eTrade 2012 Annual Report Download - page 144

The following table shows the average recorded investment and interest income recognized both on a cash
and accrual basis for the Company’s TDRs during the years ended December 31, 2012 and 2011 (dollars in
thousands):
Average Recorded Investment Interest Income Recognized
December 31, December 31,
2012 2011 2010 2012 2011 2010
One- to four-family $1,054,304 $ 770,943 $399,306 $31,109 $27,034 $13,498
Home equity 296,760 455,422 460,892 11,559 9,981 5,209
Total $1,351,064 $1,226,365 $860,198 $42,668 $37,015 $18,707
Included in the allowance for loan losses was a specific allowance of $171.4 million and $320.1 million that
was established for TDRs at December 31, 2012 and 2011, 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, 2012 and 2011 (dollars in thousands):
December 31, 2012 December 31, 2011
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 $ 503,557 $89,684 $ 413,873 $557,297 $101,188 $456,109
Home equity $ 185,133 $81,690 $ 103,443 $424,834 $218,955 $205,879
Without a recorded allowance:(1)
One- to four-family $ 725,568 $ — $ 725,568 $415,656 $ — $415,656
Home equity $ 91,890 $ — $ 91,890 $ 21,105 $ — $ 21,105
Total:
One- to four-family $1,229,125 $89,684 $1,139,441 $972,953 $101,188 $871,765
Home equity $ 277,023 $81,690 $ 195,333 $445,939 $218,955 $226,984
(1) Represents loans where the discounted cash flow analysis or collateral value is equal to or exceeds the recorded investment in the loan.
Troubled Debt Restructurings — Loan Modifications
The Company has loan modification programs that focus on the mitigation of potential losses in the one- to
four-family and home equity mortgage loan portfolio. The Company currently does not have an active loan
modification program for consumer and other loans. The various types of economic concessions that may be
granted typically consist of interest rate reductions, maturity date extensions, principal forgiveness or a
combination of these concessions. Trial modifications are classified immediately as TDRs and continue to be
reported as delinquent until the successful completion of the trial period, which is typically 90 days. The loan
then becomes a permanent modification reported as current but remains on nonaccrual status until six
consecutive payments have been made.
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