FDIC’s Tabletop exercises for TDRs

Apr 27, 2015

Troubled Debt Restructuring within the allowance for loan and lease losses (ALLL)

 

Guidance on Troubled Debt Restructurings (TDRs) has remained largely unchanged over the past decade; however, various statements have been issued to add clarification to the topic. This indicates that TDRs can often be a point of confusion for bankers.

Two items must be prevalent in order for a loan to be classified as a TDR:

1) The borrower must be experiencing financial difficulty

2) A concession must be granted to the borrower

Guidance exists in order to determine if those two conditions have been met. The FDIC’s Tabletop Exercises: Allowance for Loan and Lease Losses and Troubled Debt Restructuring document provides real-world examples and explanations of certain loans and whether or not they should be classified as TDRs.

In addition, Sageworks has a webinar, TDR 101: “ALLL” About Troubled Debt Restructurings with the aim of clarifying guidance surrounding the topic.

We hope you find the resource(s) useful.