Loans and Asset Quality (Tables)

3 Months Ended

Mar. 31, 2013

The table below provides the details of our loan distribution and industry concentrations of credit risk at March 31, 2013 and Dec. 31, 2012.



Loans	March 31,		Dec. 31,
(in millions)	2013		2012
Domestic:
Financial institutions	$	4,920	$	5,455
Commercial	1,351		1,306
Wealth management loans and mortgages	8,919		8,796
Commercial real estate	1,822		1,677
Lease financings (a)	1,295		1,329
Other residential mortgages	1,570		1,632
Overdrafts	2,772		2,228
Other	644		639
Margin loans	13,242		13,397
Total domestic	36,535		36,459
Foreign:
Financial institutions	8,864		5,833
Commercial	129		111
Wealth management loans and mortgages	72		68
Commercial real estate	52		63
Lease financings (a)	1,025		1,025
Other (primarily overdrafts)	2,547		3,070
Total foreign	12,689		10,170
Total loans	$	49,224	$	46,629


(a)	Net of unearned income on domestic and foreign lease financings of $1,106 million at March 31, 2013 and $1,135 million at Dec. 31, 2012.

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, 2013												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	$	104		$	30	$	36		$	49		$	30		$	88		$	2		$	48		$	387
Charge-offs	(2		)	—		—			—			—			(3		)	—			—			(5		)
Recoveries	—			—		—			—			—			—			—			—			—
Net (charge-offs)	(2		)	—		—			—			—			(3		)	—			—			(5		)
Provision	(5		)	1		(3		)	(10		)	(1		)	(4		)	—			(2		)	(24		)
Ending balance	$	97		$	31	$	33		$	39		$	29		$	81		$	2		$	46		$	358
Allowance for:
Loans losses	$	22		$	19	$	11		$	39		$	25		$	81		$	2		$	38		$	237
Unfunded commitments	75			12		22			—			4			—			—			8			121
Individually evaluated for impairment:
Loan balance	$	54		$	16	$	3		$	—		$	31		$	—		$	—		$	9		$	113
Allowance for loan losses	7			1		—			—			7			—			—			5			20
Collectively evaluated for impairment:
Loan balance	$	1,297		$	1,806	$	4,917		$	1,295		$	8,888		$	1,570		$	16,658	(a)	$	12,680		$	49,111
Allowance for loan losses	15			18		11			39			18			81			2			33			217


(a)	Includes $2,772 million of domestic overdrafts, $13,242 million of margin loans and $644 million of other loans at March 31, 2013.



Allowance for credit losses for quarter ended Dec. 31, 2012												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	$	98	$	35		$	37		$	55		$	33		$	141		$	2		$	55		$	456
Charge-offs	—		—			(5		)	—			(1		)	(4		)	—			—			(10		)
Recoveries	—		—			—			—			1			1			—			—			2
Net (charge-offs)	—		—			(5		)	—			—			(3		)	—			—			(8		)
Provision	6		(5		)	4			(6		)	(3		)	(50		)	—			(7		)	(61		)
Ending balance	$	104	$	30		$	36		$	49		$	30		$	88		$	2		$	48		$	387
Allowance for:
Loans losses	$	30	$	20		$	12		$	49		$	26		$	88		$	2		$	39		$	266
Unfunded commitments	74		10			24			—			4			—			—			9			121
Individually evaluated for impairment:
Loan balance	$	57	$	17		$	3		$	—		$	31		$	—		$	—		$	9		$	117
Allowance for loan losses	12		1			—			—			7			—			—			4			24
Collectively evaluated for impairment:
Loan balance	$	1,249	$	1,660		$	5,452		$	1,329		$	8,765		$	1,632		$	16,264	(a)	$	10,161		$	46,512
Allowance for loan losses	18		19			12			49			19			88			2			35			242


(a)	Includes $2,228 million of domestic overdrafts, $13,397 million of margin loans and $639 million of other loans at Dec. 31, 2012.



Allowance for credit losses activity for the quarter ended March 31, 2012												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	$	91	$	34		$	63		$	66		$	29	$	156		$	—		$	58		$	497
Charge-offs	—		—			—			—			—		(10		)	—			—			(10		)
Recoveries	—		—			—			—			—		2			—			—			2
Net (charge-offs)	—		—			—			—			—		(8		)	—			—			(8		)
Provision	6		(1		)	(10		)	(4		)	5		17			—			(8		)	5
Ending balance	$	97	$	33		$	53		$	62		$	34	$	165		$	—		$	50		$	494
Allowance for:
Loans losses	$	36	$	22		$	30		$	62		$	29	$	165		$	—		$	42		$	386
Unfunded commitments	61		11			23			—			5		—			—			8			108
Individually evaluated for impairment:
Loan balance	$	66	$	38		$	14		$	—		$	31	$	—		$	—		$	10		$	159
Allowance for loan losses	17		6			5			—			7		—			—			3			38
Collectively evaluated for impairment:
Loan balance	$	697	$	1,403		$	4,881		$	1,518		$	7,281	$	1,854		$	15,964	(a)	$	9,271		$	42,869
Allowance for loan losses	19		16			25			62			22		165			—			39			348


(a)	Includes $1,971 million of domestic overdrafts, $13,144 million of margin loans and $849 million of other loans at March 31, 2012.

