Wells Fargo 2011 Annual Report Download - page 48

Risk Management
All financial institutions must manage and control a variety of
business risks that can significantly affect their financial
performance. Key among those are credit, asset/liability and
market risk. The discussion that follows provides information
on how we manage these risks.
Credit Risk Management
Table 16: Total Loans Outstanding by Portfolio Segment and
Class of Financing Receivable
December 31,
(in millions)
2011
2010
Commercial:
Commercial and industrial
$
167,216
151,284
Real estate mortgage
105,975
99,435
Real estate construction
19,382
25,333
Lease financing
13,117
13,094
Foreign (1)
39,760
32,912
Total commercial
345,450
322,058
Consumer:
Real estate 1-4 family first mortgage
228,894
230,235
Real estate 1-4 family
junior lien mortgage
85,991
96,149
Credit card
22,836
22,260
Other revolving credit
and installment
86,460
86,565
Total consumer
424,181
435,209
Total loans
$
769,631
757,267
(1)
Substantially all of our foreign loan portfolio is commercial. Loans are classified as
foreign if the borrower’s primary address is outside of the United States.
We employ various credit risk management and monitoring
activities to mitigate risks associated with multiple risk factors
affecting loans we hold, could acquire or originate including:
Loan concentrations and related credit quality
Counterparty credit risk
Economic and market conditions
Legislative or regulatory mandates
Changes in interest rates
Merger and acquisition activities
Reputation risk
Our credit risk management process is governed centrally,
but provides for decentralized management and accountability
by our lines of business. Our overall credit process includes
comprehensive credit policies, disciplined credit underwriting,
frequent and detailed risk measurement and modeling,
extensive credit training programs, and a continual loan review
and audit process. The Credit Committee of our Board of
Directors (Board) receives reports from management,
including our Chief Risk Officer and Chief Credit Officer, and
its responsibilities include oversight of the administration and
effectiveness of, and compliance with, our credit policies and
the adequacy of the allowance for credit losses.
A key to our credit risk management is adherence to a well
controlled underwriting process, which we believe is
appropriate for the needs of our customers as well as investors
who purchase the loans or securities collateralized by the loans.
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