| Financing Receivables and Allowance for Credit Losses |
7. Loans and Allowance for Credit Losses. Loans. The Company’s loans held for investment are recorded at amortized cost, and its loans held for sale are recorded at the lower of cost or fair value in the condensed consolidated balance sheet. For a further description of these loans, refer to Note 7 to the consolidated financial statements in the 2015 Form 10-K. | Loans Held for Investment and Held for Sale. | | | | | At March 31, 2016 | | At December 31, 2015 | | Loans by Product Type | | Loans Held for Investment | | Loans Held for Sale | | Total Loans(1)(2) | | Loans Held for Investment | | Loans Held for Sale | | Total Loans(1)(2) | | | | (dollars in millions) | | Corporate loans | $ | 25,126 | $ | 12,000 | $ | 37,126 | $ | 23,554 | $ | 11,924 | $ | 35,478 | | Consumer loans | | 22,174 | | — | | 22,174 | | 21,528 | | — | | 21,528 | | Residential real estate loans | | 21,780 | | 99 | | 21,879 | | 20,863 | | 104 | | 20,967 | | Wholesale real estate loans | | 6,816 | | 1,137 | | 7,953 | | 6,839 | | 1,172 | | 8,011 | | Total loans, gross of allowance for loan losses | | 75,896 | | 13,236 | | 89,132 | | 72,784 | | 13,200 | | 85,984 | | Allowance for loan losses | | (330) | | — | | (330) | | (225) | | — | | (225) | | Total loans, net of allowance for loan losses | $ | 75,566 | $ | 13,236 | $ | 88,802 | $ | 72,559 | $ | 13,200 | $ | 85,759 |
______________ - Amounts include loans that are made to non-U.S. borrowers of $9,470 million and $9,789 million at March 31, 2016 and December 31, 2015, respectively.
- Loans at fixed interest rates and floating or adjustable interest rates were $9,384 million and $79,418 million, respectively, at March 31, 2016 and $8,471 million and $77,288 million, respectively, at December 31, 2015.
See Note 3 for further information regarding Loans and lending commitments held at fair value. Credit Quality. For a further discussion about the Company’s evaluation of credit transactions and monitoring and credit quality indicators, see Note 7 to the consolidated financial statements in the 2015 Form 10-K. | Credit Quality Indicators for Loans Held for Investment, Gross of Allowance for Loan Losses, by Product Type. | | | | | At March 31, 2016 | | | Corporate | | Consumer | | Residential Real Estate | | Wholesale Real Estate | | Total | | | | (dollars in millions) | | Pass | $ | 23,129 | $ | 22,174 | $ | 21,745 | $ | 6,816 | $ | 73,864 | | Special mention | | 437 | | — | | — | | — | | 437 | | Substandard | | 1,454 | | — | | 35 | | — | | 1,489 | | Doubtful | | 106 | | — | | — | | — | | 106 | | Loss | | — | | — | | — | | — | | — | | Total loans | $ | 25,126 | $ | 22,174 | $ | 21,780 | $ | 6,816 | $ | 75,896 |
| | | At December 31, 2015 | | | Corporate | | Consumer | | Residential Real Estate | | Wholesale Real Estate | | Total | | | | (dollars in millions) | | Pass | $ | 22,040 | $ | 21,528 | $ | 20,828 | $ | 6,839 | $ | 71,235 | | Special mention | | 300 | | — | | — | | — | | 300 | | Substandard | | 1,202 | | — | | 35 | | — | | 1,237 | | Doubtful | | 12 | | — | | — | | — | | 12 | | Loss | | — | | — | | — | | — | | — | | Total loans | $ | 23,554 | $ | 21,528 | $ | 20,863 | $ | 6,839 | $ | 72,784 |
Allowance for Credit Losses and Impaired Loans. For factors considered by the Company in determining the allowance for loan losses and impairments, see Notes 2 and 7 to the consolidated financial statements in the 2015 Form 10-K. | Impaired and Past Due Loans Held for Investment. | | | | | At March 31, 2016 | | At December 31, 2015 | | Loans by Product Type | | Corporate | | Residential Real Estate | | Total | | Corporate | | Residential Real Estate | | Total | | | (dollars in millions) | | Impaired loans with allowance | $ | 245 | $ | — | $ | 245 | $ | 39 | $ | — | $ | 39 | | Impaired loans without allowance(1) | | 382 | | 18 | | 400 | | 89 | | 17 | | 106 | | Impaired loans unpaid principal balance | | 636 | | 20 | | 656 | | 130 | | 19 | | 149 | | Past due 90 days loans and on nonaccrual | | 1 | | 18 | | 19 | | 1 | | 21 | | 22 |
