Wells Fargo 2006 Annual Report Download - page 103

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Note 19: Operating Segments
We have three lines of business for management reporting:
Community Banking, Wholesale Banking and Wells Fargo
Financial. The results for these lines of business are based
on our management accounting process, which assigns
balance sheet and income statement items to each responsible
operating segment. This process is dynamic and, unlike
financial accounting, there is no comprehensive, authoritative
guidance for management accounting equivalent to generally
accepted accounting principles. The management accounting
process measures the performance of the operating segments
based on our management structure and is not necessarily
comparable with similar information for other financial
services companies. We define our operating segments by
product type and customer segments. If the management
structure and/or the allocation process changes, allocations,
transfers and assignments may change. To reflect the
realignment of our insurance business into Wholesale Banking
in 2006, results for prior periods have been revised.
The Community Banking Group offers a complete line
of diversified financial products and services to consumers
and small businesses with annual sales generally up to
$20 million in which the owner generally is the financial
decision maker. Community Banking also offers investment
management and other services to retail customers and high
net worth individuals, securities brokerage through affiliates
and venture capital financing. These products and services
include the Wells Fargo Advantage FundsSM, a family of
mutual funds, as well as personal trust and agency assets.
Loan products include lines of credit, equity lines and loans,
equipment and transportation (recreational vehicle and
marine) loans, education loans, origination and purchase
of residential mortgage loans and servicing of mortgage
loans and credit cards. Other credit products and financial
services available to small businesses and their owners
include receivables and inventory financing, equipment
leases, real estate financing, Small Business Administration
financing, venture capital financing, cash management,
payroll services, retirement plans, Health Savings Accounts
and credit and debit card processing. Consumer and business
deposit products include checking accounts, savings deposits,
market rate accounts, Individual Retirement Accounts (IRAs),
time deposits and debit cards.
Community Banking serves customers through a wide
range of channels, which include traditional banking stores,
in-store banking centers, business centers and ATMs. Also,
Phone BankSM centers and the National Business Banking
Center provide 24-hour telephone service. Online banking
services include single sign-on to online banking, bill pay
and brokerage, as well as online banking for small business.
The Wholesale Banking Group serves businesses across
the United States with annual sales generally in excess of
$10 million. Wholesale Banking provides a complete line
of commercial, corporate and real estate banking products
and services. These include traditional commercial loans
and lines of credit, letters of credit, asset-based lending,
equipment leasing, mezzanine financing, high-yield debt,
international trade facilities, foreign exchange services,
treasury management, investment management, institutional
fixed income and equity sales, interest rate, commodity and
equity risk management, online/electronic products such as
the Commercial Electronic Office®(CEO®) portal, insurance
and investment banking services. Wholesale Banking manages
and administers institutional investments, employee benefit
trusts and mutual funds, including the Wells Fargo Advantage
Funds. Wholesale Banking includes the majority ownership
interest in the Wells Fargo HSBC Trade Bank, which provides
trade financing, letters of credit and collection services and
is sometimes supported by the Export-Import Bank of the
United States (a public agency of the United States offering
export finance support for American-made products).
Wholesale Banking also supports the commercial real estate
market with products and services such as construction
loans for commercial and residential development, land
acquisition and development loans, secured and unsecured
lines of credit, interim financing arrangements for completed
structures, rehabilitation loans, affordable housing loans
and letters of credit, permanent loans for securitization,
commercial real estate loan servicing and real estate and
mortgage brokerage services.
Wells Fargo Financial includes consumer finance and auto
finance operations. Consumer finance operations make direct
consumer and real estate loans to individuals and purchase
sales finance contracts from retail merchants from offices
throughout the United States, and in Canada and the Pacific
Rim. Automobile finance operations specialize in purchasing
sales finance contracts directly from automobile dealers and
making loans secured by automobiles in the United States,
Canada and Puerto Rico. Wells Fargo Financial also provides
credit cards and lease and other commercial financing.
The “Other” Column consists of unallocated goodwill
balances held at the enterprise level. This column also may
include separately identified transactions recorded at the
enterprise level for management reporting.