SunTrust 2011 Annual Report Download - page 68
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and/or deed-in-lieu arrangements. For loans secured by income producing commercial properties, we perform a rigorous and
ongoing programmatic review. We review a number of factors, including cash flows, loan structures, collateral values, and
guarantees, to identify loans within our income producing commercial loan portfolio that are most likely to experience distress.
Based on our review of these factors and our assessment of overall risk, we evaluate the benefits of proactively initiating
discussions with our clients to improve a loan’s risk profile. In some cases, we may renegotiate terms of their loans so that
they have a higher likelihood of continuing to perform. To date, we have restructured loans in a variety of ways to help our
clients service their debt and to mitigate the potential for additional losses. The primary restructuring methods being offered
to our residential clients are reductions in interest rates and extensions of terms. For commercial loans, the primary restructuring
method is the extensions of terms.
Accruing loans with modifications deemed to be economic concessions resulting from borrower difficulties are reported as
accruing TDRs. Nonaccruing loans that are modified and demonstrate a history of repayment performance in accordance with
their modified terms are reclassified to accruing restructured status, typically after six months of repayment performance.
Generally, once a residential loan becomes a TDR, we expect that the loan will likely continue to be reported as a TDR for
its remaining life even after returning to accruing status as the modified rates and terms at the time of modification were
typically more favorable than those generally available in the market. We note that some restructurings may not ultimately
result in the complete collection of principal and interest (as modified by the terms of the restructuring), culminating in default,
which could result in additional incremental losses. These potential incremental losses have been factored into our overall
ALLL estimate through the use of loss forecasting methodologies. Roll rate models used to forecast losses on the residential
mortgage and consumer TDRs are calculated and analyzed separately using their own portfolio attributes and history, thereby
reflecting an increased PD compared to loans that have not been restructured. The level of re-defaults will likely be affected
by future economic conditions. At December 31, 2011 and 2010, specific reserves included in the ALLL for residential TDRs
were $401 million and $422 million, respectively. See Note 6, "Loans," to the Consolidated Financial Statements in this Form
10-K for more information.
The following tables display our residential real estate TDR portfolio by modification type and payment status at December
31. Loans that have been repurchased from Ginnie Mae under an early buyout clause and subsequently modified have been
excluded from the table. Such loans totaled $65 million and $82 million at December 31, 2011 and 2010, respectively.
Selected Residential TDR Data
(Dollars in millions)
Rate reduction
Term extension
Rate reduction and term extension
Other 2
Total
(Dollars in millions)
Rate reduction
Rate reduction and term extension
Other 2
Total
2011
Accruing TDRs
Current
$473
20
1,682
20
$2,195
2010
Accruing TDRs
Current
$375
1,722
42
$2,139
Delinquent1
$40
10
290
3
$343
Delinquent1
$48
305
15
$368
Total
$513
30
1,972
23
$2,538
Total
$423
2,027
57
$2,507
Nonaccruing TDRs
Current
$16
2
35
2
$55
Nonaccruing TDRs
Current
$26
66
3
$95
Delinquent1
$69
24
439
15
$547
Delinquent1
$68
465
31
$564
Table 16
Total
$85
26
474
17
$602
Total
$94
531
34
$659
1 TDRs considered delinquent for purposes of this table were those at least thirty days past due.
2 Primarily consists of extensions and deficiency notes.
At December 31, 2011, our total TDR portfolio was $3.6 billion and was composed of $3.1 billion, or 87%, of residential
loans (predominantly first and second lien residential mortgages and home equity lines of credit), $442 million, or 12%, of
commercial loans (predominantly income-producing properties), and $39 million, or 1%, of direct consumer loans.
Accruing TDRs increased $207 million, up 8% during the year ended December 31, 2011. The increase in accruing TDRs
was partly attributable to an increase in the number of loan modifications during the year and partly related to the adoption
of new accounting guidance during 2011. Applying the new guidance, which required a review and evaluation of loan
modifications completed since January 1, 2011, resulted in the identification of $93 million of additional TDRs as of July 1,