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Interest income from loans accounted for as troubled debt restructurings is accounted for in the same manner as other
accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology
applied to loans that are not in such programs. Additional information about modified loans classified as troubled debt
restructurings is shown below (dollars in thousands):
For the year ended November 30, 2011(3):
Credit card loans
Internal programs
External programs
Personal loans(4)
Student loans
Modified credit card loans that have reverted to pre-modification
payment terms(5)
For the year ended November 30, 2010:
Credit card loans: permanent programs
For the year ended November 30, 2009(6):
Credit card loans: permanent programs
Average
recorded
investment in
loans
$ 536,568
$ 714,946
$ 7,396
$ 5,469
$ 276,300
$ 260,251
$ 79,165
Interest income
recognized during
period loans were
impaired(1)
$ 20,950
$ 61,511
$ 954
$ 362
$ 48,159
$ 2,946
$ 937
Gross interest
income that would
have been
recorded with
original terms(2)
$ 65,051
$ 9,865
$—
$—
$—
$ 39,917
$ 10,454
(1) The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average
interest rate to the average loans in the various modification programs.
(2) The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had
not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the
difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification
programs to the average loans in the modification programs.
(3) In addition to loans modified through permanent workout programs, in the first quarter 2011, the Company began accounting for credit card loans
modified through temporary hardship and external programs as troubled debt restructurings. The impact on the allowance for loan losses as a result of
this change was not material.
(4) As interest rates for personal loan customers in modification programs are rarely modified, gross interest income that would have been recorded with
original terms is not significant.
(5) This balance is considered impaired, but is excluded from the troubled debt restructuring amounts shown above. Represents credit card loans that were
modified in troubled debt restructurings but that have subsequently reverted back to loans' pre-modification payment terms either due to noncompliance
with the terms of the modification or successful completion of a temporary modification program.
(6) The amount at November 30, 2009 does not include securitized loans as the Company began consolidating its securitization trusts on December 1, 2009
upon adoption of Statement No. 167. See Note 2: Change in Accounting Principle for more information.
In order to evaluate the primary financial effects which resulted from loans entering into a loan modification program
during the year ended November 30, 2011, the Company quantified the amount by which interest and fees were reduced during
the year. During the year ended November 30, 2011, the Company forgave approximately $64.3 million of interest and fees as
a result of accounts entering into a loan modification program.
The following table provides information on loans that entered a loan modification program during the fiscal year
(dollars in thousands):
Accounts that entered a loan modification program during the period:
Credit Card:
Internal Programs
External Programs
Student Loans
Personal Loans
Number of
Accounts
68,738
52,705
262
410
Balances as of
November 30,
2011
$ 480,354
$ 310,150
$ 5,439
$ 4,613
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