Bank of America 2014 Annual Report Download - page 82

80 Bank of America 2014
Restructured Loans
Nonperforming loans also include certain loans that have been
modified in TDRs where economic concessions have been granted
to borrowers experiencing financial difficulties. These concessions
typically result from the Corporation’s loss mitigation activities and
could include reductions in the interest rate, payment extensions,
forgiveness of principal, forbearance or other actions. Certain
TDRs are classified as nonperforming at the time of restructuring
and may only be returned to performing status after considering
the borrower’s sustained repayment performance for a reasonable
period, generally six months. Nonperforming TDRs, excluding those
modified loans in the PCI loan portfolio, are included in Table 39.
Table 39 Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity (1)
(Dollars in millions) 2014 2013
Nonperforming loans and leases, January 1 $ 15,840 $ 19,431
Additions to nonperforming loans and leases:
New nonperforming loans and leases 7,077 9,652
Reductions to nonperforming loans and leases:
Paydowns and payoffs (1,625)(2,782)
Sales (4,129)(1,528)
Returns to performing status (2) (3,277)(4,273)
Charge-offs (2,187)(3,514)
Transfers to foreclosed properties (3) (672)(483)
Transfers to loans held-for-sale (4) (208)(663)
Total net reductions to nonperforming loans and leases (5,021)(3,591)
Total nonperforming loans and leases, December 31 (5) 10,819 15,840
Foreclosed properties, January 1 533 650
Additions to foreclosed properties:
New foreclosed properties (3) 1,011 936
Reductions to foreclosed properties:
Sales (829)(930)
Write-downs (85) (123)
Total net additions (reductions) to foreclosed properties 97 (117)
Total foreclosed properties, December 31 (6) 630 533
Nonperforming consumer loans, leases and foreclosed properties, December 31 $ 11,449 $ 16,373
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (7) 2.22%2.99%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and
foreclosed properties (7) 2.35 3.09
(1) Balances do not include nonperforming LHFS of $7 million and $376 million and nonaccruing TDRs removed from the PCI loan portfolio prior to January 1, 2010 of $102 million and $260 million at
December 31, 2014 and 2013 as well as loans accruing past due 90 days or more as presented in Table 25 and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.
(2) Consumer loans may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan
otherwise becomes well-secured and is in the process of collection.
(3) New foreclosed properties represents transfers of nonperforming loans to foreclosed properties net of charge-offs taken during the first 90 days after transfer of a loan to foreclosed properties. New
foreclosed properties also includes properties obtained upon foreclosure of delinquent PCI loans, properties repurchased due to representations and warranties exposure and properties acquired
with newly consolidated subsidiaries.
(4) For 2014 and 2013, transfers to loans held-for-sale included $208 million and $273 million of loans that were sold prior to December 31, 2014 and 2013.
(5) At December 31, 2014, 48 percent of nonperforming loans were 180 days or more past due and were written down through charge-offs to 66 percent of their unpaid principal balance.
(6) Foreclosed property balances do not include loans that are insured by the FHA and have entered foreclosure of $1.1 billion and $1.4 billion at December 31, 2014 and 2013.
(7) Outstanding consumer loans and leases exclude loans accounted for under the fair value option.
Our policy is to record any losses in the value of foreclosed
properties as a reduction in the allowance for loan and lease losses
during the first 90 days after transfer of a loan to foreclosed
properties. Thereafter, further losses in value as well as gains and
losses on sale are recorded in noninterest expense. New
foreclosed properties included in Table 39 are net of $191 million
and $190 million of charge-offs in 2014 and 2013, recorded during
the first 90 days after transfer.
We classify junior-lien home equity loans as nonperforming
when the first-lien loan becomes 90 days past due even if the
junior-lien loan is performing. At December 31, 2014 and 2013,
$800 million and $1.2 billion of such junior-lien home equity loans
were included in nonperforming loans and leases. This decline
was driven by enhanced identification of the delinquency on first-
lien loans serviced by other financial institutions.