FDIC’s Tabletop exercises for TDRs
Apr 27, 2015
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.