Loans and asset quality (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Loan Portfolio and Industry Concentrations of Credit Risk

The table below provides the details of our loan portfolio.


Loans	Sept. 30, 2020		Dec. 31, 2019
(in millions)
Domestic:
Commercial	$	1,839	$	1,442
Commercial real estate	5,987		5,575
Financial institutions	4,915		4,852
Lease financings	482		537
Wealth management loans and mortgages	15,805		16,050
Other residential mortgages	423		494
Overdrafts	899		524
Other	1,616		1,167
Margin loans	11,220		11,907
Total domestic	43,186		42,548
Foreign:
Commercial	102		347
Commercial real estate	5		7
Financial institutions	6,097		7,626
Lease financings	596		576
Wealth management loans and mortgages	121		140
Other (primarily overdrafts)	3,106		2,230
Margin loans	2,278		1,479
Total foreign	12,305		12,405
Total loans (a)	$	55,491	$	54,953

(a) Net of unearned income of $285 million at Sept. 30, 2020 and $313 million at Dec. 31, 2019 primarily related to domestic and foreign lease financings.

Summary of Transactions in the Allowance for Credit Losses

Activity in the allowance for credit losses on loans and lending-related commitments is presented below. This does not include activity in the allowance for credit losses related to other financial instruments, including cash and due from banks, interest-bearing deposits with banks, federal funds sold and securities purchased under resale agreements, held-to-maturity securities, available-for-sale securities and accounts receivable.


Allowance for credit losses activity for the quarter ended Sept. 30, 2020									Wealth management loans and mortgages			Other residential mortgages
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings							Total
Beginning balance	$	40	$	372	$	16	$	3	$	11		$	12	$	454


Charge-offs	—		—		—		—		—			—		—
Recoveries	—		—		—		—		—			1		1
Net recoveries	—		—		—		—		—			1		1
Provision (a)	(13)		14		(5)		—		4			5		5
Ending balance (b)	$	27	$	386	$	11	$	3	$	15		$	18	$	460
Allowance for:
Loan losses	$	14	$	270	$	7	$	3	$	13		$	18	$	325
Lending-related commitments	13		116		4		—		2			—		135
Individually evaluated for impairment:
Loan balance	$	—	$	—	$	—	$	—	$	17	(c)	$	—	$	17
Allowance for loan losses	—		—		—		—		—			—		—

(a) Does not include provision for credit losses related to other financial instruments of $4 million for the third quarter 2020.

(b) Includes $8 million of allowance for credit losses related to foreign loans, primarily financial institutions.


Allowance for credit losses activity for the quarter ended June 30, 2020									Wealth management loans and mortgages			Other residential mortgages
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings							Total


Beginning balance	$	26	$	208	$	18	$	13	$	9		$	14	$	288
Charge-offs	—		—		—		—		—			—		—
Recoveries	—		—		—		—		—			3		3
Net recoveries	—		—		—		—		—			3		3
Provision (a)	14		164		(2)		(10)		2			(5)		163
Ending balance (b)	$	40	$	372	$	16	$	3	$	11		$	12	$	454
Allowance for:
Loan losses	$	23	$	244	$	11	$	3	$	9		$	12	$	302
Lending-related commitments	17		128		5		—		2			—		152
Individually evaluated for impairment:
Loan balance	$	—	$	—	$	—	$	—	$	18	(c)	$	—	$	18
Allowance for loan losses	—		—		—		—		—			—		—

(a) Does not include provision for credit losses related to other financial instruments of $(20) million for the second quarter 2020.

(b) Includes $11 million of allowance for credit losses related to foreign loans, primarily financial institutions.


Allowance for credit losses activity for the quarter ended Sept. 30, 2019									Wealth management loans and mortgages		Other residential mortgages		All other			Foreign		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings
Beginning balance	$	77	$	72	$	21	$	4	$	20	$	14	$	—		$	33	$	241


Charge-offs	(1)		—		—		—		—		—		—			—		(1)
Recoveries	—		—		—		—		—		—		—			—		—
Net (charge-offs)	(1)		—		—		—		—		—		—			—		(1)
Provision	(15)		5		—		(1)		—		—		—			(5)		(16)
Ending balance	$	61	$	77	$	21	$	3	$	20	$	14	$	—		$	28	$	224
Allowance for:
Loan losses	$	10	$	57	$	7	$	3	$	17	$	14	$	—		$	19	$	127
Lending-related commitments	51		20		14		—		3		—		—			9		97
Individually evaluated for impairment:
Loan balance	$	—	$	—	$	—	$	—	$	16	$	—	$	—		$	—	$	16
Allowance for loan losses	—		—		—		—		—		—		—			—		—
Collectively evaluated for impairment:
Loan balance	$	1,335	$	5,292	$	4,973	$	559	$	15,748	$	520	$	12,567	(a)	$	13,871	$	54,865
Allowance for loan losses	10		57		7		3		17		14		—			19		127

(a) Includes $1,247 million of domestic overdrafts, $10,177 million of margin loans and $1,143 million of other loans at Sept. 30, 2019.


