve made adjustments over time. In fact, in the third quarter we increased -- we moved I think about 400, $500 million from non-accretable to accretable. and our expectation is over time is that if we believe that housing prices are going to -- if you believe that housing prices are going to continue to increase and we do that, that won’t the last time that we would move non-accretable to accretable. It just didn’t happen based upon our models in the fourth quarter.

And also in the good category, just a general question, how much longer -- this question I did ask last time, how much long do you think this gain on sale margin will hold a much longer, we have more of a refi boom based on your own website 30 year conforming is now 3.6% and under 3.5 for most of last quarter. And you need to have some expectations and you guys have to plan on that, do we have one more quarter, two more quarters, two more years, what’s your best guess?

You know what I don’t know for sure, but in the fourth quarter we provided some detail in terms of our servicing portfolio and we cut the portfolio, you can get this on the website. You can cut the portfolio based on note rate and then we also segmented by loan-to-value and we also segmented it by FICO score. And what you see there is there are hundreds of billions of dollars of opportunities, I am not publishing you that we get every one of those refinancing opportunities but there’s hundreds of billions of dollars of refinancing opportunities that are just in our existing portfolio alone. So it doesn’t feel like this is absent a big increase in rates that that this is going to be the last quarter that we’re going to see good volume originations from our refinance activity. So it could last a couple more quarters, sure it could last through the end of the year. Your guess is as good as mine but there is a lot of opportunity out there. We start the quarter with a very strong pipeline, one of the strongest pipelines in our history, so we feel confident and we’re optimistic about continued originations in the mortgage business.

Mike, think about this, the average rate in the portfolio, securities portfolio is 4.77% and the street rate is 3.25, 3.5, I don’t know exactly where it is from day-to-day, but so on average there is at least a 100 basis point opportunity there, customers typically are using the money, they do that 50 basis points. Now it’s going to be little more difficult, yet it is marketing and retail more important, absolutely, that’s placed to us. We have the largest retail sales force, we have thousands of team members in our stores. We’re talking to customers everyday and finding leads. So this is what we do. So again, I don’t know how many quarters it’s going to be. I don’t know all that. But I am optimistic.

And under the bad category, the loan utilization has not improved a whole lot. I guess you’re saying it’s good because you’re moving market share, but why isn’t loan utilization going up, why is it there’s more demand from the customers?

Most of our commercial customers, their balance sheets are strong as I have seen in years and years. They are sitting with tons of liquidity and cash flows. So what -- it’s kind of logical that they would use our cash firstly they would borrow. But a good part of that whole story is we are growing in spite of that. The day will come when they will start to use those lines again. We’ve already had all the embedded costs, just think what happens then. So I view this as kind of good, not a bad.

And then the ugly, I know you don’t call this as ugly, the last margin question. And you brought up that last year grew despite the margin and all that, but late quarter didn’t look as good. Look if you core deposit pricing goes down by two basis points and your loan repricing goes down by five and your securities pricing goes down by 11. That’s not a good formula. So when do you think that margin decline goes away?

You know what, if you tell me where rates are going to be on any scenario then I can give you a better idea. I don’t know where rates are going to go, Mike. I think it’s a very fair question, right. But the important thing, right, when you think about Wells Fargo is not to be overly focused on the net interest margin. We get half -- about half of our income through spread income. We get about half of our income through fee income. You saw diversified growth on the spread income side in terms of loans, the best that we had in a long time, right. More important -- as important, you saw diversified growth in fees. And so, sure we’re on that the net interest margin is under pressure. But even in a quarter where the net interest margin was down 10 basis points. Again, mostly because of deposits what we think long-term is a great thing, in terms of growing that deposit growth, our net interest income was about flat, right. I view that as pretty strong performance in this environment.

And I also suggest a lot of companies would kill for our margin. Feel pretty good. I mean, yeah, it’s come down but for the all the reasons that Tim said, why would we turn away deposits from our customers. It -- we are not -- surely we look at the margin, surely we think about that, but we don’t run a business according to it. So and I know we’ve had this discussion many times. But for a company that can grow revenue 6% to 7% without any help really, much help from the -- from half of your revenue side that’s a very strong company.

All right. Thank you.

Thank you.

Thanks.

Your next question will come from the line of Marty Mosby with Guggenheim.

Good morning.

Good morning, Marty.

