BANK LOANS, NET (Tables)

9 Months Ended

Jun. 30, 2020

Held for Sale and Held for Investment Loan Portfolios

The following table presents the balances for both the held for sale and held for investment loan portfolios, as well as the associated percentage of each portfolio segment in RJ Bank’s total loan portfolio. “Loans held for sale, net” and “Total loans held for investment, net” in the following table are presented net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs.


	June 30, 2020						September 30, 2019
$ in millions	Balance		%		Balance		%
Loans held for investment:
C&I loans	$	7,731	36	%	$	8,098	38	%
CRE construction loans	219		1	%	185		1	%
CRE loans	3,695		17	%	3,652		17	%
Tax-exempt loans	1,290		6	%	1,241		6	%
Residential mortgage loans	4,917		23	%	4,454		21	%
SBL and other	3,631		17	%	3,349		16	%
Total loans held for investment	21,483				20,979
Net unearned income and deferred expenses	(12)				(12)
Total loans held for investment, net	21,471				20,967
Loans held for sale, net	86		—		142		1	%
Total loans held for sale and investment	21,557		100	%	21,109		100	%
Allowance for loan losses	(334)				(218)
Bank loans, net	$	21,223			$	20,891

Loan Purchases and Sales

The following table presents purchases and sales of any loans held for investment by portfolio segment.


$ in millions	C&I loans		CRE loans		Residential mortgage loans		Total
Three months ended June 30, 2020
Purchases	$	—	$	—	$	113	$	113
Sales	$	265	$	27	$	—	$	292
Nine months ended June 30, 2020
Purchases	$	363	$	5	$	371	$	739
Sales	$	285	$	27	$	—	$	312
Three months ended June 30, 2019
Purchases	$	247	$	10	$	132	$	389
Sales	$	7	$	—	$	—	$	7
Nine months ended June 30, 2019
Purchases	$	937	$	35	$	254	$	1,226
Sales	$	100	$	—	$	—	$	100

Analysis of the Payment Status of Loans Held for Investment

The following table presents an analysis of the payment status of loans held for investment. Amounts in the table exclude any net unearned income and deferred expenses.


$ in millions	30-89 days and accruing		90 days or more and accruing		Total past due and accruing		Nonaccrual		Current and accruing		Total loans held for investment
June 30, 2020
C&I loans	$	—	$	—	$	—	$	1	$	7,730	$	7,731
CRE construction loans	—		—		—		—		219		219
CRE loans	—		—		—		6		3,689		3,695
Tax-exempt loans	—		—		—		—		1,290		1,290
Residential mortgage loans:
First mortgage loans	4		—		4		14		4,875		4,893
Home equity loans/lines	—		—		—		—		24		24
SBL and other	—		—		—		—		3,631		3,631
Total loans held for investment	$	4	$	—	$	4	$	21	$	21,458	$	21,483

September 30, 2019
C&I loans	$	—	$	—	$	—	$	19	$	8,079	$	8,098
CRE construction loans	—		—		—		—		185		185
CRE loans	—		—		—		8		3,644		3,652
Tax-exempt loans	—		—		—		—		1,241		1,241
Residential mortgage loans:
First mortgage loans	2		—		2		16		4,409		4,427
Home equity loans/lines	—		—		—		—		27		27
SBL and other	—		—		—		—		3,349		3,349
Total loans held for investment	$	2	$	—	$	2	$	43	$	20,934	$	20,979

Summary of Impaired Loans

The following table provides a summary of RJ Bank’s impaired loans.


	June 30, 2020										September 30, 2019
$ in millions	Gross recorded investment		Unpaid principal balance		Allowance for losses		Gross recorded investment		Unpaid principal balance		Allowance for losses
Impaired loans with allowance for loan losses:
C&I loans	$	1	$	1	$	1	$	19	$	20	$	6


Residential - first mortgage loans	8		10		1		11		13		1

Total	9		11		2		30		33		7
Impaired loans without allowance for loan losses:

CRE loans	7		12		—		8		13		—

Residential - first mortgage loans	11		16		—		11		17		—
Total	18		28		—		19		30		—
Total impaired loans	$	27	$	39	$	2	$	49	$	63	$	7

Average Balance of Impaired Loans and Interest Income Recognized

The average balance of the total impaired loans was as follows.


	Three months ended June 30,						Nine months ended June 30,
$ in millions	2020		2019		2020		2019
C&I loans	$	2	$	26	$	10	$	19
CRE loans	6		10		7		4

Residential - first mortgage loans	19		24		20		25

Total average impaired loan balance	$	27	$	60	$	37	$	48

Credit Quality of Held for Investment Loan Portfolio

The following table presents the credit quality of RJ Bank’s held for investment loan portfolio.


