Citibank 2011 Annual Report Download - page 288

266
Credit Commitments and Lines of Credit
The table below summarizes Citigroup’s credit commitments as of December, 31 2011 and December 31, 2010:
In millions of dollars U.S.
Outside of
U.S.
December 31,
2011
$ECEMBERææ

#OMMERCIALæANDæSIMILARæLETTERSæOFæCREDITæ $ 1,819 $ 7,091 $ 8,910  æ
/NEæTOæFOURFAMILYæRESIDENTIALæMORTGAGES 3,007 497 3,504 
2EVOLVINGæOPENENDæLOANSæSECUREDæBYæONEæTOæFOURFAMILYæRESIDENTIALæPROPERTIES 16,476 2,850 19,326 
#OMMERCIALæREALæESTATEæCONSTRUCTIONæANDæLANDæDEVELOPMENT 1,679 289 1,968 
#REDITæCARDæLINES 521,034 115,040 636,074 
#OMMERCIALæANDæOTHERæCONSUMERæLOANæCOMMITMENTS 138,183 85,926 224,109 
Total $682,198 $211,693 $893,891 
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 Citi substitutes its
credit for that of a customer to enable the customer to finance the purchase
of goods or to incur other commitments. Citi 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 a letter of credit is drawn, the customer
is then required to reimburse Citi.
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, as well as undistributed loan proceeds, where there is an obligation
to advance for construction progress payments. However, this line only
includes those extensions of credit that, once funded, will be classified as
Total loans, net on the Consolidated Balance Sheet.
Credit card lines
Citi 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 overdraft and
liquidity facilities, as well as commercial commitments to make or purchase
loans, to purchase third-party receivables, to provide note issuance or
revolving underwriting facilities and to invest in the form of equity. Amounts
include $65 billion and $79 billion with an original maturity of less than one
year at December 31, 2011 and December 31, 2010, 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 buyouts and similar transactions.