Loans and Asset Quality (Tables)

3 Months Ended

Mar. 31, 2015

The table below provides the details of our loan portfolio and industry concentrations of credit risk at March 31, 2015 and Dec. 31, 2014.



Loans	March 31, 2015		Dec. 31, 2014
(in millions)
Domestic:
Financial institutions	$	5,665	$	5,603
Commercial	1,686		1,390
Wealth management loans and mortgages	11,547		11,095
Commercial real estate	3,021		2,524
Lease financings	1,197		1,282
Other residential mortgages	1,181		1,222
Overdrafts	1,513		1,348
Other	1,107		1,113
Margin loans	19,459		20,034
Total domestic	46,376		45,611
Foreign:
Financial institutions	9,002		7,716
Commercial	285		252
Wealth management loans and mortgages	102		89
Commercial real estate	41		6
Lease financings	893		889
Other (primarily overdrafts)	5,520		4,569
Margin loans	107		—
Total foreign	15,950		13,521
Total loans (a)	$	62,326	$	59,132


(a)	Net of unearned income of $843 million at March 31, 2015 and $866 million at Dec. 31, 2014 primarily on domestic and foreign lease financings.

Allowance for Credit Losses Activity

Transactions in the allowance for credit losses are summarized as follows:



Allowance for credit losses activity for the quarter ended March 31, 2015										Wealth management loans and mortgages			Other residential mortgages
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings			Wealth management loans and mortgages			Other residential mortgages			All Other			Foreign			Total
Beginning balance	$	60	$	50	$	31	$	32		$	22		$	41		$	—		$	44		$	280
Charge-offs	—		—		—		—			—			—			—			—			—
Recoveries	—		—		—		—			—			1			—			—			1
Net (charge-offs) recoveries	—		—		—		—			—			1			—			—			1
Provision	5		3		2		(1		)	(1		)	(2		)	—			(4		)	2
Ending balance	$	65	$	53	$	33	$	31		$	21		$	40		$	—		$	40		$	283
Allowance for:
Loan losses	$	20	$	31	$	19	$	31		$	16		$	40		$	—		$	33		$	190
Lending-related commitments	45		22		14		—			5			—			—			7			93
Individually evaluated for impairment:
Loan balance	$	—	$	—	$	—	$	—		$	8		$	—		$	—		$	—		$	8
Allowance for loan losses	—		—		—		—			1			—			—			—			1
Collectively evaluated for impairment:
Loan balance	$	1,686	$	2,881	$	5,665	$	1,197		$	11,539		$	1,181		$	22,079	(a)	$	15,950		$	62,178
Allowance for loan losses	20		31		19		31			15			40			—			33			189


(a)	Includes $1,513 million of domestic overdrafts, $19,459 million of margin loans and $1,107 million of other loans at March 31, 2015.



Allowance for credit losses activity for the quarter ended Dec. 31, 2014												Wealth management loans and mortgages			Other residential mortgages
(in millions)	Commercial			Commercial real estate			Financial institutions		Lease financings			Wealth management loans and mortgages			Other residential mortgages			All Other			Foreign		Total
Beginning balance	$	71		$	47		$	25	$	34		$	22		$	48		$	—		$	41	$	288
Charge-offs	(8		)	(2		)	—		—			(1		)	—			—			—		(11		)
Recoveries	—			—			1		—			1			—			—			—		2
Net (charge-offs) recoveries	(8		)	(2		)	1		—			—			—			—			—		(9		)
Provision	(3		)	5			5		(2		)	—			(7		)	—			3		1
Ending balance	$	60		$	50		$	31	$	32		$	22		$	41		$	—		$	44	$	280
Allowance for:
Loan losses	$	17		$	32		$	17	$	32		$	17		$	41		$	—		$	35	$	191
Lending-related commitments	43			18			14		—			5			—			—			9		89
Individually evaluated for impairment:
Loan balance	$	—		$	—		$	—	$	—		$	8		$	—		$	—		$	—	$	8
Allowance for loan losses	—			—			—		—			1			—			—			—		1
Collectively evaluated for impairment:
Loan balance	$	1,390		$	2,503		$	5,603	$	1,282		$	11,087		$	1,222		$	22,495	(a)	$	13,521	$	59,103
Allowance for loan losses	17			32			17		32			16			41			—			35		190


(a)	Includes $1,348 million of domestic overdrafts, $20,034 million of margin loans and $1,113 million of other loans at Dec. 31, 2014.



