Bank client receivables are comprised of loans originated or purchased by RJ Bank and include C&I loans, REIT loans, tax-exempt loans, commercial and residential real estate loans, and 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, securities or are unsecured. See Note 2 of our 2020 Form 10-K for a discussion of accounting policies related to bank loans.

As of October 1, 2020, we adopted new accounting guidance related to the measurement of credit losses on financial instruments. See Note 2 for further information about this guidance and a discussion of our accounting policies related to our allowance for credit losses. We segregate our loan portfolio into six loan portfolio segments: C&I, CRE, REIT, tax-exempt, residential mortgage, and SBL and other. We have redefined certain of our portfolio segments to align with the new methodology applied in determining the allowance for credit losses. Prior-period loan portfolio segments have been revised to conform to the current presentation. Loan balances on the following tables are presented at amortized cost (outstanding principal balance net of unearned income and deferred expenses, which include purchase premiums, purchase discounts and net deferred origination fees and costs), except for certain held for sale loans recorded at fair value. Bank loans are presented on our Condensed Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for credit losses.


	December 31, 2020				September 30, 2020
$ in millions	Balance		%		Balance		%
C&I loans	$	7,499	33	%	$	7,421	34	%
CRE loans	2,664		12	%	2,489		12	%
REIT loans	1,254		6	%	1,210		5	%
Tax-exempt loans	1,237		6	%	1,259		6	%
Residential mortgage loans	4,928		22	%	4,973		23	%
SBL and other	4,544		20	%	4,087		19	%
Total loans held for investment	22,126		99	%	21,439		99	%
Held for sale loans	209		1	%	110		1	%
Total loans held for sale and investment	22,335		100	%	21,549		100	%
Allowance for credit losses	(378)				(354)
Bank loans, net	$	21,957			$	21,195
Accrued interest receivable on bank loans	$	46			$	45

At December 31, 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 of our 2020 Form 10-K for more information regarding borrowings from the FHLB.

RJ Bank originated or purchased $582 million and $706 million of loans held for sale during the three months ended December 31, 2020 and 2019, respectively. Proceeds from the sale of these held for sale loans amounted to $188 million and $214 million during the three months ended December 31, 2020 and 2019, respectively. Net gains resulting from such sales were insignificant in each of the three months ended December 31, 2020 and 2019.


$ in millions	C&I loans		Residential mortgage loans		Total
Three months ended December 31, 2020
Purchases	$	122	$	46	$	168
Sales	$	5	$	—	$	5



Three months ended December 31, 2019
Purchases	$	67	$	158	$	225
Sales	$	20	$	—	$	20

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 of our 2020 Form 10-K, 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 with allowance		Nonaccrual with no allowance		Current and accruing		Total loans held for investment
December 31, 2020
C&I loans	$	—	$	—	$	—	$	—	$	—	$	7,499	$	7,499
CRE loans	—		—		—		—		14		2,650		2,664
REIT loans	—		—		—		—		—		1,254		1,254
Tax-exempt loans	—		—		—		—		—		1,237		1,237
Residential mortgage loans	3		—		3		9		5		4,911		4,928
SBL and other	—		—		—		—		—		4,544		4,544
Total loans held for investment	$	3	$	—	$	3	$	9	$	19	$	22,095	$	22,126

September 30, 2020
C&I loans	$	—	$	—	$	—	$	2	$	—	$	7,419	$	7,421
CRE loans	—		—		—		—		14		2,475		2,489
REIT loans	—		—		—		—		—		1,210		1,210
Tax-exempt loans	—		—		—		—		—		1,259		1,259
Residential mortgage loans	—		—		—		3		11		4,959		4,973
SBL and other	—		—		—		—		—		4,087		4,087
Total loans held for investment	$	—	$	—	$	—	$	5	$	25	$	21,409	$	21,439

The preceding table includes $13 million and $15 million at December 31, 2020 and September 30, 2020, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes CRE and residential first mortgage loan TDRs of $14 million and $15 million, respectively, at December 31, 2020 and $6 million and $15 million, respectively, at September 30, 2020.

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the underlying collateral. At December 31, 2020, we had $13 million of collateral-dependent CRE loans, which were fully collateralized by retail and industrial real estate, and $7 million of collateral-dependent residential loans, which were fully collateralized by single family homes. Collateral-dependent loans do not include loans to borrowers who have been granted forbearance as result of the coronavirus (“COVID-19”) pandemic. Such loans may be considered collateral-dependent after the forbearance period expires. The recorded investment in mortgage loans secured by

The credit quality of RJ Bank’s loan portfolio is summarized monthly by management using internal risk ratings, which align with the standard asset classification system utilized by bank regulators. 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 RJ Bank’s books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. RJ Bank does not have any 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	2021		2020		2019		2018		2017		Prior		Revolving loans		Total
C&I loans
Risk rating:
Pass	$	66	$	991	$	1,109	$	1,493	$	1,121	$	1,591	$	709	$	7,080
Special mention	—		—		44		102		12		—		43		201
Substandard	—		28		78		78		—		34		—		218
Doubtful	—		—		—		—		—		—		—		—
Total C&I loans	$	66	$	1,019	$	1,231	$	1,673	$	1,133	$	1,625	$	752	$	7,499