(1) At March 31, 2016 and December 31, 2015, no allowance was outstanding for these loans as the present value of the expected future cash flows (or, alternatively, the observable market price of the loan or the fair value of the collateral held) equaled or exceeded the carrying value. | | | At March 31, 2016 | | At December 31, 2015 | | Loans by Region | | Americas | | EMEA | | Asia-Pacific | | Total | | Americas | | EMEA | | Asia-Pacific | | Total | | | (dollars in millions) | | Impaired loans | $ | 572 | $ | 23 | $ | 50 | $ | 645 | $ | 108 | $ | 12 | $ | 25 | $ | 145 | | Past due 90 days loans and on nonaccrual | | 19 | | — | | — | | 19 | | 22 | | — | | — | | 22 | | Allowance for loan losses | | 261 | | 43 | | 26 | | 330 | | 183 | | 34 | | 8 | | 225 |
EMEA—Europe, Middle East and Africa. Troubled Debt Restructurings. At March 31, 2016 and December 31, 2015, the impaired loans and lending commitments within held for investment include TDRs of $54.8 million and $44.0 million related to loans and $22.3 million and $34.8 million related to lending commitments, respectively, within corporate loans. At March 31, 2016 and December 31, 2015, the Company recorded an allowance of $8.5 million and $5.1 million, respectively, against these TDRs. These restructurings typically include modifications of interest rates, collateral requirements, other loan covenants, and payment extensions. | Allowance for Credit Losses on Lending Activities. | | | | | | | | | | | | | Corporate | | Consumer | | Residential Real Estate | | Wholesale Real Estate | | | | | | | | | | Total | | | | (dollars in millions) | | Allowance for Loan Losses. | | | | | | | | | | | | Balance at December 31, 2015 | $ | 166 | $ | 5 | $ | 17 | $ | 37 | $ | 225 | | Gross charge-offs | | — | | — | | — | | — | | — | | Gross recoveries | | — | | — | | — | | — | | — | | Net recoveries/(charge-offs) | | — | | — | | — | | — | | — | | Provision for (release of) loan losses(1) | | 109 | | (1) | | 2 | | 2 | | 112 | | Other(2) | | (7) | | — | | — | | — | | (7) | | Balance at March 31, 2016 | $ | 268 | $ | 4 | $ | 19 | $ | 39 | $ | 330 | | | | | | | | | | | | | | Allowance for Loan Losses by Impairment Methodology. | | | | | | | | | | | | Inherent | $ | 160 | $ | 4 | $ | 19 | $ | 39 | $ | 222 | | Specific | | 108 | | — | | — | | — | | 108 | | Total allowance for loan losses at March 31, 2016 | $ | 268 | $ | 4 | $ | 19 | $ | 39 | $ | 330 | | | | | | | | | | | | | | Loans Evaluated by Impairment Methodology(3). | | | | | | | | | | | | Inherent | $ | 24,499 | $ | 22,174 | $ | 21,762 | $ | 6,816 | $ | 75,251 | | Specific | | 627 | | — | | 18 | | — | | 645 | | Total loans evaluated at March 31, 2016 | $ | 25,126 | $ | 22,174 | $ | 21,780 | $ | 6,816 | $ | 75,896 | | | | | | | | | | | | | | Allowance for Lending Commitments. | | | | | | | | | | | | Balance at December 31, 2015 | $ | 180 | $ | 1 | $ | — | $ | 4 | $ | 185 | | Provision for lending commitments(4) | | 15 | | — | | — | | 1 | | 16 | | Balance at March 31, 2016 | $ | 195 | $ | 1 | $ | — | $ | 5 | $ | 201 | | | | | | | | | | | | | | Allowance for Lending Commitments by Impairment Methodology. | | | | | | | | | | Inherent | $ | 184 | $ | 1 | $ | — | $ | 5 | $ | 190 | | Specific | | 11 | | — | | — | | — | | 11 | | Total allowance for lending commitments | | | | | | | | | | | | at March 31, 2016 | $ | 195 | $ | 1 | $ | — | $ | 5 | $ | 201 | | | | | | | | | | | | | | Lending Commitments Evaluated by Impairment Methodology(3). | | | | | | | | | | Inherent | $ | 65,682 | $ | 5,066 | $ | 327 | $ | 380 | $ | 71,455 | | Specific | | 136 | | — | | — | | — | | 136 | | Total lending commitments evaluated | | | | | | | | | | | | at March 31, 2016 | $ | 65,818 | $ | 5,066 | $ | 327 | $ | 380 | $ | 71,591 |