Allowance for credit losses activity for the quarter ended March 31, 2014												Wealth management loans and mortgages			Other residential mortgages			All Other			Foreign			Total
(in millions)	Commercial			Commercial real estate		Financial institutions			Lease financings			Wealth management loans and mortgages			Other residential mortgages			All Other			Foreign			Total
Beginning balance	$	83		$	41	$	49		$	37		$	24		$	54		$	—		$	56		$	344
Charge-offs	—			—		—			—			—			(1		)	—			—			(1		)
Recoveries	—			—		—			—			—			1			—			—			1
Net (charge-offs)	—			—		—			—			—			—			—			—			—
Provision	(4		)	1		(1		)	(2		)	(1		)	(4		)	—			(7		)	(18		)
Ending balance	$	79		$	42	$	48		$	35		$	23		$	50		$	—		$	49		$	326
Allowance for:
Loan losses	$	20		$	23	$	9		$	35		$	18		$	50		$	—		$	43		$	198
Lending-related commitments	59			19		39			—			5			—			—			6			128
Individually evaluated for impairment:
Loan balance	$	13		$	3	$	—		$	—		$	10		$	—		$	—		$	7		$	33
Allowance for loan losses	3			1		—			—			2			—			—			2			8
Collectively evaluated for impairment:
Loan balance	$	1,741		$	2,125	$	4,492		$	1,308		$	9,912		$	1,346		$	18,296	(a)	$	14,783		$	54,003
Allowance for loan losses	17			22		9			35			16			50			—			41			190


(a)	Includes $1,078 million of domestic overdrafts, $16,430 million of margin loans and $788 million of other loans at March 31, 2014.

Nonperforming Assets

The table below presents the distribution of our nonperforming assets.



Nonperforming assets (in millions)	March 31, 2015		Dec. 31, 2014
Nonperforming assets (in millions)	March 31, 2015		Dec. 31, 2014
Nonperforming loans:
Domestic:
Other residential mortgages	$	111	$	112
Wealth management loans and mortgages	12		12
Commercial real estate	1		1
Total nonperforming loans	124		125
Other assets owned	4		3
Total nonperforming assets (a)	$	128	$	128

(a)

Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans of $73 million at March 31, 2015 and $53 million at Dec. 31, 2014. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.

Lost Interest

Lost interest



Lost interest
(in millions)	1Q15		4Q14		1Q14
Amount by which interest income recognized on nonperforming loans exceeded reversals	$	—	$	—	$	—
Amount by which interest income would have increased if nonperforming loans at period-end had been performing for the entire period	$	2	$	2	$	2

Information about Impaired Loans

The tables below provide information about our impaired loans. We use the discounted cash flow method as the primary method for valuing impaired loans.



Impaired loans	Quarter ended
	March 31, 2015				Dec. 31, 2014				March 31, 2014
(in millions)	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
Impaired loans with an allowance:
Commercial	$	—	$	—	$	6	$	—	$	14	$	—
Commercial real estate	—		—		1		—		3		—
Financial institutions	—		—		—		—		—		—
Wealth management loans and mortgages	6		—		7		—		9		—
Foreign	—		—		—		—		6		—
Total impaired loans with an allowance	6		—		14		—		32		—
Impaired loans without an allowance:
Commercial	—		—		—		—		—		—
Commercial real estate	—		—		1		—		1		—
Financial institutions	—		—		—		—		—		—
Wealth management loans and mortgages	2		—		2		—		2		—
Total impaired loans without an allowance (a)	2		—		3		—		3		—
Total impaired loans	$	8	$	—	$	17	$	—	$	35	$	—


(a)	When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.



