Wednesday, January 20, 2010

Microsoft Urges Government and Industry to Work Together to Build Confidence in the Cloud

Company proposes 'The Cloud Computing Advancement Act' to strengthen privacy and security protections, deter cybercrime, enhance transparency, and clarify international rules and regulations.

WASHINGTON, Jan. 20 /PRNewswire-FirstCall/ -- Today, Brad Smith, senior vice president and general counsel at Microsoft Corp., urged both Congress and the information technology industry to act now to ensure that the burgeoning era of cloud computing is guided by an international commitment to privacy, security and transparency for consumers, businesses and government.

During a keynote speech to the Brookings Institution policy forum, "Cloud Computing for Business and Society," Smith also highlighted data from a survey commissioned by Microsoft measuring attitudes on cloud computing among business leaders and the general population.

The survey found that while 58 percent of the general population and 86 percent of senior business leaders are excited about the potential of cloud computing, more than 90 percent of these same people are concerned about the security, access and privacy of their own data in the cloud. In addition, the survey found that the majority of all audiences believe the U.S. government should establish laws, rules and policies for cloud computing.

At today's event, Smith called for a national conversation about how to build confidence in the cloud and proposed the Cloud Computing Advancement Act to promote innovation, protect consumers and provide government with new tools to address the critical issues of data privacy and security. Smith also called for an international dialogue on data sovereignty to guarantee to users that their data is subject to the same rules and regulations, regardless of where the data resides.

"The PC revolution empowered individuals and democratized technology in new and profoundly important ways," said Smith in his keynote address. "As we move to embrace the cloud, we should build on that success and preserve the personalization of technology by making sure privacy rights are preserved, data security is strengthened and an international understanding is developed about the governance of data when it crosses national borders."

He continued, "Microsoft is committed to fostering the responsible development of cloud computing to ensure that data is accessible, safe and secure. We also need government to modernize the laws, adapt them to the cloud, and adopt new measures to protect privacy and promote security. There is no doubt that the future holds even more opportunities than the present, but it also contains critical challenges that we must address now if we want to take full advantage of the potential of cloud computing."

Microsoft's proposed legislation calls for the following:
  • Improvements in privacy protection and data access rules to ensure users' privacy, starting with reforming and strengthening the Electronic Communications Privacy Act to clearly define and provide stronger protections for consumers and businesses;

  • Modernization of the Computer Fraud and Abuse Act so law enforcement has the tools it needs to go after malicious hackers and deter instances of online-based crimes;

  • Truth-in-cloud-computing principles to ensure that consumers and businesses will know whether and how their information will be accessed and used by service providers and how it will be protected online;

  • Pursuit of a new multilateral framework to address data access issues globally.

The full text of Brad Smith's speech can be read at the Microsoft News Center at

About the Survey

The survey was commissioned by Microsoft and conducted by Penn, Schoen and Berland. The survey was conducted Dec. 16–22, 2009, and reached 700 members of the general population, 200 senior IT decision-makers and 200 senior business decision-makers. The margin of error for each survey group was 3 percent, 6 percent and 6 percent respectively.

About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.


RSA Global Survey: Confidence in Social Networking Security Shaken as Online Crime Rises

  • More than 4,500 people divulge concerns with safety of personal information on the Internet and a desire for better identity protection, in survey from EMC's security division

  • Two in three people reluctant to share on social networks

  • Three in ten people fall prey to phishing attacks; a six-fold increase in just two years

BEDFORD, Mass., Jan. 20 /PRNewswire/ -- RSA, The Security Division of EMC (NYSE: EMC), announced the results of its 2010 Global Online Consumer Security Survey that polled more than 4,500 consumers regarding their awareness of online threats, concerns with the safety of their personal information online and their willingness to share it, and desire for better identity protection.

To view the multimedia version of this release, visit:

Of the more significant survey findings, consumer awareness of phishing attacks has doubled between 2007 and 2009 and the number of consumers who reported falling prey to this attack increased six times during that same period of time. In addition, while hundreds of thousands of people join social networking websites each day, the survey exposed that nearly two in three (65 percent) people who belong to these online communities indicated they are less likely(1) to interact or share information due to their growing security concerns.

Social networking websites have become a hotbed for online criminals because of their global reach and the participation by hundreds of millions of active users from all walks of life. This makes these communities prime targets for exploitation by criminals who seek to steal personal information through socially engineered attacks. Reflective of this trend, the survey exposed that four out of five (81 percent) people using social networking websites displayed concern(2) with the safety of their personal information online.