CRE loans
Risk rating:
Pass	$	133	$	406	$	599	$	653	$	225	$	210	$	60	$	2,286
Special mention	—		45		103		49		—		47		—		244
Substandard	—		—		14		68		8		44		—		134
Doubtful	—		—		—		—		—		—		—		—
Total CRE loans	$	133	$	451	$	716	$	770	$	233	$	301	$	60	$	2,664



REIT loans
Risk rating:
Pass	$	121	$	49	$	164	$	98	$	82	$	344	$	322	$	1,180
Special mention	—		—		—		—		18		—		27		45
Substandard	—		—		22		—		4		—		3		29
Doubtful	—		—		—		—		—		—		—		—
Total REIT loans	$	121	$	49	$	186	$	98	$	104	$	344	$	352	$	1,254



Tax-exempt loans
Risk rating:
Pass	$	9	$	59	$	123	$	211	$	279	$	556	$	—	$	1,237
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total tax-exempt loans	$	9	$	59	$	123	$	211	$	279	$	556	$	—	$	1,237



Residential mortgage loans
Risk rating:
Pass	$	376	$	1,551	$	877	$	550	$	605	$	920	$	21	$	4,900
Special mention	—		—		—		—		—		6		—		6
Substandard	—		—		—		—		1		21		—		22
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage loans	$	376	$	1,551	$	877	$	550	$	606	$	947	$	21	$	4,928



SBL and other
Risk rating:
Pass	$	—	$	46	$	12	$	—	$	—	$	—	$	4,486	$	4,544
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total SBL and other	$	—	$	46	$	12	$	—	$	—	$	—	$	4,486	$	4,544

RJ Bank also monitors the credit quality of the residential mortgage loan portfolio utilizing FICO scores and LTV ratios. A FICO score measures a borrower’s creditworthiness by considering factors such as payment and credit history. LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan.


$ in millions	December 31, 2020		September 30, 2020
FICO score:
Below 600	$	67	$	67
600 - 699	380		363
700 - 799	3,424		3,463
800 +	1,052		1,076
FICO score not available	5		4
Total	$	4,928	$	4,973

LTV ratio:
Below 80%	$	3,812	$	3,852
80%+	1,116		1,121
Total	$	4,928	$	4,973


$ in millions	C&I loans		CRE loans		REIT loans		Tax-exempt loans		Residential mortgage loans		SBL and other		Total
Three months ended December 31, 2020
Balance at beginning of period	$	200	$	81	$	36	$	14	$	18	$	5	$	354
Impact of CECL adoption	19		(11)		(9)		(12)		24		(2)		9
Provision/(benefit) for credit losses	(22)		42		3		—		(9)		—		14
Net (charge-offs)/recoveries:
Charge-offs	—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	—		—		—		—		—		—		—
Foreign exchange translation adjustment	1		—		—		—		—		—		1
Balance at end of period	$	198	$	112	$	30	$	2	$	33	$	3	$	378












Three months ended December 31, 2019
Balance at beginning of period	$	139	$	34	$	15	$	9	$	16	$	5	$	218
Provision/(benefit) for credit losses	—		2		(3)		(1)		1		(1)		(2)
Net (charge-offs)/recoveries:
Charge-offs	—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		—
Net (charge-offs)/recoveries	—		—		—		—		—		—		—
Foreign exchange translation adjustment	—		—		—		—		—		—		—
Balance at end of period	$	139	$	36	$	12	$	8	$	17	$	4	$	216

The allowance for credit losses on held for investment bank loans increased $15 million to $378 million since the adoption of CECL on October 1, 2020. The increase was primarily driven by forecasted declines in commercial real estate values, partially offset by the impacts of a reduction in criticized loans and improvements in other forecasted macroeconomic inputs, including unemployment and gross domestic product. See Note 2 for further information about the adoption of CECL and the impact to the allowance for credit losses.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $20 million and $12 million at December 31, 2020 and September 30, 2020, respectively. The increase in the allowance for credit losses on unfunded lending commitments was predominantly due to the adoption impact of CECL.

Loans to financial advisors are primarily comprised of loans originated as a part of our recruiting activities. See Note 2 for a discussion of our accounting policies related to loans to financial advisors and the related allowance for credit losses. The following table presents the balances for our loans to financial advisors and the related accrued interest receivable.


$ in millions	December 31, 2020		September 30, 2020
Currently affiliated with the firm (1)	$	989	$	1,001
No longer affiliated with the firm (2)	16		15
Total loans to financial advisors	1,005		1,016
Allowance for credit losses	(29)		(4)
Loans to financial advisors, net	$	976	$	1,012
Accrued interest receivable on loans to financial advisors	$	4	$	4

The allowance for credit losses as of December 31, 2020 was determined using the new methodology under CECL, which was adopted on October 1, 2020. Prior periods have not been restated and were calculated under the incurred loss methodology. The increase in the allowance from September 30, 2020 to December 31, 2020 was due to the October 1, 2020 CECL adoption, which resulted in an increase in our allowance for credit losses of $25 million. See Note 2 for further information on the CECL adoption.