Wells Fargo 2009 Annual Report Download - page 123

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In addition, the allowance for credit losses included
a reserve for unfunded credit commitments of $515 million
at December 31, 2009.
The total allowance reflects management’s estimate
of credit losses inherent in the loan portfolio at the balance
sheet date. We consider the allowance for credit losses of
$25.0 billion adequate to cover credit losses inherent in the
loan portfolio, including unfunded credit commitments, at
December 31, 2009.
The allowance for credit losses consists of the allowance
for loan losses and the reserve for unfunded credit commit-
ments. Changes in the allowance for credit losses were:
Year ended December 31,
(in millions) 2009 2008 2007 2006 2005
Balance, beginning of year $ 21,711 5,518 3,964 4,057 3,950
Provision for credit losses 21,668 15,979 4,939 2,204 2,383
Loan charge-offs:
Commercial and commercial real estate:
Commercial (3,365) (1,653) (629) (414) (406)
Real estate mortgage (758) (29) (6) (5) (7)
Real estate construction (975) (178) (14) (2) (6)
Lease financing (229) (65) (33) (30) (35)
Total commercial and commercial real estate (5,327) (1,925) (682) (451) (454)
Consumer:
Real estate 1-4 family first mortgage (3,318) (540) (109) (103) (111)
Real estate 1-4 family junior lien mortgage (4,812) (2,204) (648) (154) (136)
Credit card (2,708) (1,563) (832) (505) (553)
Other revolving credit and installment (3,423) (2,300) (1,913) (1,685) (1,480)
Total consumer (14,261) (6,607) (3,502) (2,447) (2,280)
Foreign (237) (245) (265) (281) (298)
Total loan charge-offs (19,825) (8,777) (4,449) (3,179) (3,032)
Loan recoveries:
Commercial and commercial real estate:
Commercial 254 114 119 111 133
Real estate mortgage 33 5 8 19 16
Real estate construction 16 32313
Lease financing 20 13 17 21 21
Total commercial and commercial real estate 323 135 146 154 183
Consumer:
Real estate 1-4 family first mortgage 185 37 22 26 21
Real estate 1-4 family junior lien mortgage 174 89 53 36 31
Credit card 180 147 120 96 86
Other revolving credit and installment 755 481 504 537 365
Total consumer 1,294 754 699 695 503
Foreign 40 49 65 76 63
Total loan recoveries 1,657 938 910 925 749
Net loan charge-offs (1) (18,168) (7,839) (3,539) (2,254) (2,283)
Allowances related to business combinations/other (180) 8,053 154 (43) 7
Balance, end of year $ 25,031 21,711 5,518 3,964 4,057
Components:
Allowance for loan losses $ 24,516 21,013 5,307 3,764 3,871
Reserve for unfunded credit commitments 515 698 211 200 186
Allowance for credit losses $ 25,031 21,711 5,518 3,964 4,057
Net loan charge-offs as a percentage of average total loans (1) 2.21% 1.97 1.03 0.73 0.77
Allowance for loan losses as a percentage of total loans (2) 3.13 2.43 1.39 1.18 1.25
Allowance for credit losses as a percentage of total loans (2) 3.20 2.51 1.44 1.24 1.31
(1) For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates.
(2) The allowance for credit losses includes $333 million for the year ended December 31, 2009, and none for prior years related to PCI loans acquired from Wachovia.
Loans acquired from Wachovia are included in total loans, net of related purchase accounting net write-downs.
Nonaccrual loans were $24.4 billion and $6.8 billion at
December 31, 2009 and 2008, respectively. PCI loans have
been classified as accruing. Loans past due 90 days or more
as to interest or principal and still accruing interest were
$22.2 billion at December 31, 2009, and $11.8 billion at
December 31, 2008. The 2009 and 2008 balances included
$15.3 billion and $8.2 billion, respectively, in advances pursuant
to our servicing agreements to the Government National
Mortgage Association (GNMA) mortgage pools and similar
loans whose repayments are insured by the Federal Housing
Administration (FHA) or guaranteed by the Department of
Veterans Affairs (VA).