SEC Company Response from WELLS FARGO & (WFC) — Nov 18, 2008
WELLS FARGO & COMPANY/MN (WFC, WFCNP, WFC-PA, WFC-PC, WFC-PD, WFC-PL, WFC-PY, WFC-PZ) (CIK 0000072971)
Date: Nov. 18, 2008 · CIK: 0000072971 · Accession: 0000898822-08-001151
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-154879
Referenced dates: November 12, 2008
Letter
VIA EDGAR AND EMAIL Division of Corporation Finance Securities and Exchange Commission Registration Statement on Form S-4 Filed October 31, 2008 and Documents Incorporated by Reference File No. 333-154879
Dear Mr. McNair:
Set forth below are responses of Wells Fargo & Company (“Wells Fargo”) and Wachovia Corporation (“Wachovia”) to the comments of the Staff of the Division of Corporation Finance that were set forth in your letter dated November 12, 2008 regarding Wells Fargo’s Registration Statement on Form S-4 (the “Registration Statement”), Wells Fargo’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “Form 10-K”), Wells Fargo’s Quarterly Report on Form 10-Q for the Period ended September 30, 2008 (the “Wells Fargo Form 10-Q”) and Wachovia’s Quarterly Report on Form 10-Q for the Period ended September 30, 2008 (the “Wachovia Form 10-Q”). In connection with this letter responding to the Staff’s comments, we are filing Amendment No. 1 to the Registration Statement, and we have enclosed six courtesy copies of such Amendment No. 1 marked to show changes from the Registration Statement as filed on October 31, 2008.
Matt McNair, Esq.
November 17, 2008
Page 2
As we have discussed with the Staff, time is of the essence in moving this transaction forward, and we currently expect to complete the transaction, subject to the terms and conditions of the merger agreement, promptly following the meeting of Wachovia stockholders. Accordingly, to the extent the Staff believes that any of our responses are not sufficient to permit moving ahead to declare the Form S-4 to be effective, we stand ready to work with you to resolve any such concerns as quickly as possible, and we would appreciate it if the Staff would let us know of any concerns at the earliest possible time.
The Staff’s comments, indicated in bold, are followed by responses on behalf of Wells Fargo and Wachovia (with respect to the Registration Statement), by responses on behalf of Wells Fargo (with respect to the Form 10-K and the Wells Fargo Form 10-Q) and by responses on behalf of Wachovia (with respect to the Wachovia Form 10-Q).
Form S-4
General
1. Please provide any presentation, memo, report or other material provided to the boards of directors of Wells Fargo or Wachovia by either’s respective financial advisors with regard to the valuation or fairness of the transaction other than the opinion included in your registration statement.
In response to the Staff’s comment, we advise the Staff that no presentation, memo, report or other material was provided to the boards of directors of Wells Fargo or Wachovia by either’s respective financial advisors with regard to the valuation or fairness of the transaction other than the opinions included in the registration statement.
2. Please tell the staff whether any projection, analysis or other material non-public information was provided by Wells Fargo to Wachovia. Also, please provide to the staff the projections provided by Wachovia to its financial advisors and to Wells Fargo. We note that Wells Fargo did not provide financial forecasts to Wachovia’s financial advisors.
In response to the Staff’s comment, we advise the Staff that Wells Fargo did not provide any projection, analysis or other material non-public information to Wachovia. Projections provided by Wachovia to its financial advisors and to Wells Fargo are being furnished to the Staff supplementally.
3. We note numerous press articles describing the significance of IRS Notice 2008-83 relating to the treatment of deductions under section 382(h) of the Internal Revenue Code with respect to losses on loans after an ownership change of a bank. With a view toward providing greater transparency in your document, please address the following regarding that interpretation:
Please provide us with a summary of the incremental impact of this IRS Notice in relation to the merger transaction, including quantification of the tax benefits that would have resulted from the merger transaction based on the IRS guidance prior to the issuance of this IRS Notice compared to the tax benefits resulting from the merger transaction as computed based on this IRS Notice.
Matt McNair, Esq.