I want to follow-up on. Hey, I want to follow-up on one of the questions that your answer to Mike on the refinance activity. You brought up that the average rate is $4.75, the street rate is around $3.50. So half of your customers are still in a position where they should refinance? What are the two main reasons that are holding them up with all the HARP out there and all the other programs and initiatives, what helps to get those customers back in front of you and able to do the refinancing, at this point they really should be able to do?

Yeah. Marty, I don’t know or wouldn’t necessarily agree that it’s half of the servicing customers. It’s certainly a large portion. So if you think our servicing portfolio is about $1.9 trillion, I think, when you look at how we’ve cut the servicing portfolio and some of the work that we did last quarter that we provided, I think, the numbers probably a quarter to maybe a third of the $1.9 trillion. What keeps some people as they are toward the end of the maturity of their loan and they look at it and say, you know what it doesn’t make sense or they’ve got other things to do or their loan -- their LTV might be high and it might, they might be -- they could, excuse me, they could apply for the HARP program and it takes a while to do that. So there is a lot reasons why folks do it. It’s not because our team is not out there working very hard to try to help them refinance their loans.

Yeah. I would also say that there has been so much volume coming that it’s taken 90 days or it’s been a long process. Now that we’ve built up our team, we are looking more at. We can shorten that period of time which it takes to refinance is 60 days. So, I think, that’s an advantage. But the real advantage is, we’ve got this retail distribution, working together is, all our personal bankers and commercial bankers who look for these opportunities refer to a mortgage company, so that’s really one of our strengths and how we are going to harvest this and serve these customers.

Okay. Staying on mortgage for a second, if you look at the hedging value at 67 basis points, we actually saw an uptick couple of basis points this quarter. As you’re looking at rates now moving really in an upward direction at some pace in the future. What are you doing with your hedging, such that, you lightened the bite of the hedging negatives as rates go up and allow the value of the increased value and servicing as the extension of the life bringing some of that to the bottom line to help offset whatever, down draft you might see on the origination side.

We’re not going to fundamentally change our hedging strategy. We don’t want to think about the MSR as a way to speculate on interest rates, right. That’s just not -- none of us around here are smart enough to know where interest rates are going to go. But we are pretty good at doing what our mortgage team is very good at doing. And that is putting a hedge in place that keeps the appropriate level of risk so that we can look at our servicing asset and generates the income based upon the fundamentals of the business as opposed to the direction of rates.

And I guess instead of really betting on interest rate, there’s almost like we’re paying for insurance that you don’t really need to have because further drops in interest rates are not as feasible as it will be before rates were higher?

Marty, that’s a fair point except you know what if we were sitting here a year ago we might have said the same thing and then we would’ve been wrong we would have a big loss in the MSR, we’ve had to on hedge, and you could have said the same thing two years ago. So at some point you’re going to be absolutely right, I just not and we’re not smart enough to know exactly when that inflection point is going to be and we’re just not going to use the MSR to speculate on rates.

This is a really good business and that’s not making any sense for us.

When you look at the asset quality and the net charge-offs dropping down to -- if you take the OCC impact of around 89 basis points. So we have gone from 130 in the fourth quarter last year to a little less than 90 basis points. That trend, you would think, as the underwriting and the lack of demand and the cleanup in the portfolio and run off of some of the more troubled portfolios or ones that have a little bit more pressure could really in a good time end up less than 75 basis points. Do you kind of see that migration over the next couple years?

I hope you’re correct. I think we’ve got to be a little bit careful because in some of our businesses we’re already experiencing much less than typical loan losses, for example in the wholesale business. It’s about as good as it is going to get. Now we could see a little bit of improvement but that part of the business we’ve already seen a decline. The disproportionate share of our loan losses continue to come from the home equity portfolio, that portfolio continues to reduce in terms of overall size. So we’re hopeful that the loan-loss rate that we experienced in net or gross of the OCC guidance will continue to go down, whether or not we can get to 75 basis points only time’s going to tell but we’re clearly going in the right direction.

And then last question, thanks for spending so much time, is you talked about the yield curve steepened at the end of the year that you started to go and hit some of those higher yields. What kind of critical level are you looking at in a sense that the yield curve can steepen as we saw much quicker than the Fed ever starts to tighten interest rate? As you start thinking about deploying liquidity, what are some of the levels that your [Alco] guidelines or thought process brings you to be a little more aggressive on the liquidity side?

Well, Marty, if you look back at where rates rose to right toward the end of year. So we think about the two inflection points that we saw was a few days to a week period as the fiscal cliff negotiations seemed to be going fairly well, that rates backed up pretty significantly and that was a good indication of some of the inflection points that we were looking at. And then likewise when the Fed minutes were released last week and it was a little bit of surprise in terms of the dissension or healthy conversations minutes, maybe that’s a better way to describe it among the various our Fed governors, voters and not that rates rose again and we took an opportunity -- we took that opportunity to buy. So it’s at those levels we feel are pretty attractive over a long-term basis.

