Citibank 2015 Annual Report Download - page 299

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Credit Commitments and Lines of Credit
The table below summarizes Citigroup’s credit commitments:
In millions of dollars U.S.
Outside
of U.S.
December 31,
2015
December 31,
2014
Commercial and similar letters of credit $ 1,248 $ 4,854 $ 6,102 $ 6,634
One- to four-family residential mortgages 1,343 1,853 3,196 5,674
Revolving open-end loans secured by one- to four-family residential properties 12,648 2,078 14,726 16,098
Commercial real estate, construction and land development 9,177 1,345 10,522 9,242
Credit card lines 481,897 91,160 573,057 612,049
Commercial and other consumer loan commitments 178,957 92,119 271,076 243,680
Other commitments and contingencies 3,943 6,039 9,982 10,663
Total $689,213 $199,448 $888,661 $904,040
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 a letter of credit is
drawn, the customer is then 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, 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
Citigroup provides credit to customers by issuing credit cards. The credit card
lines are cancellable by providing notice to the cardholder or without such
notice as permitted by local law.
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.
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.
Other commitments and contingencies
Other commitments and contingencies include committed or unsettled
regular-way reverse repurchase agreements and all other transactions related
to commitments and contingencies not reported on the lines above.