Company: WFC-PC
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000072971-25-000253
Chunk: 59

Company: WELLS FARGO & COMPANY/MN
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 1
Chunk 59
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 underlying assets referenced by the credit derivative have an external rating that is investment grade. If an external rating is not available, we classify the credit derivative as non-investment grade. We manage our maximum exposure to sold credit derivatives by requiring collateral from our counterparties, which may include cash and non-cash collateral, and entering into purchased credit derivatives with identical or similar reference positions in order to achieve our desired credit risk profile. Our credit risk management approach is designed to provide the ability to recover amounts that would be paid under sold credit derivatives.Credit-Risk Contingent FeaturesCertain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. Table 11.10 illustrates our exposure to OTC bilateral derivative contracts with credit-risk contingent features, collateral we have posted, and the additional collateral we would be required to post if the credit rating of our debt was downgraded below investment grade.Table 11.10:  Credit-Risk Contingent Features(in billions)Sep 30,2025Dec 31,2024Net derivative liabilities with credit-risk contingent features$23.7 23.8 Collateral posted20.5 19.8 Additional collateral to be posted upon a below investment grade credit rating (1)3.2 4.1 (1)Any credit rating below investment grade requires us to post the maximum amount of collateral.

Wells Fargo & Company97

Note 12:  Fair Value Measurements

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to fulfill fair value disclosure requirements. Assets and liabilities recorded at fair value on a recurring basis, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table 12.1 in this Note. Additionally, from time to time, we record fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of an accounting method such as lower of cost or fair value (LOCOM) and the measurement alternative, or write-downs of individual assets. Assets recorded at fair value on a nonrecurring basis are presented in Table 12.4 in this Note. We provide in Table 12.9 estimates of fair value for financial instruments that are not recorded at fair value, such as loans and debt liabilities carried at amortized cost.See Note 1 (Summary of Significant Accounting Policies