NEW YORK (Standard&Poor's) Oct. 21, 2009--Standard&Poor's Ratings Services said today that Wells Fargo&Co.'s (WFC; AA-/Negative/A-1+) third-quarter earnings report does not affect the ratings. WFC's pretax preprovision income is holding up better than we expected thanks to improving funding costs and continued strong mortgage banking income, including hedging gains on mortgage-servicing rights net of write-downs. The Wachovia merger appears to be tracking favorably against management's original assumptions. Management now estimates merger costs to be only $5.5 billion versus the original assumption of $7.9 billion, and cost savings should continue to produce positive operating leverage. Management's original loss assumptions on the Wachovia loan portfolios are also tracking better than planned, notably in the Pick-a-Pay portfolio. Although