| | | Corporate | | Consumer | | Residential Real Estate | | Wholesale Real Estate | | | | | | | | | | Total | | | | (dollars in millions) | | Allowance for Loan Losses. | | | | | | | | | | | | Balance at December 31, 2014 | $ | 118 | $ | 2 | $ | 8 | $ | 21 | $ | 149 | | Gross recoveries | | 1 | | — | | — | | — | | 1 | | Net recoveries/(charge-offs) | | 1 | | — | | — | | — | | 1 | | Provision for loan losses(1) | | 25 | | — | | — | | 1 | | 26 | | Other(2) | | (11) | | — | | — | | — | | (11) | | Balance at March 31, 2015 | $ | 133 | $ | 2 | $ | 8 | $ | 22 | $ | 165 | | | | | | | | | | | | | | Allowance for Loan Losses by Impairment Methodology. | | | | | | | | | | | | Inherent | $ | 128 | $ | 2 | $ | 8 | $ | 22 | $ | 160 | | Specific | | 5 | | — | | — | | — | | 5 | | Total allowance for loan losses at March 31, 2015 | $ | 133 | $ | 2 | $ | 8 | $ | 22 | $ | 165 | | | | | | | | | | | | | | Loans Evaluated by Impairment Methodology(3). | | | | | | | | | | | | Inherent | $ | 21,096 | $ | 17,372 | $ | 16,833 | $ | 5,265 | $ | 60,566 | | Specific | | 25 | | — | | 20 | | — | | 45 | | Total loan evaluated at March 31, 2015 | $ | 21,121 | $ | 17,372 | $ | 16,853 | $ | 5,265 | $ | 60,611 | | | | | | | | | | | | | | Allowance for Lending Commitments. | | | | | | | | | | | | Balance at December 31, 2014 | $ | 147 | $ | — | $ | — | $ | 2 | $ | 149 | | Provision for lending commitments(4) | | 36 | | — | | — | | 1 | | 37 | | Other | | (1) | | — | | — | | — | | (1) | | Balance at March 31, 2015 | $ | 182 | $ | — | $ | — | $ | 3 | $ | 185 | | | | | | | | | | | | | | Allowance for Lending Commitments by Impairment Methodology. | | | | | | | | | | Inherent | $ | 182 | $ | — | $ | — | $ | 3 | $ | 185 | | Specific | | — | | — | | — | | — | | — | | Total allowance for lending commitments at | | | | | | | | | | | | March 31, 2015 | $ | 182 | $ | — | $ | — | $ | 3 | $ | 185 | | | | | | | | | | | | | | Lending Commitments Evaluated by Impairment Methodology(3). | | | | | | | | | | Inherent | $ | 70,153 | $ | 3,875 | $ | 287 | $ | 376 | $ | 74,691 | | Specific | | 26 | | — | | — | | — | | 26 | | Total lending commitments evaluated at | | | | | | | | | | | | March 31, 2015 | $ | 70,179 | $ | 3,875 | $ | 287 | $ | 376 | $ | 74,717 |
_______________ (1) The Company recorded provisions of $112 million and $26 million for loan losses for the quarters ended March 31, 2016 and 2015, respectively. (2) Amount includes the impact related to the transfer to loans held for sale and foreign currency translation adjustments. (3) Loan balances are gross of the allowance for loan losses, and lending commitments are gross of the allowance for lending commitments. (4) The Company recorded provisions of $16 million and $37 million for commitments for the quarters ended March 31, 2016 and 2015, respectively.
Employee Loans. Employee loans are granted primarily in conjunction with a program established in the Wealth Management business segment to retain and recruit certain employees. These loans are recorded in Customer and other receivables in the condensed consolidated balance sheet. These loans are full recourse, generally require periodic payments and have repayment terms ranging from 2 to 12 years. The Company establishes an allowance for loan amounts it does not consider recoverable, which is recorded in Compensation and benefits expense. At March 31, 2016, the Company had $4,708 million of employee loans, net of an allowance of approximately $103 million. At December 31, 2015, the Company had $4,923 million of employee loans, net of an allowance of approximately $108 million. |