Discover 2010 Annual Report Download - page 121

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Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the table above.
Information regarding net charge-offs of interest and fee revenues on credit card loans is as follows (dollars in
thousands):
For the Years Ended
November 30,
2010(1) 2009 2008
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income)............. $934,077 $465,283 $257,543
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income)................................ $272,805 $176,662 $108,976
(1) The amounts at November 30, 2010 include securitized loans as a result of the consolidation of the securitization trusts upon adoption of Statement No. 167 on December 1, 2009. See Note 2:
Change in Accounting Principle for more information.
Information regarding nonaccrual, past due and restructured loan receivables is as follows (dollars in thousands):
November 30,
2010(1) 2009
Loans not accruing interest..................................................................................................................................................... $325,900 $190,086
Loans over 90 days delinquent and accruing interest.................................................................................................................. $853,757 $522,190
Restructured loans(2) .............................................................................................................................................................. $305,344 $ 72,924
(1) The amounts at November 30, 2010 include securitized loans as a result of the consolidation of the securitization trusts upon adoption of Statement No. 167 on December 1, 2009. See Note 2:
Change in Accounting Principle for more information.
(2) Restructured loans include $35.0 million and $9.7 million for the years ended November 30, 2010 and 2009, respectively, that are also included in loans over 90 days delinquent and accruing
interest.
At November 30, 2010 and 2009, the Company had included $113.8 million and $28.0 million, respectively, in its
allowance for loan losses for loans in its permanent workout program that were accounted for in accordance with ASC
310-40, Troubled Debt Restructuring. Interest income on these loans is accounted for in the same manner as other
accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology
applied to loans that are not in such programs. Additional information about loans in the Company’s permanent workout
program is shown below (dollars in thousands):
For the Years Ended
November 30,
2010(1) 2009 2008
Average recorded investment in loans....................................................................................................................... $260,251 $79,165 $47,204
Interest income recognized during the time within the period these loans were impaired(2) ................................................. $ 2,946 $ 937 $ 549
Gross interest income that would have been recorded in accordance with the original terms(3) ........................................... $ 39,917 $10,454 $ 6,619
(1) The amounts at November 30, 2010 include securitized loans as a result of the consolidation of the securitization trusts upon adoption of Statement No. 167 on December 1, 2009. See Note 2:
Change in Accounting Principle for more information.
(2) The Company does not separately track interest income on loans in its permanent workout program. Amounts shown are estimated by applying an average interest rate to the average loans in the
permanent workout program.
(3) The Company does not separately track the amount of gross interest income that would have been recorded if the loans in its permanent workout programs had not been restructured and interest
had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on credit card accounts and
the average interest rate earned on loans in the permanent workout program to the average loans in the permanent workout program.
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