Wells Fargo 2011 Annual Report Download - page 155

TROUBLED DEBT RESTRUCTURINGS (TDRs)
When, for
economic or legal reasons related to a borrower’s financial
difficulties, we grant a concession for other than an insignificant
period of time to a borrower that we would not otherwise
consider, the related loan is classified as a TDR. We do not
consider any loans modified through a loan resolution such as
foreclosure or short sale to be a TDR. The following table
summarizes how our loans were modified as TDRs in 2011,
including the financial effects of the modifications.
Primary modification type (1)
Financial effects of modifications
Weighted
Recorded
Other
average
investment
Interest
interest
interest
related to
rate
rate
Charge-
rate
interest rate
(in millions)
Principal (2)
reduction
concessions (3)
Total
offs (4)
reduction
reduction
Year ended December 31, 2011
Commercial:
Commercial and industrial
$
166
64
2,412
2,642
84
3.13
%
$
69
Real estate mortgage
113
146
1,894
2,153
24
1.46
160
Real estate construction
29
114
421
564
26
0.81
125
Lease financing
-
-
57
57
-
-
-
Foreign
-
-
22
22
-
-
-
Total commercial
308
324
4,806
5,438
134
1.55
354
Consumer:
Real estate 1-4 family first mortgage
1,629
1,908
934
4,471
293
3.27
3,322
Real estate 1-4 family junior lien mortgage
98
559
197
854
28
4.34
654
Credit card
-
336
-
336
2
10.77
260
Other revolving credit and installment
74
119
7
200
24
6.36
181
Trial modifications (5)
-
-
651
651
-
-
-
Total consumer
1,801
2,922
1,789
6,512
347
4.00
4,417
Total
$
2,109
3,246
6,595
11,950
481
3.82
%
$
4,771
(1) Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs with multiple types of concessions are presented only once in the
table in the first category type based on the order presented.
(2) Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower
performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.
(3) Other interest rate concessions include loans modified to an interest rate that is not commensurate with the credit risk, even though the rate may have been increased.
These modifications would include renewals, term extensions, and other interest adjustments, but exclude modifications that also forgive principal and/or reduce the interest
rate.
(4) Charge-offs include write-downs of the investment in the loan in the period of modification. In some cases, the amount of charge-offs will differ from the modification terms
if the loan has already been charged down based on our policies. Modifications resulted in forgiving principal (actual, contingent or deferred) of $577 million in 2011.
(5) Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through
delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions;
however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified.
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