Wells Fargo 2011 Annual Report Download - page 144

Note 6: Loans and Allowance for Credit Losses (continued)
2011
2010
(in millions)
Commercial
Consumer
Total
Commercial
Consumer
Total
Year ended December 31,
Purchases (1)
$
7,078
284
7,362
2,135
162
2,297
Sales
(4,705)
(1,018)
(5,723)
(5,930)
(553)
(6,483)
Transfers from/(to) MHFS/LHFS (1)
(164)
(75)
(239)
(1,461)
(82)
(1,543)
(1) The “Purchases” and “Transfers (from)/to MHFS/LHFS" categories exclude activity in government insured/guaranteed loans where Wells Fargo acts as servicer. On a net
basis, this activity was $10.4 billion and $7.0 billion for the year ended December 31, 2011 and 2010, respectively.
Commitments to Lend
A commitment to extend credit is a legally binding agreement to
lend funds to a customer, usually at a stated interest rate and for
a specified purpose. These commitments have fixed expiration
dates and generally require a fee. When we make such a
commitment, we have credit risk. The liquidity requirements or
credit risk will be lower than the contractual amount of
commitments to extend credit because a significant portion of
these commitments are expected to expire without being used.
Certain commitments are subject to loan agreements with
covenants regarding the financial performance of the customer
or borrowing base formulas that must be met before we are
required to fund the commitment. Also, in some cases we
participate a portion of our commitment to others in an
arrangement that reduces our contractual commitment amount.
We use the same credit policies in extending credit for unfunded
commitments and letters of credit that we use in making loans.
See Note 14 for information on standby letters of credit.
In addition, we manage the potential risk in credit
commitments by limiting the total amount of arrangements,
both by individual customer and in total, by monitoring the size
and maturity structure of these portfolios and by applying the
same credit standards for all of our credit activities.
For certain extensions of credit, we may require collateral,
based on our assessment of a customer’s credit risk. We hold
various types of collateral, including accounts receivable,
inventory, land, buildings, equipment, autos, financial
instruments, income-producing commercial properties and
residential real estate. Collateral requirements for each customer
may vary according to the specific credit underwriting, terms
and structure of loans funded immediately or under a
commitment to fund at a later date.
The contractual amount of our unfunded credit
commitments, net of participations and net of all standby and
commercial letters of credit issued under the terms of these
commitments, is summarized by portfolio segment and class of
financing receivable in the following table:
December 31,
(in millions)
2011
2010
Commercial:
Commercial and industrial
$
201,061
185,947
Real estate mortgage
5,419
4,596
Real estate construction
7,347
5,698
Foreign
6,083
7,775
Total commercial
219,910
204,016
Consumer:
Real estate 1-4 family first mortgage
37,185
36,562
Real estate 1-4 family
junior lien mortgage
55,207
58,618
Credit card
65,111
62,019
Other revolving credit and installment
17,617
18,458
Total consumer
175,120
175,657
Total unfunded
credit commitments
$
395,030
379,673
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