Live-Blogging The Wachargo Conference Call

Posted by Bess Levin, Oct 03, 2008, 9:25am

9:25: all hold music sucks compared to the Treasury's choice of 'Stairway to Heaven.'

9:28: Let's make this a group thing. In case you didn't know-- 877-425-9480 (domestic) and (210) 689-8848 (international) with the access code 299254, or live audio webcast at http://www.wellsfargo.com/invest_relations/presents.

9:32: chairman of WFC, Dick Kovacevich,. "This is a very exciting moment in the long history of wells fargo and wachovia"...combining makes a "unique and unparalleled firm."

Apparently WB and WFC share "Strong ethical values of doing what's right."

"Winners are those with the best people." What do you think Citi's feeling right now?

9:34: WB CEO (and goldman alum) Bob Steel is amazing etc etc etc.

9:35: Steel in the hizzous. "THIS DEAL WILL COME AT NO COST TO THE AMERICAN TAX PAYER."

9:36 WFC CEO John Stumpf takes the mic. "A number of factors could cause everything I say today to change." Like another bank swooping in and stealing the deal, or the Patriot Act Bailout Bill not being passed.

This is a whole deal. No child left behind. We're taking the whole damn thing.

Anticipating a capital raise of up to $20 bn in the 4th quarter, primarily common.

SO. MUCH. SYNERGY. #1 commercial banking presence in the West + #1 commercial banking presence in the South East.

9:41 Howard Atkins, WFC CFO takes the mic. "An important part of what's going on today is credit."

Losses are estimated at $74 bn, comprised of credit and rate marks

9:46 $10 bn in transaction costs.

With respect to the balance sheet, synergies, and capital, we expect to exceed the longstanding commitment we've made to the public.

Questions!

Q: Matt O'Connor, UBS: The 74 bn of losses-- that's a pretax number, right?
A: correct.
Q: so you're taking 30 bn up front? approximately?
A: we didn't disclose it, and we don't know.
Q: how are you going to get your ratios higher?
A: the strength of the earnings will get us there....we're expecting run off, etc
Q: how are you going to manage the option on book that WB has?
A: all of the above matt

Q: Nancy Bush from NAB research: expecting to add to WFC's earning's per share yadda yadda...isn't that like 'other than that, how did you like the show, mrs. lincoln?' does it become accretive in your 3rd quarter?
A: yes.
Q: ARE YOU GOING TO HANG BANNERS OUTSIDE ON THE WACHOVIA STORE?
A. we're going to do lots of different things to help welcome them...share ATMs when it's available, make sure people are excited and engaged.

Q: Mike Mayo from Deutsche Bank: [makes a joke about how long it'll take to integrate that i guess was based on a quote WFC said at one point and goes 'so i guess those are your words, right back at ya']
A: indeed, this will not happen quickly...we're convinced with the teams we have, and our experience merging with large organizations that we'll do it right, delivering compelling value to shareholders, communities, etc.
Q: how did you come up with 20 bn of capital that you need? if you same the same marks on your own portfolio that you're taking on wb etc? and is Warren Buffett going to throw you some money?
A: it was a conservative estimate to levels that we feel are appropriate. it was a number we feel is 'doable.' keep in mind the powerful internal rate of capital generation.
Q: and Warren Buffett?
A: it's going to be attractive...warren can speak to it himself.

Q: Chris from Stifel Nicholas: dick- do you plan to stay on longer than the 65 year old retirement age?
A: howard answers--"i've asked dick to stay on...i haven't figured out how to talk to his wife mary jo."
Q: what changed your mind in 5 days to do the deal now
[awkwardly long pause]
A: any deal of this size and complexity is either v. difficult or almost impossible to do in a short time frame...so...as we always do...we don't do any deal that we're not comfortable that the financials will increase shareholder value...it took us the amount of time til today to make sure we got to that place.
Q: Thanks Dick, good luck with that conversation with your wife.

Q: Jason Goldberg from Barclays: i'm going to throw out two headlines--"citi believes it has exclusive rights to wachovia's branch operations" and "fed cautious about wells fargo bid to wachovia"
A: huh?
Q: [reads the headlines again]
A: we think this deal is solid...we're not aware of merger agreements that had been consummated at the time...i don't know about issues that citi has or doesn't have...we're going to see this through to consummation
Q: and that other headline? have you had discussions w/ regulators?
A: yes, we've had discussions...i think the regulators are comfortable with what's going on here
Q: and the 10 percent deposit cap?
A: we believe we don't exceed the ten percent deposit cap...but we're close

Q: John from Stanford Berstein: what determines how much of the 74 bn gets taken at closing and what gets spread out.
A: accounting...looking at portfolios...there are going to be a lot of up front costs...not just accretive, but net losses. "I can't think of anything worse than losing customers because you're trying to get something done in year one or two."

Kovacevish: "I remember, and you're all so young that you don't, that we said it would take us three years to do the Norwest deal...and there was a resounding boo at the New York Plaza....Dick Baker me at Wachovia First Union and asked us how we did it. The old Wells Fargo people won't let us do it faster because they've suffered through the process when you rush it."

Q:David Hilder, Putnam Investments: any thoughts on management structure beyond Dick staying on?
A: it's too early
Q: and the name?
A: I think it's pretty obvious. it's going to be Wells Fargo
Q: Steel-- did WB have a binding agreement w/ Citi and do you owe Citi anything in compensation?
A: these calls are forward looking...but i'm sensing some controversy on this issue.
Q: but you can't speak to a binding agreement w/ citi?
A. NO.

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