November 17, 2008
Page 3
The Staff is supplementally advised that IRS Notice 2008-83 did not have a direct incremental impact on the financial statements. Although Wachovia’s total losses were forecast to be large, at the time of signing of the definitive agreement our internal estimate of Wachovia’s “net unrealized built-in loss” (i.e., the amount of Wachovia’s total losses that would be subject to limitation under Section 382 of the Code following the transaction) was relatively small at approximately $3 billion. Contemporaneous internal estimates of the value of the Wachovia’s stock (including its outstanding preferred stock) resulted in an expected Section 382 limitation of approximately $1 billion per year. Accordingly, even in the extremely unlikely worst case scenario in which all of Wachovia’s built in losses were realized within the first year following the transaction, under the basic statutory provisions of Section 382 and without regard to Notice 2008-83, Wells Fargo would be able to use all such losses in excess of $3 billion immediately, and the $3 billion of such losses that would be subject to limitation under Section 382 would be used $1 billion per year in each of the first, second and third years following the merger. Wachovia’s “net unrealized built-in loss” is not, however, a static number and cannot ultimately be determined until closing. Absent Notice 2008-83, Wachovia’s “net unrealized built-in losses” would need to exceed $21 billion in order to lose any tax benefits under Section 382. We currently do not expect Wachovia’s “net unrealized built-in loss” to exceed $21 billion at closing.
Please tell us how this IRS notice impacted your decision making process to make an offer to Wachovia on October 2, 2008 after informing Wachovia that you were not prepared to make an offer on September 28, 2008.
The Staff is supplementally advised that the financial impact of the change reflected in the IRS notice was itself not a major factor in causing Wells Fargo to reconsider its willingness to ultimately make an offer for Wachovia on an unassisted basis. During the weekend of September 27/28, in which events were moving extremely fast in a highly compressed timeframe, Wells Fargo ultimately concluded that it had not had an opportunity to conduct asset due diligence that was sufficient to support the risk of making an offer to engage in a transaction in the absence of some kind of risk-sharing with the FDIC. Wells Fargo then engaged in several discussions with the FDIC about the nature and extent of such an “assisted transaction” involving such a risk-sharing arrangement. At that time, there was a primary focus on various loss risk allocation scenarios and the potential financial impact of those scenarios on Wells Fargo, and less of a focus on the effect of an assisted transaction from a tax standpoint (including the fact that under pre-existing law, an acquiror in a government-assisted bank acquisition is generally not permitted to carry forward any built-in losses of the target). After the public announcement regarding a letter of intent for a potential transaction involving Citigroup, the disclosure of the IRS notice contributed to Wells Fargo re-focusing on the issue of limitations under Section 382 generally. As a result of this further review, Wells Fargo concluded that the availability of tax benefits related to built-in losses at Wachovia under pre-existing law made a traditional, unassisted acquisition more financially attractive relative to an assisted transaction than had previously been believed. While the IRS notice served to help stimulate this further analysis, under the circumstances the additional economic benefit from the change reflected in the IRS notice itself was modest. In addition, the tax analysis was one of several factors that helped Wells Fargo conclude that it could make an offer on an unassisted basis; additional time to perform further analysis helped Wells Fargo to better estimate the risk inherent in various Wachovia businesses and assets and the likely range of ultimate cost to Wells Fargo.
Matt McNair, Esq.
November 17, 2008
Page 4
Please provide us with an analysis of the impact of this IRS notice on the pro forma results of operations of the combined company and your internal rate of return goal as noted in the third bullet point on page 47.
As noted above the issuance of the notice did not have any material impact on the pro forma results of operations of the combined company, other than added assurance that tax benefits resulting from any losses would not be limited as to the timing of the recognitions of any such tax benefit.
4. Please file all exhibits, including drafts of your legality and tax opinions, with your next amendment; providing them as soon as practicable will permit for an expedited review of the materials.
In response to the Staff’s request, we have filed all exhibits with the amended Form S-4 and certain of the exhibits have previously been provided to the Staff supplementally.
5. The Forms 10-Q and 8-K filed October 30, 2008 disclose Treasury’s $25 billion investment in Wells Fargo pursuant to the Capital Purchase Program and the issuance of warrants to purchase approximately 110.3 million shares of Wells Fargo common stock. We note that Capital Purchase Program participants are subject to certain restrictions with respect to executive compensation. Please revise the registration statement, where appropriate, to briefly summarize the restrictions on compensation applicable to Wells Fargo as a result of its participation in the Capital Purchase Program.
In response to the Staff's comment, we have added additional disclosure on page 18 of the Form S-4.
