As we think about 2010, we came in to the year with a focus on continuing to clean up the issues left over from the crisis, while continue to driving the franchise forward. Finishing integration work in Merrill Lynch and Countrywide and continue to simplify our business model. During the year, we made progress in many of these items. In the area of credit, our improvement has been strong. Charge-offs have now improved for seven consecutive quarters and yet there's still room to improve here. We continue to see improvements in delinquencies at this quarter and of the last few quarters. The underwriting changes we made in 2008 across all the products with Credit Card, Home Equity and First Mortgage are performing better than we would've expected when we made those changes in those years. This onto to hold us in good stead as we move towards 2011 in terms of credit.On the credit side, we released reserves of $7 billion during 2010, and while we know this is not core earnings, it helped offset some of the cost of representation and warranties about $7 billion, no litigation costs and other matters during the year. But even without release, our reserve coverage ratio of 1.6x annualized charge-offs is the highest this company's had in many, many years. We also identified the non-core loan portfolios and began to work those off out of the company. As we showed you, that's about $130 billion at the start of the year, now it's down around $100 billion. Now the good news on the loan side as the franchise is driven forward, we are starting to see stability in the core loan balances that we want to carry-forward for this company. We've even seen some modest growth with some of the areas. Our utilization rates, for example, and our commercial rate was stable in the fourth quarter from quarter three and that bodes well for 2011.
As we think about capital, we ended the year with questions around it especially given the fact that the new Basel Rules are starting to emerge along with the other changes in adopting Basel II and the fed market risk rules, et cetera. We told you at the beginning of the year we need to hit targets of 5.5% to 6% tangible common equity ratios and 8.5% to 9% tier 1 common ratios under Basel I by year end in order to have the capital to run this company. This represents the view that we have that the risk capital we need to run the company. We achieved both of those goals this year.We've also started early to make good progress to mitigating the changes that are going to come about in both capital and risk-weighted asset measures that will come with the new Basel Rules. This gives us strong confidence that we have a clear path meeting all these rules as are adapted in staying above regulatory minimums during the next couple of years as they come through. And even during that period, we have the ability to pay dividends and do stock buybacks over time as approved by our regulators. During the year, we also focused on our franchise. And what we mean by focused, we sold non-core positions and businesses, 20-some units overall, netting $19 billion proceeds, at the same time fulfilling the commitments to our TARP repayments and streamlining the franchise and focusing on the three core customer goods and the core products for them. In addition to that work, we redesigned the consumer account strategy to deal with the new regulations that came in 2009 and 2010. As you read in the press, we patterned our new account structure to mitigate the revenue loss from these regulations and still provide strong customer choice. By providing that choice and the changes we've made, we've seen dramatically lower attrition and complaints and account closures on our consumer businesses.
From the shareholders side, our stock did underperform, and our returns on equity returns and returns on assets are not where we want them and continue to be affected by one-time events. But during the year, we did successfully grow our tangible book value per share by 15% and we look forward to driving that forward in the future.By far, the biggest legacy issue we continue to deal is on the mortgage side. On Pages 7 and 8, we highlight some of the changes that Chuck will talk about, some the rep and warranty put-back issues later. But let me summarize on the key elements. As we entered the year 2010, a lot of the operational work is around the modification area and building up the teams due to foreclosures. As we move through the year, discussions around representations and warranties started dominating the discussions. This year we took a total of $7 billion of representation and warranty cost that offsets the revenue and significant portion of our mitigation expenses here was also due to mortgage issues. We are pleased to put the GSEs behind us this quarter as we announced on January 3. We'll continue to focus our efforts in protecting our shareholders regarding these matters as we deal with the other counterparties involved in representation and warranty and put-back issues. When we think about modifications, our efforts continue to build. We did 285,000 modifications during 2010, including 76,000 during the fourth quarter alone, the most in the industry. We completed our review of the foreclosure practices. The process is working. And we've restarted the efforts cautiously. We'll continue to face regulatory and other scrutiny here but the work is proceeding and we are very focused on doing this right for all the parties involved. During 2010, we also completed a milestone of $2 billion of merger integration work. The next quarter will actually complete the final touches on the Merrill Lynch integration. And for the first time in many years, we'll have no integration work to do in this company. What that gives us the ability to do is turn that energy and focus to managing our efficiency in the company towards simplification, including that, we'll be taking our four deposit systems during 2011, 2012 to one deposit system and many other like activities. Our expense levels are not where we want them right now. They are higher because of debt collection and other costs related to legacy issues. But if you think about what we've been doing in managing expenses, we continue to invest in the franchise while managing through the post-crisis issues. Read the rest of this transcript for free on seekingalpha.com