"Fraudsters continue to fine-tune their array of tactics that result in millions of computers becoming infected with Trojans and other malware," said Christopher Young, Senior Vice President at RSA. "These online criminals are adept at social engineering with at-the-ready phishing attacks that are launched within moments of breaking news about popular celebrities, professional athletes or serious global events. In these cases, people are lured to legitimate websites infected with malware as well as complete fakes designed to look like well-known news sources. Within these websites, Trojans can easily be masked as 'required' updates to a media player which can result in countless computers becoming infected with malware. While it's difficult to prevent consumers from visiting these websites, we can do a better job of protecting those who do."

Consumers more aware of phishing threats, but new attack methods dupe six times as many in just two years

In a similar RSA survey in 2007, one in three (38 percent) consumers reported they were aware of the threat of a phishing attack – and this figure doubled in two years(3) where three in four (76 percent) consumers have become aware. Additionally, in RSA's 2010 survey, nine in ten consumers (89 percent) reported concerns caused by the threat of phishing.

Despite increased awareness, there have been a growing number of online users that have fallen victim to a phishing attack. In the 2007 RSA survey, only one in twenty (5 percent) consumers cited they had fallen victim to a phishing scam – and this rate increased six-times in 2009 to represent three in ten (29 percent) consumers. This increase can be attributed to more advanced communications tactics and greater sophistication such as improved writing and web design skills on the part of the fraudsters. Phishing attacks have also evolved in an attempt to exploit users in different ways and through a broader variety of methods including offshoots known as "vishing", "smishing" and "spear phishing."

The sheer volume of phishing attacks launched in recent months is also contributing to these trends. The RSA® Anti-Fraud Command Center recently reported(4) the highest-yet detected rates of phishing attacks between August and October 2009, as well as a 17 percent increase in the total number of attacks between 2008 and 2009.

An increase in consumer knowledge of online threats is further evident from the growth in the number of respondents that expressed awareness of Trojans. In 2007, 63 percent of consumers stated that they were aware of Trojans and in 2009 that figure climbed to 81 percent.

Consumers' safety concerns translate to significant eagerness for better identity protection

Online banking continues to provide significant levels of convenience for consumers, with quick access to checking and savings accounts, the ability to pay bills automatically, transfer funds and perform other financial transactions. There is dramatic adoption of the use of social networks in which people use to form and nurture personal and professional relationships with each other. Finally, healthcare organizations as well as local, state and federal government agencies are bringing the power and convenience of online services to the consumer – offering access to personal healthcare records, driver's license renewals and payment of tax bills.

The RSA survey revealed that consumers using online banking (86 percent) websites shared more concern with the theft of their personal information than those using healthcare portals (64 percent) and government websites (68 percent). As a result of these concerns, more than half of all consumers reported that they are less likely to share information and interact on these websites.

Consumers agreed that their identities should be better protected than a simple username and password on social networking (59 percent), healthcare (64 percent), government (70 percent) and online banking (80 percent) websites. Nine in ten consumers are willing to use a stronger form of security if offered.

Young continued, "Consumer education and awareness is one of the first lines of defense in the ongoing battle against online crime. Organizations will continue to take advantage of the many benefits offered by the Internet and consumers will seek the convenience offered online – all despite the inherent risks. In order to maximize the full value of what the online world can offer, organizations need to take a layered approach to Internet security in order to best protect their customers' information."

Survey Methodology

  • Respondents totaled 4,539 consumers between the ages of 18 and 65

  • Conducted in October 2009 by market research firm InfoSurv, Inc.

  • Represented 22 countries across North America, South America, Europe and Asia Pacific

  • All respondents actively use the Internet


(1) "Less likely" = "somewhat less likely" + "much less likely"

(2) "Concerned" = "somewhat concerned" + "very concerned"

(3) The 2010 Global Online Consumer Security Survey was conducted in October 2009

(4) Source: RSA Monthly Online Fraud Report, November 2009

About RSA

RSA, The Security Division of EMC, is the premier provider of security solutions for business acceleration, helping the world's leading organizations succeed by solving their most complex and sensitive security challenges. RSA's information-centric approach to security guards the integrity and confidentiality of information throughout its lifecycle – no matter where it moves, who accesses it or how it is used.

RSA offers industry-leading solutions in identity assurance & access control, data loss prevention, encryption & key management, compliance & security information management and fraud protection. These solutions bring trust to millions of user identities, the transactions that they perform, and the data that is generated. For more information, please visit and

RSA is a registered trademark or trademark of RSA Security, Inc. in the U.S. and/or other countries. EMC is a registered trademark of EMC Corporation. All other company and product names may be trademarks of their respective owners.

SOURCE EMC Corporation

Who Wins The Mobile [Payments] Platform Wars?