6. We note the disclosure on page 46 that, in agreeing to the merger, Wachovia took into account the fact that “Wells Fargo’s credit rating will be a substantial strength for the combined company in terms of funding and liquidity.” However, recent reports have indicated that Wells Fargo’s credit rating may be downgraded. Please briefly disclose, where appropriate, the impact a credit rating downgrade may have on the combined company’s funding and liquidity and whether a downgrade would cause Wells Fargo, or the combined company, to violate any debt covenants. Please also disclose whether Wachovia’s board, despite any impact a downgrade might have, would continue to consider Wells Fargo’s credit rating to be a substantial strength to the combined company.
In response to the Staff’s comment, we have added additional disclosure on pages 20 and 37 of the Form S-4. We supplementally advise the Staff that a reasonably possible credit rating downgrade would not otherwise significantly impact the combined company's funding or liquidity or cause the violation of any debt covenants.
7. The risk factor discussion must immediately follow the summary section. Please revise accordingly. Refer to Item 503(c) of Regulation S-K.
In response to the Staff’s comment, we have revised the Form S-4 so that the risk factor discussion immediately follows the summary section.
Matt McNair, Esq.
November 17, 2008
Page 5
8. You qualify the summaries of certain documents, such as the merger agreement and fairness opinion, by referencing the individual documents. Where you do this, please indicate that they are summaries of the material terms.
In response to the Staff’s comment, we have revised the disclosure on pages 43, 49, 55 and 73 of the Form S-4.
Prospectus Cover Page
9. Please state the title and amount of securities to be offered. Refer to Item 501(b)(2) of Regulation S-K.
In response to the Staff’s comment, we have added the title and amount of securities to be offered on the Prospectus cover page.
10. Please identify the trading symbol of the securities to be offered. We note this is disclosed elsewhere in the document. Refer to Item 501(b)(4) of Regulation S-K.
In response to the Staff’s comment, we have added the trading symbol of the securities to be offered on the Prospectus cover page.
Summary
General
11. Please revise the preamble to state that it highlights “the material” information, not “selected” from the document.
In response to the Staff’s comment, we have revised the disclosure on page 6 of the Form S-4.
Opinions of Wachovia’s Financial Advisors, page 8
12. Please revise this section to describe the method of selection of Perella Weinberg. Refer to Item 1015(b)(3) of Regulation M-A.
In response to the Staff’s comment, we have revised the disclosure on page 50 of the Form S-4.
13. Please revise this section to disclose any material relationship that existed during the past two years, or is mutually understood to be contemplated, and any compensation received or to be received as a result of the relationship between the financial advisors and Wachovia and/or Wells Fargo. Refer to Item 1015(b)(4) of Regulation M-A. Alternatively, confirm that no such relationships existed.
In response to the Staff’s comment, we have revised the disclosure on pages 44 and 50 of the Form S-4.
Wachovia’s Directors and Executive Officers May Receive Additional Benefits ..., page 8
Matt McNair, Esq.
November 17, 2008
Page 6
14. Please disclose the approximate total dollar amount that will be paid to Wachovia directors and executive officers as a result of the merger. We note the disclosure beginning on page 59.
In response to the Staff’s comment, we have revised the disclosure on page 8 of the Form S-4.
Unaudited Pro Forma Condensed Combined Financial Information, page 18
15. You disclose that the unaudited pro forma information does not give effect to the Wachovia preferred stock issued to Wells Fargo in connection with the merger. Please revise to disclose the date the preferred stock was issued and to clarify that this transaction would get eliminated in the pro forma presentation.
In response to the Staff’s comment, we have disclosed the date on which the Wachovia preferred stock was issued to Wells Fargo in connection with the merger and clarified that this transaction would be eliminated in the pro forma presentation on pages 59 and 63 of the Form S-4.
16. We note your disclosure in footnote 1 on page 20 that total stockholders’ equity does not reflect the $25 billion in securities issued to the US Treasury Department. Given the significance of the transactions with the US Treasury Department, please tell us why you do not believe it would be appropriate and more transparent to provide a separate column in the financial statements illustrating the impact of the securities issued to the U.S. Treasury Department on total stockholders’ equity, net income available to common stockholders, earnings per common share, diluted earnings per common share, and diluted average common shares outstanding.
In response to the Staff’s comment, we have revised the unaudited pro forma condensed combined financial information to illustrate both the impact of the securities issued to the U.S. Treasury Department on October 28, 2008 and our common stock offering on November 6, 2008.