Allowance for credit losses activity for the nine months ended Sept. 30, 2020									Wealth management loans and mortgages		Other residential mortgages		Foreign			Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings								(a)
Balance at Dec. 31, 2019	$	60	$	76	$	20	$	3	$	20	$	13	$	24		$	216
Impact of adopting ASU 2016-13	(43)		14		(6)		—		(12)		2		(24)			(69)
Balance at Jan. 1, 2020	17		90		14		3		8		15		—			147
Charge-offs	—		—		—		—		—		—		—			—
Recoveries	—		—		—		—		—		4		—			4
Net recoveries	—		—		—		—		—		4		—			4
Provision (b)	10		296		(3)		—		7		(1)		—			309
Ending balance	$	27	$	386	$	11	$	3	$	15	$	18	$	—		$	460

(a) The allowance related to foreign exposure has been reclassified to financial institutions ($10 million), commercial ($10 million) and lease financings ($4 million).

(b) Does not include provision for credit losses related to other financial instruments of $12 million for the nine months ended Sept. 30, 2020.


Allowance for credit losses activity for the nine months ended Sept. 30, 2019									Wealth management loans and mortgages		Other residential mortgages		All other		Foreign		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings
Beginning balance	$	81	$	75	$	22	$	5	$	21	$	16	$	—	$	32	$	252


Charge-offs	(12)		—		—		—		(1)		—		—		—		(13)
Recoveries	—		—		—		—		—		2		—		—		2
Net (charge-offs) recoveries	(12)		—		—		—		(1)		2		—		—		(11)
Provision	(8)		2		(1)		(2)		—		(4)		—		(4)		(17)
Ending balance	$	61	$	77	$	21	$	3	$	20	$	14	$	—	$	28	$	224

Distribution of Nonperforming Assets

The table below presents our nonperforming assets.


Nonperforming assets	Sept. 30, 2020						Dec. 31, 2019
	Recorded investment
	With an allowance		Without an allowance
(in millions)					Total
Nonperforming loans:

Other residential mortgages	$	56	$	—	$	56	$	62
Wealth management loans and mortgages	10		17		27		24
Total nonperforming loans	66		17		83		86
Other assets owned	—		1		1		3
Total nonperforming assets	$	66	$	18	$	84	$	89

Information about Past Due Loans

The table below presents our past due loans.


Past due loans and still accruing interest	Sept. 30, 2020								Dec. 31, 2019
	Days past due						Total past due		Days past due						Total past due
(in millions)	30-59		60-89		≥90				30-59		60-89		≥90
Wealth management loans and mortgages	$	20	$	1	$	—	$	21	$	22	$	5	$	—	$	27
Other residential mortgages	7		—		—		7		8		3		—		11
Financial institutions	—		—		—		—		1		30		—		31
Commercial real estate	9		—		—		9		6		12		—		18
Total past due loans	$	36	$	1	$	—	$	37	$	37	$	50	$	—	$	87

Credit Profile of Loan Portfolio by Origination

The table below provides information about the credit profile of the loan portfolio by the period of origination.


Credit profile of the loan portfolio													Sept. 30, 2020
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans - Amortized cost				Accrued interest receivable
(in millions)	YTD20		2019		2018		2017		2016		Prior to 2016						Total (a)
Commercial:
Investment grade	$	153	$	73	$	96	$	450	$	57	$	—	$	893	$	—	$	1,722
Non-investment grade	85		61		7		—		—		—		66		—		219
Total commercial	238		134		103		450		57		—		959		—		1,941		$	1
Commercial real estate:
Investment grade	611		1,065		542		543		385		430		175		—		3,751
Non-investment grade	160		526		604		159		367		152		244		29		2,241
Total commercial real estate	771		1,591		1,146		702		752		582		419		29		5,992		8
Financial institutions:
Investment grade	60		238		47		125		14		165		8,471		—		9,120
Non-investment grade	98		36		—		—		—		—		1,758		—		1,892
Total financial institutions	158		274		47		125		14		165		10,229		—		11,012		13
Wealth management loans and mortgages:
Investment grade	31		80		11		149		56		85		7,235		—		7,647
Non-investment grade	—		—		—		—		—		—		63		—		63
Wealth management mortgages	781		1,082		682		1,267		1,622		2,748		34		—		8,216
Total wealth management loans and mortgages	812		1,162		693		1,416		1,678		2,833		7,332		—		15,926		29
Lease financings	126		19		17		10		25		881		—		—		1,078		—
Other residential mortgages	—		—		—		—		—		423		—		—		423		2
Other loans	—		—		—		—		—		—		1,658		—		1,658		1
Margin loans	3,553		—		—		—		—		—		9,945		—		13,498		7
Total loans	$	5,658	$	3,180	$	2,006	$	2,703	$	2,526	$	4,884	$	30,542	$	29	$	51,528	$	61

(a) Excludes overdrafts of $3,963 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.