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LENDING ACTIVITIES (Tables)
 6 Months Ended
Jun. 30, 2020
LENDING ACTIVITIES  
Composition of Mortgages and other loans receivable

 

June 30,

 

December 31,

(in millions)

 

2020

 

2019

Commercial mortgages(a)

$

36,535

$

36,170

Residential mortgages

 

6,046

 

6,683

Life insurance policy loans

 

2,091

 

2,065

Commercial loans, other loans and notes receivable

 

2,644

 

2,504

Total mortgage and other loans receivable

 

47,316

 

47,422

Allowance for credit losses(b)

 

(794)

 

(438)

Mortgage and other loans receivable, net

$

46,522

$

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 24 percent and 10 percent, respectively, at June 30, 2020 and 23 percent and 10 percent, respectively, at December 31, 2019).(b)Does not include $58 million of expected credit loss liability at June 30, 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

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

>1.2X

$

933

$

5,593

$

6,051

$

4,275

$

5,172

$

11,171

$

33,195

1.00 - 1.20X

 

116

 

331

 

511

 

372

 

161

 

1,419

 

2,910

<1.00X

 

-

 

75

 

-

 

51

 

-

 

304

 

430

Total commercial mortgages

$

1,049

$

5,999

$

6,562

$

4,698

$

5,333

$

12,894

$

36,535

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

Less than 65%

$

923

$

4,461

$

4,615

$

3,549

$

4,067

$

10,527

$

28,142

65% to 75%

 

126

 

1,493

 

1,947

 

1,012

 

932

 

1,806

 

7,316

76% to 80%

 

-

 

45

 

-

 

-

 

26

 

305

 

376

Greater than 80%

 

-

 

-

 

-

 

137

 

308

 

256

 

701

Total commercial mortgages

$

1,049

$

5,999

$

6,562

$

4,698

$

5,333

$

12,894

$

36,535

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 2.1X at June 30, 2020 and 2.0X at December 31, 2019. The debt service coverage ratios have been updated within the last six 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 June 30, 2020 and December 31, 2019. The loan-to-value ratios have been updated within the last six 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

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In good standing

699

 

$

14,262

$

10,484

$

5,106

$

3,578

$

2,145

$

435

$

36,010

98

%

Restructured(a)

5

 

 

1

 

85

 

50

 

-

 

86

 

-

 

222

1

 

90 days or less delinquent

7

 

 

1

 

152

 

57

 

-

 

18

 

-

 

228

1

 

>90 days delinquent or in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

process of foreclosure

3

 

 

-

 

75

 

-

 

-

 

-

 

-

 

75

-

 

Total(b)

714

 

$

14,264

$

10,796

$

5,213

$

3,578

$

2,249

$

435

$

36,535

100

%

Allowance for credit losses

 

 

$

134

$

292

$

154

$

56

$

25

$

6

$

667

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:

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

FICO*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780 and greater

$

233

$

879

$

477

$

796

$

865

$

811

$

4,061

720 - 779

 

283

 

458

 

148

 

224

 

257

 

240

 

1,610

660 - 719

 

8

 

71

 

39

 

53

 

63

 

81

 

315

600 - 659

 

1

 

7

 

7

 

8

 

6

 

15

 

44

Less than 600

 

-

 

-

 

1

 

2

 

3

 

10

 

16

Total residential mortgages

$

525

$

1,415

$

672

$

1,083

$

1,194

$

1,157

$

6,046

*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 June 30,

2020

 

2019

 

 

Commercial

 

Other

 

 

 

 

Commercial

 

 

Other

 

 

(in millions)

 

Mortgages

 

Loans

 

Total

 

 

Mortgages

 

 

Loans

 

Total

Allowance, beginning of period

$

689

$

98

$

787

 

$

323

 

$

99

$

422

Initial allowance upon CECL adoption

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Loans charged off

 

(12)

 

-

 

(12)

 

 

-

 

 

-

 

-

Recoveries of loans previously charged off

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Net charge-offs

 

(12)

 

-

 

(12)

 

 

-

 

 

-

 

-

Provision for loan losses

 

(10)

 

29

 

19

 

 

(13)

 

 

(2)

 

(15)

Allowance, end of period

$

667

$

127

$

794

 

$

310

(b)

$

97

$

407

Six Months Ended June 30,

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

 

(12)

 

-

 

(12)

 

 

-

 

 

-

 

-

Recoveries of loans previously charged off

 

-

 

-

 

-

 

 

-

 

 

-

 

-

Net charge-offs

 

(12)

 

-

 

(12)

 

 

-

 

 

-

 

-

Provision for loan losses

 

32

 

18

 

50

 

 

(8)

 

 

18

 

10

Allowance, end of period

$

667

$

127

$

794

 

$

310

(b)

$

97

$

407

(a)Does not include $58 million of expected credit loss liability at June 30, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)The June 30, 2019 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $8 million relates to individually assessed credit losses on $173 million of commercial mortgages at June 30, 2019.