Net charge-offs in the real estate 1-4 family junior lien portfolio of $847million included $801 million in the legacy Wells Fargo portfolio, whichincreased $99 million from fourth quarter 2008 as residential real estate valuescontinued to be depressed. "These results aren`t solely because of declininghome values," said Loughlin. "As more customers seek to modify their firstmortgages, there may be an adverse effect on the credit performance of juniorlien holders behind these modifications." More information about the Home Equityportfolio is available in table HOME EQUITY PORTFOLIOS. Commercial and commercial real estate net charge-offs of $697 million included$667 million from the legacy Wells Fargo portfolio, down $175 million from $842million in fourth quarter 2008, which included $294 million related to thecustomers of the Madoff investment firm.

The linked-quarter trends alsoreflected a $100 million increase in losses in our Business Direct portfoliowhile other commercial losses declined and remained at relatively low levels."Wholesale credit results continued to deteriorate," said Loughlin. Total nonperforming assets were $12.6 billion (1.50 percent of total loans) atMarch 31, 2009, and included $10.5 billion of nonperforming loans and $2.1billion of foreclosed assets and repossessed real estate and vehicles.Nonperforming loans increased $3.7 billion, or 44 basis points as a percentageof loan balances, from December 31, 2008, with increases in both the commercialand retail segments. The increase included $1.5 billion relating to Wachovia,which grew from a relatively low $97 million at year end as virtually all of theassociated nonaccrual loans were no longer considered nonaccrual after applyingrequired purchase accounting The vast majority of nonperforming loans aresecured. The increases in nonperforming loans were concentrated in portfoliossecured by residential real estate or with borrowers dependent on the housingindustry. "We expect nonperforming asset balances to continue to grow, reflecting anenvironment where retaining these assets is the most viable economic option, aswell as our efforts to modify more mortgage loans to reduce foreclosures andkeep customers in their homes," said Loughlin. "We remain focused on proactivelyidentifying problem credits, moving them to nonperforming status and recordingthe loss content in a timely manner. We`ve increased and will continue toincrease staffing in our workout and collection organizations to ensure thesetroubled borrowers receive the attention and help they need." Loans 90 days or more past due and still accruing totaled $15.1 billion, $12.7billion, and $6.9 billion at March 31, 2009, December 31, 2008, and March 31,2008, respectively.

For the same periods, the totals included $9.5 billion, $8.2billion and $5.3 billion, respectively, in advances pursuant to the Company`sservicing agreement to GNMA mortgage pools and similar loans whose repaymentsare insured by the Federal Housing Administration or guaranteed by theDepartment of Veteran Affairs. Loans 90 Days or More Past Due and Still Accruing*(Excluding Insured/Guaranteed GNMA and Similar Loans) Includes Wells Fargo and WachoviaMarch 31,December 31,(in millions) 20092008Commercial and commercial real estate:Commercial $417$218 Other real estate mortgage355 88Real estate construction624 232 Total commercial and commercial real estate 1,396 538 Consumer: Real estate 1-4 family first mortgage 1,688 1,565 Real estate 1-4 family junior lien mortgage 660 590 Credit card 738 687 Other revolving credit and installment1,105 1,047 Total consumer4,191 3,889 Foreign 2934Total loans$5,616$4,461 *The table above does not include loans acquired from Wachovia accounted for underSOP 03-3 that were contractually 90 days past due and still accruing. These loans have a related nonaccretable difference that will absorb future losses, therefore charge-offs on these loans are not expected to reduce income in future periods to the extent the original estimates maintain their accuracy. Allowance for Credit Losses2(Includes Wells Fargo and, beginning December 31, 2008, Wachovia)The allowance for credit losses, including the reserve for unfunded commitments,totaled $22.8 billion at March 31, 2009, compared with $21.7 billion at December31, 2008. First quarter 2009 results included a credit reserve build of $1.3billion, primarily for higher projected losses in several consumer creditportfolios, increased levels of residential real estate modifications classifiedas troubled debt restructurings and expected deterioration in the wholesaleportfolios and commercial non-SOP 03-3 impaired loans. The allowance coverage tototal loans increased to 2.71 percent, or 2.91 percent of loans excluding SOP03-3 impaired loans, compared with 2.51 percent at December 31, 2008, andcovered expected consumer losses for at least the next 12 months and providedapproximately 24 months of anticipated commercial loss coverage.

"We believe theallowance was adequate for expected losses inherent in the loan portfolio atMarch 31, 2009, including both performing and nonperforming loans," saidLoughlin. (2 See explanation in table LOANS SUBJECT TO SOP 03-3 of the accounting forcredit-impaired loans acquired from Wachovia accounted for under SOP 03-3, andthe impact on selected financial ratios.)CapitalCapital ratios increased during the quarter. Tier 1 capital was 8.28 percent.The TCE ratio increased to 3.28 percent of tangible assets, up from 2.86 percentat December 31, 2008. See table TANGIBLE COMMON EQUITY for the TCE calculation.TCE to estimated risk-weighted assets rose to 3.83 percent at March 31, 2009. "We have built reserves for six consecutive quarters, dating back to fourthquarter 2007 when credit deterioration became evident," said Atkins. "Thesereserve builds have strengthened the balance sheet and position us for thefuture.