eTrade 2011 Annual Report Download - page 134

Included in the allowance for loan losses was a specific allowance of $320.1 million, $357.0 million, and
$193.6 million that was established for TDRs at December 31, 2011, 2010, and 2009, respectively. The specific
allowance for these individually impaired loans represents the forecasted losses over the estimated remaining life
of the loan, including the economic concession to the borrower. The following table shows detailed information
related to the Company’s loans that were modified in a TDR as of December 31, 2011 and 2010 (dollars in
thousands):
December 31, 2011 December 31, 2010
Recorded
Investment in
TDRs
Specific
Valuation
Allowance
Net Investment
in TDRs
Recorded
Investment in
TDRs
Specific
Valuation
Allowance
Net Investment
in TDRs
With a recorded allowance:
One- to four-family $557,297 $101,188 $456,109 $385,266 $ 84,492 $300,774
Home equity $424,834 $218,955 $205,879 $479,745 $272,475 $207,270
Without a recorded
allowance: (1)
One- to four-family $415,656 $ — $415,656 $163,276 $ — $163,276
Home equity $ 21,105 $ — $ 21,105 $ 8,584 $ — $ 8,584
Total:
One- to four-family $972,953 $101,188 $871,765 $548,542 $ 84,492 $464,050
Home equity $445,939 $218,955 $226,984 $488,329 $272,475 $215,854
(1) The TDRs without a recorded specific valuation allowance represents loans where the discounted cash flow analysis is equal to or
exceeds the recorded investment in the loan.
The vast majority of the Company’s TDRs include an interest rate reduction in combination with another
type of concession. The Company prioritizes the interest rate reduction modifications in combination with the
following modification categories: principal forgiven, principal deferred and re-age/extension/capitalization of
accrued interest. Each class is mutually exclusive in that if a TDR had an interest rate reduction with principal
forgiven and an extension, the TDR would only show up in the principal forgiven column in the table below. The
following tables provide the number of loans, post-modification balances immediately after being modified as a
TDR by major class of modification, and the financial impact of modifications for loans that were modified as a
TDR during the year ended December 31, 2011 (dollars in thousands):
Interest Rate Reduction
Number of
Loans
Principal
Forgiven
Principal
Deferred
Re-age/
Extension/
Interest
Capitalization Other Other Total
One- to four-family 1,177 $29,343 $78,582 $337,604 $ 25,354 $25,253 $496,136
Home equity 1,452 317 — 24,531 98,873 2,245 125,966
Total 2,629 $29,660 $78,582 $362,135 $124,227 $27,498 $622,102
Financial Impact
Principal
Forgiven
Pre-TDR Weighted
Average Interest Rate
Post-TDR Weighted
Average Interest Rate
One- to four-family $9,308 6.1 % 2.6 %
Home equity 646 4.7 % 1.8 %
Total $9,954
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