Citibank 2010 Annual Report Download - page 90

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Impaired Loans, Non-Accrual Loans and Assets and
Renegotiated Loans
The following pages include information on Citi’s impaired loans, non-
accrual loans and assets and renegotiated loans. There is a certain amount of
overlap between these categories. The following general summary provides a
basic description of each category:
Impaired loans:
Corporate loans are determined to be impaired when they are placed on •฀
non-accrual status; that is, when it is determined that the payment of
interest or principal is doubtful.
Consumer impaired loans include: (i) Consumer loans modified in •฀
troubled debt restructurings (TDRs) where a long-term concession has
been granted to a borrower in financial difficulty; and (ii) non-accrual
Consumer (commercial market) loans.
Non-accrual loans and assets:
Corporate and Consumer (commercial market) non-accrual status •฀
is based on the determination that payment of interest or principal is
doubtful. These loans are also included in impaired loans.
Consumer non-accrual status is based on aging, i.e., the borrower has •฀
fallen behind in payments.
North America•฀ branded and retail partner cards are not included in non-
accrual loans and assets as, under industry standards, they accrue interest
until charge-off.
Renegotiated loans:
Includes both Corporate and Consumer loans whose terms have been •฀
modified in a TDR.
Includes both accrual and non-accrual TDRs.•฀
Impaired Loans
Impaired loans are those where Citigroup believes it is probable that it will
not collect all amounts due according to the original contractual terms of the
loan. Impaired loans include Corporate and Consumer (commercial market)
non-accrual loans as well as smaller-balance homogeneous loans whose
terms have been modified due to the borrower’s financial difficulties and
Citigroup having granted a concession to the borrower. Such modifications
may include interest rate reductions and/or principal forgiveness.
Valuation allowances for impaired loans are determined in accordance
with ASC 310-10-35 and estimated considering all available evidence
including, as appropriate, the present value of the expected future cash flows
discounted at the loan’s original effective rate, the secondary market value of
the loan and the fair value of collateral less disposal costs.
Consumer impaired loans exclude smaller-balance homogeneous loans
that have not been modified and are carried on a non-accrual basis, as well
as substantially all loans modified for periods of 12 months or less. As of
December 31, 2010, loans included in these short-term programs amounted
to approximately $5.7 billion. The allowance for loan losses for these loans is
materially consistent with the requirements of ASC 310-10-35.
The following table presents information about impaired loans:
In millions of dollars
Dec. 31,
2010
Dec. 31,
2009
Non-accrual Corporate loans
Commercial and industrial $ 5,125 $ 6,347
Loans to financial institutions 1,258 1,794
Mortgage and real estate 1,782 4,051
Lease financing 45 —
Other 400 1,287
Total non-accrual corporate loans $ 8,610 $13,479
Impaired Consumer loans (1)(2)
Mortgage and real estate $17,677 $10,629
Installment and other 3,745 3,853
Cards 5,906 2,453
Total impaired Consumer loans $27,328 $16,935
Total (3) $35,938 $30,414
Non-accrual Corporate loans with
valuation allowances $ 6,324 $ 8,578
Impaired Consumer loans with
valuation allowances 25,949 16,453
Non-accrual Corporate valuation allowance $ 1,689 $ 2,480
Impaired Consumer valuation allowance 7,735 4,977
Total valuation allowances (4) $ 9,424 $ 7,457
(1) Prior to 2008, Citi’s financial accounting systems did not separately track impaired smaller-balance,
homogeneous Consumer loans whose terms were modified due to the borrowers’ financial difficulties
and it was determined that a concession be granted to the borrower. Smaller-balance Consumer loans
modified since January 1, 2008 amounted to $26.6 billion and $15.9 billion at December 31, 2010 and
December 31, 2009, respectively. However, information derived from Citi’s risk management systems
indicates that the amounts of outstanding modified loans, including those modified prior to 2008,
approximated $28.2 billion and $18.1 billion at December 31, 2010 and December 31, 2009, respectively.
(2) Excludes deferred fees/costs.
(3) Excludes loans purchased for investment purposes.
(4) Included in the Allowance for loan losses.