Wells Fargo 2010 Annual Report Download - page 66

Risk Management – Credit Risk Management (continued)
NONACCRUAL LOANS AND OTHER NONPERFORMING ASSETS
Table 26 shows the five-year trend for nonaccrual loans and
other NPAs. We generally place loans on nonaccrual status
when:
• the full and timely collection of interest or principal
becomes uncertain;
• they are 90 days (120 days with respect to real estate 1-4
family first and junior lien mortgages) past due for interest
or principal, unless both well-secured and in the process of
collection; or
• part of the principal balance has been charged off and no
restructuring has occurred.
Note 1 (Summary of Significant Accounting Policies – Loans)
to Financial Statements in this Report describes our accounting
policy for nonaccrual and impaired loans.
Wachovia nonaccrual loans were virtually eliminated at
December 31, 2008 (acquisition date), due to the purchase
accounting adjustments. As a result, the rate of growth for
nonaccrual loans since acquisition has been higher than it would
have been without the PCI loan accounting. The impact of
purchase accounting on our credit data will diminish over time.
Table 27 summarizes NPAs for each of the four quarters of 2010
and shows a decline in the total balance in fourth quarter 2010
for the first quarter since the acquisition of Wachovia.
Table 26: Nonaccrual Loans and Other Nonperforming Assets
December 31,
(in millions) 2010 2009 2008 2007 2006
Nonaccrual loans:
Commercial:
Commercial and industrial $ 3,213 4,397 1,253 432 331
Real estate mortgage 5,227 3,696 594 128 105
Real estate construction 2,676 3,313 989 293 78
Lease financing 108 171 92 45 29
Foreign 127 146 57 45 43
Total commercial (1) 11,351 11,723 2,985 943 586
Consumer:
Real estate 1-4 family first mortgage (2) 12,289 10,100 2,648 1,272 688
Real estate 1-4 family junior lien mortgage 2,302 2,263 894 280 212
Other revolving credit and installment 300 332 273 184 180
Total consumer 14,891 12,695 3,815 1,736 1,080
Total nonaccrual loans (3)(4) 26,242 24,418 6,800 2,679 1,666
As a percentage of total loans 3.47 % 3.12 0.79 0.70 0.52
Foreclosed assets:
GNMA (5) $ 1,479 960 667 535 322
Other 4,530 2,199 1,526 649 423
Real estate and other nonaccrual investments (6) 120 62 16 5 5
Total nonaccrual loans and other nonperforming assets $ 32,371 27,639 9,009 3,868 2,416
As a percentage of total loans 4.27 % 3.53 1.04 1.01 0.76
(1) Includes LHFS of $3 million and $27 million at December 31, 2010 and 2009, respectively.
(2) Includes MHFS of $426 million, $339 million, $193 million, $222 million, and $82 million at December 31, 2010, 2009, 2008, 2007 and 2006, respectively.
(3) Excludes loans acquired from Wachovia that are accounted f
or as PCI loans because they continue to earn interest income from accretable yield, independent of performance
in accordance with their contractual terms.
(4)
See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further information on impaired loans.
(5) Consistent with regulatory reporting requirements, foreclosed real estate securing GNMA loans is classified as nonperforming. Both principal and interest for GNMA loans
secured by the foreclosed real estate are collectible because the GNMA loans are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of
Veterans Affairs (VA).
(6) Includes real estate investments (loans with non-traditional interest terms accounted for as investments) that would be classified as nonaccrual if these assets were recorded
as loans, and nonaccrual debt securities.
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