Wells Fargo 2015 Annual Report Download - page 167

Allowance for Credit Losses
Table 6.5 presents the allowance for credit losses, which consists
of the allowance for loan losses and the allowance for unfunded
credit commitments.
Table 6.5: Allowance for Credit Losses
Year ended December 31,
(in millions) 2015 2014 2013 2012 2011
Balance, beginning of year $ 13,169 14,971 17,477 19,668 23,463
Provision for credit losses 2,442 1,395 2,309 7,217 7,899
Interest income on certain impaired loans (1) (198) (211) (264) (315) (332)
Loan charge-offs:
Commercial:
Commercial and industrial (734) (627) (739) (1,404) (1,681)
Real estate mortgage (59) (66) (190) (382) (636)
Real estate construction (4) (9) (28) (191) (351)
Lease financing (14) (15) (34) (24) (41)
Total commercial (811) (717) (991) (2,001) (2,709)
Consumer:
Real estate 1-4 family first mortgage (507) (721) (1,439) (3,020) (3,896)
Real estate 1-4 family junior lien mortgage (635) (864) (1,579) (3,437) (3,765)
Credit card (1,116) (1,025) (1,022) (1,105) (1,458)
Automobile (742) (729) (625) (651) (797)
Other revolving credit and installment (643) (668) (754) (759) (990)
Total consumer (3,643) (4,007) (5,419) (8,972) (10,906)
Total loan charge-offs (4,454) (4,724) (6,410) (10,973) (13,615)
Loan recoveries:
Commercial:
Commercial and industrial 252 369 396 472 426
Real estate mortgage 127 160 226 163 143
Real estate construction 37 136 137 124 146
Lease financing 8 8 17 20 25
Total commercial 424 673 776 779 740
Consumer:
Real estate 1-4 family first mortgage 245 212 246 157 405
Real estate 1-4 family junior lien mortgage 259 238 269 260 218
Credit card 175 161 127 188 257
Automobile 325 349 322 364 449
Other revolving credit and installment 134 146 161 191 247
Total consumer 1,138 1,106 1,125 1,160 1,576
Total loan recoveries 1,562 1,779 1,901 1,939 2,316
Net loan charge-offs (2) (2,892) (2,945) (4,509) (9,034) (11,299)
Other (9) (41) (42) (59) (63)
Balance, end of year $ 12,512 13,169 14,971 17,477 19,668
Components:
Allowance for loan losses $ 11,545 12,319 14,502 17,060 19,372
Allowance for unfunded credit commitments 967 850 469 417 296
Allowance for credit losses (3) $ 12,512 13,169 14,971 17,477 19,668
Net loan charge-offs as a percentage of average total loans (2) 0.33% 0.35 0.56 1.17 1.49
Allowance for loan losses as a percentage of total loans (3) 1.26 1.43 1.76 2.13 2.52
Allowance for credit losses as a percentage of total loans (3) 1.37 1.53 1.82 2.19 2.56
(1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize
reductions in the allowance as interest income.
(2) For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates.
(3) The allowance for credit losses includes $1 million, $11 million, $30 million, $117 million and $231 million at December 31, 2015, 2014, 2013, 2012, and 2011,
respectively, related to PCI loans acquired from Wachovia. Loans acquired from Wachovia are included in total loans net of related purchase accounting net write-downs.
Wells Fargo & Company
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