Impaired loans	March 31, 2015						Dec. 31, 2014
(in millions)	Recorded investment		Unpaid principal balance		Related allowance (a)		Recorded investment		Unpaid principal balance		Related allowance (a)
Impaired loans with an allowance:
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	—		3		—		—		—		—
Financial institutions	—		—		—		—		—		—
Wealth management loans and mortgages	6		6		1		6		6		1
Foreign	—		—		—		—		—		—
Total impaired loans with an allowance	6		9		1		6		6		1
Impaired loans without an allowance:
Commercial real estate	—		—		N/A		1		3		N/A
Wealth management loans and mortgages	2		2		N/A		2		2		N/A
Total impaired loans without an allowance (b)	2		2		N/A		3		5		N/A
Total impaired loans (c)	$	8	$	11	$	1	$	9	$	11	$	1


(a)	The allowance for impaired loans is included in the allowance for loan losses.


(b)	When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.


(c)	Excludes an aggregate of less than $1 million of impaired loans in amounts individually less than $1 million at both March 31, 2015 and Dec. 31, 2014. The allowance for loan loss associated with these loans totaled less than $1 million at both March 31, 2015 and Dec. 31, 2014.

Information about Past Due Loans

The table below sets forth information about our past due loans.



Past due loans and still accruing interest	March 31, 2015								Dec. 31, 2014
	Days past due						Total past due		Days past due						Total past due
(in millions)	30-59		60-89		>90				30-59		60-89		>90
Domestic:
Financial institutions	$	6	$	—	$	—	$	6	$	—	$	—	$	—	$	—
Wealth management loans and mortgages	48		—		—		48		45		—		1		46
Commercial real estate	43		—		—		43		79		—		—		79
Other residential mortgages	20		5		4		29		23		3		5		31
Total domestic	117		5		4		126		147		3		6		156
Foreign:
Financial institutions (a)	30		20		—		50		—		—		—		—
Total past due loans	$	147	$	25	$	4	$	176	$	147	$	3	$	6	$	156


(a)	Substantially all of these past due loans have been repaid subsequent to March 31, 2015.

Troubled Debt Restructurings

The following table presents TDRs that occurred in the first quarter of 2015, fourth quarter of 2014 and first quarter of 2014.



TDRs	1Q15							4Q14							1Q14
		Outstanding recorded investment							Outstanding recorded investment							Outstanding recorded investment
(dollars in millions)	Number of contracts	Pre-modification			Post-modification			Number of contracts	Pre-modification			Post-modification			Number of contracts	Pre-modification			Post-modification
Other residential mortgages	19		$	4		$	4	22		$	3		$	4	31		$	5		$	5
Foreign	—		—			—		—		—			—		1		5			4
Total TDRs	19		$	4		$	4	22		$	3		$	4	32		$	10		$	9

Credit Quality Indicators - Commercial Portfolio - Credit Risk Profile by Creditworthiness Category

The following tables set forth information about credit quality indicators.

Commercial loan portfolio



Commercial loan portfolio – Credit risk profile by creditworthiness category
	Commercial				Commercial real estate				Financial institutions
(in millions)	March 31, 2015		Dec. 31, 2014		March 31, 2015		Dec. 31, 2014		March 31, 2015		Dec. 31, 2014
Investment grade	$	1,711	$	1,381	$	2,082	$	1,641	$	12,753	$	11,576
Non-investment grade	260		261		980		889		1,914		1,743
Total	$	1,971	$	1,642	$	3,062	$	2,530	$	14,667	$	13,319

Credit Quality Indicators - Wealth Management Loans and Mortgages - Credit Risk Profile by Internally Assigned Grade

Wealth management loans and mortgages



Wealth management loans and mortgages – Credit risk profile by internally assigned grade
(in millions)	March 31, 2015		Dec. 31, 2014
Wealth management loans:
Investment grade	$	5,848	$	5,621
Non-investment grade	88		29
Wealth management mortgages	5,713		5,534
Total	$	11,649	$	11,184