T ABLE 36
ACQUIRED CREDIT-IMPAIRED LOAN PORTFOLIO (millions of Canadian dollars, except as noted) Unpaid
principal balance1
FDIC-assisted acquisitions South Financial Other2
Total ACI loan portfolio
FDIC-assisted acquisitions South Financial Other2
Total ACI loan portfolio
$ 508 529 2
$ 1,039
$ 636 853 40
$ 1,529
1 Represents contractual amount owed net of charge-offs since acquisition of the loan. 2
Other includes the ACI loan portfolios of Chrysler Financial and an acquired credit card portfolio within the U.S. strategic cards portfolio.
During the year ended October 31, 2016, the Bank recorded a recovery of $31 million in PCL on ACI loans (2015 – $36 million, 2014 – $2 million). The following table provides key credit statistics by past due contractual status and geographic concentrations based on ACI loans unpaid principal balance.
T ABLE 37 ACQUIRED CREDIT-IMPAIRED LOANS – Key Credit Statistics (millions of Canadian dollars, except as noted) October 31, 2016 Unpaid principal balance1
Past due contractual status Current and less than 30 days past due 30-89 days past due
90 or more days past due Total ACI loans
Geographic region Florida
South Carolina North Carolina
Other U.S. and Canada Total ACI loans
1 Represents contractual amount owed net of charge-offs since acquisition of the loan.
EXPOSURE TO NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
As a result of the acquisition of Commerce Bancorp Inc., the Bank has exposure to non-agency Collateralized Mortgage Obligations (CMOs) collateralized primarily by Alt-A and Prime Jumbo mortgages, most of which are pre-payable fixed-rate mortgages without rate reset features. At the time of acquisition, the portfolio was recorded at fair value, which became the new cost basis for this portfolio. These debt securities are classified as loans and carried at amortized cost using the effective interest rate method, and are evaluated for loan losses on a quarterly basis using the incurred credit loss model. The impairment assessment follows the loan loss accounting model, where there are two types of allowances for credit losses, counterparty-specific and collectively assessed. Counterparty-specific
allowances represent individually significant loans, including the Bank’s debt securities classified as loans, which are assessed for whether impairment exists at the counterparty-specific level. Collectively assessed allowances consist of loans for which no impairment is identified on a counterparty-specific level and are grouped into portfolios of exposures with similar credit risk characteristics to collectively assess if impairment exists at the portfolio level.
The allowance for losses that are incurred but not identified
as at October 31, 2016, was US$41 million (October 31, 2015 – US$43 million). During the year ended October 31, 2016, the Bank recorded an increase of allowances for credit losses of US$3 million in PCL (net release of allowance for credit losses of US$29 million in 2015 and of US$14 million in 2014).
$ 914 24
101 $ 1,039
$ 691 260 83 5
$ 1,039
88.0% 2.3 9.7
100.0%
66.5% 25.0 8.0 0.5
100.0%
$ 1,314 42
173 $ 1,529
$ 933 443 110 43
$ 1,529 As at October 31, 2015 Unpaid principal balance1
85.9% 2.8
11.3 100.0%
61.0% 29.0 7.2 2.8
100.0%
Carrying value
$ 480 494 –
$ 974
$ 601 813 –
$ 1,414
Counterparty- specific
allowance
$ 1 3 –
$ 4
$ 1 5 –
$ 6
Allowance for individually insignificant
impaired loans
$ 35 23 –
$ 58
$ 45 32 –
$ 77 Carrying As at Percentage of
value net of unpaid principal allowances
October 31, 2016
$ 444 468 –
$ 912
$ 555 776 –
$ 1,331
87.4% 88.5 –
87.8% October 31, 2015
87.3% 91.0 –
87.1% balance
56 TD BANK GROUP ANNUAL REPORT 2016 MANAGEMENT’S DISCUSSION AND ANALYSIS
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