Note 5: Pro Forma Adjustments, page 24
17. We have the following comments related to Balance Sheet Adjustment B:
A. Please revise
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responseletter.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
Wachtell, Lipton, Rosen & Katz
November 17, 2008
VIA EDGAR AND EMAIL
Matt McNair, Esq.
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 4561
Washington, D.C. 20549
Re: Wells Fargo & Company
Registration Statement on Form S-4
Filed October 31, 2008
and Documents Incorporated by Reference
File No. 333-154879
Dear Mr. McNair:
Set forth below are responses of Wells Fargo & Company (“Wells Fargo”) and Wachovia Corporation (“Wachovia”) to the comments of the Staff of the Division of Corporation Finance that were set forth in your letter dated November 12, 2008 regarding Wells Fargo’s Registration Statement on Form S-4 (the “Registration Statement”), Wells Fargo’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “Form 10-K”), Wells Fargo’s Quarterly Report on Form 10-Q for the Period ended September 30, 2008 (the “Wells Fargo Form 10-Q”) and Wachovia’s Quarterly Report on Form 10-Q for the Period ended September 30, 2008 (the “Wachovia Form 10-Q”). In connection with this letter responding to the Staff’s comments, we are filing Amendment No. 1 to the Registration Statement, and we have enclosed six courtesy copies of such Amendment No. 1 marked to show changes from the Registration Statement as filed on October 31, 2008.
Matt McNair, Esq.
November 17, 2008
Page 2
As we have discussed with the Staff, time is of the essence in moving this transaction forward, and we currently expect to complete the transaction, subject to the terms and conditions of the merger agreement, promptly following the meeting of Wachovia stockholders. Accordingly, to the extent the Staff believes that any of our responses are not sufficient to permit moving ahead to declare the Form S-4 to be effective, we stand ready to work with you to resolve any such concerns as quickly as possible, and we would appreciate it if the Staff would let us know of any concerns at the earliest possible time.
The Staff’s comments, indicated in bold, are followed by responses on behalf of Wells Fargo and Wachovia (with respect to the Registration Statement), by responses on behalf of Wells Fargo (with respect to the Form 10-K and the Wells Fargo Form 10-Q) and by responses on behalf of Wachovia (with respect to the Wachovia Form 10-Q).
Form S-4
General
1. Please provide any presentation, memo, report or other material provided to the boards of directors of Wells Fargo or Wachovia by either’s respective financial advisors with regard to the valuation or fairness of the transaction other than the opinion included in your registration statement.
In response to the Staff’s comment, we advise the Staff that no presentation, memo, report or other material was provided to the boards of directors of Wells Fargo or Wachovia by either’s respective financial advisors with regard to the valuation or fairness of the transaction other than the opinions included in the registration statement.
2. Please tell the staff whether any projection, analysis or other material non-public information was provided by Wells Fargo to Wachovia. Also, please provide to the staff the projections provided by Wachovia to its financial advisors and to Wells Fargo. We note that Wells Fargo did not provide financial forecasts to Wachovia’s financial advisors.
In response to the Staff’s comment, we advise the Staff that Wells Fargo did not provide any projection, analysis or other material non-public information to Wachovia. Projections provided by Wachovia to its financial advisors and to Wells Fargo are being furnished to the Staff supplementally.
3. We note numerous press articles describing the significance of IRS Notice 2008-83 relating to the treatment of deductions under section 382(h) of the Internal Revenue Code with respect to losses on loans after an ownership change of a bank. With a view toward providing greater transparency in your document, please address the following regarding that interpretation:
Please provide us with a summary of the incremental impact of this IRS Notice in relation to the merger transaction, including quantification of the tax benefits that would have resulted from the merger transaction based on the IRS guidance prior to the issuance of this IRS Notice compared to the tax benefits resulting from the merger transaction as computed based on this IRS Notice.
Matt McNair, Esq.
