Wells Fargo 2006 Annual Report Download - page 86

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(in millions) December 31,
2006 2005
Impairment measurement based on:
Collateral value method $122 $115
Discounted cash flow method 108 75
Total (1) $230 $190
(1) Includes $146 million and $56 million of impaired loans with a related allowance
of $29 million and $10 million at December 31, 2006 and 2005, respectively.
The average recorded investment in impaired loans during
2006, 2005 and 2004 was $173 million, $260 million and
$481 million, respectively.
All of our impaired loans are on nonaccrual status.
When the ultimate collectibility of the total principal of
an impaired loan is in doubt, all payments are applied to
principal, under the cost recovery method. When the ultimate
collectibility of the total principal of an impaired loan is not
in doubt, contractual interest is credited to interest income
when received, under the cash basis method. Total interest
income recognized for impaired loans in 2006, 2005 and
2004 under the cash basis method was not significant.
Nonaccrual loans were $1,666 million and $1,338 million
at December 31, 2006 and 2005, respectively. Loans past
due 90 days or more as to interest or principal and still
accruing interest were $5,073 million at December 31, 2006,
and $3,606 million at December 31, 2005. The 2006 and
2005 balances included $3,913 million and $2,923 million,
respectively, in advances pursuant to our servicing agree-
ments to the Government National Mortgage Association
mortgage pools whose repayments are insured by the Federal
Housing Administration or guaranteed by the Department of
Veterans Affairs.
The recorded investment in impaired loans and the
methodology used to measure impairment was:
84