v3.25.2
BANK LOANS, NET
 9 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
BANK LOANS, NET BANK LOANS, NET
Bank client receivables are comprised of loans originated or purchased by our Bank segment and include securities-based loans (“SBL”), corporate loans (commercial and industrial (“C&I”) loans, commercial real estate (“CRE”) loans, and real estate investment trust (“REIT”) loans), residential mortgage 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 of our 2024 Form 10-K for a discussion of our accounting policies related to bank loans and the allowance for credit losses.

Loan balances in the following tables are presented at amortized cost (outstanding principal balance net of unamortized purchase discounts or premiums, unearned income, deferred origination fees and costs, and charge-offs), 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 (“ACL”).

The following table presents the balances for held for investment loans by portfolio segment and held for sale loans.
$ in millionsJune 30, 2025September 30, 2024
SBL$18,497 $16,233 
C&I loans10,754 9,953 
CRE loans7,777 7,615 
REIT loans1,735 1,716 
Residential mortgage loans9,976 9,412 
Tax-exempt loans1,311 1,338 
Total loans held for investment50,050 46,267 
Held for sale loans255 184 
Total loans held for sale and investment50,305 46,451 
Allowance for credit losses(465)(457)
Bank loans, net
$49,840 $45,994 
ACL as a % of total loans held for investment0.93 %0.99 %
Accrued interest receivable on bank loans (included in “Other receivables, net”)$207 $214 

See Note 6 for additional information regarding bank loans pledged with the FHLB and FRB.

Held for sale loans

We originated or purchased $877 million and $2.59 billion of loans held for sale during the three and nine months ended June 30, 2025, respectively, and $856 million and $1.85 billion during the three and nine months ended June 30, 2024, respectively. The majority of these loans were purchases of the guaranteed portions of Small Business Administration (“SBA”) loans that were initially classified as loans held for sale upon purchase and subsequently transferred to trading instruments once they had been securitized into pools. Proceeds from the sales of these loans held for sale and not securitized amounted to $197 million and $859 million during the three and nine months ended June 30, 2025, respectively, and $200 million and $443 million during the three and nine months ended June 30, 2024, respectively. Net gains resulting from such sales were insignificant for each of the three and nine months ended June 30, 2025 and 2024.
Purchases and sales of loans held for investment

The following table presents purchases and sales of loans held for investment by portfolio segment.
$ in millionsC&I loansCRE loansREIT loansResidential mortgage loansTotal
Three months ended June 30, 2025
Purchases$156 $— $14 $94 $264 
Sales$103 $— $— $— $103 
Nine months ended June 30, 2025
Purchases$802 $— $14 $226 $1,042 
Sales$180 $13 $— $— $193 
Three months ended June 30, 2024
Purchases$218 $— $5 $112 $335 
Sales$159 $— $— $— $159 
Nine months ended June 30, 2024
Purchases$738 $— $5 $234 $977 
Sales$322 $— $9 $— $331 

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 2024 Form 10-K, corporate loan sales generally occur as part of our credit management activities.

Past due, nonaccrual, and modified loans

The following table presents information on delinquency status of our loans held for investment.
$ in millions30-89 days and accruing90 days or more and accruing Total past due and accruingNonaccrual with allowanceNonaccrual with no allowanceCurrent and accruingTotal loans held for investment
June 30, 2025      
SBL$1 $— $1 $— $— $18,496 $18,497 
C&I loans— — — 47 5 10,702 10,754 
CRE loans— — — 120 9 7,648 7,777 
REIT loans— — — 19 — 1,716 1,735 
Residential mortgage loans2 — 2 — 14 9,960 9,976 
Tax-exempt loans— — — — — 1,311 1,311 
Total loans held for investment$3 $— $3 $186 $28 $49,833 $50,050 
September 30, 2024      
SBL$3 $— $3 $— $— $16,230 $16,233 
C&I loans— — — 58 — 9,895 9,953 
CRE loans— — — 67 18 7,530 7,615 
REIT loans— — — 19 — 1,697 1,716 
Residential mortgage loans3 — 3 — 13 9,396 9,412 
Tax-exempt loans— — — — — 1,338 1,338 
Total loans held for investment$6 $— $6 $144 $31 $46,086 $46,267 

The preceding table includes $127 million and $89 million at June 30, 2025 and September 30, 2024, respectively, of nonaccrual loans which were current pursuant to their contractual terms.