November 17, 2008
Page 3
The Staff is supplementally advised that IRS Notice 2008-83 did not have a direct incremental impact on the financial statements. Although Wachovia’s total losses were forecast to be large, at the time of signing of the definitive agreement our internal estimate of Wachovia’s “net unrealized built-in loss” (i.e., the amount of Wachovia’s total losses that would be subject to limitation under Section 382 of the Code following the transaction) was relatively small at approximately $3 billion. Contemporaneous internal estimates of the value of the Wachovia’s stock (including its outstanding preferred stock) resulted in an expected Section 382 limitation of approximately $1 billion per year. Accordingly, even in the extremely unlikely worst case scenario in which all of Wachovia’s built in losses were realized within the first year following the transaction, under the basic statutory provisions of Section 382 and without regard to Notice 2008-83, Wells Fargo would be able to use all such losses in excess of $3 billion immediately, and the $3 billion of such losses that would be subject to limitation under Section 382 would be used $1 billion per year in each of the first, second and third years following the merger. Wachovia’s “net unrealized built-in loss” is not, however, a static number and cannot ultimately be determined until closing. Absent Notice 2008-83, Wachovia’s “net unrealized built-in losses” would need to exceed $21 billion in order to lose any tax benefits under Section 382. We currently do not expect Wachovia’s “net unrealized built-in loss” to exceed $21 billion at closing.
Please tell us how this IRS notice impacted your decision making process to make an offer to Wachovia on October 2, 2008 after informing Wachovia that you were not prepared to make an offer on September 28, 2008.
The Staff is supplementally advised that the financial impact of the change reflected in the IRS notice was itself not a major factor in causing Wells Fargo to reconsider its willingness to ultimately make an offer for Wachovia on an unassisted basis. During the weekend of September 27/28, in which events were moving extremely fast in a highly compressed timeframe, Wells Fargo ultimately concluded that it had not had an opportunity to conduct asset due diligence that was sufficient to support the risk of making an offer to engage in a transaction in the absence of some kind of risk-sharing with the FDIC. Wells Fargo then engaged in several discussions with the FDIC about the nature and extent of such an “assisted transaction” involving such a risk-sharing arrangement. At that time, there was a primary focus on various loss risk allocation scenarios and the potential financial impact of those scenarios on Wells Fargo, and less of a focus on the effect of an assisted transaction from a tax standpoint (including the fact that under pre-existing law, an acquiror in a government-assisted bank acquisition is generally not permitted to carry forward any built-in losses of the target). After the public announcement regarding a letter of intent for a potential transaction involving Citigroup, the disclosure of the IRS notice contributed to Wells Fargo re-focusing on the issue of limitations under Section 382 generally. As a result of this further review, Wells Fargo concluded that the availability of tax benefits related to built-in losses at Wachovia under pre-existing law made a traditional, unassisted acquisition more financially attractive relative to an assisted transaction than had previously been believed. While the IRS notice served to help stimulate this further analysis, under the circumstances the additional economic benefit from the change reflected in the IRS notice itself was modest. In addition, the tax analysis was one of several factors that helped Wells Fargo conclude that it could make an offer on an unassisted basis; additional time to perform further analysis helped Wells Fargo to better estimate the risk inherent in various Wachovia businesses and assets and the likely range of ultimate cost to Wells Fargo.
Matt McNair, Esq.
November 17, 2008
Page 4
Please provide us with an analysis of the impact of this IRS notice on the pro forma results of operations of the combined company and your internal rate of return goal as noted in the third bullet point on page 47.
As noted above the issuance of the notice did not have any material impact on the pro forma results of operations of the combined company, other than added assurance that tax benefits resulting from any losses would not be limited as to the timing of the recognitions of any such tax benefit.
4. Please file all exhibits, including drafts of your legality and tax opinions, with your next amendment; providing them as soon as practicable will permit for an expedited review of the materials.
In response to the Staff’s request, we have filed all exhibits with the amended Form S-4 and certain of the exhibits have previously been provided to the Staff supplementally.
5. The Forms 10-Q and 8-K filed October 30, 2008 disclose Treasury’s $25 billion investment in Wells Fargo pursuant to the Capital Purchase Program and the issuance of warrants to purchase approximately 110.3 million shares of Wells Fargo common stock. We note that Capital Purchase Program participants are subject to certain restrictions with respect to executive compensation. Please revise the registration statement, where appropriate, to briefly summarize the restrictions on compensation applicable to Wells Fargo as a result of its participation in the Capital Purchase Program.
In response to the Staff's comment, we have added additional disclosure on page 18 of the Form S-4.
