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Commercial Loans by Contractual Maturity Date
The following tables set forth the breakdown of our commercial loan portfolio by contractual maturity as of
December 31, 2003.
As of December 31, 2003
Financial Services
Businesses
Closed Block
Business
Gross
Carrying
Value
%of
Total
Gross
Carrying
Value
%of
Total
($ in millions)
Maturing in 2004 ................................................................... $ 1,643 13.4% $ 511 7.2%
Maturing in 2005 ................................................................... 1,144 9.4 332 4.7
Maturing in 2006 ................................................................... 1,003 8.2 343 4.9
Maturing in 2007 ................................................................... 1,241 10.2 565 8.0
Maturing in 2008 ................................................................... 1,280 10.5 546 7.7
Maturing in 2009 ................................................................... 1,578 12.9 779 11.0
Maturing in 2010 ................................................................... 694 5.7 565 8.0
Maturing in 2011 ................................................................... 372 3.0 590 8.4
Maturing in 2012 ................................................................... 366 3.0 690 9.8
Maturing in 2013 and beyond ......................................................... 2,889 23.7 2,138 30.3
Total Commercial Loans ......................................................... $12,210 100.0% $7,059 100.0%
Commercial Loan Quality
We establish valuation allowances for loans that are determined to be non-performing as a result of our loan
review process. We define a non-performing loan as a loan for which it is probable that amounts due according to the
contractual terms of the loan agreement will not be collected. Valuation allowances for a non-performing loan are
recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or at
the fair value of the collateral if the loan is collateral dependent. We record subsequent adjustments to our valuation
allowances when appropriate.
The following tables set forth the gross carrying value for commercial loans by loan classification as of the dates
indicated:
As of December 31, 2003 As of December 31, 2002
Financial
Services
Businesses
Closed
Block
Business
Financial
Services
Businesses
Closed
Block
Business
(in millions)
Performing ............................................................... $11,709 $7,029 $11,693 $7,031
Delinquent, not in foreclosure ................................................ 391 1 339 —
Delinquent, in foreclosure .................................................... 23 5 13 5
Restructured .............................................................. 87 24 95 25
Total Commercial Loans ................................................ $12,210 $7,059 $12,140 $7,061
The following table sets forth the change in valuation allowances for our commercial loan portfolio as of the dates
indicated:
2003 2002
Financial Services
Businesses
Closed Block
Business
Financial Services
Businesses
Closed Block
Business
(in millions)
Allowance, beginning of year ................................ $420 $ 74 $472 $ 75
Additions (release) of allowance for losses .................. (15) (20) (30) (1)
Charge-offs, net of recoveries ............................ (6) (1) (40) —
Change in foreign exchange .............................. 37 — 18 —
Allowance, end of year ...................................... $436 $ 53 $420 $ 74
Prudential Financial 2003 Annual Report 73