eTrade 2011 Annual Report Download - page 69

modification programs, as well as uncertainty around certain loans modified under our previous programs. Once
the evaluation of the existing programs and practices is complete and any necessary changes have been
implemented, we will re-assess the overall qualitative reserve. See Summary of Critical Accounting Policies and
Estimates for a discussion of the estimates and assumptions used in the allowance for loan losses, including the
qualitative reserve.
Troubled Debt Restructurings
Included in allowance for loan losses was a specific allowance of $320.1 million and $357.0 million that
was established for TDRs at December 31, 2011 and 2010, respectively. The specific allowance for these
individually impaired loans represents the forecasted losses over the remaining life of the loan, including the
economic concession to the borrower. The following table shows loans that have been modified in a TDR and the
specific valuation allowance by loan portfolio as well as the percentage of total expected losses as of
December 31, 2011 and 2010 (dollars in millions):
Recorded
Investment in
TDRs
Specific
Valuation
Allowance
Net Investment in
TDRs
Specific Valuation
Allowance as a %
of TDR Loans
Total
Expected
Losses
December 31, 2011
One- to four-family $ 973.0 $101.2 $ 871.8 10% 28%
Home equity 445.9 218.9 227.0 49% 55%
Total $1,418.9 $320.1 $1,098.8 23% 35%
December 31, 2010
One- to four-family $ 548.6 $ 84.5 $ 464.1 15% 28%
Home equity 488.3 272.5 215.8 56% 59%
Total $1,036.9 $357.0 $ 679.9 34% 42%
The recorded investment in TDRs includes the charge-offs related to certain loans that were written down to
the estimated current value of the underlying property less estimated costs to sell. These charge-offs were recorded
on loans that were delinquent in excess of 180 days or in bankruptcy prior to the loan modification. The total
expected loss on TDRs includes both the previously recorded charge-offs and the specific valuation allowance.
The following table shows the TDRs by delinquency category as of December 31, 2011 and 2010 (dollars in
millions):
TDRs
Current
TDRs 30-89
Days
Delinquent
TDRs 90-179
Days
Delinquent
TDRs 180+
Days
Delinquent
Total Recorded
Investment in
TDRs
December 31, 2011
One- to four-family $ 774.0 $ 85.7 $31.3 $82.0 $ 973.0
Home equity 351.6 51.4 34.5 8.4 445.9
Total $1,125.6 $137.1 $65.8 $90.4 $1,418.9
December 31, 2010
One- to four-family $ 420.2 $ 55.5 $21.6 $51.3 $ 548.6
Home equity 388.7 56.7 39.8 3.1 488.3
Total $ 808.9 $112.2 $61.4 $54.4 $1,036.9
TDRs on accrual status, which are current and have made six or more consecutive payments, were $795.3
million, $508.9 million and $222.8 million as of December 31, 2011, 2010 and 2009, respectively. We did not
have any TDRs as of December 31, 2008 and 2007.
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