6. We note the disclosure on page 46 that, in agreeing to the merger, Wachovia took into account the fact that “Wells Fargo’s credit rating will be a substantial strength for the combined company in terms of funding and liquidity.” However, recent reports have indicated that Wells Fargo’s credit rating may be downgraded. Please briefly disclose, where appropriate, the impact a credit rating downgrade may have on the combined company’s funding and liquidity and whether a downgrade would cause Wells Fargo, or the combined company, to violate any debt covenants. Please also disclose whether Wachovia’s board, despite any impact a downgrade might have, would continue to consider Wells Fargo’s credit rating to be a substantial strength to the combined company.
In response to the Staff’s comment, we have added additional disclosure on pages 20 and 37 of the Form S-4. We supplementally advise the Staff that a reasonably possible credit rating downgrade would not otherwise significantly impact the combined company's funding or liquidity or cause the violation of any debt covenants.
7. The risk factor discussion must immediately follow the summary section. Please revise accordingly. Refer to Item 503(c) of Regulation S-K.
In response to the Staff’s comment, we have revised the Form S-4 so that the risk factor discussion immediately follows the summary section.
Matt McNair, Esq.
November 17, 2008
Page 5
8. You qualify the summaries of certain documents, such as the merger agreement and fairness opinion, by referencing the individual documents. Where you do this, please indicate that they are summaries of the material terms.
In response to the Staff’s comment, we have revised the disclosure on pages 43, 49, 55 and 73 of the Form S-4.
Prospectus Cover Page
9. Please state the title and amount of securities to be offered. Refer to Item 501(b)(2) of Regulation S-K.
In response to the Staff’s comment, we have added the title and amount of securities to be offered on the Prospectus cover page.
10. Please identify the trading symbol of the securities to be offered. We note this is disclosed elsewhere in the document. Refer to Item 501(b)(4) of Regulation S-K.
In response to the Staff’s comment, we have added the trading symbol of the securities to be offered on the Prospectus cover page.
Summary
General
11. Please revise the preamble to state that it highlights “the material” information, not “selected” from the document.
In response to the Staff’s comment, we have revised the disclosure on page 6 of the Form S-4.
Opinions of Wachovia’s Financial Advisors, page 8
12. Please revise this section to describe the method of selection of Perella Weinberg. Refer to Item 1015(b)(3) of Regulation M-A.
In response to the Staff’s comment, we have revised the disclosure on page 50 of the Form S-4.
13. Please revise this section to disclose any material relationship that existed during the past two years, or is mutually understood to be contemplated, and any compensation received or to be received as a result of the relationship between the financial advisors and Wachovia and/or Wells Fargo. Refer to Item 1015(b)(4) of Regulation M-A. Alternatively, confirm that no such relationships existed.
In response to the Staff’s comment, we have revised the disclosure on pages 44 and 50 of the Form S-4.
Wachovia’s Directors and Executive Officers May Receive Additional Benefits ..., page 8
Matt McNair, Esq.
November 17, 2008
Page 6
14. Please disclose the approximate total dollar amount that will be paid to Wachovia directors and executive officers as a result of the merger. We note the disclosure beginning on page 59.
In response to the Staff’s comment, we have revised the disclosure on page 8 of the Form S-4.
Unaudited Pro Forma Condensed Combined Financial Information, page 18
15. You disclose that the unaudited pro forma information does not give effect to the Wachovia preferred stock issued to Wells Fargo in connection with the merger. Please revise to disclose the date the preferred stock was issued and to clarify that this transaction would get eliminated in the pro forma presentation.
In response to the Staff’s comment, we have disclosed the date on which the Wachovia preferred stock was issued to Wells Fargo in connection with the merger and clarified that this transaction would be eliminated in the pro forma presentation on pages 59 and 63 of the Form S-4.
16. We note your disclosure in footnote 1 on page 20 that total stockholders’ equity does not reflect the $25 billion in securities issued to the US Treasury Department. Given the significance of the transactions with the US Treasury Department, please tell us why you do not believe it would be appropriate and more transparent to provide a separate column in the financial statements illustrating the impact of the securities issued to the U.S. Treasury Department on total stockholders’ equity, net income available to common stockholders, earnings per common share, diluted earnings per common share, and diluted average common shares outstanding.
In response to the Staff’s comment, we have revised the unaudited pro forma condensed combined financial information to illustrate both the impact of the securities issued to the U.S. Treasury Department on October 28, 2008 and our common stock offering on November 6, 2008.
Note 5: Pro Forma Adjustments, page 24
17. We have the following comments related to Balance Sheet Adjustment B:
A. Please revise