As more fully described in Note 2 of our 2024 Form 10-K, in the normal course of business, we may modify the original terms of a loan agreement. In certain circumstances, we may agree to modify the original terms of a loan agreement to a borrower experiencing financial difficulty, which may include a borrower in default, financial distress, bankruptcy or other circumstances. Loans to borrowers experiencing financial difficulty modified during the three and nine months ended June 30, 2025 and 2024 were not significant.
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. The following table presents the amortized cost of our collateral-dependent loans and the nature of the collateral.
$ in millionsNature of collateralJune 30, 2025September 30, 2024
C&I loansCommercial real estate and other business assets$14 $9 
CRE loansHospitality, office, multi-family residential, industrial, healthcare, and medical office real estate$128 $115 
Residential mortgage loansSingle family homes$14 $8 

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. Loans classified as special mention, substandard or doubtful are all considered to be “criticized” loans.
As of and for the nine months ended June 30, 2025
Loans by origination fiscal year
$ in millions20252024202320222021PriorRevolving loansTotal
SBL
Risk rating:
Pass$17$118$124$20$62$69$18,087$18,497
Special mention
————————
Substandard
————————
Doubtful————————
Total SBL$17$118$124$20$62$69$18,087$18,497
Gross charge-offs
$—$—$—$—$—$—$—$—
C&I loans
Risk rating:
Pass$574$660$361$1,122$799$3,745$3,340$10,601
Special mention——171—12939
Substandard—1———9518114
Doubtful————————
Total C&I loans$574$661$378$1,123$799$3,852$3,367$10,754
Gross charge-offs
$—$—$—$—$—$17$—$17
CRE loans
Risk rating:
Pass$891$803$1,118$1,885$698$1,575$551$7,521
Special mention——2579—1—105
Substandard——589—61—128
Doubtful—————23—23
Total CRE loans$891$803$1,201$1,973$698$1,660$551$7,777
Gross charge offs
$—$—$—$—$—$6$2$8
REIT loans
Risk rating:
Pass$69$177$185$106$111$290$662$1,600
Special mention————————
Substandard——19—116——135
Doubtful————————
Total REIT loans$69$177$204$106$227$290$662$1,735
Gross charge-offs
$—$—$—$—$—$—$—$—
Residential mortgage loans
Risk rating:
Pass$1,252$1,246$1,509$2,576$1,412$1,914$39$9,948
Special mention———116—8
Substandard———8—12—20
Doubtful————————
Total residential mortgage loans$1,252$1,246$1,509$2,585$1,413$1,932$39$9,976
Gross charge-offs
$—$—$—$—$—$—$—$—
Tax-exempt loans
Risk rating:
Pass$57$62$57$234$145$756$—$1,311
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$57$62$57$234$145$756$—$1,311
Gross charge-offs
$—$—$—$—$—$—$—$—
As of and for the year ended September 30, 2024
Loans by origination fiscal year
$ in millions20242023202220212020PriorRevolving loansTotal
SBL
Risk rating:
Pass$131$30$15$76$27$52$15,900$16,231
Special mention————————
Substandard (1)
2——————2
Doubtful————————
Total SBL$133$30$15$76$27$52$15,900$16,233
Gross charge-offs
$—$—$—$—$—$—$—$—
C&I loans
Risk rating:
Pass$616$454$1,178$716$586$3,287$2,966$9,803
Special mention—41—541—60
Substandard————46251283
Doubtful
—————527
Total C&I loans$616$458$1,179$716$686$3,318$2,980$9,953
Gross charge-offs
$—$—$—$3$4$38$—$45
CRE loans
Risk rating:
Pass$873$1,156$2,082$930$706$1,111$435$7,293
Special mention—3076—1416—136
Substandard—589598916186
Doubtful————————
Total CRE loans$873$1,244$2,167$935$729$1,216$451$7,615
Gross charge-offs
$—$—$—$—$—$21$—$21
REIT loans
Risk rating:
Pass$172$250$167$135$55$195$564$1,538
Special mention————————
Substandard—19——40—119178
Doubtful————————
Total REIT loans$172$269$167$135$95$195$683$1,716
Gross charge-offs
$—$—$—$—$—$—$—$—
Residential mortgage loans
Risk rating:
Pass$1,373$1,637$2,725$1,493$858$1,260$39$9,385
Special mention——11—5—7
Substandard——8——12—20
Doubtful————————
Total residential mortgage loans$1,373$1,637$2,734$1,494$858$1,277$39$9,412
Gross charge-offs
$—$—$—$—$—$—$—$—
Tax-exempt loans
Risk rating:
Pass$62$57$248$153$52$766$—$1,338
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$62$57$248$153$52$766$—$1,338
Gross charge-offs
$—$—$—$—$—$—$—$—

(1)As of September 30, 2024, these balances related to loans which were collateralized by private securities or other financial instruments with a limited trading market.
We also monitor the credit quality of the residential mortgage loan portfolio utilizing FICO scores and loan-to-value (“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 LTV ratio at origination and by FICO score.
June 30, 2025
Loans by origination fiscal year
$ in millions20252024202320222021PriorRevolving loansTotal
FICO score:
Below 600$4$5$11$17$7$19$—$63
600 - 69946606710243944416
700 - 7999917658461,4657591,058275,911
800 +2114145851,00160275883,579
FICO score not available—2——23—7
Total$1,252$1,246$1,509$2,585$1,413$1,932$39$9,976
LTV ratio:
Below 80%$878$899$1,071$1,977$1,120$1,487$38$7,470
80%+37434743860829344512,506
Total$1,252$1,246$1,509$2,585$1,413$1,932$39$9,976

