Wells Fargo 2006 Annual Report Download - page 51

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Table 11: Contractual Obligations
(in millions) Note(s) to Less than 1-3 3-5 More than Indeterminate Total
Financial Statements 1 year years years 5 years maturity (1)
Contractual payments by period:
Deposits 10 $71,254 $ 4,753 $ 1,125 $ 256 $232,855 $310,243
Long-term debt (2) 7, 12 14,741 18,640 23,941 29,823 — 87,145
Operating leases 7 567 870 574 1,135 — 3,146
Purchase obligations (3) 326 589 10 2 — 927
Total contractual obligations $86,888 $24,852 $25,650 $31,216 $232,855 $401,461
(1) Includes interest-bearing and noninterest-bearing checking, and market rate and other savings accounts.
(2) Includes capital leases of $12 million.
(3) Represents agreements to purchase goods or services.
these commitments were approximately $705 million. Our
other investment commitments, principally related to affordable
housing, civic and other community development initiatives,
were approximately $400 million at December 31, 2006.
In the ordinary course of business, we enter into indemni-
fication agreements, including underwriting agreements relating
to our securities, securities lending, acquisition agreements, and
various other business transactions or arrangements. For more
information, see Note 24 (Guarantees) to Financial Statements.
Contractual Obligations
In addition to the contractual commitments and arrange-
ments described above, which, depending on the nature of
the obligation, may or may not require use of our resources,
we enter into other contractual obligations in the ordinary
course of business, including debt issuances for the funding
of operations and leases for premises and equipment.
Table 11 summarizes these contractual obligations at
December 31, 2006, except obligations for short-term bor-
rowing arrangements and pension and postretirement benefit
plans. More information on those obligations is in Note 11
(Short-Term Borrowings) and Note 15 (Employee Benefits
and Other Expenses) to Financial Statements. The table also
excludes other commitments more fully described under
“Off-Balance Sheet Arrangements, Variable Interest Entities,
Guarantees and Other Commitments.”
We enter into derivatives, which create contractual
obligations, as part of our interest rate risk management
process, for our customers or for other trading activities.
See “Asset/Liability and Market Risk Management” in this
Report and Note 26 (Derivatives) to Financial Statements
for more information.
Transactions with Related Parties
FAS 57, Related Party Disclosures, requires disclosure of
material related party transactions, other than compensation
arrangements, expense allowances and other similar items
in the ordinary course of business. We had no related party
transactions required to be reported under FAS 57 for the
years ended December 31, 2006, 2005 and 2004.
Credit Risk Management Process
Our credit risk management process provides for decentral-
ized management and accountability by our lines of business.
Our overall credit process includes comprehensive credit
policies, judgmental or statistical credit underwriting, fre-
quent and detailed risk measurement and modeling, exten-
sive credit training programs and a continual loan review
and audit process. In addition, regulatory examiners review
and perform detailed tests of our credit underwriting, loan
administration and allowance processes.
Managing credit risk is a company-wide process. We have
credit policies for all banking and nonbanking operations
incurring credit risk with customers or counterparties that
provide a prudent approach to credit risk management. We
use detailed tracking and analysis to measure credit perfor-
mance and exception rates and we routinely review and
modify credit policies as appropriate. We have corporate
data integrity standards to ensure accurate and complete
credit performance reporting for the consolidated company.
We strive to identify problem loans early and have dedicated,
specialized collection and work-out units.
The Chief Credit Officer, who reports directly to the
Chief Executive Officer, provides company-wide credit over-
sight. Each business unit with direct credit risks has a credit
officer and has the primary responsibility for managing its
own credit risk. The Chief Credit Officer delegates authority,
limits and other requirements to the business units. These
delegations are routinely reviewed and amended if there are
significant changes in personnel, credit performance or busi-
ness requirements. The Chief Credit Officer is a member of
the Company’s Management Committee. The Chief Credit
Officer provides a quarterly credit review to the Credit
Committee of the Board of Directors and meets with them
periodically.
Risk Management