Bank client receivables are comprised of loans originated or purchased by RJ Bank and include C&I loans, tax-exempt loans, commercial and residential real estate loans, SBL and other loans. These receivables are collateralized by first and, to a lesser extent, second mortgages on residential or other real property, other assets of the borrower, a pledge of revenue or are unsecured. See Note 2 for a discussion of accounting policies related to bank loans and allowances for losses.

We segregate our loan portfolio into six loan portfolio segments: C&I, CRE, CRE construction, tax-exempt, residential mortgage, and SBL and other. These portfolio segments also serve as the portfolio loan classes for purposes of credit analysis, except for residential mortgage loans which are further disaggregated into residential first mortgage and residential home equity classes.

The following tables present 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 tables are presented net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs.


	September 30,
	2020				2019				2018
$ in millions	Balance		%		Balance		%		Balance		%
Loans held for investment:
C&I loans	$	7,450	34	%	$	8,098	38	%	$	7,786	40	%
CRE construction loans	177		1	%	185		1	%	151		1	%
CRE loans	3,534		16	%	3,652		17	%	3,624		18	%
Tax-exempt loans	1,259		6	%	1,241		6	%	1,227		6	%
Residential mortgage loans	4,947		23	%	4,454		21	%	3,757		19	%
SBL and other	4,085		19	%	3,349		16	%	3,033		15	%
Total loans held for investment	21,452				20,979				19,578
Net unearned income and deferred expenses	(13)				(12)				(21)
Total loans held for investment, net	21,439				20,967				19,557
Loans held for sale, net	110		1	%	142		1	%	164		1	%
Total loans held for sale and investment	21,549		100	%	21,109		100	%	19,721		100	%
Allowance for loan losses	(354)				(218)				(203)
Bank loans, net	$	21,195			$	20,891			$	19,518


	September 30,
	2017				2016
$ in millions	Balance		%		Balance		%
Loans held for investment:
C&I loans	$	7,386	43	%	$	7,470	48	%
CRE construction loans	113		1	%	123		1	%
CRE loans	3,106		18	%	2,554		17	%
Tax-exempt loans	1,018		6	%	741		5	%
Residential mortgage loans	3,149		18	%	2,442		16	%
SBL and other	2,386		14	%	1,905		12	%
Total loans held for investment	17,158				15,235
Net unearned income and deferred expenses	(31)				(41)
Total loans held for investment, net	17,127				15,194
Loans held for sale, net	70		—		214		1	%
Total loans held for sale and investment	17,197		100	%	15,408		100	%
Allowance for loan losses	(190)				(197)
Bank loans, net	$	17,007			$	15,211

At September 30, 2020, the FHLB had a blanket lien on RJ Bank’s residential mortgage loan portfolio as security for the repayment of certain borrowings. See Note 14 for more information regarding borrowings from the FHLB.

RJ Bank originated or purchased $1.79 billion, $2.33 billion and $1.69 billion of loans held for sale during the years ended September 30, 2020, 2019 and 2018, respectively. Proceeds from the sale of these held for sale loans amounted to $776 million, $800 million and $606 million for the years ended September 30, 2020, 2019 and 2018, respectively. Net gains resulting from such sales were insignificant in each of the years ended September 30, 2020, 2019 and 2018.


$ in millions	C&I loans		CRE loans		Residential mortgage loans		Total
Year ended September 30, 2020
Purchases	$	589	$	5	$	402	$	996
Sales	$	598	$	27	$	2	$	627
Year ended September 30, 2019
Purchases	$	1,046	$	42	$	400	$	1,488
Sales	$	126	$	—	$	—	$	126
Year ended September 30, 2018
Purchases	$	467	$	145	$	303	$	915
Sales	$	213	$	—	$	—	$	213

Sales in the preceding table represent the recorded investment (i.e., net of charge-offs and discounts or premiums) of loans held for investment that were transferred to loans held for sale and subsequently sold to a third party during the respective period. As more fully described in Note 2, corporate loan sales generally occur as part of our credit management activities.


$ 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
September 30, 2020
C&I loans	$	—	$	—	$	—	$	2	$	7,448	$	7,450
CRE construction loans	—		—		—		—		177		177
CRE loans	—		—		—		14		3,520		3,534
Tax-exempt loans	—		—		—		—		1,259		1,259
Residential mortgage loans:
First mortgage loans	—		—		—		14		4,911		4,925
Home equity loans/lines	—		—		—		—		22		22
SBL and other	—		—		—		—		4,085		4,085
Total loans held for investment	$	—	$	—	$	—	$	30	$	21,422	$	21,452

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

Other real estate owned, included in “Other assets” on our Consolidated Statements of Financial Condition, was $2 million and $3 million at September 30, 2020 and 2019. The recorded investment in mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was $6 million and $7 million at September 30, 2020 and 2019, respectively.


