LENDING ACTIVITIES

6 Months Ended

Jun. 30, 2019

LENDING ACTIVITIES

LENDING ACTIVITIES

7. Lending Activities

The following table presents the composition of Mortgage and other loans receivable, net:

	June 30,			December 31,
(in millions)		2019		2018
Commercial mortgages*	$	33,437	$	32,882
Residential mortgages		6,324		6,532
Life insurance policy loans		2,108		2,147
Commercial loans, other loans and notes receivable		2,094		1,971
Total mortgage and other loans receivable		43,963		43,532
Allowance for credit losses		(407)		(397)
Mortgage and other loans receivable, net	$	43,556	$	43,135

*Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 10 percent, respectively, at June 30, 2019, and 22 percent and 11 percent, respectively, at December 31, 2018).

Credit Quality of Commercial Mortgages

The following table presents debt service coverage ratios and loan-to-value ratios for commercial mortgages:

	Debt Service Coverage Ratios(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
June 30, 2019
Loan-to-Value Ratios(b)
Less than 65%	$	19,243	$	2,054	$	245	$	21,542
65% to 75%		9,720		564		214		10,498
76% to 80%		975		19		3		997
Greater than 80%		201		88		111		400
Total commercial mortgages	$	30,139	$	2,725	$	573	$	33,437
December 31, 2018
Loan-to-Value Ratios(b)
Less than 65%	$	19,204	$	2,543	$	250	$	21,997
65% to 75%		9,060		300		203		9,563
76% to 80%		476		20		15		511
Greater than 80%		596		103		112		811
Total commercial mortgages	$	29,336	$	2,966	$	580	$	32,882

(a)The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 1.9X for both periods ended June 30, 2019 and December 31, 2018.

(b)The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 58 percent for both periods ended June 30, 2019, and December 31, 2018.

The following table presents the credit quality performance indicators for commercial mortgages:

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total(c)	Total $
June 30, 2019
Credit Quality Performance
Indicator:
In good standing	743	$	12,012	$	9,790	$	5,505	$	2,973	$	2,462	$	568	$	33,310	100	%
Restructured(a)	2		-		92		-		-		15		-		107	-
90 days or less delinquent	-		-		-		-		-		-		-		-	-
>90 days delinquent or in
process of foreclosure	1		-		20		-		-		-		-		20	-
Total(b)	746	$	12,012	$	9,902	$	5,505	$	2,973	$	2,477	$	568	$	33,437	100	%
Allowance for credit losses:
Specific		$	-	$	6	$	1	$	-	$	1	$	-	$	8	-	%
General			109		103		52		12		20		6		302	1
Total allowance for credit losses		$	109	$	109	$	53	$	12	$	21	$	6	$	310	1	%

December 31, 2018
Credit Quality Performance
Indicator:
In good standing	762	$	11,190	$	9,774	$	5,645	$	3,074	$	2,507	$	580	$	32,770	100	%
Restructured(a)	2		-		96		-		-		16		-		112	-
90 days or less delinquent	-		-		-		-		-		-		-		-	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total(b)	764	$	11,190	$	9,870	$	5,645	$	3,074	$	2,523	$	580	$	32,882	100	%
Allowance for credit losses:
Specific		$	-	$	2	$	-	$	-	$	1	$	-	$	3	-	%
General			122		104		51		13		19		6		315	1
Total allowance for credit losses		$	122	$	106	$	51	$	13	$	20	$	6	$	318	1	%

(a)Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see Note 7 to the Consolidated Financial Statements in the 2018 Annual Report.

(b)Does not reflect allowance for credit losses.

(c)Our commercial mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

Allowance for Credit Losses

For a discussion of our accounting policy for evaluating Mortgage and other loans receivable for impairment see Note 7 to the Consolidated Financial Statements in the 2018 Annual Report.

The following table presents a rollforward of the changes in the allowance for losses on Mortgage and other loans receivable:

Six Months Ended June 30,	2019							2018
		Commercial			Other				Commercial			Other
(in millions)		Mortgages			Loans		Total		Mortgages			Loans		Total
Allowance, beginning of year	$	318		$	79	$	397	$	247		$	75	$	322
Loans charged off		-			-		-		(16)			-		(16)
Recoveries of loans previously charged off		-			-		-		-			-		-
Net charge-offs		-			-		-		(16)			-		(16)
Provision for loan losses		(8)			18		10		51			(1)		50
Allowance, end of period	$	310	*	$	97	$	407	$	282	*	$	74	$	356

*Of the total allowance, $8 million and $5 million relate to individually assessed credit losses on $173 million and $60 million of commercial mortgages at June 30, 2019 and 2018, respectively.

There were no loans modified in troubled debt restructurings during the six-month periods ended June 30, 2019, and June 30, 2018.