Industry Leaders Sound Off in new Briefing Room on Mobile

BOSTON--(BUSINESS WIRE)--The Briefing Room on Mobile Platform Wars focuses on the varying and sometimes competing approaches to mobile commerce currently in play, including NFC, barcode, SMS, and the development of applications for mobile platforms such as the iPhone and Google's Android. Leading mobile players such as Fiserv and Mocapay express their views on "what's next" in mobile payments.

The full Mobile Platform Wars briefing room can be found here, promotes the companies, products and people that drive "what's next" in payments, worldwide. is a joint venture between Berkshire Hathaway's Business Wire and Market Platform Dynamics. In the two months since its launch, has assembled a very large and highly engaged community of relevant (and senior) industry executives and opinion makers across the payments ecosystem who regularly click on its newsletter, visit the site, and spend a lot of time there. has become the "hub" for payments innovation for those whose core business is payments and for those who view payments as central to their own commerce capabilities.

For information on contact You can also follow on Twitter at and join the PYMNTS Linked In group.

About Market Platform Dynamics (MPD):

MPD is a management consulting firm that ignites catalyst businesses by leveraging new technologies, business models and pricing strategies. MPD has a wealth of experience within industries that are characterized by complex platform-centered ecosystems, including payments, mobile/telecoms, digital and advertising-supported media, and software-based businesses.

MPD works with both incumbents and new entrants, offering a unique lens into the dynamics that shape the competitive playing field. In addition to traditional consulting-based services, MPD’s Catalyst Ventures provides intellectual and human capital to new firms. MPD’s experts include economists, econometricians, product development specialists, and strategic marketers who apply cutting-edge business theory and statistical methods to the practical problems of building and growing a profitable catalyst business. MPD is headquartered in Cambridge, MA, and has offices in London and Hong Kong.

For more information visit

MoneyGram and Bank of China Announce Agreement for 10,000 Branches in China

MoneyGram International and Bank of China Announce Agreement to Bring Money Transfer Service to the Bank’s 10,000 Branches in China

Completion of Successful Pilot in Beijing Leads to Expansion Throughout Bank’s Network

MINNEAPOLIS--(BUSINESS WIRE)--MoneyGram International (NYSE: MGI), a leading global money transfer company, and Bank of China, a pillar of China’s banking community and Global Fortune 500 company, announced today an agreement that will bring MoneyGram money transfer services to Bank of China’s 10,000 domestic branches in the mainland in the coming years. The agreement, which more than triples MoneyGram’s presence in this growing remittance market, follows the successful completion of a six-month pilot that ran in 240 Bank of China branch locations in Beijing.

MoneyGram will begin rolling out its money transfer services in Bank of China branches in key provinces across the southern and eastern coast in China beginning in January and will continue expanding throughout the Bank’s extensive network in the country in 2010 and 2011. In addition, this new strategic alliance with Bank of China will create further opportunities for MoneyGram’s money transfer services in several other countries in the Asia Pacific region.

“This partnership brings significant benefits to MoneyGram, the Bank of China and to the billions of people in this region,” said Pamela H. Patsley, MoneyGram chairman and CEO. “With more than $25 billion in annual remittances, China is a critical focus for MoneyGram’s market expansion in 2010,” said Patsley. “We are delighted to further align ourselves with Bank of China’s globally recognized brand and to bring more value, more options and more convenience to the increasing number of money transfer consumers across this important remittance market.”

MoneyGram has been providing services in China since 1994 through agents including Industrial & Commercial Bank of China (ICBC), Bank of Communications (BCOM), CITIC Bank, China Industrial Bank, Shengjing Bank (former Shengyang Commercial Bank); Shenzhen Ping An Bank and Anshan Bank.

About MoneyGram International

MoneyGram International offers more control and more choices for people separated from friends and family by distance or those with limited bank relationships to meet their financial needs. A leading global provider of money transfer services, MoneyGram International helps consumers to safely send money around the world with funds arriving at available agent locations in as little as 10 minutes. Its global network is comprised of 186,000 agent locations in more than 190 countries and territories. MoneyGram’s convenient and reliable network includes retailers, international post offices and financial institutions. To learn more about money transfer at an agent location, please visit or find us on Facebook.

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MoneyGram "Hungary for Expansion"

MoneyGram International Adds Hungary to List of Countries in Global Money Transfer Network

Corner Cash adds money transfer services in 11 cities

MINNEAPOLIS--(BUSINESS WIRE)--MoneyGram International (NYSE: MGI), a leading global money transfer company, today announced that it has expanded its money transfer services to Hungary through new super agent Corner Cash Keszpenz Zrt, which is adding the service at its currency exchange shops in 11 cities across the country.

