Morgan Stanley 2014 Annual Report Download - page 230

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
There are two components of the allowance for loan losses: the inherent allowance component and the specific
allowance component.
The inherent allowance component of the allowance for loan losses is used to estimate the probable losses inherent in
the loan portfolio and includes non-homogeneous loans that have not been identified as impaired and portfolios of
smaller balance homogeneous loans. The Company maintains methodologies by loan product for calculating an
allowance for loan losses that estimates the inherent losses in the loan portfolio. Qualitative and environmental factors
such as economic and business conditions, nature and volume of the portfolio and lending terms, and volume and
severity of past due loans may also be considered in the calculations. The allowance for loan losses is maintained at a
level reasonable to ensure that it can adequately absorb the estimated probable losses inherent in the portfolio.
The specific allowance component of the allowance for loan losses is used to estimate probable losses for non-
homogeneous exposures, including loans modified in a Troubled Debt Restructuring (“TDR”), which have been
specifically identified for impairment analysis by the Company and determined to be impaired. At December 31,
2014 and December 31, 2013, the Company’s TDRs were not significant. For further information on allowance
for loan losses, see Note 2.
The tables below provide details on impaired loans, past due loans and allowances for the Company’s held for
investment loans:
December 31, 2014
Loans by Product Type Corporate Consumer
Residential
Real Estate
Wholesale
Real Estate Total
(dollars in millions)
Impaired loans with allowance ...................... $— $— $— $— $—
Impaired loans without allowance(1) ................. 2 — 17 — 19
Impaired loans unpaid principal balance ............... 2 — 17 — 19
Past due 90 days loans and on nonaccrual .............. 2 — 25 — 27
December 31, 2013
Loans by Product Type Corporate Consumer
Residential
Real Estate
Wholesale
Real Estate Total
(dollars in millions)
Impaired loans with allowance ....................... $63 $— $— $ 10 $73
Impaired loans without allowance(1) .................. 6 — 11 — 17
Impaired loans unpaid principal balance ............... 69 — 11 10 90
Past due 90 days loans and on nonaccrual .............. 7 — 11 10 28
December 31, 2014
Loans by Region Americas EMEA Asia-Pacific Total
(dollars in millions)
Impaired loans ............................................ $ 19 $— $— $ 19
Past due 90 days loans and on nonaccrual ....................... 27 — — 27
Allowance for loan losses .................................... 121 20 8 149
December 31, 2013
Loans by Region Americas EMEA Asia-Pacific Total
(dollars in millions)
Impaired loans ............................................ $ 90 $— $— $ 90
Past due 90 days loans and on nonaccrual ....................... 28 — — 28
Allowance for loan losses .................................... 123 28 5 156
EMEA—Europe, Middle East and Africa.
(1) At December 31, 2014 and December 31, 2013, no allowance was outstanding for these loans as the fair value of the collateral held
exceeded or equaled the carrying value.
226