Citibank 2008 Annual Report Download - page 219

Credit Commitments
The table below summarizes Citigroup’s other commitments as of December 31, 2008 and December 31, 2007.
In millions of dollars U.S.
Outside
U.S.
December 31,
2008
December 31,
2007
Commercial and similar letters of credit $ 2,187 $ 6,028 $ 8,215 $ 9,175
One- to four-family residential mortgages 628 309 937 4,587
Revolving open-end loans secured by one- to four-family residential properties 22,591 2,621 25,212 35,187
Commercial real estate, construction and land development 2,084 618 2,702 4,834
Credit card lines 867,261 135,176 1,002,437 1,103,535
Commercial and other consumer loan commitments 217,818 92,179 309,997 473,631
Total $1,112,569 $236,931 $1,349,500 $1,630,949
The majority of unused commitments are contingent upon customers’
maintaining specific credit standards. Commercial commitments generally
have floating interest rates and fixed expiration dates and may require
payment of fees. Such fees (net of certain direct costs) are deferred and, upon
exercise of the commitment, amortized over the life of the loan or, if exercise
is deemed remote, amortized over the commitment period.
Commercial and similar letters of credit
A commercial letter of credit is an instrument by which Citigroup substitutes
its credit for that of a customer to enable the customer to finance the
purchase of goods or to incur other commitments. Citigroup issues a letter
on behalf of its client to a supplier and agrees to pay the supplier upon
presentation of documentary evidence that the supplier has performed in
accordance with the terms of the letter of credit. When drawn, the customer
then is required to reimburse Citigroup.
One- to four-family residential mortgages
A one- to four-family residential mortgage commitment is a written
confirmation from Citigroup to a seller of a property that the bank will
advance the specified sums enabling the buyer to complete the purchase.
Revolving open-end loans secured by one- to four-family
residential properties
Revolving open-end loans secured by one- to four-family residential
properties are essentially home equity lines of credit. A home equity line of
credit is a loan secured by a primary residence or second home to the extent
of the excess of fair market value over the debt outstanding for the first
mortgage.
Commercial real estate, construction and land
development
Commercial real estate, construction and land development include unused
portions of commitments to extend credit for the purpose of financing
commercial and multifamily residential properties as well as land
development projects. Both secured-by-real-estate and unsecured
commitments are included in this line. In addition, undistributed loan
proceeds, where there is an obligation to advance for construction progress,
payments are also included in this line. However, this line only includes
those extensions of credit that once funded will be classified as Loans on the
Consolidated Balance Sheet.
Credit card lines
Citigroup provides credit to customers by issuing credit cards. The credit card
lines are unconditionally cancellable by the issuer.
Commercial and other consumer loan commitments
Commercial and other consumer loan commitments include commercial
commitments to make or purchase loans, to purchase third-party receivables
and to provide note issuance or revolving underwriting facilities. Amounts
include $140 billion and $259 billion with an original maturity of less than
one year at December 31, 2008 and December 31, 2007, respectively.
In addition, included in this line item are highly leveraged financing
commitments which are agreements that provide funding to a borrower with
higher levels of debt (measured by the ratio of debt capital to equity capital
of the borrower) than is generally considered normal for other companies.
This type of financing is commonly employed in corporate acquisitions,
management buy-outs and similar transactions.
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