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LOANS TO FINANCIAL ADVISORS, NET
 12 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
LOANS TO FINANCIAL ADVISORS, NET BANK LOANS, NET
Bank client receivables are comprised of loans originated or purchased by our Bank segment and include SBL, C&I loans, commercial and residential real estate loans, REIT loans, and tax-exempt 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. We segregate our loan portfolio into six loan portfolio segments: SBL, C&I, CRE, REIT, residential mortgage, and tax-exempt. See Note 2 for a discussion of accounting policies related to bank loans.

Loan balances in the following tables are presented at amortized cost (outstanding principal balance net of unamortized purchase discounts or premiums, unearned income, and deferred origination fees and costs), except for certain held for sale loans recorded at fair value. Bank loans are presented on our Consolidated Statements of Financial Condition at amortized cost (or fair value where applicable) less the allowance for credit losses. As it pertains to TriState Capital Bank’s loans acquired as of June 1, 2022, the amortized cost of such purchased loans reflects the fair value of the loans on the acquisition date, and as described further in Note 3, the purchase discount on such loans is accreted to interest income over the weighted-average life of the underlying loans, which may vary based on prepayments.

The following table presents the balances for held for investment loans by portfolio segment and held for sale loans.
September 30,
$ in millions20222021
SBL$15,297 $6,106 
C&I loans11,173 8,440 
CRE loans6,549 2,872 
REIT loans1,592 1,112 
Residential mortgage loans7,386 5,318 
Tax-exempt loans1,501 1,321 
Total loans held for investment43,498 25,169 
Held for sale loans137 145 
Total loans held for sale and investment43,635 25,314 
Allowance for credit losses(396)(320)
Bank loans, net (1)
$43,239 $24,994 
ACL as a % of total loans held for investment0.91 %1.27 %
Accrued interest receivable on bank loans (included in “Other receivables, net”)$137 $48 

(1)    Bank loans, net as of September 30, 2022 are presented net of $112 million of net unamortized discount, unearned income, and deferred loan fees and costs. The net unamortized discount primarily arose from the acquisition date fair value purchased discount on bank loans acquired in the TriState Capital acquisition. See Note 3 for further information. Bank loans, net as of September 30, 2021 are presented net of $1 million of unearned income and deferred loan fees and costs.

At September 30, 2022, we had pledged $6.58 billion of residential mortgage loans and $1.43 billion of CRE loans with the FHLB as security for both the repayment of certain borrowings and to secure capacity for additional borrowings as needed. Additionally, as of September 30, 2022, we had pledged $791 million of C&I loans with the FRB to be eligible to participate in the Federal Reserve’s discount window program. See Notes 7 and 16 for more information regarding borrowings from the FHLB and bank loans pledged with the FHLB and FRB.

Held for sale loans

Exclusive of the loans acquired on June 1, 2022 in our acquisition of TriState Capital Bank, we originated or purchased $3.38 billion, $2.15 billion, and $1.79 billion of loans held for sale during the years ended September 30, 2022, 2021 and 2020, respectively.  Of these loans purchased during the years ended September 30, 2022, 2021 and 2020, $2.09 billion, $1.19 billion, and $1.03 billion, respectively, related to the guaranteed portions of SBA loans that were initially classified as loans for held sale upon purchase and subsequently transferred to trading instruments once they had been securitized into pools. Proceeds from the sales of all other loans held for sale and not securitized amounted to $1.29 billion, $973 million, and $776 million for the years ended September 30, 2022, 2021 and 2020, respectively. Net gains resulting from such sales were insignificant for each of the years ended September 30, 2022, 2021, and 2020.
Purchases and sales of loans held for investment

The following table presents purchases and sales of loans held for investment by portfolio segment. Purchases do not include loans obtained from the acquisition of TriState Capital Bank.
$ in millionsC&I loansCRE loansResidential mortgage loansTotal
Year ended September 30, 2022
Purchases$1,288 $— $1,207 

$2,495 
Sales $147 $— $1 $148 
Year ended September 30, 2021
Purchases$1,528 $— $524 $2,052 
Sales $297 $— $— $297 
Year ended September 30, 2020
Purchases$589 $5 $402 $996 
Sales $598 $27 $2 $627 

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.

