PNC Bank 2014 Annual Report Download - page 156

Troubled Debt Restructurings (TDRs)
A TDR is a loan whose terms have been restructured in a
manner that grants a concession to a borrower experiencing
financial difficulty. TDRs result from our loss mitigation
activities, and include rate reductions, principal forgiveness,
postponement/reduction of scheduled amortization, and
extensions, which are intended to minimize economic loss and
to avoid foreclosure or repossession of collateral.
Additionally, TDRs also result from borrowers that have been
discharged from personal liability through Chapter 7
bankruptcy and have not formally reaffirmed their loan
obligations to PNC. In those situations where principal is
forgiven, the amount of such principal forgiveness is
immediately charged off.
Some TDRs may not ultimately result in the full collection of
principal and interest, as restructured, and result in potential
incremental losses. These potential incremental losses have
been factored into our overall ALLL estimate. The level of
any subsequent defaults will likely be affected by future
economic conditions. Once a loan becomes a TDR, it will
continue to be reported as a TDR until it is ultimately repaid
in full, the collateral is foreclosed upon, or it is fully charged
off. We held specific reserves in the ALLL of $.4 billion and
$.5 billion at December 31, 2014 and December 31, 2013,
respectively, for the total TDR portfolio.
Table 67: Summary of Troubled Debt Restructurings
In millions
December 31
2014
December 31
2013
Total consumer lending $2,041 $2,161
Total commercial lending 542 578
Total TDRs $2,583 $2,739
Nonperforming $1,370 $1,511
Accruing (a) 1,083 1,062
Credit card 130 166
Total TDRs $2,583 $2,739
(a) Accruing TDR loans have demonstrated a period of at least six months of
performance under the restructured terms and are excluded from nonperforming
loans. Loans where borrowers have been discharged from personal liability through
Chapter 7 bankruptcy and have not formally reaffirmed their loan obligations to
PNC and loans to borrowers not currently obligated to make both principal and
interest payments under the restructured terms are not returned to accrual status.
Table 68 quantifies the number of loans that were classified as
TDRs as well as the change in the recorded investments as a
result of the TDR classification during 2014, 2013, and 2012,
respectively. Additionally, the table provides information
about the types of TDR concessions. The Principal
Forgiveness TDR category includes principal forgiveness and
accrued interest forgiveness. These types of TDRs result in a
write down of the recorded investment and a charge-off if
such action has not already taken place. The Rate Reduction
TDR category includes reduced interest rate and interest
deferral. The TDRs within this category result in reductions to
future interest income. The Other TDR category primarily
includes consumer borrowers that have been discharged from
personal liability through Chapter 7 bankruptcy and have not
formally reaffirmed their loan obligations to PNC, as well as
postponement/reduction of scheduled amortization and
contractual extensions for both consumer and commercial
borrowers.
In some cases, there have been multiple concessions granted
on one loan. This is most common within the commercial loan
portfolio. When there have been multiple concessions granted
in the commercial loan portfolio, the principal forgiveness
concession was prioritized for purposes of determining the
inclusion in Table 68. For example, if there is principal
forgiveness in conjunction with lower interest rate and
postponement of amortization, the type of concession will be
reported as Principal Forgiveness. Second in priority would be
rate reduction. For example, if there is an interest rate
reduction in conjunction with postponement of amortization,
the type of concession will be reported as a Rate Reduction. In
the event that multiple concessions are granted on a consumer
loan, concessions resulting from discharge from personal
liability through Chapter 7 bankruptcy without formal
affirmation of the loan obligations to PNC would be
prioritized and included in the Other type of concession in the
table below. After that, consumer loan concessions would
follow the previously discussed priority of concessions for the
commercial loan portfolio.
138 The PNC Financial Services Group, Inc. – Form 10-K