	September 30,
	2020						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	$	2	$	2	$	—	$	19	$	20	$	6

Residential - first mortgage loans	8		10		1		11		13		1

Total	10		12		1		30		33		7
Impaired loans without allowance for loan losses:

CRE loans	13		21		—		8		13		—
Residential - first mortgage loans	10		14		—		11		17		—
Total	23		35		—		19		30		—
Total impaired loans	$	33	$	47	$	1	$	49	$	63	$	7

Impaired loan balances with allowances for loan losses have had reserves established based upon management’s analysis. There is no allowance required when the discounted cash flow, collateral value or market value of a loan equals or exceeds the carrying value. These are generally loans in process of foreclosure that have already been adjusted to fair value.

The preceding table includes TDRs of $6 million and $15 million related to CRE and residential first mortgage loans, respectively, at September 30, 2020 and $19 million, $8 million and $18 million related to C&I, CRE and residential first mortgage loans, respectively, at September 30, 2019.

The credit quality of RJ Bank’s loan portfolio is summarized monthly by management using the standard asset classification system utilized by bank regulators for the SBL and residential mortgage loan portfolios and internal risk ratings, which correspond to the same standard asset classifications for the corporate loan portfolios. These classifications are divided into three groups: Not Classified (Pass), Special Mention, and Classified or Adverse Rating (Substandard, Doubtful and Loss). These terms are defined as follows:

Pass – Loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell, of any underlying collateral in a timely manner.

Special Mention – Loans which have potential weaknesses that deserve management’s close attention. These loans are not adversely classified and do not expose RJ Bank to sufficient risk to warrant an adverse classification.

Substandard – Loans which are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that RJ Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans which have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently-known facts, conditions and values.

Loss – Loans which are considered by management to be uncollectible and of such little value that their continuance on our books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. We do not have any

bank loan balances within this classification because, in accordance with our accounting policy, loans, or a portion thereof considered to be uncollectible, are charged-off prior to the assignment of this classification.


$ in millions	Pass		Special mention		Substandard		Doubtful		Total
September 30, 2020
C&I loans	$	6,966	$	236	$	248	$	—	$	7,450
CRE construction loans	177		—		—		—		177
CRE loans	3,113		256		165		—		3,534
Tax-exempt loans	1,259		—		—		—		1,259
Residential mortgage loans:
First mortgage loans	4,897		6		22		—		4,925
Home equity loans/lines	22		—		—		—		22
SBL and other	4,085		—		—		—		4,085
Total loans held for investment	$	20,519	$	498	$	435	$	—	$	21,452

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


	Loans held for investment
$ in millions	C&I loans		CRE construction loans		CRE loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Year ended September 30, 2020
Balance at beginning of year	$	139	$	3	$	46	$	9	$	16	$	5	$	218
Provision for loan losses	157		—		71		5		—		—		233
Net (charge-offs)/recoveries:
Charge-offs (1)	(96)		—		(4)		—		—		—		(100)
Recoveries	—		—		—		—		2		—		2
Net (charge-offs)/recoveries	(96)		—		(4)		—		2		—		(98)
Foreign exchange translation adjustment	—		—		1		—		—		—		1
Balance at end of year	$	200	$	3	$	114	$	14	$	18	$	5	$	354

Year ended September 30, 2019
Balance at beginning of year	$	123	$	3	$	47	$	9	$	17	$	4	$	203
Provision/(benefit) for loan losses	19		—		4		—		(2)		1		22
Net (charge-offs)/recoveries:
Charge-offs (1)	(2)		—		(5)		—		(1)		—		(8)
Recoveries	—		—		—		—		2		—		2
Net (charge-offs)/recoveries	(2)		—		(5)		—		1		—		(6)
Foreign exchange translation adjustment	(1)		—		—		—		—		—		(1)
Balance at end of year	$	139	$	3	$	46	$	9	$	16	$	5	$	218


	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
September 30, 2020
C&I loans	$	—	$	200	$	200	$	2	$	7,448	$	7,450
CRE construction loans	—		3		3		—		177		177
CRE loans	—		114		114		14		3,520		3,534
Tax-exempt loans	—		14		14		—		1,259		1,259
Residential mortgage loans	1		17		18		25		4,922		4,947
SBL and other	—		5		5		—		4,085		4,085
Total	$	1	$	353	$	354	$	41	$	21,411	$	21,452

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

The reserve for unfunded lending commitments, which is included in “Other payables” on our Consolidated Statements of Financial Condition, was $12 million and $9 million at September 30, 2020 and 2019, respectively.