Aging analysis of loans held for investment

The following table presents information on delinquency status of our loans held for investment.
$ in millions30-89
days and accruing		90 days
or more and accruing		Total past due and accruingNonaccrual with allowanceNonaccrual with no allowanceCurrent and accruingTotal loans held for
investment
September 30, 2022     
SBL$— $— $— $— $— $15,297 $15,297 
C&I loans
— — — 32 — 11,141 11,173 
CRE loans— — — 12 16 6,521 6,549 
REIT loans— — — — — 1,592 1,592 
Residential mortgage loans4 — 4 — 14 7,368 7,386 
Tax-exempt loans
— — — — — 1,501 1,501 
Total loans held for investment
$4 $— $4 $44 $30 $43,420 $43,498 
September 30, 2021     
SBL$— $— $— $— $— $6,106 $6,106 
C&I loans— — — 39 — 8,401 8,440 
CRE loans— — — — 20 2,852 2,872 
REIT loans— — — — — 1,112 1,112 
Residential mortgage loans2 — 2 2 13 5,301 5,318 
Tax-exempt loans— — — — — 1,321 1,321 
Total loans held for investment$2 $— $2 $41 $33 $25,093 $25,169 

The preceding table includes $63 million and $61 million at September 30, 2022 and 2021, respectively, of nonaccrual loans which were current pursuant to their contractual terms. The table also includes TDRs of $11 million, $9 million, and $10 million for C&I loans, CRE loans, and residential first mortgage loans, respectively, at September 30, 2022, and $12 million and $13 million for CRE loans and residential first mortgage loans, respectively, at September 30, 2021.

Other real estate owned, included in “Other assets” on our Consolidated Statements of Financial Condition, was insignificant at both September 30, 2022 and 2021.
Collateral-dependent loans

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. Collateral-dependent loans are recorded based upon the fair value of the collateral less the estimated selling costs. At September 30, 2022, we had $11 million of collateral-dependent C&I loans, which were collateralized by commercial real estate and other business assets and $21 million of collateral-dependent CRE loans which were collateralized by retail, industrial, and health care real estate. At September 30, 2021, we had $20 million of collateral-dependent CRE loans which were collateralized by retail and industrial real estate. We had $6 million and $5 million of collateral-dependent residential mortgage loans at September 30, 2022 and September 30, 2021, respectively, which were collateralized by single family homes. The recorded investment in residential mortgage loans secured by one-to-four family residential properties for which formal foreclosure proceedings were in process was $5 million and $4 million at September 30, 2022 and 2021, respectively.

Credit quality indicators

The credit quality of our bank 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 and generally are performing in accordance with the contractual terms.