Marty, we don’t have any sad number that we say this is a number that which we will buy for the next 30 or 60 day or whatever. It’s a very dynamic that are in process. We’re looking, we’re reading, we’re thinking, we’re -- so that’s kind of how we go about this. And with the bias towards conservatism and making sure that we understand in the whole asset liability mix and so forth.

Your next question will come from the line of Nancy Bush with NAB Research LLC.

One sort of universal question, it’s applicable to you and I think it’s applicable to the industry as well. Your ROE has improved to about 13%, which is one of the better ROEs in the industry. So, I guess, my question is how do we look at normalized ROE, not only for you, but for the rest of the industry? I mean, the 13% is good. It’s below your historical levels. Is it desirable or is it possible to get back to those historical levels?

Yeah. That’s a really good question. I think that fundamental to the question is just that when you look at the level of equity that the industry is going to have to hold in the next few years or beyond that is just higher than it was pre-crisis. So, I think, it’s unlikely when you compare pre-crisis return on equity to post-crisis what we are experiencing now that we are going to get back to that high teens that even in some quarters low 20s returns on equity. Now, having said that, at our Investor Day we provided a range of return on equity between 12% and 15%, the reason we provided that range is that the level of economic activity and interest rates as we know can drive our return. So, our best guess is that in the current environment relatively slow growing economy that we’re obviously making the best of that in lower rates, we think will be the middle to lower end of that range. If rates tick up and the economy starts to pick up a bit, we think we can be at the higher end of that range and hopefully get up to the mid-teens. Hopefully that helps.

A question for you, John, I mean, the QM, I don’t know, how it has come out relative to what the industry expected. But it’s clearly going to keep some people out of mortgage market, who got into the mortgage market before. You expect that that now that we have the QM and you are going to be getting, I think, a higher quality customers resolve that the consumer groups are now going to start screaming about people being kept out of the mortgage market, who were getting mortgage loans before?

No. It’s hard to speculate or comment with any confidence on what others might see in it. I guess, I’d just go back to couple of things. First of all, I don’t know everything that’s in the 800 and some pages. But what I do know about it, it solved a couple of issues I think are really important. It created a broad standard or we got as many loans as possible into the QM definition. And number two, there is good clarity around legal protections and risk and so forth. And there is also a debt to income or consumer debt or mortgage debt vis-à-vis income. So there are some bright lines. Hopefully, that will encourage more participants in the industry, more borrowers and I think that’s all good. Now, whether in that -- but I don’t think that alone will open up the floodgates of credit because all these other things went on that I had mentioned that are still unresolved, but I think this is a step in the right direction. I really do.

Okay. Thirdly, I would just ask you a question that could have been hanging around the Atlantic article which highlighted your accounting issues. This is not new. It’s bringing up a lot of the issues that have been brought up before. Can you just give me your reaction to that and is there anything that you or anybody else in the industry can do to make some of these things like VIEs more transparent?

First, let’s talk about transparency. We want -- in fact this team is available to anyone of you and call us, we’re not hearing these things from our investors. When I became CEO, we reinstituted or started the live call. We have the credit supplement. The company is a pretty plain vanilla in the way we operate the company. Yeah, there are -- there is levels one, twos and three assets in this but that doesn’t make them less credible just that sometimes there is not market prices we can do. So we have to go through cash flows and establish values that way. I have never seen us to be more transparent. So if there is other things we can do, I’m all ears for it. But I’m not hearing that from investors and frankly I’m not hearing that kind of commentary from most of the people including analysts that I talk to. But people are going to write what they want to write and they can make their own choices about where they invest their money.

Thank you.

Your next question will come from the line of Chris Mutascio with Stifel Nicolaus.

Good morning, John and Tim, happy New Year to you.

Hey, happy New Year, Chris.

Happy New Year.

And Tim, I had a real quick question for you a follow up on the reserves. You mentioned that your reserve releases will be lower in ‘13 than ‘12, but they could still continue to some degree. If I back out the charge-offs from the OCC guidance related charge-offs in both third quarter and this quarter, because I think you guys have mentioned they were already reserved for. It looks like that you did under provide last quarter, provision was $200 million lower the net charge-offs. But this quarter if I backed them out your provision would be $70 million higher. So in essence have the reserve releases already ended?

