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LENDING ACTIVITIES (Tables)
 3 Months Ended
Mar. 31, 2020
LENDING ACTIVITIES  
Composition of Mortgages and other loans receivable

 

March 31,

 

December 31,

(in millions)

 

2020

 

2019

Commercial mortgages(a)

$

36,291

$

36,170

Residential mortgages

 

6,718

 

6,683

Life insurance policy loans

 

2,061

 

2,065

Commercial loans, other loans and notes receivable

 

2,561

 

2,504

Total mortgage and other loans receivable

 

47,631

 

47,422

Allowance for credit losses(b)

 

(787)

 

(438)

Mortgage and other loans receivable, net

$

46,844

$

46,984

(a)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 11 percent, respectively, at March 31, 2020 and 23 percent and 10 percent, respectively, at December 31, 2019).(b)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.
Schedule of debt service coverage ratio and loan-to-value ratio for the commercial mortgage loans

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

>1.2X

$

701

$

5,557

$

5,963

$

4,309

$

5,165

$

10,745

$

32,440

1.00 - 1.20X

 

115

 

255

 

505

 

338

 

162

 

2,072

 

3,447

<1.00X

 

-

 

74

 

-

 

-

 

-

 

330

 

404

Total commercial mortgages

$

816

$

5,886

$

6,468

$

4,647

$

5,327

$

13,147

$

36,291

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

Less than 65%

$

567

$

4,567

$

4,508

$

3,584

$

4,032

$

10,745

$

28,003

65% to 75%

 

249

 

1,319

 

1,960

 

924

 

1,104

 

2,221

 

7,777

76% to 80%

 

-

 

-

 

-

 

-

 

191

 

5

 

196

Greater than 80%

 

-

 

-

 

-

 

139

 

-

 

176

 

315

Total commercial mortgages

$

816

$

5,886

$

6,468

$

4,647

$

5,327

$

13,147

$

36,291

December 31, 2019

Debt Service Coverage Ratios(a)

(in millions)

 

>1.20X

 

1.00X - 1.20X

 

<1.00X

 

Total

Loan-to-Value Ratios(b)

 

 

 

 

 

 

 

 

Less than 65%

$

23,013

$

2,440

$

245

$

25,698

65% to 75%

 

9,007

 

899

 

40

 

9,946

76% to 80%

 

200

 

6

 

-

 

206

Greater than 80%

 

184

 

2

 

134

 

320

Total commercial mortgages

$

32,404

$

3,347

$

419

$

36,170

(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 2.0X at both March 31, 2020 and December 31, 2019. The debt service coverage ratios have been updated within the last three months.

 

(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 56 percent at both March 31, 2020 and December 31, 2019. The loan-to-value ratios have been updated within the last three months.
Schedule of credit quality performance indicators for the commercial mortgages

 

Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent

 

 

of

 

Class

 

 

of

 

(dollars in millions)

Loans

 

Apartments

 

Offices

 

Retail

Industrial

 

Hotel

 

Others

 

Total(c)

Total $

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In good standing

718

 

$

14,153

$

10,478

$

5,221

$

3,574

$

2,156

$

438

$

36,020

99

%

Restructured(a)

5

 

 

-

 

87

 

25

 

-

 

101

 

-

 

213

1

 

90 days or less delinquent

1

 

 

1

 

-

 

-

 

-

 

-

 

-

 

1

-

 

>90 days delinquent or in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

process of foreclosure

2

 

 

-

 

57

 

-

 

-

 

-

 

-

 

57

-

 

Total(b)

726

 

$

14,154

$

10,622

$

5,246

$

3,574

$

2,257

$

438

$

36,291

100

%

Allowance for credit losses

 

 

$

161

$

315

$

115

$

66

$

24

$

8

$

689

2

%

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In good standing

736

 

$

13,698

$

10,553

$

5,332

$

3,663

$

2,211

$

522

$

35,979

99

%

Restructured(a)

3

 

 

-

 

89

 

-

 

-

 

101

 

-

 

190

1

 

90 days or less delinquent

1

 

 

1

 

-

 

-

 

-

 

-

 

-

 

1

-

 

>90 days delinquent or in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

process of foreclosure

-

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

 

Total(b)

740

 

$

13,699

$

10,642

$

5,332

$

3,663

$

2,312

$

522

$

36,170

100

%

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific

 

 

$

-

$

2

$

1

$

-

$

6

$

-

$

9

-

%

General

 

 

 

81

 

153

 

44

 

30

 

14

 

5

 

327

1

 

Total allowance for credit losses

 

 

$

81

$

155

$

45

$

30

$

20

$

5

$

336

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 8 to the Consolidated Financial Statements in the 2019 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.

The following table presents credit quality performance indicators for residential mortgages by year of vintage:

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

FICO*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780 and greater

$

116

$

973

$

638

$

984

$

996

$

969

$

4,676

720 - 779

 

128

 

496

 

190

 

265

 

282

 

285

 

1,646

660 - 719

 

6

 

77

 

43

 

55

 

65

 

85

 

331

600 - 659

 

1

 

8

 

7

 

8

 

7

 

16

 

47

Less than 600

 

-

 

1

 

1

 

2

 

3

 

11

 

18

Total residential mortgages

$

251

$

1,555

$

879

$

1,314

$

1,353

$

1,366

$

6,718

*Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within the last three months
Schedule of changes in the allowance for losses on Mortgage and other loans receivable

Three Months Ended March 31,

 

 

2020

 

2019

 

 

 

 

 

Commercial

 

Other

 

 

 

 

Commercial

 

 

Other

 

 

(in millions)

 

 

 

 

Mortgages

 

Loans

 

Total

 

 

Mortgages

 

 

Loans

 

Total

Allowance, beginning of year

 

 

 

$

336

$

102

$

438

 

$

318

 

$

79

$

397

Initial allowance upon CECL adoption

 

 

 

 

311

 

7

 

318

 

 

-

 

 

-

 

-

Loans charged off

 

 

 

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Recoveries of loans previously charged off

 

 

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Net charge-offs

 

 

 

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Provision for loan losses

 

 

 

 

42

 

(11)

 

31

 

 

5

 

 

20

 

25

Allowance, end of period

 

 

 

$

689

$

98

$

787

 

$

323

(b)

$

99

$

422

(a)Does not include $58 million of expected credit loss liability at March 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)The March 31, 2019 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $3 million relates to individually assessed credit losses on $148 million of commercial mortgages at 2019.