Wells Fargo 2014 Annual Report Download - page 80

Risk Management - Credit Risk Management (continued)
capacity at the time of modification are charged down to the fair
value of the collateral, if applicable. For an accruing loan that
has been modified, if the borrower has demonstrated
performance under the previous terms and the underwriting
process shows the capacity to continue to perform under the
restructured terms, the loan will generally remain in accruing
status. Otherwise, the loan will be placed in nonaccrual status
until the borrower demonstrates a sustained period of
performance, generally six consecutive months of payments, or
equivalent, inclusive of consecutive payments made prior to
modification. Loans will also be placed on nonaccrual, and a
corresponding charge-off is recorded to the loan balance, when
Table 37: Analysis of Changes in TDRs
we believe that principal and interest contractually due under
the modified agreement will not be collectible.
Table 37 provides an analysis of the changes in TDRs. Loans
that may be modified more than once are reported as TDR
inflows only in the period they are first modified. Other than
resolutions such as foreclosures, sales and transfers to held for
sale, we may remove loans held for investment from TDR
classification, but only if they have been refinanced or
restructured at market terms and qualify as a new loan.
Quarter ended
Dec 31, Sep 30, Jun 30, Mar 31, Year ended Dec. 31,
(in millions) 2014 2014 2014 2014 2014
Commercial TDRs
Balance, beginning of period $ 3,201 3,525 3,781 3,765 3,765 5,146
Inflows 232 208 276 442 1,158 1,794
Outflows
Charge-offs (62) (42) (28) (23) (155) (132)
Foreclosure (27) (12) (8) (3) (50) (88)
Payments, sales and other (1) (424) (478) (496) (400) (1,798) (2,955)
Balance, end of period 2,920 3,201 3,525 3,781 2,920 3,765
Consumer TDRs
Balance, beginning of period 21,841 22,082 22,698 22,696 22,696 21,768
Inflows 957 946 1,003 1,104 4,010 5,958
Outflows
Charge-offs (99) (120) (139) (157) (515) (859)
Foreclosure (252) (303) (283) (325) (1,163) (1,290)
Payments, sales and other (1) (797) (768) (1,073) (563) (3,201) (2,826)
Net change in trial modifications (2) (21) 4 (124) (57) (198) (55)
Balance, end of period 21,629 21,841 22,082 22,698 21,629 22,696
Total TDRs $ 24,549 25,042 25,607 26,479 24,549 26,461
(1) Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. It also includes $1 million of loans refinanced or
restructured as new loans and removed from TDR classification for the quarter ended March 31, 2014. No loans were removed from TDR classification for the quarters
ended December 31, September 30, and June 30, 2014, respectively. During 2013, $84 million of loans were refinanced or restructured as new loans and removed from
TDR classification.
(2) Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and
enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or
otherwise resolved. Our experience is that substantially all of the mortgages that enter a trial payment period program are successful in completing the program
requirements.
2013
78