Wells Fargo 2008 Annual Report Download - page 110

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
(in millions) Year ended December 31,
2008 2007 2006 2005 2004
Balance, beginning of year $ 5,518 $ 3,964 $ 4,057 $ 3,950 $ 3,891
Provision for credit losses (1) 15,979 4,939 2,204 2,383 1,717
Loan charge-offs:
Commercial and commercial real estate:
Commercial (1,653) (629) (414) (406) (424)
Other real estate mortgage (29) (6) (5) (7) (25)
Real estate construction (178) (14) (2) (6) (5)
Lease financing (65) (33) (30) (35) (62)
Total commercial and commercial real estate (1,925) (682) (451) (454) (516)
Consumer:
Real estate 1-4 family first mortgage (540) (109) (103) (111) (53)
Real estate 1-4 family junior lien mortgage (2,204) (648) (154) (136) (107)
Credit card (1,563) (832) (505) (553) (463)
Other revolving credit and installment (2,300) (1,913) (1,685) (1,480) (919)
Total consumer (6,607) (3,502) (2,447) (2,280) (1,542)
Foreign (245) (265) (281) (298) (143)
Total loan charge-offs (8,777) (4,449) (3,179) (3,032) (2,201)
Loan recoveries:
Commercial and commercial real estate:
Commercial 114 119 111 133 150
Other real estate mortgage 58191617
Real estate construction 323136
Lease financing 13 17 21 21 26
Total commercial and commercial real estate 135 146 154 183 199
Consumer:
Real estate 1-4 family first mortgage 37 22 26 21 6
Real estate 1-4 family junior lien mortgage 89 53 36 31 24
Credit card 147 120 96 86 62
Other revolving credit and installment 481 504 537 365 220
Total consumer 754 699 695 503 312
Foreign 49 65 76 63 24
Total loan recoveries 938 910 925 749 535
Net loan charge-offs (2) (7,839) (3,539) (2,254) (2,283) (1,666)
Allowances related to business combinations/other 8,053 154 (43) 7 8
Balance, end of year $21,711 $ 5,518 $ 3,964 $ 4,057 $ 3,950
Components:
Allowance for loan losses $21,013 $ 5,307 $ 3,764 $ 3,871 $ 3,762
Reserve for unfunded credit commitments 698 211 200 186 188
Allowance for credit losses $21,711 $ 5,518 $ 3,964 $ 4,057 $ 3,950
Net loan charge-offs as a percentage of average total loans 1.97% 1.03% 0.73% 0.77% 0.62%
Allowance for loan losses as a percentage of total loans (3) 2.43% 1.39% 1.18% 1.25% 1.31%
Allowance for credit losses as a percentage of total loans (3) 2.51 1.44 1.24 1.31 1.37
(1) Provision included $3.9 billion to conform credit reserve practices of Wells Fargo and Wachovia.
(2) Because the Wachovia acquisition occurred on the last day of 2008, charge-offs and recoveries include only those of Wells Fargo and exclude Wachovia’s 2008 charge-offs
and recoveries.
(3) The allowance for loan losses and the allowance for credit losses do not include any amounts related to loans acquired from Wachovia that are accounted for under
SOP 03-3 (Wachovia’s allowance related to these loans was $12.0 billion). Loans acquired from Wachovia are included in total loans net of related purchase accounting
net write-downs (see Note 1).
The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded credit commitments.
Changes in the allowance for credit losses were: