| Outstanding Loans and Leases |
Outstanding Loans and Leases
The following tables present total outstanding loans and leases and an aging analysis at December 31, 2011 and 2010.
The Legacy Asset Servicing portfolio, as shown in the table below, is a separately managed legacy mortgage portfolio. Legacy Asset Servicing, which was created on January 1, 2011 in connection with the re-alignment of the Consumer Real Estate Services (CRES) business segment, is responsible for servicing loans on its balance sheet and for others including loans held in other business segments and All Other. This includes servicing and managing the runoff and exposures related to selected residential mortgages and home equity loans, including discontinued real estate products, Countrywide PCI loans and certain loans that met a pre-defined delinquency status or probability of default threshold as of January 1, 2011. Since making the determination of the pool of loans to be included in the Legacy Asset Servicing portfolio, the criteria have not changed for this portfolio; however, the criteria will continue to be evaluated over time.
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December 31, 2011 |
(Dollars in millions) |
30-59 Days Past Due (1)
|
|
60-89 Days Past Due (1)
|
|
90 Days or
More
Past Due (2)
|
|
Total Past
Due 30 Days
or More
|
|
Total Current or Less Than 30 Days Past Due (3)
|
|
Purchased
Credit-impaired (4)
|
|
Loans Accounted for Under the Fair Value Option |
|
Total
Outstandings
|
Home loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage (5)
|
$ |
2,151 |
|
|
$ |
751 |
|
|
$ |
3,017 |
|
|
$ |
5,919 |
|
|
$ |
172,418 |
|
|
$ |
— |
|
|
|
|
$ |
178,337 |
|
Home equity |
260 |
|
|
155 |
|
|
429 |
|
|
844 |
|
|
66,211 |
|
|
— |
|
|
|
|
67,055 |
|
Legacy Asset Servicing portfolio |
|
|
|
|
|
|
|
|
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|
|
|
|
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Residential mortgage |
3,195 |
|
|
2,174 |
|
|
32,167 |
|
|
37,536 |
|
|
36,451 |
|
|
9,966 |
|
|
|
|
83,953 |
|
Home equity |
845 |
|
|
508 |
|
|
1,735 |
|
|
3,088 |
|
|
42,578 |
|
|
11,978 |
|
|
|
|
57,644 |
|
Discontinued real estate (6)
|
65 |
|
|
24 |
|
|
351 |
|
|
440 |
|
|
798 |
|
|
9,857 |
|
|
|
|
11,095 |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
981 |
|
|
772 |
|
|
2,070 |
|
|
3,823 |
|
|
98,468 |
|
|
— |
|
|
|
|
102,291 |
|
Non-U.S. credit card |
148 |
|
|
120 |
|
|
342 |
|
|
610 |
|
|
13,808 |
|
|
— |
|
|
|
|
14,418 |
|
Direct/Indirect consumer (7)
|
805 |
|
|
338 |
|
|
779 |
|
|
1,922 |
|
|
87,791 |
|
|
— |
|
|
|
|
89,713 |
|
Other consumer (8)
|
55 |
|
|
21 |
|
|
17 |
|
|
93 |
|
|
2,595 |
|
|
— |
|
|
|
|
2,688 |
|
Total consumer loans |
8,505 |
|
|
4,863 |
|
|
40,907 |
|
|
54,275 |
|
|
521,118 |
|
|
31,801 |
|
|
|
|
607,194 |
|
Consumer loans accounted for under the fair value option (9)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,190 |
|
|
2,190 |
|
Total consumer |
8,505 |
|
|
4,863 |
|
|
40,907 |
|
|
54,275 |
|
|
521,118 |
|
|
31,801 |
|
|
2,190 |
|
|
609,384 |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial |
272 |
|
|
83 |
|
|
2,249 |
|
|
2,604 |
|
|
177,344 |
|
|
— |
|
|
|
|
179,948 |
|
Commercial real estate (10)
|
133 |
|
|
44 |
|
|
3,887 |
|
|
4,064 |
|
|
35,532 |
|
|
— |
|
|
|
|
39,596 |
|
Commercial lease financing |
78 |
|
|
13 |
|
|
40 |
|
|
131 |
|
|
21,858 |
|
|
— |
|
|
|
|
21,989 |
|
Non-U.S. commercial |
24 |
|
|
— |
|
|
143 |
|
|
167 |
|
|
55,251 |
|
|
— |
|
|
|
|
55,418 |
|
U.S. small business commercial |
142 |
|
|
100 |
|
|
331 |
|
|
573 |
|
|
12,678 |
|
|
— |
|
|
|
|
13,251 |
|
Total commercial loans |
649 |
|
|
240 |
|
|
6,650 |
|
|
7,539 |
|
|
302,663 |
|
|
— |
|
|
|
|
310,202 |
|
Commercial loans accounted for under the fair value option (9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,614 |
|
|
6,614 |
|
Total commercial |
649 |
|
|
240 |
|
|
6,650 |
|
|
7,539 |
|
|
302,663 |
|
|
— |
|
|
6,614 |
|
|
316,816 |
|
Total loans and leases |
$ |
9,154 |
|
|
$ |
5,103 |
|
|
$ |
47,557 |
|
|
$ |
61,814 |
|
|
$ |
823,781 |
|
|
$ |
31,801 |
|
|
$ |
8,804 |
|
|
$ |
926,200 |
|
Percentage of outstandings |
0.99 |
% |
|
0.55 |
% |
|
5.13 |
% |
|
6.67 |
% |
|
88.95 |
% |
|
3.43 |
% |
|
0.95 |
% |
|
|
|
|
|
(1) |
Home loans includes $3.6 billion of fully-insured loans, $770 million of nonperforming loans and $119 million of TDRs that were removed from the Countrywide PCI loan portfolio prior to the adoption of accounting guidance on PCI loans effective January 1, 2010.
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(2) |
Home loans includes $21.2 billion of fully-insured loans and $378 million of TDRs that were removed from the Countrywide PCI loan portfolio prior to the adoption of accounting guidance on PCI loans effective January 1, 2010.
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(3) |
Home loans includes $1.8 billion of nonperforming loans as all principal and interest are not current or the loans are TDRs that have not demonstrated sustained repayment performance.
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|
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(4) |
PCI loan amounts are shown gross of the valuation allowance. |
|
|
(5) |
Total outstandings includes non-U.S. residential mortgages of $85 million at December 31, 2011.
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|
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(6) |
Total outstandings includes $9.9 billion of pay option loans and $1.2 billion of subprime loans at December 31, 2011. The Corporation no longer originates these products.
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|
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(7) |
Total outstandings includes dealer financial services loans of $43.0 billion, consumer lending loans of $8.0 billion, U.S. securities-based lending margin loans of $23.6 billion, student loans of $6.0 billion, non-U.S. consumer loans of $7.6 billion and other consumer loans of $1.5 billion at December 31, 2011.
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(8) |
Total outstandings includes consumer finance loans of $1.7 billion, other non-U.S. consumer loans of $929 million and consumer overdrafts of $103 million at December 31, 2011.
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|
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(9) |
Certain consumer loans are accounted for under the fair value option and include residential mortgage loans of $906 million and discontinued real estate loans of $1.3 billion at December 31, 2011. Certain commercial loans are accounted for under the fair value option and include U.S. commercial loans of $2.2 billion and non-U.S. commercial loans of $4.4 billion at December 31, 2011. See Note 22 – Fair Value Measurements and Note 23 – Fair Value Option for additional information.
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|
|
(10) |
Total outstandings includes U.S. commercial real estate loans of $37.8 billion and non-U.S. commercial real estate loans of $1.8 billion at December 31, 2011.
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|
|
December 31, 2010 |
(Dollars in millions) |
30-59 Days
Past Due (1)
|
|
60-89 Days Past Due (1)
|
|
90 Days or
More
Past Due (2)
|
|
Total Past
Due 30 Days
or More |
|
Total Current or Less Than 30 Days Past Due (3)
|
|
Purchased
Credit-impaired (4)
|
|
Loans Accounted for Under the Fair Value Option |
|
Total Outstandings |
Home loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage (5)
|
$ |
1,160 |
|
|
$ |
236 |
|
|
$ |
1,255 |
|
|
$ |
2,651 |
|
|
$ |
164,276 |
|
|
$ |
— |
|
|
|
|
|
$ |
166,927 |
|
Home equity |
186 |
|
|
12 |
|
|
105 |
|
|
303 |
|
|
71,216 |
|
|
— |
|
|
|
|
|
71,519 |
|
Legacy Asset Servicing portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
3,999 |
|
|
2,879 |
|
|
31,985 |
|
|
38,863 |
|
|
41,591 |
|
|
10,592 |
|
|
|
|
|
91,046 |
|
Home equity |
1,096 |
|
|
792 |
|
|
2,186 |
|
|
4,074 |
|
|
49,798 |
|
|
12,590 |
|
|
|
|
|
66,462 |
|
Discontinued real estate (6)
|
68 |
|
|
39 |
|
|
419 |
|
|
526 |
|
|
930 |
|
|
11,652 |
|
|
|
|
|
13,108 |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
1,398 |
|
|
1,195 |
|
|
3,320 |
|
|
5,913 |
|
|
107,872 |
|
|
— |
|
|
|
|
|
113,785 |
|
Non-U.S. credit card |
439 |
|
|
316 |
|
|
599 |
|
|
1,354 |
|
|
26,111 |
|
|
— |
|
|
|
|
|
27,465 |
|
Direct/Indirect consumer (7)
|
1,086 |
|
|
522 |
|
|
1,104 |
|
|
2,712 |
|
|
87,596 |
|
|
— |
|
|
|
|
|
90,308 |
|
Other consumer (8)
|
65 |
|
|
25 |
|
|
50 |
|
|
140 |
|
|
2,690 |
|
|
— |
|
|
|
|
|
2,830 |
|
Total consumer |
9,497 |
|
|
6,016 |
|
|
41,023 |
|
|
56,536 |
|
|
552,080 |
|
|
34,834 |
|
|
|
|
|
643,450 |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial |
432 |
|
|
222 |
|
|
3,689 |
|
|
4,343 |
|
|
171,241 |
|
|
2 |
|
|
|
|
|
175,586 |
|
Commercial real estate (9)
|
250 |
|
|
70 |
|
|
5,876 |
|
|
6,196 |
|
|
43,036 |
|
|
161 |
|
|
|
|
|
49,393 |
|
Commercial lease financing |
82 |
|
|
18 |
|
|
135 |
|
|
235 |
|
|
21,707 |
|
|
— |
|
|
|
|
|
21,942 |
|
Non-U.S. commercial |
25 |
|
|
2 |
|
|
239 |
|
|
266 |
|
|
31,722 |
|
|
41 |
|
|
|
|
|
32,029 |
|
U.S. small business commercial |
189 |
|
|
158 |
|
|
529 |
|
|
876 |
|
|
13,843 |
|
|
— |
|
|
|
|
|
14,719 |
|
Total commercial loans |
978 |
|
|
470 |
|
|
10,468 |
|
|
11,916 |
|
|
281,549 |
|
|
204 |
|
|
|
|
|
293,669 |
|
Commercial loans accounted for under the fair value option (10)
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,321 |
|
|
3,321 |
|
Total commercial |
978 |
|
|
470 |
|
|
10,468 |
|
|
11,916 |
|
|
281,549 |
|
|
204 |
|
|
3,321 |
|
|
296,990 |
|
Total loans and leases |
$ |
10,475 |
|
|
$ |
6,486 |
|
|
$ |
51,491 |
|
|
$ |
68,452 |
|
|
$ |
833,629 |
|
|
$ |
35,038 |
|
|
$ |
3,321 |
|
|
$ |
940,440 |
|
Percentage of outstandings |
1.11 |
% |
|
0.69 |
% |
|
5.48 |
% |
|
7.28 |
% |
|
88.64 |
% |
|
3.73 |
% |
|
0.35 |
% |
|
|
|
|
|
(1) |
Home loans includes $2.4 billion of fully-insured loans, $818 million of nonperforming loans and $156 million of TDRs that were removed from the Countrywide PCI loan portfolio prior to the adoption of accounting guidance on PCI loans effective January 1, 2010.
|
|
|
(2) |
Home loans includes $16.8 billion of fully-insured loans and $372 million of TDRs that were removed from the Countrywide PCI loan portfolio prior to the adoption of accounting guidance on PCI loans effective January 1, 2010.
|
|
|
(3) |
Home loans includes $1.1 billion of nonperforming loans as all principal and interest are not current or the loans are TDRs that have not demonstrated sustained repayment performance.
|
|
|
(4) |
PCI loan amounts are shown gross of the valuation allowance and exclude $1.6 billion of PCI home loans from the Merrill Lynch acquisition which are included in their appropriate aging categories.
|
|
|
(5) |
Total outstandings includes non-U.S. residential mortgages of $90 million at December 31, 2010.
|
|
|
(6) |
Total outstandings includes $11.8 billion of pay option loans and $1.3 billion of subprime loans at December 31, 2010. The Corporation no longer originates these products.
|
|
|
(7) |
Total outstandings includes dealer financial services loans of $43.3 billion, consumer lending loans of $12.4 billion, U.S. securities-based lending margin loans of $16.6 billion, student loans of $6.8 billion, non-U.S. consumer loans of $8.0 billion and other consumer loans of $3.2 billion at December 31, 2010.
|
|
|
(8) |
Total outstandings includes consumer finance loans of $1.9 billion, other non-U.S. consumer loans of $803 million and consumer overdrafts of $88 million at December 31, 2010.
|
|
|
(9) |
Total outstandings includes U.S. commercial real estate loans of $46.9 billion and non-U.S. commercial real estate loans of $2.5 billion at December 31, 2010.
|
|
|
(10) |
Certain commercial loans are accounted for under the fair value option and include U.S. commercial loans of $1.6 billion, non-U.S. commercial loans of $1.7 billion and commercial real estate loans of $79 million at December 31, 2010. See Note 22 – Fair Value Measurements and Note 23 – Fair Value Option for additional information.
|
The Corporation mitigates a portion of its credit risk on the residential mortgage portfolio through the use of synthetic securitization vehicles. These vehicles issue long-term notes to investors, the proceeds of which are held as cash collateral. The Corporation pays a premium to the vehicles to purchase mezzanine loss protection on a portfolio of residential mortgages owned by the Corporation. Cash held in the vehicles is used to reimburse the Corporation in the event that losses on the mortgage portfolio exceed 10 basis points (bps) of the original pool balance, up to the remaining amount of purchased loss protection of $783 million and $1.1 billion at December 31, 2011 and 2010. The vehicles from which the Corporation purchases credit protection are VIEs. The Corporation does not have a variable interest in these vehicles. Accordingly, these vehicles are not consolidated by the Corporation. Amounts due from the vehicles are recorded in other income (loss) when the Corporation recognizes a reimbursable loss, as described above. Amounts are collected when reimbursable losses are realized through the sale of the underlying collateral. At December 31, 2011 and 2010, the Corporation had a receivable of $359 million and $722 million from these vehicles for reimbursement of losses, and principal of $23.9 billion and $53.9 billion of residential mortgage loans was referenced under these agreements. The Corporation records an allowance for credit losses on these loans without regard to the existence of the purchased loss protection as the protection does not represent a guarantee of individual loans.
In addition, the Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on principal totaling $23.8 billion and $12.9 billion at December 31, 2011 and 2010, providing full protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured and therefore the Corporation does not record an allowance for credit losses related to these loans.
Nonperforming Loans and Leases
The Credit Quality table presents the Corporation’s nonperforming loans and leases including nonperforming TDRs and loans accruing past due 90 days or more at December 31, 2011 and 2010. Nonperforming loans and leases exclude performing TDRs and loans accounted for under the fair value option. Nonperforming LHFS are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. In addition, PCI loans, consumer credit card loans, business card loans and in general consumer loans not secured by real estate, including renegotiated loans, are not considered nonperforming and are therefore excluded from nonperforming loans and leases in the table below. Real estate-secured past due consumer fully-insured loans are reported as performing since the principal repayment is insured. See Note 1 – Summary of Significant Accounting Principles for further information on the criteria for classification as nonperforming.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality |
|
|
|
|
|
|
|
|
|
|
|
Nonperforming Loans and Leases |
|
Accruing Past Due
90 Days or More
|
|
December 31 |
|
December 31 |
(Dollars in millions) |
2011 |
|
2010 |
|
2011 |
|
2010 |
Home loans |
|
|
|
|
|
|
|
|
|
|
|
Core portfolio |
|
|
|
|
|
|
|
Residential mortgage (1)
|
$ |
2,414 |
|
|
$ |
1,510 |
|
|
$ |
883 |
|
|
$ |
16 |
|
Home equity |
439 |
|
|
107 |
|
|
— |
|
|
— |
|
Legacy Asset Servicing portfolio |
|
|
|
|
|
|
|
|
|
|
Residential mortgage (1)
|
13,556 |
|
|
16,181 |
|
|
20,281 |
|
|
16,752 |
|
Home equity |
2,014 |
|
|
2,587 |
|
|
— |
|
|
— |
|
Discontinued real estate |
290 |
|
|
331 |
|
|
— |
|
|
— |
|
Credit card and other consumer |
|
|
|
|
|
|
|
|
|
U.S. credit card |
n/a |
|
|
n/a |
|
|
2,070 |
|
|
3,320 |
|
Non-U.S. credit card |
n/a |
|
|
n/a |
|
|
342 |
|
|
599 |
|
Direct/Indirect consumer |
40 |
|
|
90 |
|
|
746 |
|
|
1,058 |
|
Other consumer |
15 |
|
|
48 |
|
|
2 |
|
|
2 |
|
Total consumer |
18,768 |
|
|
20,854 |
|
|
24,324 |
|
|
21,747 |
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial |
2,174 |
|
|
3,453 |
|
|
75 |
|
|
236 |
|
Commercial real estate |
3,880 |
|
|
5,829 |
|
|
7 |
|
|
47 |
|
Commercial lease financing |
26 |
|
|
117 |
|
|
14 |
|
|
18 |
|
Non-U.S. commercial |
143 |
|
|
233 |
|
|
— |
|
|
6 |
|
U.S. small business commercial |
114 |
|
|
204 |
|
|
216 |
|
|
325 |
|
Total commercial |
6,337 |
|
|
9,836 |
|
|
312 |
|
|
632 |
|
Total consumer and commercial |
$ |
25,105 |
|
|
$ |
30,690 |
|
|
$ |
24,636 |
|
|
$ |
22,379 |
|
|
|
(1) |
Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At December 31, 2011 and 2010, residential mortgage includes $17.0 billion and $8.3 billion of loans on which interest has been curtailed by the FHA, and therefore are no longer accruing interest, although principal is still insured, and $4.2 billion and $8.5 billion of loans on which interest is still accruing.
|
n/a = not applicable
Included in certain loan categories in nonperforming loans and leases in the table above are TDRs that are classified as nonperforming. At December 31, 2011 and 2010, the Corporation had $4.7 billion and $3.0 billion of residential mortgages, $539 million and $535 million of home equity, $97 million and $75 million of discontinued real estate, $531 million and $175 million of U.S. commercial, $1.1 billion and $770 million of commercial real estate and $38 million and $7 million of non-U.S. commercial loans that were TDRs and classified as nonperforming.
Credit Quality Indicators
The Corporation monitors credit quality within its three portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles. Within the home loans portfolio segment, the primary credit quality indicators are refreshed LTV and refreshed FICO score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of property securing the loan, refreshed quarterly. Home equity loans are evaluated using CLTV which measures the carrying value of the combined loans that have liens against the property and the available line of credit as a percentage of the appraised value of the property securing the loan, refreshed quarterly. Refreshed FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. At a minimum, FICO scores are refreshed quarterly, and in many cases, more frequently. Refreshed FICO score is also a primary credit quality indicator for the credit card and other consumer portfolio segment and the business card portfolio within U.S. small business commercial. The Corporation’s commercial loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, which are asset categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.
The following tables present certain credit quality indicators for the Corporation’s home loans, credit card and other consumer loans, and commercial loan portfolio segments, by class of financing receivables, at December 31, 2011 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans - Credit Quality Indicators (1)
|
|
|
|
December 31, 2011 |
(Dollars in millions) |
Core Portfolio Residential
Mortgage (2)
|
|
Legacy Asset Servicing Residential
Mortgage (2)
|
|
Countrywide Residential Mortgage PCI |
|
Core Portfolio Home Equity (2)
|
|
Legacy Asset Servicing Home Equity (2)
|
|
Countrywide Home Equity PCI |
|
Legacy Asset Servicing Discontinued
Real Estate (2)
|
|
Countrywide
Discontinued
Real Estate
PCI
|
Refreshed LTV (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 90 percent |
$ |
80,032 |
|
|
$ |
20,450 |
|
|
$ |
3,821 |
|
|
$ |
46,646 |
|
|
$ |
17,354 |
|
|
$ |
2,253 |
|
|
$ |
895 |
|
|
$ |
5,953 |
|
Greater than 90 percent but less than 100 percent |
11,838 |
|
|
5,847 |
|
|
1,468 |
|
|
6,988 |
|
|
4,995 |
|
|
1,077 |
|
|
122 |
|
|
1,191 |
|
Greater than 100 percent |
17,673 |
|
|
22,630 |
|
|
4,677 |
|
|
13,421 |
|
|
23,317 |
|
|
8,648 |
|
|
221 |
|
|
2,713 |
|
Fully-insured loans (4)
|
68,794 |
|
|
25,060 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
178,337 |
|
|
$ |
73,987 |
|
|
$ |
9,966 |
|
|
$ |
67,055 |
|
|
$ |
45,666 |
|
|
$ |
11,978 |
|
|
$ |
1,238 |
|
— |
|
$ |
9,857 |
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
7,020 |
|
|
$ |
17,337 |
|
|
$ |
3,749 |
|
|
$ |
4,148 |
|
|
$ |
8,990 |
|
|
$ |
3,203 |
|
|
$ |
548 |
|
|
$ |
5,968 |
|
Greater than or equal to 620 |
102,523 |
|
|
31,590 |
|
|
6,217 |
|
|
62,907 |
|
|
36,676 |
|
|
8,775 |
|
|
690 |
|
|
3,889 |
|
Fully-insured loans (4)
|
68,794 |
|
|
25,060 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
178,337 |
|
|
$ |
73,987 |
|
|
$ |
9,966 |
|
|
$ |
67,055 |
|
|
$ |
45,666 |
|
|
$ |
11,978 |
|
|
$ |
1,238 |
|
|
$ |
9,857 |
|
|
|
(1) |
Excludes $2.2 billion of loans accounted for under the fair value option.
|
|
|
(2) |
Excludes Countrywide PCI loans. |
|
|
(3) |
Refreshed LTV percentages for PCI loans are calculated using the carrying value gross of the related valuation allowance. |
|
|
(4) |
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer - Credit Quality Indicators |
|
|
|
December 31, 2011 |
(Dollars in millions) |
U.S. Credit
Card
|
|
Non-U.S.
Credit Card
|
|
Direct/Indirect
Consumer
|
|
Other
Consumer (1)
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
8,172 |
|
|
$ |
— |
|
|
$ |
3,325 |
|
|
$ |
802 |
|
Greater than or equal to 620 |
94,119 |
|
|
— |
|
|
46,981 |
|
|
854 |
|
Other internal credit metrics (2, 3, 4)
|
— |
|
|
14,418 |
|
|
39,407 |
|
|
1,032 |
|
Total credit card and other consumer |
$ |
102,291 |
|
|
$ |
14,418 |
|
|
$ |
89,713 |
|
|
$ |
2,688 |
|
|
|
(1) |
96 percent of the other consumer portfolio was associated with portfolios from certain consumer finance businesses that the Corporation previously exited.
|
|
|
(2) |
Other internal credit metrics may include delinquency status, geography or other factors. |
|
|
(3) |
Direct/indirect consumer includes $31.1 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $6.0 billion of loans the Corporation no longer originates.
|
|
|
(4) |
Non-U.S. credit card represents the select European countries’ credit card portfolios which are evaluated using internal credit metrics, including delinquency status. At December 31, 2011, 96 percent of this portfolio was current or less than 30 days past due, two percent was 30-89 days past due and two percent was 90 days or more past due.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial - Credit Quality Indicators (1)
|
|
|
|
December 31, 2011 |
(Dollars in millions) |
U.S.
Commercial
|
|
Commercial
Real Estate
|
|
Commercial
Lease
Financing
|
|
Non-U.S.
Commercial
|
|
U.S. Small
Business
Commercial (2)
|
Risk Ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass rated |
$ |
169,599 |
|
|
$ |
28,602 |
|
|
$ |
20,850 |
|
|
$ |
53,945 |
|
|
$ |
2,392 |
|
Reservable criticized |
10,349 |
|
|
10,994 |
|
|
1,139 |
|
|
1,473 |
|
|
836 |
|
Refreshed FICO score (3)
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
|
|
|
|
|
|
|
|
|
|
|
|
562 |
|
Greater than or equal to 620 |
|
|
|
|
|
|
|
|
4,674 |
|
Other internal credit metrics (3, 4)
|
|
|
|
|
|
|
|
|
4,787 |
|
Total commercial credit |
$ |
179,948 |
|
|
$ |
39,596 |
|
|
$ |
21,989 |
|
|
$ |
55,418 |
|
|
$ |
13,251 |
|
|
|
(1) |
Excludes $6.6 billion of loans accounted for under the fair value option.
|
|
|
(2) |
U.S. small business commercial includes $491 million of criticized business card and small business loans which are evaluated using FICO scores or internal credit metrics, including delinquency status, rather than risk ratings. At December 31, 2011, 97 percent of the balances where internal credit metrics are used were current or less than 30 days past due.
|
|
|
(3) |
Refreshed FICO score and other internal credit metrics are applicable only to the U.S. small business commercial portfolio. |
|
|
(4) |
Other internal credit metrics may include delinquency status, application scores, geography or other factors. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans - Credit Quality Indicators |
|
|
|
December 31, 2010 |
(Dollars in millions) |
Core Portfolio Residential
Mortgage (1)
|
|
Legacy Asset Servicing Residential
Mortgage (1)
|
|
Countrywide Residential Mortgage PCI |
|
Core Portfolio Home Equity (1)
|
|
Legacy Asset Servicing Home Equity (1)
|
|
Countrywide Hone Equity PCI |
|
Legacy Asset Servicing Discontinued
Real Estate (1)
|
|
Countrywide
Discontinued
Real Estate
PCI
|
Refreshed LTV (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 90 percent |
$ |
95,874 |
|
|
$ |
21,357 |
|
|
$ |
3,710 |
|
|
$ |
51,555 |
|
|
$ |
22,125 |
|
|
$ |
2,313 |
|
|
$ |
1,033 |
|
|
$ |
6,713 |
|
Greater than 90 percent but less than 100 percent |
11,581 |
|
|
8,234 |
|
|
1,664 |
|
|
7,534 |
|
|
6,504 |
|
|
1,215 |
|
|
155 |
|
|
1,319 |
|
Greater than 100 percent |
14,047 |
|
|
29,043 |
|
|
5,218 |
|
|
12,430 |
|
|
25,243 |
|
|
9,062 |
|
|
268 |
|
|
3,620 |
|
Fully-insured loans (3)
|
45,425 |
|
|
21,820 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
166,927 |
|
|
$ |
80,454 |
|
|
$ |
10,592 |
|
|
$ |
71,519 |
|
|
$ |
53,872 |
|
|
$ |
12,590 |
|
|
$ |
1,456 |
|
— |
|
$ |
11,652 |
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
5,193 |
|
|
$ |
22,126 |
|
|
$ |
4,016 |
|
|
$ |
3,932 |
|
|
$ |
11,562 |
|
|
$ |
3,206 |
|
|
$ |
663 |
|
|
$ |
7,168 |
|
Greater than or equal to 620 |
116,309 |
|
|
36,508 |
|
|
6,576 |
|
|
67,587 |
|
|
42,310 |
|
|
9,384 |
|
|
793 |
|
|
4,484 |
|
Fully-insured loans (3)
|
45,425 |
|
|
21,820 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total home loans |
$ |
166,927 |
|
|
$ |
80,454 |
|
|
$ |
10,592 |
|
|
$ |
71,519 |
|
|
$ |
53,872 |
|
|
$ |
12,590 |
|
|
$ |
1,456 |
|
— |
|
$ |
11,652 |
|
|
|
(1) |
Excludes Countrywide PCI loans. |
|
|
(2) |
Refreshed LTV percentages for PCI loans are calculated using the carrying value gross of the related valuation allowance. |
|
|
(3) |
Credit quality indicators are not reported for fully-insured loans as principal repayment is insured. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer - Credit Quality Indicators |
|
|
|
December 31, 2010 |
(Dollars in millions) |
U.S. Credit
Card
|
|
Non-U.S.
Credit Card
|
|
Direct/Indirect
Consumer
|
|
Other
Consumer (1)
|
Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
Less than 620 |
$ |
14,159 |
|
|
$ |
631 |
|
|
$ |
6,748 |
|
|
$ |
979 |
|
Greater than or equal to 620 |
99,626 |
|
|
7,528 |
|
|
48,209 |
|
|
961 |
|
Other internal credit metrics (2, 3, 4)
|
— |
|
|
19,306 |
|
|
35,351 |
|
|
890 |
|
Total credit card and other consumer |
$ |
113,785 |
|
|
$ |
27,465 |
|
|
$ |
90,308 |
|
|
$ |
2,830 |
|
|
|
(1) |
96 percent of the other consumer portfolio was associated with portfolios from certain consumer finance businesses that the Corporation previously exited.
|
|
|
(2) |
Other internal credit metrics may include delinquency status, geography or other factors. |
|
|
(3) |
Direct/indirect consumer includes $24.0 billion of securities-based lending which is overcollateralized and therefore has minimal credit risk and $7.4 billion of loans the Corporation no longer originates.
|
|
|
(4) |
Non-U.S. credit card represents the select European countries’ credit card portfolios and a portion of the Canadian credit card portfolio which are evaluated using internal credit metrics, including delinquency status. At December 31, 2010, 95 percent of this portfolio was current or less than 30 days past due, three percent was 30-89 days past due and two percent was 90 days past due or more.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial - Credit Quality Indicators (1)
|
|
|
|
December 31, 2010 |
(Dollars in millions) |
U.S.
Commercial
|
|
Commercial
Real Estate
|
|
Commercial
Lease
Financing
|
|
Non-U.S.
Commercial
|
|
U.S. Small
Business
Commercial (2)
|
Risk Ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass rated |
$ |
160,154 |
|
|
$ |
29,757 |
|
|
$ |
20,754 |
|
|
$ |
30,180 |
|
|
$ |
3,139 |
|
Reservable criticized |
15,432 |
|
|
19,636 |
|
|
1,188 |
|
|
1,849 |
|
|
988 |
|
Refreshed FICO score (3)
|
|
|
|
|
|
|
|
|
|
Less than 620 |
|
|
|
|
|
|
|
|
888 |
|
Greater than or equal to 620 |
|
|
|
|
|
|
|
|
5,083 |
|
Other internal credit metrics (3, 4)
|
|
|
|
|
|
|
|
|
4,621 |
|
Total commercial credit |
$ |
175,586 |
|
|
$ |
49,393 |
|
|
$ |
21,942 |
|
|
$ |
32,029 |
|
|
$ |
14,719 |
|
|
|
(1) |
Includes $204 million of PCI loans in the commercial portfolio segment and excludes $3.3 billion of loans accounted for under the fair value option.
|
|
|
(2) |
U.S. small business commercial includes $690 million of criticized business card and small business loans which are evaluated using FICO scores or internal credit metrics, including delinquency status, rather than risk ratings. At December 31, 2010, 95 percent of the balances where internal credit metrics are used were current or less than 30 days past due.
|
|
|
(3) |
Refreshed FICO score and other internal credit metrics are applicable only to the U.S. small business commercial portfolio. |
|
|
(4) |
Other internal credit metrics may include delinquency status, application scores, geography or other factors. |
Impaired Loans and Troubled Debt Restructurings
A loan is considered impaired when, based on current information, it is probable that the Corporation will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans, all TDRs, and the renegotiated credit card and other consumer TDR portfolio (the renegotiated credit card and other consumer TDR portfolio, collectively, the renegotiated TDR portfolio). Impaired loans exclude nonperforming consumer loans and nonperforming commercial leases unless they are classified as TDRs. Loans accounted for under the fair value option are also excluded. PCI loans are excluded and reported separately on page 194.
Home Loans
Impaired home loans within the home loans portfolio segment consist entirely of TDRs. Excluding PCI loans, substantially all modifications of home loans meet the definition of TDRs. Modifications of home loans are done in accordance with the government’s Making Home Affordable Program (modifications under government programs) or the Corporation’s proprietary programs (modifications under proprietary programs). These modifications are considered to be TDRs if concessions have been granted to borrowers experiencing financial difficulties. Concessions may include reductions in interest rates, capitalization of past due amounts, principal and/or interest forbearance, payment extensions, principal and/or interest forgiveness or combinations thereof.
Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers under both government and proprietary programs. Trial modifications generally represent a three- to four-month period during which the borrower makes monthly payments under the anticipated modified payment terms. Upon successful completion of the trial period, the Corporation and the borrower enter into a permanent modification. In accordance with new accounting guidance effective in 2011, a loan is classified as a TDR when a binding offer is extended to borrowers to enter into a trial modification. At December 31, 2011, the Corporation classified as TDRs $2.6 billion of home loans that were participating in or had been offered a binding trial modification. These home loans TDRs had an aggregate allowance of $154 million at December 31, 2011. Approximately 55 percent of all loans that entered into a trial modification during 2011 became permanent modifications as of December 31, 2011.
In accordance with applicable accounting guidance, home loans are not classified as impaired loans unless they have been designated as a TDR. Once such a loan has been designated as a TDR, it is then individually assessed for impairment. Home loan TDRs are measured primarily based on the net present value of the estimated cash flows discounted at the loan’s original effective interest rate. If the carrying value of a TDR exceeds this amount, a specific allowance is recorded as a component of the allowance for loan and lease losses. Alternatively, home loan TDRs that are considered to be dependent solely on the collateral for repayment (e.g., due to the lack of income verification) are measured based on the estimated fair value of the collateral and a charge-off is recorded if the carrying value exceeds the fair value of the collateral. Home loans that reached 180 days past due prior to modification would have been charged-off to their net realizable value before they were modified as TDRs in accordance with established policy. Therefore, the modification of home loans that are 180 or more days past due as TDRs does not have an impact on the allowance for credit losses nor are additional charge-offs required at the time of modification. Subsequent declines in the fair value of the collateral after a loan has reached 180 days past due are recorded as charge-offs. Fully-insured loans are protected against principal loss, and therefore, the Corporation does not record an allowance for credit losses on the outstanding principal balance, even after they have been modified in a TDR.
The net present value of the estimated cash flows is based on model-driven estimates of projected payments, prepayments, defaults and loss-given-default (LGD). Using statistical modeling methodologies, the Corporation estimates the probability that a loan will default prior to maturity based on the attributes of each loan. The factors that are most relevant to the probability of default are the refreshed LTV or in the case of a subordinated lien, refreshed CLTV, borrower credit score, months since origination (i.e., vintage) and geography. Each of these factors is further broken down by present collection status (whether the loan is current, delinquent, in default or in bankruptcy). Severity (or LGD) is estimated based on the refreshed LTV for the first mortgages or CLTV for subordinated liens. The estimates are based on the Corporation’s historical experience, but are adjusted to reflect an assessment of environmental factors that may not be reflected in the historical data, such as changes in real estate values, local and national economies, underwriting standards and the regulatory environment. The probability of default models also incorporate recent experience with modification programs, a loan’s default history prior to modification and the change in borrower payments post-modification.
At December 31, 2011 and 2010, remaining commitments to lend additional funds to debtors whose terms have been modified in a home loan TDR were immaterial. Home loan foreclosed properties totaled $2.0 billion and $1.2 billion at December 31, 2011 and 2010.
The table below presents impaired loans in the Corporation’s home loans portfolio segment at December 31, 2011 and 2010. The impaired home loans table below includes primarily loans managed by Legacy Asset Servicing. Certain impaired home loans do not have a related allowance as the current valuation of these impaired loans exceeded the carrying value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans – Home Loans |
|
|
|
|
|
December 31, 2011 |
|
2011 |
(Dollars in millions) |
Unpaid
Principal
Balance
|
|
Carrying
Value
|
|
Related
Allowance
|
|
Average
Carrying
Value
|
|
Interest
Income
Recognized (1)
|
With no recorded allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
10,907 |
|
|
$ |
8,168 |
|
|
n/a |
|
|
$ |
6,285 |
|
|
$ |
233 |
|
Home equity |
1,747 |
|
|
479 |
|
|
n/a |
|
|
442 |
|
|
23 |
|
Discontinued real estate |
421 |
|
|
240 |
|
|
n/a |
|
|
222 |
|
|
8 |
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
12,296 |
|
|
$ |
11,119 |
|
|
$ |
1,295 |
|
|
$ |
9,379 |
|
|
$ |
319 |
|
Home equity |
1,551 |
|
|
1,297 |
|
|
622 |
|
|
1,357 |
|
|
34 |
|
Discontinued real estate |
213 |
|
|
159 |
|
|
29 |
|
|
173 |
|
|
6 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
23,203 |
|
|
$ |
19,287 |
|
|
$ |
1,295 |
|
|
$ |
15,664 |
|
|
$ |
552 |
|
Home equity |
3,298 |
|
|
1,776 |
|
|
622 |
|
|
1,799 |
|
|
57 |
|
Discontinued real estate |
634 |
|
|
399 |
|
|
29 |
|
|
395 |
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
2010 |
With no recorded allowance |
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
5,493 |
|
|
$ |
4,382 |
|
|
n/a |
|
|
$ |
4,429 |
|
|
$ |
184 |
|
Home equity |
1,411 |
|
|
437 |
|
|
n/a |
|
|
493 |
|
|
21 |
|
Discontinued real estate |
361 |
|
|
218 |
|
|
n/a |
|
|
219 |
|
|
8 |
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
8,593 |
|
|
$ |
7,406 |
|
|
$ |
1,154 |
|
|
$ |
5,226 |
|
|
$ |
196 |
|
Home equity |
1,521 |
|
|
1,284 |
|
|
676 |
|
|
1,509 |
|
|
23 |
|
Discontinued real estate |
247 |
|
|
177 |
|
|
41 |
|
|
170 |
|
|
7 |
|
Total |
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
14,086 |
|
|
$ |
11,788 |
|
|
$ |
1,154 |
|
|
$ |
9,655 |
|
|
$ |
380 |
|
Home equity |
2,932 |
|
|
1,721 |
|
|
676 |
|
|
2,002 |
|
|
44 |
|
Discontinued real estate |
608 |
|
|
395 |
|
|
41 |
|
|
389 |
|
|
15 |
|
|
|
(1) |
Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the ultimate collectability of principal is not uncertain. |
n/a = not applicable
The table below presents the December 31, 2011 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of home loans that were modified in TDRs during 2011, along with net charge-offs that were recorded during 2011. The table below consists primarily of TDRs managed by Legacy Asset Servicing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans - TDRs Entered into During 2011 |
|
|
|
December 31, 2011 |
|
2011 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value |
|
Pre-modification Interest Rate |
|
Post-modification Interest Rate |
|
Net Charge-offs |
Residential mortgage |
$ |
10,293 |
|
|
$ |
8,872 |
|
|
6.03 |
% |
|
5.28 |
% |
|
$ |
188 |
|
Home equity |
899 |
|
|
480 |
|
|
7.05 |
|
|
5.79 |
|
|
184 |
|
Discontinued real estate |
89 |
|
|
59 |
|
|
7.42 |
|
|
5.94 |
|
|
3 |
|
Total |
$ |
11,281 |
|
|
$ |
9,411 |
|
|
6.12 |
|
|
5.33 |
|
|
$ |
375 |
|
The table below presents the December 31, 2011 carrying value for home loans which were modified in a TDR during 2011. The table below consists primarily of TDRs managed by Legacy Asset Servicing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans - Modification Programs |
|
|
|
TDRs Entered into During 2011 |
(Dollars in millions) |
Residential Mortgage |
|
Home Equity |
|
Discontinued Real Estate |
|
Total Carrying Value |
Modifications under government programs |
|
|
|
|
|
|
|
Contractual interest rate reduction |
$ |
969 |
|
|
$ |
181 |
|
|
$ |
9 |
|
|
$ |
1,159 |
|
Principal and/or interest forbearance |
179 |
|
|
36 |
|
|
2 |
|
|
217 |
|
Other modifications (1)
|
18 |
|
|
3 |
|
|
— |
|
|
21 |
|
Total modifications under government programs |
1,166 |
|
|
220 |
|
|
11 |
|
|
1,397 |
|
|
|
|
|
|
|
|
|
Modifications under proprietary programs |
|
|
|
|
|
|
|
Contractual interest rate reduction |
3,441 |
|
|
83 |
|
|
20 |
|
|
3,544 |
|
Capitalization of past due amounts |
381 |
|
|
1 |
|
|
2 |
|
|
384 |
|
Principal and/or interest forbearance |
845 |
|
|
47 |
|
|
7 |
|
|
899 |
|
Other modifications (1)
|
405 |
|
|
33 |
|
|
1 |
|
|
439 |
|
Total modifications under proprietary programs |
5,072 |
|
|
164 |
|
|
30 |
|
|
5,266 |
|
Trial modifications (2)
|
2,634 |
|
|
96 |
|
|
18 |
|
|
2,748 |
|
Total modifications |
$ |
8,872 |
|
|
$ |
480 |
|
|
$ |
59 |
|
|
$ |
9,411 |
|
|
|
(1)
|
Includes other modifications such as term or payment extensions and repayment plans. |
|
|
(2) |
Includes $187 million of trial modifications that were considered TDRs prior to the application of new accounting guidance that was effective in 2011.
|
The table below presents the carrying value of loans that entered into payment default during 2011 and that were modified in a TDR during the 12 months preceding payment default. A payment default for home loan TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification. Payment default on trial modification where the borrower has not yet met the terms of the agreement are included in the table below if the borrower is 90 days or more past due three months after the offer to modify is made.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Loans - Payment Default |
|
|
|
2011 |
(Dollars in millions) |
Residential Mortgage |
|
Home Equity |
|
Discontinued Real Estate |
|
Total Carrying Value |
Modifications under government programs |
$ |
348 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
351 |
|
Modifications under proprietary programs |
2,068 |
|
|
42 |
|
|
11 |
|
|
2,121 |
|
Trial modifications |
1,011 |
|
|
15 |
|
|
5 |
|
|
1,031 |
|
Total modifications |
$ |
3,427 |
|
|
$ |
58 |
|
|
$ |
18 |
|
|
$ |
3,503 |
|
Credit Card and Other Consumer
The credit card and other consumer portfolio segment includes impaired loans that have been modified as a TDR. The Corporation seeks to assist customers that are experiencing financial difficulty by modifying loans while ensuring compliance with federal laws and guidelines. Substantially all of the Corporation’s credit card and other consumer loan modifications involve reducing the interest rate on the account and placing the customer on a fixed payment plan not exceeding 60 months, all of which are considered TDRs. In all cases, the customer’s available line of credit is canceled. The Corporation makes loan modifications directly with borrowers for debt held only by the Corporation (internal programs). Additionally, the Corporation makes loan modifications for borrowers working with third-party renegotiation agencies which provide solutions to customers’ entire unsecured debt structures (external programs).
All credit card and other consumer loans not secured by real estate, including modified loans, remain on accrual status until the loan is either charged-off or paid in full. The allowance for impaired credit card loans is based on the present value of projected cash flows discounted using the portfolio’s average contractual interest rate, excluding promotionally priced loans, in effect prior to restructuring. Prior to modification, credit card and other consumer loans are included in homogeneous pools which are collectively evaluated for impairment. For these portfolios, loss forecast models are utilized that consider a variety of factors including but not limited to historical loss experience, delinquencies, economic trends and credit scores.
The table below provides information on the Corporation’s renegotiated TDR portfolio. At December 31, 2011 and 2010, the renegotiated TDR portfolio was considered impaired and had a related allowance as shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans – Credit Card and Other Consumer – Renegotiated TDRs |
|
|
|
|
|
December 31, 2011 |
|
2011 |
(Dollars in millions) |
Unpaid
Principal
Balance
|
|
Carrying
Value (1)
|
|
Related
Allowance
|
|
Average
Carrying
Value
|
|
Interest
Income
Recognized (2)
|
With an allowance recorded |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
5,272 |
|
|
$ |
5,305 |
|
|
$ |
1,570 |
|
|
$ |
7,211 |
|
|
$ |
433 |
|
Non-U.S. credit card |
588 |
|
|
597 |
|
|
435 |
|
|
759 |
|
|
6 |
|
Direct/Indirect consumer |
1,193 |
|
|
1,198 |
|
|
405 |
|
|
1,582 |
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
2010 |
With an allowance recorded |
|
|
|
|
|
|
|
|
|
U.S. credit card |
$ |
8,680 |
|
|
$ |
8,766 |
|
|
$ |
3,458 |
|
|
$ |
10,549 |
|
|
$ |
621 |
|
Non-U.S. credit card |
778 |
|
|
797 |
|
|
506 |
|
|
973 |
|
|
21 |
|
Direct/Indirect consumer |
1,846 |
|
|
1,858 |
|
|
822 |
|
|
2,126 |
|
|
111 |
|
|
|
(1) |
Includes accrued interest and fees. |
|
|
(2) |
Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the ultimate collectability of principal is not uncertain. |
The table below provides information on the Corporation’s primary modification programs for the renegotiated TDR portfolio at December 31, 2011 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Renegotiated TDR Portfolio by Program Type |
|
|
|
|
|
|
|
|
|
|
|
Internal Programs |
|
External Programs |
|
Other (1)
|
|
Total |
|
Percent of Balances Current or Less Than 30 Days Past Due |
|
December 31 |
|
December 31 |
|
December 31 |
|
December 31 |
|
December 31 |
(Dollars in millions) |
2011 |
|
2010 |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
U.S. credit card |
$ |
3,788 |
|
|
$ |
6,592 |
|
|
$ |
1,436 |
|
|
$ |
1,927 |
|
|
$ |
81 |
|
|
$ |
247 |
|
|
$ |
5,305 |
|
|
$ |
8,766 |
|
|
78.97 |
% |
|
77.66 |
% |
Non-U.S. credit card |
218 |
|
|
282 |
|
|
113 |
|
|
176 |
|
|
266 |
|
|
339 |
|
|
597 |
|
|
797 |
|
|
54.02 |
|
|
58.86 |
|
Direct/Indirect consumer |
784 |
|
|
1,222 |
|
|
392 |
|
|
531 |
|
|
22 |
|
|
105 |
|
|
1,198 |
|
|
1,858 |
|
|
80.01 |
|
|
78.81 |
|
Total renegotiated TDR loans |
$ |
4,790 |
|
|
$ |
8,096 |
|
|
$ |
1,941 |
|
|
$ |
2,634 |
|
|
$ |
369 |
|
|
$ |
691 |
|
|
$ |
7,100 |
|
|
$ |
11,421 |
|
|
77.05 |
|
|
76.51 |
|
|
|
(1) |
Other programs include ineligible U.K. credit card and other consumer loans. |
At December 31, 2011 and 2010, the Corporation had a renegotiated TDR portfolio of $7.1 billion and $11.4 billion of which $5.5 billion was current or less than 30 days past due under the modified terms at December 31, 2011. The renegotiated TDR portfolio is excluded from nonperforming loans as the Corporation generally does not classify consumer loans not secured by real estate as nonperforming. Instead, these loans are charged off no later than the end of the month in which the loan becomes 180 days past due.
The table below provides information on the Corporation’s renegotiated TDR portfolio including the unpaid principal balance and carrying value of loans that were modified in TDRs during 2011, along with charge-offs that were recorded during 2011. The table also presents the average pre- and post-modification interest rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Renegotiated TDRs Entered into During 2011 |
|
|
|
December 31, 2011 |
|
2011 |
(Dollars in millions) |
Unpaid Principal Balance |
|
Carrying Value (1)
|
|
Pre-modification Interest Rate |
|
Post-modification Interest Rate |
|
Net Charge-offs |
U.S. credit card |
$ |
890 |
|
|
$ |
902 |
|
|
19.04 |
% |
|
6.16 |
% |
|
$ |
44 |
|
Non-U.S. credit card |
305 |
|
|
322 |
|
|
26.32 |
|
|
1.04 |
|
|
126 |
|
Direct/Indirect consumer |
198 |
|
|
199 |
|
|
15.63 |
|
|
5.22 |
|
|
10 |
|
Total |
$ |
1,393 |
|
|
$ |
1,423 |
|
|
20.20 |
|
|
4.87 |
|
|
$ |
180 |
|
|
|
(1) |
Includes accrued interest and fees. |
The table below provides information on the Corporation’s primary modification programs for the renegotiated TDR portfolio for loans that were modified in TDRs during 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Card and Other Consumer – Renegotiated TDRs by Program Type |
|
|
|
Renegotiated TDRs Entered into During 2011 |
|
December 31, 2011 |
(Dollars in millions) |
Internal Programs |
|
External Programs |
|
Other |
|
Total |
U.S. credit card |
$ |
492 |
|
|
$ |
407 |
|
|
$ |
3 |
|
|
$ |
902 |
|
Non-U.S. credit card |
163 |
|
|
158 |
|
|
1 |
|
|
322 |
|
Direct/Indirect consumer |
112 |
|
|
87 |
|
|
— |
|
|
199 |
|
Total renegotiated TDR loans |
$ |
767 |
|
|
$ |
652 |
|
|
$ |
4 |
|
|
$ |
1,423 |
|
Credit card and other consumer loans are deemed to be in payment default during the quarter in which a borrower misses the second of two consecutive payments. Payment defaults are one of the factors considered when projecting future cash flows in the calculation of the allowance for loan losses for impaired credit card and other consumer loans. Loans that entered into payment default during 2011 and that had been modified in a TDR during the 12 months preceding payment default were $863 million for U.S. credit card, $409 million for non-U.S. credit card and $180 million for direct/indirect consumer.
Commercial Loans
Impaired commercial loans, which include nonperforming loans and TDRs (both performing and nonperforming) are primarily measured based on the present value of payments expected to be received, discounted at the loan’s original effective interest rate. Commercial impaired loans may also be measured based on observable market prices or, for loans that are solely dependent on the collateral for repayment, the estimated fair value of collateral less estimated costs to sell. If the carrying value of a loan exceeds this amount, a specific allowance is recorded as a component of the allowance for loan and lease losses.
Modifications of loans to commercial borrowers that are experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing the borrower with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique and reflects the individual circumstances of the borrower. Modifications that result in a TDR may include extensions of maturity at a concessionary (below market) rate of interest, payment forbearances or other actions designed to benefit the customer while mitigating the Corporation’s risk exposure. Reductions in interest rates are rare. Instead, the interest rates are typically increased, although the increased rate may not represent a market rate of interest. Infrequently, concessions may also include principal forgiveness in connection with foreclosure, short sale or other settlement agreements leading to termination or sale of the loan.
At the time of restructuring, the loans are remeasured to reflect the impact, if any, on projected cash flows, observable market prices or collateral value resulting from the modified terms. If there was no forgiveness of principal and the interest rate was not decreased, the modification may have little or no impact on the allowance established for the loan. If a portion of the loan is deemed to be uncollectible, a charge-off may be recorded at the time of restructuring. Alternatively, a charge-off may have already been recorded in a previous period such that no charge-off is required at the time of modification.
At December 31, 2011 and 2010, remaining commitments to lend additional funds to debtors whose terms have been modified in a commercial loan TDR were immaterial. Commercial foreclosed properties totaled $612 million and $725 million at December 31, 2011 and 2010.
The table below presents impaired loans in the Corporation’s commercial loan portfolio at December 31, 2011 and 2010. Certain impaired commercial loans do not have a related allowance as the valuation of these impaired loans exceeded the carrying value, which is net of previously recorded charge-offs.
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Impaired Loans – Commercial |
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December 31, 2011 |
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2011 |
(Dollars in millions) |
Unpaid
Principal
Balance
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Carrying
Value
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Related
Allowance
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Average
Carrying
Value
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Interest
Income
Recognized (1)
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With no recorded allowance |
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U.S. commercial |
$ |
1,482 |
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$ |
985 |
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n/a |
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$ |
774 |
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$ |
7 |
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Commercial real estate |
2,587 |
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2,095 |
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n/a |
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1,994 |
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7 |
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Non-U.S. commercial |
216 |
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101 |
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n/a |
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101 |
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— |
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U.S. small business commercial (2)
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— |
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— |
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n/a |
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— |
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— |
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With an allowance recorded |
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U.S. commercial |
$ |
2,654 |
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$ |
1,987 |
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$ |
232 |
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$ |
2,422 |
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$ |
13 |
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Commercial real estate |
3,329 |
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2,384 |
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135 |
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3,309 |
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19 |
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Non-U.S. commercial |
308 |
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58 |
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6 |
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76 |
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3 |
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U.S. small business commercial (2)
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531 |
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503 |
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172 |
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666 |
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23 |
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Total |
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U.S. commercial |
$ |
4,136 |
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$ |
2,972 |
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$ |
232 |
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$ |
3,196 |
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$ |
20 |
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Commercial real estate |
5,916 |
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4,479 |
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135 |
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5,303 |
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26 |
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Non-U.S. commercial |
524 |
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159 |
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6 |
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177 |
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3 |
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U.S. small business commercial (2)
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531 |
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503 |
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172 |
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666 |
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23 |
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December 31, 2010 |
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2010 |
With no recorded allowance |
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U.S. commercial |
$ |
968 |
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$ |
441 |
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n/a |
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$ |
547 |
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$ |
3 |
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Commercial real estate |
2,655 |
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1,771 |
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n/a |
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1,736 |
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8 |
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Non-U.S. commercial |
46 |
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28 |
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n/a |
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9 |
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— |
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U.S. small business commercial (2)
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— |
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— |
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n/a |
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— |
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— |
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With an allowance recorded |
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U.S. commercial |
$ |
3,891 |
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$ |
3,193 |
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$ |
336 |
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$ |
3,389 |
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$ |
36 |
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Commercial real estate |
5,682 |
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4,103 |
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208 |
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4,813 |
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29 |
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Non-U.S. commercial |
572 |
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217 |
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91 |
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190 |
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— |
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U.S. small business commercial (2)
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935 |
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892 |
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445 |
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1,028 |
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34 |
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Total |
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U.S. commercial |
$ |
4,859 |
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$ |
3,634 |
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$ |
336 |
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$ |
3,936 |
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$ |
39 |
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Commercial real estate |
8,337 |
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5,874 |
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208 |
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6,549 |
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37 |
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Non-U.S. commercial |
618 |
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245 |
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91 |
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199 |
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— |
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U.S. small business commercial (2)
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935 |
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892 |
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445 |
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1,028 |
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34 |
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(1) |
Interest income recognized includes interest accrued and collected on the outstanding balances of accruing impaired loans as well as interest cash collections on nonaccruing impaired loans for which the ultimate collectability of principal is not uncertain. |
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(2) |
Includes U.S. small business commercial renegotiated TDR loans and related allowance. |
n/a = not applicable
The Commercial table below presents the December 31, 2011 unpaid principal balance and carrying value of commercial loans that were modified as TDRs during 2011, along with charge-offs that were recorded during 2011. As a result of the retrospective application of new accounting guidance on TDRs, the Corporation classified as TDRs $1.1 billion of commercial loan modifications. See Note 1 – Summary of Significant Accounting Principles for additional information.
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Commercial - TDRs Entered into During 2011 |
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December 31, 2011 |
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2011 |
(Dollars in millions) |
Unpaid Principal Balance |
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Carrying Value |
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Net Charge-offs |
U.S commercial |
$ |
1,381 |
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$ |
1,211 |
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$ |
74 |
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Commercial real estate |
1,604 |
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1,333 |
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152 |
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Non-U.S. commercial |
44 |
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44 |
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— |
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U.S. small business commercial |
58 |
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59 |
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10 |
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Total |
$ |
3,087 |
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$ |
2,647 |
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$ |
236 |
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A commercial TDR is generally deemed to be in payment default when the loan is 90 days or more past due, including delinquencies that were not resolved as part of the modification. U.S. small business commercial TDRs are deemed to be in payment default during the quarter in which a borrower misses the second of two consecutive payments. Payment defaults are one of the factors considered when projecting future cash flows, along with observable market prices or fair value of collateral when measuring the allowance for loan losses. TDRs that were in payment default at December 31, 2011 had a carrying value of $164 million for U.S. commercial, $446 million for commercial real estate and $68 million for U.S. small business commercial.
Purchased Credit-impaired Loans
PCI loans are acquired loans with evidence of credit quality deterioration since origination for which it is probable at purchase date that the Corporation will be unable to collect all contractually required payments. PCI loans are pooled based on similar characteristics and evaluated for impairment on a pool basis. The Corporation estimates impairment on its PCI loan portfolio in accordance with applicable accounting guidance on contingencies which involves estimating the expected cash flows of each pool using internal credit risk, interest rate and prepayment risk models. The key assumptions used in the models include the Corporation’s estimate of default rates, loss severity and prepayment speeds. The carrying value and valuation allowance for Countrywide consumer PCI loans are presented together with the allowance for loan and lease losses. See Note 7 – Allowance for Credit Losses for additional information.
The table below shows activity for the accretable yield on Countrywide consumer PCI loans. The $912 million reclassification from nonaccretable difference during 2011 is primarily due to an increase in the expected life of the PCI loans. The reclassification did not increase the annual yield but, as a result of estimated slower prepayment speeds, added additional interest periods to the expected cash flows.
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Rollforward of Accretable Yield |
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(Dollars in millions) |
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Accretable yield, January 1, 2010 |
$ |
7,317 |
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Accretion |
(1,704 |
) |
Disposals/transfers |
(124 |
) |
Reclassifications to nonaccretable difference |
(8 |
) |
Accretable yield, December 31, 2010 |
5,481 |
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Accretion |
(1,285 |
) |
Disposals/transfers |
(118 |
) |
Reclassifications from nonaccretable difference |
912 |
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Accretable yield, December 31, 2011 |
$ |
4,990 |
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Loans Held-for-Sale
The Corporation had LHFS of $13.8 billion and $35.1 billion at December 31, 2011 and 2010. Proceeds from sales, securitizations and paydowns of LHFS were $147.5 billion, $281.7 billion and $365.1 billion for 2011, 2010 and 2009. Proceeds used for originations and purchases of LHFS were $118.2 billion, $263.0 billion and $369.4 billion for 2011, 2010 and 2009.
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