“Money transfer services are a vital part of the economy in Hungary and MoneyGram will focus on providing the greatest value as it grows its locations across the country.”

“After nearly seven years without a presence in Hungary, MoneyGram is pleased to be back with a partner like Corner Cash, providing Hungary’s 10 million people a new choice and a better value for money transfer services,” said John Hempsey, executive vice president for MoneyGram’s Europe, Middle East, Africa and Asia Pacific regions. “Money transfer services are a vital part of the economy in Hungary and MoneyGram will focus on providing the greatest value as it grows its locations across the country.”

The World Bank estimated that in 2008, Hungary’s remittance market was worth nearly $4.5 billion with the United States, the Ukraine, Germany, Romania, and the Slovak Republic being key send and receive markets.

In addition to adding MoneyGram’s services to its 11 locations, Corner Cash is focused on adding MoneyGram services to other locations across Hungary.

Hempsey added, “The Corner Cash locations are well established financial service businesses in Hungary’s mid-sized cities. Together we plan to rapidly grow our service and especially gain a presence in Budapest.”

Hungary is the first country added to MoneyGram’s global network in 2010. 

Coinstar Appoints CFO

Coinstar Appoints J. Scott Di Valerio Chief Financial Officer

BELLEVUE, Wash.--(BUSINESS WIRE)--Coinstar, Inc. (NASDAQ: CSTR), today announced the appointment of J. Scott Di Valerio as chief financial officer effective March 2, 2010. Di Valerio joined the company on January 19 and will work with Paul Davis, Coinstar chief executive officer, prior to taking over as CFO.

"Scott brings with him a strong finance, management and business background with high-growth, world-class organizations, as well as a demonstrated ability to communicate effectively with the investment community,” said Paul Davis. “The depth and breadth of his experience further enhances our management team, and we look forward to his contributions as we execute our strategic plans for growth and success as a leader in automated retail."

Di Valerio, 47, has over 25 years finance, operations and management experience, most recently serving as President of the Americas for the Lenovo Group Limited, a leading computer manufacturer. Previously, he held senior positions at Microsoft Corp., where he served as the company’s corporate vice president of Finance and Administration and chief accounting officer, and as corporate vice president of the Original Equipment Manufacturer (OEM) division. Before joining Microsoft, Di Valerio served as corporate vice president corporate controllership at The Walt Disney Company, chief financial officer of Mindwave Software Inc., and partner at PricewaterhouseCoopers.

Di Valerio is a certified public accountant and holds a bachelor’s degree in business administration from the University of San Diego.

James Blanda, a Tatum, LLC, partner will stay on as interim CFO with the company through March 1 prior to the transition to Di Valerio.

About Coinstar, Inc.

Coinstar, Inc. (NASDAQ: CSTR) is a leading provider of automated retail solutions offering convenient products and services that make life easier for consumers and drive incremental traffic and revenue for its retailers. The Company’s core automated retail businesses are self-service coin counting and self-service DVD rental. Other Coinstar products and services include e-payment products – such as gift cards, prepaid debit cards and other prepaid products – and money transfer services. The Company’s products and services can be found at more than 90,000 points of presence including supermarkets, drug stores, mass merchants, financial institutions, convenience stores, restaurants, and money transfer agents. For more information, visit

Ecommerce Soaring Across Europe

E-commerce accounts for 12 per cent of EU business Study finds enterprise web use soaring across Europe

Revenues from e-commerce accounted for some 12 per cent of European business income last year, according to a recent report. 

The European Commission's Eurostat office found that companies in many member countries are drawing significant revenues from e-commerce transactions, mainly within their own borders. Domestic transactions accounted for 83 per cent of e-commerce sales in the UK, for example.

Ireland reported the highest percentage of e-commerce sales, at 26 per cent, and was also among the highest in sales beyond its own borders, at nearly 40 per cent.

Continue Reading

More Information: Here's a link to the Eurostat Report

A little more than a quarter of e-commerce turnover with destinations outside the country

The share of enterprise turnover generated from e-commerce2 in 2008 varied significantly between Member States. The highest shares were recorded in Ireland (26%), Finland and Sweden (both 18%), the Czech Republic, Germany and the United Kingdom (all 15%), Hungary (14%) and France (13%). The lowest shares were observed in Bulgaria and Cyprus (both 1%).

