Dealing with troubled loans
Abstract: For the first time in years, banks face significant numbers of troubled loans. As you review your loan portfolio and make decisions about how to handle troubled borrowers, it’s a good idea to familiarize yourself with “troubled debt restructurings” (TDRs), which can affect your financial statements. This article discusses the red flags of a troubled loan, the difference between TDRs and other restructurings, and the accounting implications of TDRs. A sidebar offers an example of a TDR.