Bank of America 2015 Annual Report Download - page 76

74 Bank of America 2015
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 35.
Table 35 Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity (1)
(Dollars in millions) 2015 2014
Nonperforming loans and leases, January 1 $ 10,819 $ 15,840
Additions to nonperforming loans and leases:
New nonperforming loans and leases 4,949 7,077
Reductions to nonperforming loans and leases:
Paydowns and payoffs (1,018)(1,625)
Sales (1,674)(4,129)
Returns to performing status (2) (2,710)(3,277)
Charge-offs (1,769)(2,187)
Transfers to foreclosed properties (3) (432)(672)
Transfers to loans held-for-sale —(208)
Total net reductions to nonperforming loans and leases (2,654)(5,021)
Total nonperforming loans and leases, December 31 (4) 8,165 10,819
Foreclosed properties, January 1 630 533
Additions to foreclosed properties:
New foreclosed properties (3) 606 1,011
Reductions to foreclosed properties:
Sales (686)(829)
Write-downs (106)(85)
Total net additions (reductions) to foreclosed properties (186)97
Total foreclosed properties, December 31 (5) 444 630
Nonperforming consumer loans, leases and foreclosed properties, December 31 $ 8,609 $ 11,449
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (6) 1.80%2.22%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and
foreclosed properties (6) 1.89 2.35
(1) Balances do not include nonperforming LHFS of $5 million and $7 million and nonaccruing TDRs removed from the PCI loan portfolio prior to January 1, 2010 of $38 million and $102 million at
December 31, 2015 and 2014 as well as loans accruing past due 90 days or more as presented in Table 23 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) At December 31, 2015, 41 percent of nonperforming loans were 180 days or more past due.
(5) Foreclosed property balances do not include properties insured by certain government-guaranteed loans, principally FHA-insured loans, of $1.4 billion and $1.1 billion at December 31, 2015 and
2014.
(6) 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 35 are net of $162 million
and $191 million of charge-offs and write-offs of PCI loans in 2015
and 2014, 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, 2015 and 2014,
$484 million and $800 million of such junior-lien home equity
loans were included in nonperforming loans and leases. This
decline was driven by overall portfolio improvement as well as $75
million of charge-offs related to the consumer relief portion of the
DoJ Settlement.