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

 

December 31,

 

December 31,

(in millions)

 

2020

 

2019

Commercial mortgages(a)

$

36,424

$

36,170

Residential mortgages

 

4,645

 

6,683

Life insurance policy loans

 

1,986

 

2,065

Commercial loans, other loans and notes receivable

 

3,321

 

2,504

Total mortgage and other loans receivable

 

46,376

 

47,422

Allowance for credit losses(b)

 

(814)

 

(438)

Mortgage and other loans receivable, net

$

45,562

$

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 December 31, 2020, and 23 percent and 10 percent, respectively, at December 31, 2019).

(b) Does not include $79 million of expected credit loss liability at December 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

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

>1.2X

$

1,914

$

5,596

$

5,649

$

3,941

$

4,592

$

10,730

$

32,422

1.00 - 1.20X

 

770

 

467

 

456

 

144

 

161

 

1,106

 

3,104

<1.00X

 

4

 

86

 

343

 

87

 

96

 

282

 

898

Total commercial mortgages

$

2,688

$

6,149

$

6,448

$

4,172

$

4,849

$

12,118

$

36,424

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

Less than 65%

$

2,382

$

3,755

$

3,855

$

2,565

$

2,852

$

8,145

$

23,554

65% to 75%

 

274

 

2,330

 

2,363

 

1,306

 

1,200

 

2,551

 

10,024

76% to 80%

 

28

 

45

 

30

 

-

 

70

 

515

 

688

Greater than 80%

 

4

 

19

 

200

 

301

 

727

 

907

 

2,158

Total commercial mortgages

$

2,688

$

6,149

$

6,448

$

4,172

$

4,849

$

12,118

$

36,424

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 2.2X and 2.0X at December 31, 2020 and 2019, respectively. 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 60 percent and 56 percent at December 31, 2020, and 2019, respectively. The loan-to-value ratios have been updated within the last three to nine 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 $

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In good standing

688

 

$

13,969

$

10,506

$

5,144

$

3,766

$

2,064

$

460

$

35,909

99

%

Restructured(a)

5

 

 

-

 

52

 

50

 

-

 

4

 

-

 

106

-

 

90 days or less delinquent

3

 

 

-

 

87

 

-

 

-

 

114

 

-

 

201

-

 

>90 days delinquent or in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

process of foreclosure

4

 

 

-

 

67

 

55

 

-

 

86

 

-

 

208

1

 

Total(b)

700

 

$

13,969

$

10,712

$

5,249

$

3,766

$

2,268

$

460

$

36,424

100

%

Allowance for credit losses

 

 

$

145

$

267

$

145

$

53

$

65

$

10

$

685

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 below.

(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.

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Total

FICO*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780 and greater

$

522

$

619

$

283

$

469

$

539

$

484

$

2,916

720 - 779

 

478

 

349

 

103

 

155

 

180

 

156

 

1,421

660 - 719

 

19

 

61

 

28

 

42

 

51

 

58

 

259

600 - 659

 

1

 

5

 

6

 

7

 

4

 

12

 

35

Less than 600

 

-

 

-

 

1

 

2

 

2

 

9

 

14

Total residential mortgages

$

1,020

$

1,034

$

421

$

675

$

776

$

719

$

4,645

*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

Years Ended December 31,

2020

 

2019

 

2018

 

Commercial

 

 

Other

 

 

 

Commercial

 

 

Other

 

 

 

Commercial

 

 

Other

 

 

(in millions)

Mortgages

 

 

Loans

 

Total

 

Mortgages

 

 

Loans

 

Total

 

Mortgages

 

 

Loans

 

Total

Allowance, beginning of year

$

336

 

$

102

$

438

 

$

318

 

$

79

$

397

 

$

247

 

$

75

$

322

Initial allowance upon CECL adoption

 

311

 

 

7

 

318

 

 

-

 

 

-

 

-

 

 

-

 

 

-

 

-

Loans charged off

 

(12)

 

 

(5)

 

(17)

 

 

(2)

 

 

(3)

 

(5)

 

 

(17)

 

 

(2)

 

(19)

Recoveries of loans previously

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

charged off

 

-

 

 

-

 

-

 

 

-

 

 

-

 

-

 

 

-

 

 

1

 

1

Net charge-offs

 

(12)

 

 

(5)

 

(17)

 

 

(2)

 

 

(3)

 

(5)

 

 

(17)

 

 

(1)

 

(18)

Provision for loan losses

 

50

 

 

25

 

75

 

 

20

 

 

26

 

46

 

 

88

 

 

5

 

93

Allowance, end of year

$

685

 

$

129

$

814

 

$

336

(b)

$

102

$

438

 

$

318

(b)

$

79

$

397

(a) Does not include $79 million of expected credit loss liability at December 31, 2020 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b) The December 31, 2019 and 2018 total allowance was calculated prior to the adoption of ASC 326 on January 1, 2020. Of the total allowance, $10 million and $3 million relates to individually assessed credit losses on $148 million and $54 million of commercial mortgages at December 31, 2019 and 2018, respectively.