In the EU27, three quarters (73%) of e-commerce turnover came from within the country, 19% from another EU27 Member State and 8% from outside the EU27. Over 80% of e-commerce turnover came from within the country in Latvia (88%), Bulgaria (85%), the United Kingdom (83%), Greece and France (both 82%) and Spain (81%). Hungary (60%) recorded the highest share of e-commerce turnover with another Member State, followed by Cyprus (51%), Slovakia (44%) and Ireland (39%). Highest proportions of e-commerce turnover from outside the EU27 were observed for enterprises in Malta (56%), Slovakia (34%), Ireland (23%) and Cyprus (20%).

Mobile Shopping Takes Hold Worldwide

Mobile Shopping Takes Hold Worldwide

More than one-half of consumers used their mobile phones for in-store holiday shopping activities, including comparison shopping and couponing. Full Article

Gartner: Online Banking Transactions Not Secure

The Ecommerce Journal published a story regarding Gartner's recent report that One-Time Passwords (OTP's) do not provide adequate protection against the bad guys.  In fact, if a banking Trojan, designed to steal online banking credentials, were to receive the OTP at the same time the consumer did, they can carry out a transaction about 20 to 30 times faster than the online banking customer.  Since it's a "one-time" password, whomever enters it first, is the one who is able to use it.   End result?  OTP's work better for the bad guys than they do for the good ones.  Here's the story:

Transactions are still not secure with online 

banking, what else should be done?

The simple answer:  Log on to online banking with the same trusted method used to access cash from an ATM.  Insert your card into a card reader and enter your PIN into a PCI 2.x certified PIN Entry Device...

Gartner Inc. warns that the measures taken by the financial institutions to protect online transactions are lame and are no longer enough to protect online banking systems against fraud.

Sophisticated tools used by the cybercriminals make them successful in hacking security systems so as to steal customers' log-in credentials and pillage their bank accounts, says Gartner analyst Avivah Litan.

Trojan horses steal credentials or intercept transactions and other measures like a phone-based, "out of band" authentication system, makes no good either. Perpetrators use call forwarding so that the fraudster, not the legitimate customer, gets the call from the financial institution, Litan said.

A Trojan completes transactions much faster than a human would; a Trojan can take as little as one second to enter a money transfer amount and press OK, whereas a human would take 20 to 30 seconds.  Editor Translation:  If both of them receive the generated One-Time-Password at the same time,  the online banking customer doesn't stand a chance against a Trojan.

Wells Fargo Earns Record $22.7 Billion Full Year Income

https://www.wellsfargo.comWells Fargo Reports Record Full Year Net Income

Q4 Record Revenue of $22.7 billion; Q4 Net Income of $2.8 billion


“Despite doubling the size of the Company and despite cyclically elevated credit costs this past year, our capital ratios ended 2009 higher than they were upon completion of the Wachovia acquisition, even after redeeming TARP in full and purchasing Prudential’s noncontrolling interest in the retail securities brokerage joint venture.”

Full Year 2009:

  • Record net income of $12.3 billion

  • Record revenue of $88.7 billion

  • Record pre-tax pre-provision profit (PTPP) of $39.7 billion, more than 2.1 times annual net charge-offs. (See footnote 4 on page 18 for information on PTPP)

  • Diluted earnings per common share of $1.75 reduced by $0.76 per share for TARP preferred stock dividends, including the deemed dividend upon redemption of TARP preferred stock

  • Total credit extended to consumers and businesses of $711 billion

  • Net interest margin of 4.28 percent, return on assets of 0.97 percent, and return on equity of 9.88 percent

Fourth Quarter 2009:

  • Net income of $2.8 billion, after pre-tax $500 million credit reserve build and $861 million of merger-related and incremental expenses, including:

    • $450 million in merger costs

    • $261 million previously disclosed expense provision for auction rate securities (ARS) settlement

    • $150 million employee benefit-related expenses for 401(k) profit sharing contribution to all eligible team members

  • Diluted earnings per common share of $0.08 reduced by $0.47 for TARP preferred stock dividends, including $0.39 per share upon redemption of TARP preferred stock

  • Record revenue of $22.7 billion, up 4 percent (annualized) from third quarter 2009

  • PTPP of $9.9 billion, driven by continued revenue growth offset by $861 million in merger-related and incremental expenses

  • Average checking and savings deposits of $661 billion, up 20 percent (annualized) from prior quarter

  • Continued signs of a positive turn in credit quality:

    • 30 day delinquent balances in a number of the retail and commercial segments were stable or improved, including auto, credit card, liquidating home equity, personal credit management, small business direct, and student lending, aided by continued improvement in the performance of newer vintages

    • Growth in nonperforming loans concentrated in secured real estate portfolios; other loan categories stable, including flat or declining commercial and industrial (C&I) and consumer revolving/installment credit nonaccruals

    • Growth in net charge-offs declined significantly in the quarter. Almost all major loan categories had relatively flat/declining losses, with the exception of commercial real estate. Credit card losses declined for the second consecutive quarter.

