Wells Fargo 2013 Annual Report Download - page 56

Risk Management – Credit Risk Management (continued)
Credit Risk Management
Loans represent the largest component of assets on our balance
sheet and their related credit risk is a significant risk we
manage. We define credit risk as the risk of loss associated with
a borrower or counterparty default (failure to meet obligations
in accordance with agreed upon terms). Table 16 presents our
total loans outstanding by portfolio segment and class of
financing receivable.
Table 16: Total Loans Outstanding by Portfolio Segment and
Class of Financing Receivable
December 31,
(in millions) 2013 2012
Commercial:
Commercial and industrial $ 197,210 187,759
Real estate mortgage 107,100 106,340
Real estate construction 16,747 16,904
Lease financing 12,034 12,424
Foreign (1) 47,665 37,771
Total commercial 380,756 361,198
Consumer:
Real estate 1-4 family first mortgage 258,497 249,900
Real estate 1-4 family junior lien mortgage 65,914 75,465
Credit card 26,870 24,640
Automobile 50,808 45,998
Other revolving credit and installment 42,954 42,373
Total consumer 445,043 438,376
Total loans $ 825,799 799,574
(1) Substantially all of our foreign loan portfolio is commercial loans. Loans are
classified as foreign primarily based on whether the borrower’s primary address is
outside of the United States.
We manage our credit risk by establishing what we believe
are sound credit policies for underwriting new business, while
monitoring and reviewing the performance of our existing loan
portfolios. 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:
x Loan concentrations and related credit quality
x Counterparty credit risk
x Economic and market conditions
x Legislative or regulatory mandates
x Changes in interest rates
x Merger and acquisition activities
x Reputation risk
Our credit risk management oversight 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.
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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