Goldman Sachs 2013 Annual Report Download - page 183

Notes to Consolidated Financial Statements
Note 18.
Commitments, Contingencies and Guarantees
Commitments
The table below presents the firm’s commitments.
Commitment Amount by Period
of Expiration as of December 2013
Total Commitments
as of December
in millions 2014
2015-
2016
2017-
2018
2019-
Thereafter 2013 2012
Commitments to extend credit
Commercial lending:
Investment-grade $ 9,735 $16,903 $32,960 $ 901 $ 60,499 $ 53,736
Non-investment-grade 4,339 6,590 10,396 4,087 25,412 21,102
Warehouse financing 995 721 — — 1,716 784
Total commitments to extend credit 15,069 24,214 43,356 4,988 87,627 75,622
Contingent and forward starting resale and securities
borrowing agreements 34,410 — — — 34,410 47,599
Forward starting repurchase and secured lending agreements 8,256 — — — 8,256 6,144
Letters of credit 1465 21 10 5 501 789
Investment commitments 1,359 5,387 20 350 7,116 7,339
Other 3,734 102 54 65 3,955 4,624
Total commitments $63,293 $29,724 $43,440 $5,408 $141,865 $142,117
1. Consists of commitments under letters of credit issued by various banks which the firm provides to counterparties in lieu of securities or cash to satisfy various
collateral and margin deposit requirements.
Commitments to Extend Credit
The firm’s commitments to extend credit are agreements to
lend with fixed termination dates and depend on the
satisfaction of all contractual conditions to borrowing.
These commitments are presented net of amounts
syndicated to third parties. The total commitment amount
does not necessarily reflect actual future cash flows because
the firm may syndicate all or substantial additional portions
of these commitments. In addition, commitments can
expire unused or be reduced or cancelled at the
counterparty’s request.
The firm generally accounts for commitments to extend
credit at fair value. Losses, if any, are generally recorded,
net of any fees in “Other principal transactions.”
As of December 2013 and December 2012, approximately
$35.66 billion and $16.09 billion, respectively, of the firm’s
lending commitments were held for investment and were
accounted for on an accrual basis. The carrying value and
the estimated fair value of such lending commitments were
liabilities of $132 million and $1.02 billion, respectively, as
of December 2013, and $63 million and $523 million,
respectively, as of December 2012. As these lending
commitments are not accounted for at fair value under the
fair value option or at fair value in accordance with other
U.S. GAAP, their fair value is not included in the firm’s fair
value hierarchy in Notes 6, 7 and 8. Had these
commitments been included in the firm’s fair value
hierarchy, they would have primarily been classified in
level 3 as of December 2013 and December 2012.
Commercial Lending. The firm’s commercial lending
commitments are extended to investment-grade and non-
investment-grade corporate borrowers. Commitments to
investment-grade corporate borrowers are principally used
for operating liquidity and general corporate purposes. The
firm also extends lending commitments in connection with
contingent acquisition financing and other types of
corporate lending as well as commercial real estate
financing. Commitments that are extended for contingent
acquisition financing are often intended to be short-term in
nature, as borrowers often seek to replace them with other
funding sources.
Goldman Sachs 2013 Annual Report 181