    • “Roll rates” from current to 30 days past due continued to improve in Pick-a-Pay portfolio, both impaired and non-impaired

  • Significant increases in capital:







Dec. 31,


Dec. 31,

(as a percent of total risk-weighted assets)

2009 (1)



Tier 1 capital




Tier 1 common equity (2)



Total capital




(1) December 31, 2009, ratios are preliminary.

(2) See table on page 38 for more information on Tier 1 common equity.

  • Stockholders’ equity and Tier 1 common ratio higher at December 31, 2009, than prior to Wachovia acquisition

  • Equity offering in December raised $12.2 billion

  • Full repayment of $25 billion TARP investment; paid $1.44 billion in cash dividends to U.S. Treasury over the life of the investment

  • Purchased Prudential Financial’s noncontrolling interest in securities brokerage joint venture, giving Wells Fargo 100 percent of the future earnings of the business

  • Adoption of FAS 166/167 on January 1, 2010, improved Tier 1 common ratio by 1 basis point, reduced Tier 1 capital ratio by 1 basis point

  • Wachovia integration on track and on schedule:

    • Pick-a-Pay portfolio performed better than originally modeled

    • Re-confirmed estimate for $5 billion annual cost saves upon completion of integration in 2011, over 50 percent of annual run rate achieved in 2009

    • Estimated cumulative merger expenses further reduced to less than $5 billion

    • Asset reduction in non-strategic loan categories proceeding as planned – reduced non-strategic loans by $18.9 billion, or 15 percent in 2009

    • $109 billion of higher-cost certificates of deposits (CDs) matured in 2009; retained approximately 60 percent in lower-rate CDs and liquid deposits at lower than expected yields

    • Converted first state banking stores (Colorado) in November 2009, conversion of remaining overlapping markets expected throughout 2010

  • Industry leader in loan modifications for homeowners:

    • As of December 31, 2009, nearly half a million Wells Fargo mortgage customers were in active trial or completed loan modifications started in prior 12 months; of this total, 119,000 were under the Home Affordable Modification Program (HAMP), including 8,400 completed modifications, and the rest were non-HAMP modifications

    • Over 30 percent of purchased credit-impaired (PCI) Pick-a-Pay portfolio modified through December 31, 2009

Selected Financial Information






Quarter ended

Year ended

Dec. 31,

Sept. 30,

Dec. 31,






Diluted earnings per share





Wells Fargo net income (in billions)





Asset Quality

Net charge-offs as % of avg. total loans





Nonperforming loans as % of total loans




Allowance as a % of total loans






Revenue (in billions)





Average loans (in billions)




Average core deposits (in billions)




Net interest margin





Wells Fargo & Company (NYSE:WFC) reported record net income of $12.3 billion, or $1.75 per common share, for 2009. Fourth quarter 2009 diluted earnings per share were $0.08, compared with $0.56 for third quarter 2009 and a loss of $0.84 per share in fourth quarter 2008. Fourth quarter and full year 2009 diluted earnings per share were reduced by $0.47 and $0.76, respectively, for combined cash dividends and the deemed dividend upon redemption and full repayment of TARP preferred stock. Results prior to January 1, 2009, do not include Wachovia.

“For the fourth quarter of 2009 and for the full year, we delivered significant value for our customers, communities, shareholders and country,” said Chairman and CEO John Stumpf. “We thank our team of 281,000 for their dedication and steadfast focus on customers in 2009 as we continued the important integration of Wachovia into Wells Fargo. This merger, which essentially doubled the size of our company, has already generated tremendous synergies as we expand the time-tested Wells Fargo model to more customers and team members over a broader geography, including additional businesses that help customers succeed financially. In particular, we are very pleased with the positive results we’ve seen in attracting deposits from new and existing customers, and we are excited about the opportunity to deepen current relationships, cross-sell to new customers and achieve even higher customer satisfaction, while rewarding them for more of their business. Our mission and fundamental business model remains the same and we believe our strategic and financial position is even stronger today than it was a year ago when we completed our merger with Wachovia.

“Wells Fargo continued to do its part in making credit available to help our nation’s economic recovery. Nearly half a million Wells Fargo loan customers were provided with mortgage payment relief through active trial and completed loan modifications in 2009. We provided $711 billion in loans and lines of credit to help get the economy going again.

