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I am writing in response to both your article on TDR reporting (Nov. 2, page 1) and Michael Poulos’  response (Nov. 23, page 15). I wanted to offer some opinions on how to improve on a few of the issues imposed by TDR reporting and tracking.

First off, I don’t think generically characterizing the restructurings as 60 or 90 days delinquent is going to change the fact that the classifications are misleading to the users of the Call Reports. The TDRs need to be classified using the correct delinquency bucket. With the growing popularity of TDRs and their significant impact on charge offs, it may be prudent to add an entire page to the Call Report. Here they could disclose TDR balances and back out TDRs that have demonstrated satisfactory payment history to come to a true delinquent TDR figure. This page could also include line items to track the new requirements from the Financial Accounting Standards Board’s Accounting Standards Update 2010-20 on “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” including TDRs that subsequently defaulted and amount reserved for modified loans in the allowance for loan losses. This solution is not going to ease the burden of tracking these loans, but it is going to add value to members who look at the Call Reports. It’s going to show off how great your TDR program has been in keeping members in their houses. I would want to do business with a credit union that is willing to work with its members.

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