Special Mention – Loans which have potential weaknesses that deserve management’s close attention. These loans are not adversely classified and do not expose us 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 we 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 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.
The following tables present our held for investment bank loan portfolio by credit quality indicator.
September 30, 2022
Loans by origination fiscal year
$ in millions20222021202020192018PriorRevolving loansTotal
SBL
Risk rating:
Pass$14$27$72$44$36$41$15,063$15,297
Special mention————————
Substandard————————
Doubtful————————
Total SBL$14$27$72$44$36$41$15,063$15,297
C&I loans
Risk rating:
Pass$1,011$1,448$1,301$1,124$1,389$2,200$2,380$10,853
Special mention1028337—826166
Substandard1—602840614149
Doubtful————5——5
Total C&I loans$1,022$1,476$1,364$1,189$1,434$2,288$2,400$11,173
CRE loans
Risk rating:
Pass$1,916$1,345$892$707$816$551$176$6,403
Special mention—1——362—39
Substandard——14174630—107
Doubtful————————
Total CRE loans$1,916$1,346$906$724$898$583$176$6,549
REIT loans
Risk rating:
Pass$169$230$96$53$40$222$782$1,592
Special mention————————
Substandard————————
Doubtful————————
Total REIT loans$169$230$96$53$40$222$782$1,592
Residential mortgage loans
Risk rating:
Pass$2,984$1,704$1,023$477$290$843$35$7,356
Special mention11—2—4—8
Substandard1———120—22
Doubtful————————
Total residential mortgage loans$2,986$1,705$1,023$479$291$867$35$7,386
Tax-exempt loans
Risk rating:
Pass$264$169$56$115$192$705$—$1,501
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$264$169$56$115$192$705$—$1,501
September 30, 2021
Loans by origination fiscal year
$ in millions20212020201920182017PriorRevolving loansTotal
SBL
Risk rating:
Pass$3$45$12$—$—$—$6,046$6,106
Special mention————————
Substandard————————
Doubtful————————
Total SBL$3$45$12$—$—$—$6,046$6,106
C&I loans
Risk rating:
Pass$999$1,273$1,180$1,408$935$1,633$739$8,167
Special mention——41—26541122
Substandard——2484—28—136
Doubtful——15————15
Total C&I loans$999$1,273$1,260$1,492$961$1,715$740$8,440
CRE loans
Risk rating:
Pass$533$459$442$652$223$174$62$2,545
Special mention—455836———139
Substandard——3298850—188
Doubtful————————
Total CRE loans$533$504$532$786$231$224$62$2,872
REIT loans
Risk rating:
Pass$235$95$75$60$46$167$237$915
Special mention——1311331066169
Substandard——21—4—328
Doubtful————————
Total REIT loans$235$95$109$71$83$273$246$1,112
Residential mortgage loans
Risk rating:
Pass$1,861$1,266$640$386$451$666$20$5,290
Special mention—————5—5
Substandard———1220—23
Doubtful————————
Total residential mortgage loans$1,861$1,266$640$387$453$691$20$5,318
Tax-exempt loans
Risk rating:
Pass$158$57$124$204$272$506$—$1,321
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$158$57$124$204$272$506$—$1,321

Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.
We also monitor 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. The following table presents the held for investment residential mortgage loan portfolio by FICO score and by LTV ratio at origination.
September 30, 2022
Loans by origination fiscal year
$ in millions20222021202020192018PriorRevolving loansTotal
FICO score:
Below 600$1$3$2$3$1$54$—$64
600 - 699155112903220684481
700 - 7992,4031,301744353219470225,512
800 +424284184874827361,306
FICO score not available353432323
Total$2,986$1,705$1,023$479$291$867$35$7,386
LTV ratio:
Below 80%$2,287$1,333$797$358$226$661$31$5,693
80%+6993722261216520641,693
Total$2,986$1,705$1,023$479$291$867$35$7,386

September 30, 2021
Loans by origination fiscal year
$ in millions20212020201920182017PriorRevolving loansTotal
FICO score:
Below 600$3$2$4$1$46$11$—$67
600 - 699134114463216731416
700 - 7991,420921483294252386163,772
800 +3032281075913822031,058
FICO score not available11—111—5
Total$1,861$1,266$640$387$453$691$20$5,318
LTV ratio:
Below 80%$1,451$990$480$304$378$500$20$4,123
80%+4102761608375191—1,195
Total$1,861$1,266$640$387$453$691$20$5,318
Allowance for credit losses

