Wells Fargo 2013 Annual Report Download - page 178

Note 6: Loans and Allowance for Credit Losses (continued)
Primary modification type (1) Financial effects of modifications
(in millions) Principal (2)
Interest
rate
reduction
Other
concessions (3) Total
Charge-
offs (4)
Weighted
average
interest
rate
reduction
Recorded
investment
related to
interest rate
reduction (5)
Year ended December 31, 2013
Commercial:
Commercial and industrial $ 4 176 1,081 1,261 17 4.71 % $ 176
Real estate mortgage 33 307 1,391 1,731 8 1.66 308
Real estate construction - 12 381 393 4 1.07 12
Lease financing - - - - - - -
Foreign 15 1 - 16 - - 1
Total commercial 52 496 2,853 3,401 29 2.72 497
Consumer:
Real estate 1-4 family first mortgage 1,143 1,170 3,681 5,994 233 2.64 2,019
Real estate 1-4 family junior lien mortgage 103 181 472 756 42 3.33 276
Credit card - 182 - 182 - 10.38 182
Automobile 3 12 97 112 34 7.66 12
Other revolving credit and installment - 10 12 22 - 4.87 10
Trial modifications (6) - - 50 50 - - -
Total consumer 1,249 1,555 4,312 7,116 309 3.31 2,499
Total $ 1,301 2,051 7,165 10,517 338 3.21 % $ 2,996
Year ended December 31, 2012
Commercial:
Commercial and industrial $ 11 35 1,370 1,416 40 1.60 % $ 38
Real estate mortgage 47 219 1,907 2,173 12 1.57 226
Real estate construction 12 19 531 562 10 1.69 19
Lease financing - - 4 4 - - -
Foreign - - 19 19 - - -
Total commercial 70 273 3,831 4,174 62 1.58 283
Consumer:
Real estate 1-4 family first mortgage 1,371 1,302 5,822 8,495 547 3.00 2,379
Real estate 1-4 family junior lien mortgage 79 244 756 1,079 512 3.70 313
Credit card - 241 - 241 - 10.85 241
Automobile 5 54 265 324 50 6.90 56
Other revolving credit and installment - 1 22 23 5 4.29 2
Trial modifications (6) -- 666 666 - - -
Total consumer 1,455 1,842 7,531 10,828 1,114 3.78 2,991
Total $ 1,525 2,115 11,362 15,002 1,176 3.59 % $ 3,274
Year ended December 31, 2011
Commercial:
Commercial and industrial $ 166 64 2,412 2,642 84 3.13 % $ 69
Real estate mortgage 113 146 1,894 2,153 24 1.46 160
Real estate construction 29 114 421 564 26 0.81 125
Lease financing - - 57 57 - - -
Foreign - - 22 22 - - -
Total commercial 308 324 4,806 5,438 134 1.55 354
Consumer:
Real estate 1-4 family first mortgage 1,629 1,908 934 4,471 293 3.27 3,322
Real estate 1-4 family junior lien mortgage 98 559 197 854 28 4.34 654
Credit card - 336 - 336 2 10.77 260
Automobile 73 115 3 191 23 6.39 177
Other revolving credit and installment 1 4 4 9 1 5.00 4
Trial modifications (6) -- 651 651 - - -
Total consumer 1,801 2,922 1,789 6,512 347 4.00 4,417
Total $ 2,109 3,246 6,595 11,950 481 3.82 % $ 4,771
(1) Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only
once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $3.1 billion, $3.9 billion and
$496 million, for the years ended December 31, 2013, 2012 and 2011, respectively, which reflect the impact of the prospective adoption of the OCC guidance issued in 2012.
(2) Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower
performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.
(3) Other concessions include loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce
the interest rate. Years ended December 2013 and 2012 includes $4.0 billion and $5.2 billion of consumer loans discharged in bankruptcy, respectively, as a result of the
OCC guidance implementation. The OCC guidance issued in third quarter 2012 required consumer loans discharged in bankruptcy to be classified as TDRs, as well as written
down to net realizable collateral value.
(4) Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the
loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal
modification. Modifications resulted in legally forgiving principal (actual, contingent or deferred) of $393 million, $495 million and $577 million for the years ended
December 31, 2013, 2012 and 2011, respectively.
(5) Reflects the effect of reduced interest rates on loans with principal or interest rate reduction primary modification type.
(6) Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through
delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions;
however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are
presented net of previously reported trial modifications that became permanent in the current period.
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