Loans

3 Months Ended

Mar. 31, 2020

We segregate our loans into two segments: commercial and financial loans and commercial real estate loans. We further classify commercial and financial loans as loans to investment funds, senior secured bank loans (otherwise known as leveraged loans), loans to municipalities and other. These classifications reflect their risk characteristics, their initial measurement attributes and the methods we use to monitor and assess credit risk. For additional information on our loans, including our internal risk-rating system used to assess our risk of credit loss for each loan, refer to Note 5 to the consolidated financial statements in this Form 10-Q and for prior periods refer

to pages 141 to 143 in Note 4 to the consolidated financial statements included under Item 8, Financial Statements and Supplementary Data, in our 2019 Form 10-K.

The following table presents our recorded investment in loans, by segment, as of the dates indicated:



(In millions)	March 31, 2020			December 31, 2019
Domestic⁽¹⁾:
Commercial and financial:
Loans to investment funds	$	17,077		$	14,546
Senior secured bank loans	3,194			3,342
Loans to municipalities	850			848
Other	24			26
Commercial real estate	1,815			1,766
Total domestic	22,960			20,528
Foreign⁽¹⁾:
Commercial and financial:
Loans to investment funds	8,181			4,662
Senior secured bank loans	1,211			1,119
Other	27			—
Total foreign	9,419			5,781
Total loans⁽²⁾	32,379			26,309
Allowance for loan losses	(97		)	(74		)
Loans, net of allowance	$	32,282		$	26,235

⁽¹⁾ Domestic and foreign categorization is based on the borrower’s country of domicile.

⁽²⁾ Loans to investment funds Include $8,685 million and $3,256 million of overdrafts as of March 31, 2020 and December 31, 2019, respectively.

The commercial and financial segment is composed primarily of floating-rate loans to mutual fund and private equity fund clients, purchased senior secured bank loans and loans to municipalities. Investment fund lending is composed of revolving credit lines providing liquidity and leverage to mutual fund and private equity fund clients.

Certain loans are pledged as collateral for access to the Federal Reserve's discount window. As of March 31, 2020 and December 31, 2019, the loans pledged as collateral totaled $8.07 billion and $6.75 billion, respectively.

As of March 31, 2020 and December 31, 2019, we had no loans on non-accrual status. As of March 31, 2020, we had one loan with interest past due 30 days or more. As of December 31, 2019, we had no loans 30 days or more contractually past due.

In certain circumstances, we restructure troubled loans by granting concessions to borrowers experiencing financial difficulty. Once restructured, the loans are generally considered impaired until their maturity, regardless of whether the borrowers perform under the modified terms of the loans. There were no loans modified in troubled debt restructurings as of both March 31, 2020 and December 31, 2019.

We review loans for indicators of impairment. Loans where indicators exist are evaluated individually

for impairment at least quarterly. For those loans where no such indicators are identified, the loans are collectively evaluated for impairment. As of March 31, 2020, we had two loans for $35 million in the commercial and financial segment that were individually evaluated for impairment and deemed to be impaired. We recorded specific reserves of $2 million on these loans. As of December 31, 2019, we had one loan for $25 million in the commercial and financial segment that was individually evaluated for impairment and deemed to be impaired. We recorded a specific reserve of $1 million on that loan.

Loans are reviewed on a regular basis, and any provisions for credit losses that are recorded reflect management's estimate of the amount necessary to maintain the allowance for loan losses at a level considered appropriate to absorb estimated expected losses in the loan portfolio.