$ in millions	Pass		Special mention		Substandard		Doubtful		Total
June 30, 2020
C&I loans	$	7,384	$	281	$	66	$	—	$	7,731
CRE construction loans	219		—		—		—		219
CRE loans	3,341		262		92		—		3,695
Tax-exempt loans	1,290		—		—		—		1,290
Residential mortgage loans:
First mortgage loans	4,861		9		23		—		4,893
Home equity loans/lines	24		—		—		—		24
SBL and other	3,631		—		—		—		3,631
Total loans held for investment	$	20,750	$	552	$	181	$	—	$	21,483

September 30, 2019
C&I loans	$	7,870	$	152	$	76	$	—	$	8,098
CRE construction loans	185		—		—		—		185
CRE loans	3,630		—		22		—		3,652
Tax-exempt loans	1,241		—		—		—		1,241
Residential mortgage loans:
First mortgage loans	4,392		10		25		—		4,427
Home equity loans/lines	27		—		—		—		27
SBL and other	3,349		—		—		—		3,349
Total loans held for investment	$	20,694	$	162	$	123	$	—	$	20,979

Changes in the Allowance for Loan Losses

The following table presents changes in the allowance for loan losses of RJ Bank by portfolio segment.


	Loans held for investment
$ in millions	C&I loans		CRE construction loans		CRE loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended June 30, 2020
Balance at beginning of period	$	197	$	3	$	88	$	11	$	18	$	7	$	324
Provision/(benefit) for loan losses	59		1		20		2		1		(2)		81
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(71)		—		(2)		—		—		—		(73)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(71)		—		(2)		—		1		—		(72)
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	186	$	4	$	106	$	13	$	20	$	5	$	334

Nine months ended June 30, 2020
Balance at beginning of period	$	139	$	3	$	46	$	9	$	16	$	5	$	218
Provision for loan losses	118		1		62		4		3		—		188
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(71)		—		(2)		—		—		—		(73)
Recoveries	—		—		—		—		1		—		1
Net (charge-offs)/recoveries	(71)		—		(2)		—		1		—		(72)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	186	$	4	$	106	$	13	$	20	$	5	$	334

Three months ended June 30, 2019
Balance at beginning of period	$	140	$	3	$	45	$	8	$	17	$	5	$	218
Provision/(benefit) for loan losses	(8)		1		1		1		(1)		1		(5)
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	—		—		—		—		—		—		—
Recoveries	1		—		—		—		—		—		1
Net recoveries	1		—		—		—		—		—		1
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	134	$	4	$	46	$	9	$	16	$	6	$	215

Nine months ended June 30, 2019
Balance at beginning of period	$	123	$	3	$	47	$	9	$	17	$	4	$	203
Provision/(benefit) for loan losses	13		1		2		—		(2)		2		16
Net (charge-offs)/recoveries:
Charge-offs ⁽¹⁾	(3)		—		(3)		—		—		—		(6)
Recoveries	1		—		—		—		1		—		2
Net (charge-offs)/recoveries	(2)		—		(3)		—		1		—		(4)
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	134	$	4	$	46	$	9	$	16	$	6	$	215

(1) Charge-offs related to loan sales amounted $61 million for both the three and nine months ended June 30, 2020 and $2 million for the nine months ended June 30, 2019.

Recorded Investment and Related Allowance for Loan Losses, by Loan Portfolio Segment

The following table presents, by loan portfolio segment, RJ Bank’s recorded investment (excluding any net unearned income and deferred expenses) and the related allowance for loan losses.


	Loans held for investment
	Allowance for loan losses										Recorded investment
$ in millions	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
June 30, 2020
C&I loans	$	1	$	185	$	186	$	1	$	7,730	$	7,731
CRE construction loans	—		4		4		—		219		219
CRE loans	—		106		106		6		3,689		3,695
Tax-exempt loans	—		13		13		—		1,290		1,290
Residential mortgage loans	1		19		20		25		4,892		4,917
SBL and other	—		5		5		—		3,631		3,631
Total	$	2	$	332	$	334	$	32	$	21,451	$	21,483

September 30, 2019
C&I loans	$	6	$	133	$	139	$	19	$	8,079	$	8,098
CRE construction loans	—		3		3		—		185		185
CRE loans	—		46		46		8		3,644		3,652
Tax-exempt loans	—		9		9		—		1,241		1,241
Residential mortgage loans	1		15		16		28		4,426		4,454
SBL and other	—		5		5		—		3,349		3,349
Total	$	7	$	211	$	218	$	55	$	20,924	$	20,979