The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment. The allowance for credit losses on held for investment bank loans and related provision for fiscal 2020 were calculated under the incurred loss model.
$ in millionsSBLC&I loansCRE loansREIT loansResidential
mortgage
loans		Tax-exempt loansTotal
Year ended September 30, 2022     
Balance at beginning of year$4 $191 $66 $22 $35 $2 $320 
Initial allowance on acquired PCD loans— 1 2 — — — 3 
Provision/(benefit) for credit losses:
Initial provision for credit losses on non-PCD loans acquired with TriState Capital2 5 19 — — — 26 
Provision/(benefit) for credit losses(3)57 — (1)21 — 74 
Total provision/(benefit) for credit losses(1)62 19 (1)21 — 100 
Net (charge-offs)/recoveries:     
Charge-offs— (28)(4)— — — (32)
Recoveries— — 5 — 1 — 6 
Net (charge-offs)/recoveries— (28)1 — 1 — (26)
Foreign exchange translation adjustment— — (1)— — — (1)
Balance at end of year$3 $226 $87 $21 $57 $2 $396 
ACL by loan portfolio segment as a % of total ACL0.8 %57.0 %22.0 %5.3 %14.4 %0.5 %100.0 %
Year ended September 30, 2021     
Balance at beginning of year$5 $200 $81 $36 $18 $14 $354 
Impact of CECL adoption(2)19 (11)(9)24 (12)9 
Provision/(benefit) for credit losses1 (25)5 (5)(8)— (32)
Net (charge-offs)/recoveries:  
Charge-offs— (4)(10)— — — (14)
Recoveries— — — — 1 — 1 
Net (charge-offs)/recoveries— (4)(10)— 1 — (13)
Foreign exchange translation adjustment— 1 1 — — — 2 
Balance at end of year$4 $191 $66 $22 $35 $2 $320 
ACL by loan portfolio segment as a % of total ACL1.3 %59.7 %20.6 %6.9 %10.9 %0.6 %100.0 %
Year ended September 30, 2020
Balance at beginning of year$5 $139 $34 $15 $16 $9 $218 
Provision/(benefit) for credit losses— 157 48 23 — 5 233 
Net (charge-offs)/recoveries:
Charge-offs— (96)(2)(2)— — (100)
Recoveries— — — — 2 — 2 
Net (charge-offs)/recoveries— (96)(2)(2)2 — (98)
Foreign exchange translation adjustment— — 1 — — — 1 
Balance at end of year$5 $200 $81 $36 $18 $14 $354 
ACL by loan portfolio segment as a % of total ACL1.4 %56.4 %22.9 %10.2 %5.1 %4.0 %100.0 %

The allowance for credit losses on held for investment bank loans increased $76 million during the year ended September 30, 2022 resulting from a $100 million provision for credit losses, primarily due to the impacts of loan growth at Raymond James Bank and a weakener economic outlook, as well as the initial provision for credit losses of $26 million recorded on non-PCD loans acquired as part of the TriState Capital acquisition. These increases in the allowance for credit losses on held for investment bank loans were partially offset by net charge-offs during the year of $26 million, primarily related to a specific C&I loan.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Consolidated Statements of Financial Condition, was $19 million, $13 million, and $12 million at September 30, 2022, 2021, and 2020, respectively. The increase in the allowance for credit losses on unfunded lending commitments for the year ended September 30, 2022 included $5 million related to the initial provision for credit losses on lending commitments assumed as a result of the
acquisition of TriState Capital which was included in “Other” expenses on our Consolidated Statements of Income and Comprehensive Income.LOANS TO FINANCIAL ADVISORS, NET
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.
September 30,
$ in millions20222021
Affiliated with the firm as of year-end (1)
$1,173 $1,074 
No longer affiliated with the firm as of year-end (2)
8 10 
Total loans to financial advisors1,181 1,084 
Allowance for credit losses(29)(27)
Loans to financial advisors, net$1,152 $1,057 
Accrued interest receivable on loans to financial advisors (included in “Other receivables, net”)
$5 $4 
Allowance for credit losses as a percent of total loans to financial advisors
2.46 %2.49 %

(1) These loans were predominantly current.
(2) These loans were predominantly past due for a period of 180 days or more.