“As this past year’s financial performance has shown, the earnings capability of Wells Fargo’s business model has significant power to generate capital internally. Because of the value we created in 2009 for our customers and communities, we were able to achieve record revenue and earnings for the year. As we enter 2010, we believe our franchise has never been better positioned to meet the challenges and opportunities ahead of it. The Wells Fargo model has been built to outperform our peers over time and through cycles. Clearly we have done just that again in 2009 and believe that this very same model and execution discipline will continue to outperform the industry in the years and cycles ahead.”

Financial Performance

“Fourth quarter financial results reflected a continuation of the solid revenue, earnings and capital generation we have produced all year,” said Chief Financial Officer Howard Atkins. “Fourth quarter earnings of $2.8 billion contributed to a record $12.3 billion in net income for the full year. Revenue continued to build during the quarter across the majority of our businesses, reaching a new quarterly record of $22.7 billion, leading to pre-tax pre-provision profit of nearly $10.0 billion despite $861 million of merger-related and incremental expenses in the quarter. Risk in our asset portfolios has been reduced throughout the year, including fourth quarter, by reducing higher-risk loan portfolios, shedding legacy trading positions, and reducing longer duration investment securities at lower interest rates. We continued to strengthen our balance sheet by building credit reserves to $25 billion at quarter end, up $500 million in the quarter, up $3.5 billion during 2009 and more than six times the reserve (pre-merger) we had at the start of the credit crisis in mid-2007.

The Wachovia integration is proceeding as expected. Credit losses are tracking better than originally estimated at the time of the merger. Expense synergies are on track for $5 billion in annual run rate savings upon completion of the integration in 2011 and cumulative integration costs are now expected to be $3 billion less than the originally assumed $8 billion. Revenue synergies have already begun to be realized with great potential for many more. We built capital significantly throughout the year. Stockholders’ equity and Tier 1 common at December 31, 2009, were above the strong levels we had prior to the Wachovia acquisition, even after redeeming TARP and purchasing Prudential’s minority interest.”


Revenue of $22.7 billion increased 4 percent (annualized) from third quarter 2009, largely the result of continued growth in fee income in our trust and investment management, credit/debit card and mortgage banking businesses. We also experienced broad-based growth across multiple businesses, including double-digit (annualized) linked-quarter revenue growth in asset management, auto lending through Wachovia Dealer Services, insurance, merchant card, mortgage banking, and wealth management. Legacy Wells Fargo had record retail bank household cross-sell of Wells Fargo products of 5.95 in the fourth quarter, and core product solutions (sales) of 6.08 million, up 16 percent from prior year. While mortgage originations and servicing revenue remained high, total mortgage banking noninterest income contributed just 15 percent of the Company’s consolidated revenue for the quarter.

Net Interest Income

Net interest income was $11.5 billion, compared with $11.7 billion in third quarter 2009. While earning assets were up slightly, the decline in core loans, the reduction in non-strategic assets and the third quarter sale of longer-duration mortgage-backed securities reduced net interest income growth and net interest margin in the fourth quarter, offset by significant growth in noninterest-bearing checking and savings deposits and wider new lending spreads, which are expected to benefit net interest income over the long term.

Noninterest Income

Noninterest income was $11.2 billion, up 15 percent (annualized) from $10.8 billion in third quarter 2009, and included:

  • Mortgage banking income of $3.4 billion, including:

    • $1.2 billion in income from mortgage loan originations/sales activities (net of $316 million increase in repurchase reserves) on $94 billion of residential mortgage originations and $144 billion of applications

    • $1.9 billion market-related valuation changes to mortgage servicing rights (MSRs) net of economic hedge results, largely reflecting the continuation of strong carry income and effective hedge performance; average servicing portfolio note rate was only 5.66 percent, the lowest since September 30, 2005, and the value of MSRs to loans serviced for others was 91 basis points.

  • Trust and investment fees of $2.6 billion, up 16 percent (annualized) linked quarter, primarily reflecting an increase in client assets and higher revenue from the retail securities brokerage business. After purchasing Prudential’s noncontrolling interest in the securities brokerage joint venture on December 31, 2009, Wells Fargo has 100 percent of the future earnings of the business.

  • Service charges on deposit accounts of $1.4 billion, down 15 percent (annualized) linked quarter due to normal seasonality

  • Credit/debit card fees of $961 million, up 6 percent (annualized) linked quarter reflecting seasonally higher volumes and higher debit card penetration

  • Insurance revenue of $482 million, up 12 percent (annualized) linked quarter

  • Net gains on debt and equity securities of $383 million, largely reflecting private equity gains

  • $272 million reduction in other noninterest income linked quarter, partly reflecting lower investment income in employee benefit plan

The Company had net unrealized securities gains of $5.6 billion at December 31, 2009, consisting of $3.3 billion in unrealized gains in the agency mortgage-backed securities portfolio and $2.3 billion on spread-related fixed-income securities and equity investments. During the quarter, mortgage-backed securities yields increased while capital market credit spreads generally narrowed.

