Company: WFC-PC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000072971-25-000201
Chunk: 57

Company: WELLS FARGO & COMPANY/MN
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 1
Chunk 57
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 risk related to derivative assets, debit valuation adjustments (DVA) to reflect Wells Fargo’s own credit risk related to derivative liabilities, and funding valuation adjustments (FVA) to reflect the funding cost of uncollateralized or partially collateralized derivative assets and liabilities. CVA, which considers the effects of enforceable master netting agreements and collateral arrangements, reflects market-based views of the credit quality of each counterparty. We estimate CVA based on observed credits spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.Table 11.7 presents the impact of derivative valuation adjustments (excluding the effect of any related hedges), which are included in net gains (losses) from trading and securities on the consolidated statement of income. For additional information, see Note 2 (Trading Activities).Table 11.7:  Net Gains (Losses) from Derivative Valuation AdjustmentsQuarter ended June 30,Six months ended June 30,(in millions)2025202420252024CVA$(36)(28)$(59)24 DVA10 10 (8)(11)FVA(26)— (47)— Total$(52)(18)$(114)13 Table 11.8 presents the impact of derivative valuation adjustments on derivative fair values. Table 11.8:  Derivative Valuation AdjustmentsContra Liability (Contra Asset)(in millions)Jun 30,2025Dec 31,2024CVA$(333)(275)DVA217 226 FVA, net(132)(85)Total derivative valuation adjustments$(248)(134)Credit DerivativesCredit derivative contracts transfer the credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers in managing their risks, to manage our counterparty credit risk, and to hedge certain loan exposures. We act as both a purchaser and seller of credit protection. We may purchase and sell credit protection on corporate debt obligations through the use of credit default swaps, risk participation swaps or other credit derivatives. As a seller of credit protection, we would be required to perform under the sold credit derivatives in the event of default by the referenced obligors, such as bankruptcy, capital restructuring or lack of principal and/or interest payment.Table 11.9 provides details of sold credit derivatives.Table 11.9:  Sold Credit Derivatives Credit protection sold -