PNC Bank 2013 Annual Report Download - page 158

T ROUBLED D EBT R ESTRUCTURINGS (TDR S )
A TDR is a loan whose terms have been restructured in a
manner that grants a concession to a borrower experiencing
financial difficulties. TDRs result from our loss mitigation
activities, and include rate reductions, principal forgiveness,
postponement/reduction of scheduled amortization, and
extensions, which are intended to minimize economic loss and
to avoid foreclosure or repossession of collateral.
Additionally, TDRs also result from borrowers that have been
discharged from personal liability through Chapter 7
bankruptcy and have not formally reaffirmed their loan
obligations to PNC. In those situations where principal is
forgiven, the amount of such principal forgiveness is
immediately charged off.
Some TDRs may not ultimately result in the full collection of
principal and interest, as restructured, and result in potential
incremental losses. These potential incremental losses have
been factored into our overall ALLL estimate. The level of
any subsequent defaults will likely be affected by future
economic conditions. Once a loan becomes a TDR, it will
continue to be reported as a TDR until it is ultimately repaid
in full, the collateral is foreclosed upon, or it is fully charged
off. We held specific reserves in the ALLL of $.5 billion and
$.6 billion at December 31, 2013 and December 31, 2012,
respectively, for the total TDR portfolio.
Table 70: Summary of Troubled Debt Restructurings
In millions
Dec. 31
2013
Dec. 31
2012
Total consumer lending $2,161 $2,318
Total commercial lending 578 541
Total TDRs $2,739 $2,859
Nonperforming $1,511 $1,589
Accruing (a) 1,062 1,037
Credit card 166 233
Total TDRs $2,739 $2,859
(a) Accruing loans have demonstrated a period of at least six months of performance
under the restructured terms and are excluded from nonperforming loans. Loans
where borrowers have been discharged from personal liability through Chapter 7
bankruptcy and have not formally reaffirmed their loan obligations to PNC are not
returned to accrual status.
Table 71 quantifies the number of loans that were classified as
TDRs as well as the change in the recorded investments as a
result of the TDR classification during 2013, 2012 and 2011.
Additionally, the table provides information about the types of
TDR concessions. The Principal Forgiveness TDR category
includes principal forgiveness and accrued interest
forgiveness. These types of TDRs result in a write down of the
recorded investment and a charge-off if such action has not
already taken place. The Rate Reduction TDR category
includes reduced interest rate and interest deferral. The TDRs
within this category would result in reductions to future
interest income. The Other TDR category primarily includes
consumer borrowers that have been discharged from personal
liability through Chapter 7 bankruptcy and have not formally
reaffirmed their loan obligations to PNC, as well as
postponement/reduction of scheduled amortization and
contractual extensions for both consumer and commercial
borrowers.
In some cases, there have been multiple concessions granted
on one loan. This is most common within the commercial loan
portfolio. When there have been multiple concessions granted
in the commercial loan portfolio, the principal forgiveness
TDR was prioritized for purposes of determining the inclusion
in the table below. For example, if there is principal
forgiveness in conjunction with lower interest rate and
postponement of amortization, the type of concession will be
reported as Principal Forgiveness. Second in priority would be
rate reduction. For example, if there is an interest rate
reduction in conjunction with postponement of amortization,
the type of concession will be reported as a Rate Reduction. In
the event that multiple concessions are granted on a consumer
loan, concessions resulting from discharge from personal
liability through Chapter 7 bankruptcy without formal
affirmation of the loan obligations to PNC would be
prioritized and included in the Other type of concession in the
table below. After that, consumer loan concessions would
follow the previously discussed priority of concessions for the
commercial loan portfolio.
140 The PNC Financial Services Group, Inc. – Form 10-K