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LENDING ACTIVITIES
 9 Months Ended
Sep. 30, 2019
LENDING ACTIVITIES  
LENDING ACTIVITIES

7. Lending Activities

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

 

September 30,

 

December 31,

(in millions)

 

2019

 

2018

Commercial mortgages*

$

34,954

$

32,882

Residential mortgages

 

6,525

 

6,532

Life insurance policy loans

 

2,096

 

2,147

Commercial loans, other loans and notes receivable

 

1,930

 

1,971

Total mortgage and other loans receivable

 

45,505

 

43,532

Allowance for credit losses

 

(430)

 

(397)

Mortgage and other loans receivable, net

$

45,075

$

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 22 percent and 11 percent, respectively, at both September 30, 2019 and 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

September 30, 2019

 

 

 

 

 

 

 

 

Loan-to-Value Ratios(b)

 

 

 

 

 

 

 

 

Less than 65%

$

20,822

$

2,771

$

173

$

23,766

65% to 75%

 

9,744

 

677

 

93

 

10,514

76% to 80%

 

173

 

19

 

13

 

205

Greater than 80%

 

182

 

143

 

144

 

469

Total commercial mortgages

$

30,921

$

3,610

$

423

$

34,954

 

 

 

 

 

 

 

 

 

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 September 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 57 percent and 58 percent at September 30, 2019 and December 31, 2018, respectively.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 $

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In good standing

747

 

$

13,263

$

9,903

$

5,479

$

3,348

$

2,337

$

519

$

34,849

100

%

Restructured(a)

2

 

 

-

 

90

 

-

 

-

 

15

 

-

 

105

-

 

90 days or less delinquent

-

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

 

>90 days delinquent or in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

process of foreclosure

-

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

 

Total(b)

749

 

$

13,263

$

9,993

$

5,479

$

3,348

$

2,352

$

519

$

34,954

100

%

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific

 

 

$

-

$

2

$

1

$

-

$

6

$

-

$

9

-

%

General

 

 

 

93

 

141

 

44

 

28

 

15

 

5

 

326

1

 

Total allowance for credit losses

 

 

$

93

$

143

$

45

$

28

$

21

$

5

$

335

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:

Nine Months Ended September 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

 

 

 

 

 

 

 

(2)

 

 

-

 

(2)

 

 

(17)

 

 

-

 

(17)

Recoveries of loans previously charged off

 

 

 

 

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

-

Net charge-offs

 

 

 

 

 

 

 

(2)

 

 

-

 

(2)

 

 

(17)

 

 

-

 

(17)

Provision for loan losses

 

 

 

 

 

 

 

19

 

 

16

 

35

 

 

66

 

 

8

 

74

Allowance, end of period

 

 

 

 

 

 

$

335

*

$

95

$

430

 

$

296

*

$

83

$

379

*Of the total allowance, $10 million and $3 million relate to individually assessed credit losses on $151 million and $25 million of commercial mortgages at September 30, 2019 and 2018, respectively.

 

There were no loans modified in troubled debt restructurings during the nine-month period ended September 30, 2019. During the nine-month period ended September 30, 2018, loans with a carrying value of $15 million were modified in troubled debt restructurings.