Nonperforming Assets

The table below sets forth information about our nonperforming assets.



Nonperforming assets	March 31, 2013		Dec. 31, 2012
(in millions)	March 31, 2013		Dec. 31, 2012
Nonperforming loans:
Other residential mortgages	$	148	$	158
Wealth management loans and mortgages	30		30
Commercial	24		27
Commercial real estate	17		18
Foreign loans	9		9
Financial institutions	3		3
Total nonperforming loans	231		245
Other assets owned	3		4
Total nonperforming assets (a)	$	234	$	249

(a)

Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in these loans are nonperforming loans of $161 million at March 31, 2013 and $174 million at Dec. 31, 2012. 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	1Q13		4Q12		1Q12
(in millions)	1Q13		4Q12		1Q12
Amount by which interest income recognized on nonperforming loans exceeded reversals	$	1	$	2	$	—
Amount by which interest income would have increased if nonperforming loans at period-end had been performing for the entire period	$	3	$	3	$	5

Information about Impaired Loans

The table below sets forth 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, 2013				Dec. 31, 2012				March 31, 2012
(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	$	56	$	1	$	59	$	1	$	46	$	1
Commercial real estate	9		—		20		—		35		—
Financial institutions	1		—		1		—		16		—
Wealth management loans and mortgages	27		—		28		—		28		—
Foreign	9		—		9		—		10		—
Total impaired loans with an allowance	102		1		117		1		135		1
Impaired loans without an allowance:
Commercial real estate	8		—		2		—		3		—
Financial institutions	1		—		2		—		3		—
Wealth management loans and mortgages	4		—		6		—		3		—
Total impaired loans without an allowance (a)	13		—		10		—		9		—
Total impaired loans	$	115	$	1	$	127	$	1	$	144	$	1


(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, 2013						Dec. 31, 2012
(in millions)	Recorded investment		Unpaid principal balance		Related allowance (a)		Recorded investment		Unpaid principal balance		Related allowance (a)
Impaired loans with an allowance:
Commercial	$	54	$	58	$	7	$	57	$	61	$	12
Commercial real estate	3		4		1		15		16		1
Financial institutions	1		1		—		1		1		—
Wealth management loans and mortgages	27		27		7		28		28		7
Foreign	9		17		5		9		17		4
Total impaired loans with an allowance	94		107		20		110		123		24
Impaired loans without an allowance:
Commercial real estate	13		13		N/A		2		2		N/A
Financial institutions	2		8		N/A		1		8		N/A
Wealth management loans and mortgages	4		4		N/A		4		4		N/A
Total impaired loans without an allowance (b)	19		25		N/A		7		14		N/A
Total impaired loans (c)	$	113	$	132	$	20	$	117	$	137	$	24


(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 $1 million and $2 million of impaired loans in amounts individually less than $1 million at March 31, 2013 and Dec. 31, 2012, respectively. The allowance for loan loss associated with these loans totaled less than $1 million at both March 31, 2013 and Dec. 31, 2012.

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, 2013								Dec. 31, 2012
	Days past due						Total past due		Days past due						Total past due
(in millions)	30-59		60-89		>90		Total past due		30-59		60-89		>90		Total past due
Domestic:
Commercial real estate	$	45	$	—	$	8	$	53	$	44	$	—	$	—	$	44
Wealth management loans and mortgages	30		4		—		34		33		7		1		41
Commercial	—		—		—		—		—		60		—		60
Other residential mortgages	29		6		6		41		50		9		5		64
Financial institutions	1		—		—		1		—		—		—		—
Total domestic	105		10		14		129		127		76		6		209
Foreign	—		—		—		—		—		—		—		—
Total past due loans	$	105	$	10	$	14	$	129	$	127	$	76	$	6	$	209

Troubled Debt Restructurings

The following table presents TDRs that occurred in the first quarter of 2013, the fourth quarter of 2012 and the first quarter of 2012.



TDRs	March 31, 2013					Dec. 31, 2012					March 31, 2012
		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	31	$	5	$	6	36	$	8	$	11	30	$	7	$	8
Wealth management loans and mortgages	—	—		—		2	1		1		—	—		—
Commercial	—	—		—		—	—		—		2	38		32
Commercial real estate	—	—		—		—	—		—		2	11		12
Foreign	—	—		—		—	—		—		1	3		3
Total TDRs	31	$	5	$	6	38	$	9	$	12	35	$	59	$	55

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, 2013		Dec. 31, 2012		March 31, 2013		Dec. 31, 2012		March 31, 2013		Dec 31, 2012
Investment grade	$	1,110	$	1,064	$	1,493	$	1,289	$	12,128	$	9,935
Noninvestment grade	370		353		381		451		1,656		1,353
Total	$	1,480	$	1,417	$	1,874	$	1,740	$	13,784	$	11,288

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, 2013		Dec. 31, 2012
Wealth management loans:
Investment grade	$	4,583	$	4,597
Noninvestment grade	121		125
Wealth management mortgages	4,287		4,142
Total	$	8,991	$	8,864