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Loans and Leases (Tables)
 3 Months Ended
Mar. 31, 2017
Loans and Leases Receivable Disclosure [Abstract]  
Net Loans
The following table presents our recorded investment in loans and leases, by segment, as of the dates indicated:
(In millions)
March 31, 2017
 
December 31, 2016
Domestic:
 
 
 
Commercial and financial:
 
 
 
Loans to investment funds
$
12,362

 
$
11,734

Senior secured bank loans
3,202

 
3,256

Loans to municipalities
1,660

 
1,352

Other
65

 
70

Commercial real estate
27

 
27

Lease financing
329

 
338

Total domestic
17,645

 
16,777

Non-U.S.:
 
 
 
Commercial and financial:
 
 
 
Loans to investment funds
4,158

 
2,224

Senior secured bank loans
230

 
252

Lease financing
504

 
504

Total non-U.S.
4,892

 
2,980

Total loans and leases
22,537

 
19,757

Allowance for loan and lease losses
(51
)
 
(53
)
Loans and leases, net of allowance
$
22,486

 
$
19,704
Recorded Investment in Each Class of Total Loans and Leases by Credit Quality Indicator
The following tables present our recorded investment in each class of loans and leases by credit quality indicator as of the dates indicated:
March 31, 2017
Commercial and Financial
 
Commercial Real Estate
 
Lease
Financing
 
Total Loans and Leases
(In millions)
Investment grade(1)
$
17,502

 
$
27

 
$
833

 
$
18,362

Speculative(2)
4,160

 
—

 
—

 
4,160

Substandard(3)
15

 
—

 
—

 
15

Total
$
21,677

 
$
27

 
$
833

 
$
22,537

December 31, 2016
Commercial and Financial
 
Commercial Real Estate
 
Lease
Financing
 
Total Loans and Leases
(In millions)
Investment grade(1)
$
14,889

 
$
27

 
$
842

 
$
15,758

Speculative(2)
3,984

 
—

 
—

 
3,984

Substandard(3)
15

 
—

 
—

 
15

Total
$
18,888

 
$
27

 
$
842

 
$
19,757

 
 
 
 
(1) Investment-grade loans and leases consist of counterparties with strong credit quality and low expected credit risk and probability of default. Ratings apply to counterparties with a strong capacity to support the timely repayment of any financial commitment.
(2) Speculative loans and leases consist of counterparties that face ongoing uncertainties or exposure to business, financial, or economic downturns. However, these counterparties may have financial flexibility or access to financial alternatives, which allow for financial commitments to be met.
(3) Substandard loans and leases consist of counterparties with well-defined weakness that jeopardizes repayment with the possibility we will sustain some loss.
Schedule of Loans and Leases Receivable by Impairment Methodology
The following table presents our recorded investment in loans and leases, disaggregated based on our impairment methodology, as of the dates indicated:
 
March 31, 2017
 
December 31, 2016
(In millions)
Commercial and Financial
 
Commercial Real Estate
 
Lease Financing
 
Total Loans and Leases
 
Commercial and Financial
 
Commercial Real Estate
 
Lease Financing
 
Total Loans and Leases
Loans and leases(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
15

 
$
—

 
$
—

 
$
15

 
$
15

 
$
—

 
$
—

 
$
15

Collectively evaluated for impairment
21,662

 
27

 
833

 
22,522

 
18,873

 
27

 
842

 
19,742

Total
$
21,677

 
$
27

 
$
833

 
$
22,537

 
$
18,888

 
$
27

 
$
842

 
$
19,757

 
 
 
 
(1) For those portfolios where there are a small number of loans each with a large balance, we review each loan annually for indicators of impairment. For those loans where no such indicators are identified, the loans are collectively evaluated for impairment. As of March 31, 2017 and December 31, 2016 $195 thousand of the allowance for loan and lease loss related to commercial and financial loans individually evaluated for impairment, and the remainder of the allowance related to commercial and financial loans collectively evaluated for impairment.
Impaired Loans
The following table presents information related to our recorded investment in impaired loans and leases as of the dates indicated:
 
As of March 31, 2017
 
As of December 31, 2016
(In millions)
Recorded Investment
 
Unpaid
Principal
Balance(1)
 
Related Allowance(2)
 
Recorded Investment
 
Unpaid
Principal
Balance
 
Related Allowance(2)
With an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial and financial(1)(3)
$
15

 
$
15

 
$
—

 
$
15

 
$
15

 
$
—

Total
$
15

 
$
15

 
$
—

 
$
15

 
$
15

 
$
—

 
 
 
 
(1) As of March 31, 2017 and December 31, 2016, the related allowance for loan loss was approximately $195 thousand. This relates to one loan, which was on non-accrual status.
(2) As of March 31, 2017 and December 31, 2016, with exception of the aforementioned specific allowance, all of the allowance for loan and lease losses of $51 million and $53 million, respectively, related to loans that were not impaired.
(3) We identified $15 million of commercial and financial loans as impaired. The average recorded investment and related interest income recognized is $15 million and zero, respectively, for the three months ended March 31, 2017.
Schedule of Activity in the Allowance for Loan Losses
The following table presents activity in the allowance for loan and lease losses for the periods indicated:
 
Three Months Ended March 31,
 
2017
 
2016
(In millions)
Total Loans and Leases
 
Total Loans and Leases
Allowance for loan and lease losses(1):
 
 
 
Beginning balance
$
53

 
$
46

Provision for loan and lease losses
(2
)
 
4

Charge-offs
—

 
(3
)
Ending balance
$
51

 
$
47

 
 
 
 
(1) The provisions and charge-offs for loans and leases were attributable to exposure to senior secured loans to non-investment grade borrowers, purchased in connection with our participation in syndicated loans.