No. Not at all.

Okay.

There are so many puts and takes that go into our reserve release -- our reserving methodology that ultimately than produces our reserve release or if you look back a few years of reserve bill, I wouldn’t just focus on the impact of the OCC guidance as the primary driver for that, just a lot of puts and takes. And if we thought that the reserve releases had ended, we’d say so.

Okay. Is there any thought, I mean, you may have asked this before and I know it’s a difficult question to answer, but with FASB and with the environment we are from a regulatory perspective and where reserves were heading into the crisis? Any thought of where reserve to loans in a range and up post re-regulation versus the financial crisis? If we were at one to one in a quarter pre-crisis are we up to $1.50 to $1.75 when all is said and done on a reserve to loan basis or is that still too difficult to us retain?

That’s a really fair question and I wish we had a great answer for you, but there has been a lot of discussion and a lot of commentaries and jawboning from the regulators on this topic. So I would describe it as a work in process. We think that we’re appropriately reserved and we are hopeful that overtime our reserves can come down as long as our portfolio -- the credit losses and the portfolio continues to improve which is what we’ve been seeing.

All right. Well, thank you for the answer and good luck to you the rest of the year.

Thank you.

Thanks.

Our final question will come from the line of Andrew Marquardt with Evercore Partners.

Hey, Andrew.

Hi, Andrew.

Good morning, guys. How are you?

Good.

A couple of ticky-tack questions for you. First on the margins, this last quarter you went through a couple of items in terms of the cash build burden, in terms of the NIM impact and reprising. But then also there was variable sources benefited few basis points. What was that or what is that and how do we think about that? Is it seasonal one timer, how do we think about that?

I think that as we’ve described variable it’s a broad definition. The primary drivers this quarter for the variable income was higher fee income. So what that means is that when we have a loan we are -- and we charge a fee on a loan, that fee generally accrues over the life of the loan. When that loan is paid off early then we go ahead and recognize any of the unamortized portion of the loan fee. So, that was a primary driver this quarter. I wouldn’t call it seasonal or one time. We see that from time to time within the business. Some quarters, it’s higher, sometimes it’s lower.

Got it. Was it about the same last quarter or was this quarter a little bit higher?

I’ll go back and look. I think it was a little bit higher this quarter. And again that’s not a typical for -- in terms of the -- but the amount of the variation is not a typical to what we’ve seen on a quarterly basis but it was a little bit higher.

Okay. Thanks. And then on asset quality and the reserve question, Chris I think just mentioned.

Yeah.

I wanted to ask more granularly on Hurricane Sandy implications you had mentioned it on the earlier comments in your release. How much of an impact was it really this quarter, was it in charge-offs, less reserve release, how do we think about it?

It really wasn’t in the absolute charge off number because it was -- we think about the timing of Hurricane Sandy. So, it was probably -- it was primarily in the reserve -- in the methodology that we use. We assume that we are going to have some additional losses in the future from Hurricane Sandy. So, we wanted to make sure that we were appropriately reserve which we believe we are based upon our best estimates right now. But as you can appreciate, we’re very early into our true analysis or finalizing the analysis. It’s going to take a while to see what the ultimate impact is. But we think there were appropriate reserve based upon some conservatism assumptions right now.

Can you quantify how much the impact was this quarter?

I’d rather not. It was any -- the reason I don’t want to go into the specific details is because when you think about the reserving methodology, again there’s lots of puts and takes. Some things go up, some things go down but just rest assured that we think we are appropriately reserved.

Okay. That’s helpful. And then just lastly on the tax rate, even adjusting for the settlement this quarter, it looks like -- the tax rate looks a little bit low 31% on an adjusted basis. How do we think -- is that lower than what it’s been recently, is that a new kind of run rate or should we think about going back another 33%, 34% rate?

Yeah. What I would do -- that’s a fair question. What I would do is go along the direction that you are and that is a back out the impact that we had in the fourth quarter and which is why we called that out, because we don’t think 27% is sustainable. And then you get to that the number that you are talking about 31%, 32%. I think that 31%, 32%, 33% is a reasonable number. But it’s more likely to go up a bit in 2013 and what we’ve seen in 2012.

Okay. Great. Thanks guys.

Okay. Thanks very much everybody. We had a full set of discussions and we really appreciate your interest in Wells Fargo. Happy New Year again and we will see you at the end of the first quarter. Thank you again.

Ladies and gentlemen, this does conclude today’s conference. Thank you all for participating and you may now disconnect.