September 30, 2024
Loans by origination fiscal year
$ in millions20242023202220212020PriorRevolving loansTotal
FICO score:
Below 600$1$7$13$5$3$14$—$43
600 - 699795210752441245463
700 - 7991,0939921,564793469636235,570
800 +1975841,050642341499103,323
FICO score not available32—214113
Total$1,373$1,637$2,734$1,494$858$1,277$39$9,412
LTV ratio:
Below 80%$988$1,155$2,104$1,182$665$973$38$7,105
80%+38548263031219330412,307
Total$1,373$1,637$2,734$1,494$858$1,277$39$9,412
Allowance for credit losses

The following table presents changes in the allowance for credit losses on held for investment bank loans by portfolio segment.
$ in millionsSBLC&I loansCRE loansREIT loansResidential mortgage loansTax-exempt loansTotal
Three months ended June 30, 2025     
Balance at beginning of period
$7 $171 $181 $32 $60 $1 $452 
Provision/(benefit) for credit losses(1)12 (1)4 1 — 15 
Net (charge-offs)/recoveries:
      
Charge-offs— (4)— — — — (4)
Recoveries— 1 — — — — 1 
Net (charge-offs)/recoveries
— (3)— — — — (3)
Foreign exchange translation adjustment
— 1 — — — — 1 
Balance at end of period
$6 $181 $180 $36 $61 $1 $465 
Nine months ended June 30, 2025
Balance at beginning of period
$6 $173 $188 $23 $65 $2 $457 
Provision/(benefit) for credit losses— 23 — 13 (4)(1)31 
Net (charge-offs)/recoveries:
     
Charge-offs— (17)(8)— — — (25)
Recoveries— 2 1 — — — 3 
Net (charge-offs)/recoveries
— (15)(7)— — — (22)
Foreign exchange translation adjustment
— — (1)— — — (1)
Balance at end of period
$6 $181 $180 $36 $61 $1 $465 
ACL by loan portfolio segment as a % of total ACL1.3 %39.0 %38.7 %7.7 %13.1 %0.2 %100.0 %
Three months ended June 30, 2024
Balance at beginning of period
$6 $196 $181 $19 $67 $2 $471 
Provision/(benefit) for credit losses(1)(20)16 1 (6)— (10)
Net (charge-offs)/recoveries:
     
Charge-offs— (6)(1)— — — (7)
Recoveries— — — — 1 — 1 
Net (charge-offs)/recoveries— (6)(1)— 1 — (6)
Foreign exchange translation adjustment
— — 1 — — — 1 
Balance at end of period
$5 $170 $197 $20 $62 $2 $456 
Nine months ended June 30, 2024
Balance at beginning of period
$7 $214 $161 $16 $74 $2 $474 
Provision/(benefit) for credit losses(2)(9)43 4 (13)— 23 
Net (charge-offs)/recoveries:
    
Charge-offs— (37)(8)— — — (45)
Recoveries— 2 — — 1 — 3 
Net (charge-offs)/recoveries
— (35)(8)— 1 — (42)
Foreign exchange translation adjustment
— — 1 — — — 1 
Balance at end of period
$5 $170 $197 $20 $62 $2 $456 
ACL by loan portfolio segment as a % of total ACL1.1 %37.3 %43.2 %4.4 %13.6 %0.4 %100.0 %

The allowance for credit losses on held for investment bank loans increased $13 million during the three months ended June 30, 2025, primarily resulting from the bank loan provision for credit losses of $15 million, partially offset by net charge-offs during the quarter. The bank loan provision for credit losses for the three months ended June 30, 2025 primarily reflected the impacts of a weaker economic outlook for the C&I loan portfolio, loan downgrades, and specific reserves.

The allowance for credit losses on held for investment bank loans increased $8 million during the nine months ended June 30, 2025, primarily resulting from the bank loan provision for credit losses of $31 million, partially offset by net charge-offs during the period. The bank loan provision for credit losses for the nine months ended June 30, 2025 primarily reflected the impacts of loan downgrades, charge-offs in our C&I and CRE loan portfolios, and specific reserves.
The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $24 million, $20 million, and $22 million at June 30, 2025, March 31, 2025, and September 30, 2024, respectively. The increase in the allowance for credit losses on unfunded lending commitments for the three and nine months ended June 30, 2025 was primarily due to growth in our unfunded lending commitments.
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 of our 2024 Form 10-K 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 millionsJune 30, 2025September 30, 2024
Affiliated with the firm as of period-end (1)
$1,527 $1,350 
No longer affiliated with the firm as of period-end (2)
15 16 
Total loans to financial advisors1,542 1,366 
Allowance for credit losses(42)(40)
Loans to financial advisors, net$1,500 $1,326 
Accrued interest receivable on loans to financial advisors (included in “Other receivables, net”)
$11 $9 
Allowance for credit losses as a percent of total loans to financial advisors
2.72 %2.93 %

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