Company: WFC-PC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000072971-25-000201
Chunk: 86

Company: WELLS FARGO & COMPANY/MN
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 1
Chunk 86
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 expected loss. We believe the carrying value is more representative of our current exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.For our guarantees in Table 14.1, non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee, which is determined based on an external rating or an internal credit grade that is below investment grade, if applicable.WRITTEN OPTIONS.  We enter into written foreign currency options and over-the-counter written equity put options that are derivative contracts that have the characteristics of a guarantee. The fair value of written options represents our view of the probability that we will be required to perform under the contract. The fair value of these written options was a liability of $172 million and $88 million at June 30, 2025, and December 31, 2024, respectively. The fair value may be an asset as a result of deferred premiums on certain option trades. The maximum exposure to loss represents the notional value of these derivative contracts. At June 30, 2025, the maximum exposure to loss was $60.9 billion, with $57.0 billion expiring in three years or less compared with $34.3 billion and $31.5 billion, respectively, at December 31, 2024. See Note 11 (Derivatives) for additional information regarding written derivative contracts.MERCHANT SERVICES.  We provide merchants with solutions for processing debit and credit card transactions through payment networks and serve as a card network sponsor for large payment companies. In April 2025, we acquired the remaining interest in our merchant services joint venture. In our role as a merchant acquiring bank, we have a potential obligation in connection with disputes between the merchant and the cardholder that are resolved in favor of the cardholder, referred to as a charge-back transaction. We estimate our potential maximum exposure to be the total merchant transaction volume in the preceding four months, which is generally the lifecycle for a charge-back transaction. As of June 30, 2025, our potential maximum exposure was approximately $412.2 billion, and related losses were insignificant. GUARANTEES OF SUBSIDIARIES.  The Parent fully and unconditionally guarantees the payment of principal, interest, and any other