Noninterest Expense

“While our core cost discipline remained very much in place in the quarter, noninterest expense increased to $12.8 billion from $11.7 billion in third quarter 2009, driven in large part by $450 million of Wachovia merger integration and severance expense (up $251 million from third quarter), $261 million for the previously announced ARS settlement and $150 million for employee benefit-related expense for 401(k) profit sharing contribution to all eligible team members,” said Atkins. “We also continued to invest for both the short- and long-term benefit of our customers. We added sales and service team members in regional banking as we align Wachovia’s banking stores with the Wells Fargo model. As we’ve rolled out our regional commercial banking office model into the Eastern states, we’ve increased sales and service headcount by 8 percent from the third quarter. We also added resources to handle the higher volumes of mortgage loan modifications, with home retention staff up 17 percent in the quarter to more than 15,000 team members dedicated to helping customers stay in their homes. The Company’s efficiency ratio was 56.5 percent, up from the third quarter’s record level but roughly flat with the first and second quarter.”

Income Taxes

The Company’s effective income tax rate was 25.2 percent in the fourth quarter, down from 29.5 percent in the third quarter (adjusted for noncontrolling interest). The reduction in tax expense primarily related to the resolution of certain federal and state income tax matters in the quarter and to a greater proportion of tax-exempt income.


Average total loans were $792.4 billion in the fourth quarter compared with $810.2 billion in the third quarter. In part, the decline was driven by the Company’s objective to reduce identified higher-risk, non-strategic and liquidating consumer loan portfolios, down $4.7 billion in the fourth quarter. “While we believe we’ve been an industry-leader in supplying credit to consumers and businesses – $711 billion in commitments and originations in 2009 – loan demand remained relatively soft in the fourth quarter, although the pace of decline in core loans moderated slightly in the quarter,” said Atkins. “Wells Fargo continued to gain market share in many lending segments including residential mortgage, auto, education finance, SBA and middle market commercial. With commercial line utilization at cyclical lows and total wholesale banking commitments of $258 billion, we are encouraged by the potential for increased loan volume should a growing economy lead to increased commercial loan demand.”


“Deposit growth remained very strong as we continued to build consumer and business checking account relationships,” said Atkins. Average checking and savings deposits increased 20 percent (annualized) to $661.4 billion from $629.6 billion in third quarter 2009. Average mortgage escrow deposits were $27.5 billion compared with $28.7 billion in third quarter 2009. Average consumer checking accounts grew a net 5.8 percent from 2008 for Wells Fargo and Wachovia combined, and average business checking accounts grew a net 3.9 percent for the same period. Average total core deposits were $770.8 billion, up 6 percent (annualized) from $759.3 billion in third quarter 2009. During the quarter, $14 billion of Wachovia’s higher-rate certificates of deposit matured, with $6 billion of those balances retained. For the full year 2009, $109 billion of Wachovia’s high-rate certificates of deposit matured, with $62 billion retained, largely in low-cost CDs, checking and savings accounts. Only $8 billion of Wachovia high-rate CDs are expected to mature in 2010.


“We have built capital significantly in the last 15 months through industry-leading internal capital generation and three successful common stock offerings totaling over $33 billion, including the $12.2 billion offering in the fourth quarter that allowed us to repay TARP in full,” said Atkins. “Despite doubling the size of the Company and despite cyclically elevated credit costs this past year, our capital ratios ended 2009 higher than they were upon completion of the Wachovia acquisition, even after redeeming TARP in full and purchasing Prudential’s noncontrolling interest in the retail securities brokerage joint venture.”





Dec. 31,


Dec. 31,

(as a percent of total risk-weighted assets)

2009 (1)



Tier 1 capital




Tier 1 common equity (2)



Total capital




(1) December 31, 2009, ratios are preliminary.

(2) See table on page 38 for more information on Tier 1 common equity.

On January 1, 2010, the Company adopted new accounting guidance contained in FASB ASC 810, Consolidations, and FASB ASC 860, Transfers and Servicing (FAS 166/167), which resulted in the consolidation of certain off-balance sheet assets not currently included in its financial statements. The adoption of the new guidance added approximately $10 billion in risk-weighted assets and had a small positive impact on common equity upon adoption. The total impact was to increase Tier 1 common equity as a percentage of risk-weighted assets by 1 basis point, to reduce the Tier 1 capital ratio by 1 basis point and to reduce the total capital ratio by 4 basis points.

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