eTrade 2010 Annual Report Download - page 135
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typically result in an insignificant delay in the timing of payments; therefore, the Company does not consider
such activities to be economic concessions to the borrowers. A loan is impaired when, based on current
information and events, it is probable that the Company will be unable to collect all amounts due according to the
contractual term of the loan agreement. Upon being classified as a TDR loan, such loan is categorized as an
impaired loan and impairment is measured on an individual basis.
Included in the allowance for loan losses was a specific allowance of $357.0 million and $193.6 million that
was established for TDRs at December 31, 2010 and 2009, respectively. The specific allowance for these
individually impaired loans represents the expected loss over the remaining life of the loan, including the
economic concession to the borrower. The average recorded investment in TDR loans was $860.2 million and
$309.8 million and the interest income recognized on a cash basis on these loans was $18.7 million and $6.8
million for the years ended December 31, 2010 and 2009, respectively. The following table shows detailed
information related to the Company’s modified loans accounted for as TDRs as December 31, 2010 and 2009
(dollars in thousands):
Recorded
Investment in TDRs
Specific
Valuation
Allowance
Net Investment in
TDRs
Specific Valuation
Allowance as a % of TDR
Loans
Total Expected
Losses
December 31, 2010
One- to four-family $ 548,542 $ 84,492 $464,050 15% 28%
Home equity 488,329 272,475 215,854 56% 59%
Total $1,036,871 $356,967 $679,904 34% 42%
December 31, 2009
One- to four-family $ 207,581 $ 26,916 $180,665 13% 21%
Home equity 371,320 166,636 204,684 45% 48%
Total $ 578,901 $193,552 $385,349 33% 38%
At December 31, 2010 and 2009, respectively, $865.0 million and $519.2 million of TDRs had an
associated specific valuation allowance, and $171.9 million and $59.7 million did not have an associated specific
valuation allowance as the amount of the loan balance in excess of the estimated current property value less costs
to sell had been charged-off. At December 31, 2010 and 2009, the unpaid principal balance in one- to four-family
TDRs was $546.4 million and $207.7 million, respectively. For home equity loans, the recorded investment in
TDRs represents the unpaid principal balance.
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