v3.26.1
BANK LOANS, NET
 6 Months Ended
Mar. 31, 2026
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 2025 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 less the allowance for credit losses (“ACL”) or fair value where applicable.

The following table presents the balances for held for investment loans by portfolio segment and held for sale loans.
$ in millionsMarch 31, 2026September 30, 2025
SBL$23,007 $19,775 
C&I loans10,489 10,777 
CRE loans7,972 7,840 
REIT loans1,695 1,690 
Residential mortgage loans10,789 10,295 
Tax-exempt loans1,123 1,226 
Total loans held for investment55,075 51,603 
Held for sale loans198 416 
Total loans held for sale and investment55,273 52,019 
Allowance for credit losses(440)(452)
Bank loans, net
$54,833 $51,567 
ACL as a % of total loans held for investment0.80 %0.88 %
Accrued interest receivable on bank loans (included in “Other receivables, net”)$211 $216 

See Note 7 for additional information regarding bank loans pledged with the FHLB and FRB.

Held for sale loans

We originated or purchased $717 million and $1.21 billion of loans held for sale during the three and six months ended March 31, 2026, respectively, and $1.01 billion and $1.72 billion during the three and six months ended March 31, 2025, 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 $122 million and $299 million during the three and six months ended March 31, 2026, respectively, and $497 million and $662 million during the three and six months ended March 31, 2025, respectively. Net gains resulting from such sales were insignificant for each of the three and six months ended March 31, 2026 and 2025.
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 loansResidential mortgage loansTotal
Three months ended March 31, 2026
Purchases$123 $— $2 $125 
Sales$20 $— $— $20 
Six months ended March 31, 2026
Purchases$288 $— $16 $304 
Sales$104 $— $— $104 
Three months ended March 31, 2025
Purchases$404 $— $67 $471 
Sales$29 $13 $— $42 
Six months ended March 31, 2025
Purchases$646 $— $132 $778 
Sales$77 $13 $— $90 

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 2025 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
March 31, 2026      
SBL$6 $— $6 $— $— $23,001 $23,007 
C&I loans— — — 31 19 10,439 10,489 
CRE loans— — — 113 8 7,851 7,972 
REIT loans— — — — — 1,695 1,695 
Residential mortgage loans2 — 2 — 11 10,776 10,789 
Tax-exempt loans— — — — — 1,123 1,123 
Total loans held for investment$8 $— $8 $144 $38 $54,885 $55,075 
September 30, 2025      
SBL$1 $— $1 $— $— $19,774 $19,775 
C&I loans1 — 1 39 5 10,732 10,777 
CRE loans— — — 101 9 7,730 7,840 
REIT loans— — — 19 — 1,671 1,690 
Residential mortgage loans5 — 5 — 13 10,277 10,295 
Tax-exempt loans— — — — — 1,226 1,226 
Total loans held for investment$7 $— $7 $159 $27 $51,410 $51,603 

The preceding table included $75 million and $109 million at March 31, 2026 and September 30, 2025, respectively, of nonaccrual loans which were current pursuant to their contractual terms.

As more fully described in Note 2 of our 2025 Form 10-K, in the normal course of business, we may 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 each of the three and six months ended March 31, 2026 and 2025 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 collateralMarch 31, 2026September 30, 2025
C&I loansCommercial real estate and other business assets$17 $13 
CRE loans (1)
Office, hospitality, industrial, multi-family residential, and medical office real estate$278 $165 
REIT loans (1)
Office real estate$— $113 
Residential mortgage loansSingle family homes$4 $9 

(1) During the six months ended March 31, 2026, a certain loan was reassigned from the REIT loan portfolio to the CRE loan portfolio based on changes in the loan characteristics during the period.

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 six months ended March 31, 2026
Loans by origination fiscal year
$ in millions20262025202420232022PriorRevolving loansTotal
SBL
Risk rating:
Pass$8$15$57$156$24$72$22,621$22,953
Special mention (1)
——————5454
Substandard
————————
Doubtful————————
Total SBL$8$15$57$156$24$72$22,675$23,007
Gross charge-offs
$—$—$—$—$—$—$—$—
C&I loans
Risk rating:
Pass$336$617$838$330$956$4,028$3,292$10,397
Special mention—2—121—1025
Substandard——1——431357
Doubtful—————9110
Total C&I loans$336$619$839$342$957$4,080$3,316$10,489
Gross charge-offs
$—$1$—$—$—$—$—$1
CRE loans
Risk rating:
Pass$705$1,480$633$812$1,390$1,788$729$7,537
Special mention——426114——144
Substandard———5174143—268
Doubtful—————23—23
Total CRE loans$705$1,480$637$889$1,578$1,954$729$7,972
Gross charge offs
$—$—$—$—$12$2$—$14
REIT loans
Risk rating:
Pass$105$324$68$146$58$297$697$1,695
Special mention————————
Substandard————————
Doubtful————————
Total REIT loans$105$324$68$146$58$297$697$1,695
Gross charge-offs
$—$—$—$—$—$—$—$—
Residential mortgage loans
Risk rating:
Pass$1,066$1,729$1,113$1,367$2,419$3,031$38$10,763
Special mention——1135—10
Substandard———1510—16
Doubtful————————
Total residential mortgage loans$1,066$1,729$1,114$1,369$2,427$3,046$38$10,789
Gross charge-offs
$—$—$—$—$—$—$—$—
Tax-exempt loans
Risk rating:
Pass$55$49$—$57$194$768$—$1,123
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$55$49$—$57$194$768$—$1,123
Gross charge-offs
$—$—$—$—$—$—$—$—

(1)As of March 31, 2026, this balance related to a loan which was collateralized by private securities.
As of and for the year ended September 30, 2025
Loans by origination fiscal year
$ in millions20252024202320222021PriorRevolving loansTotal
SBL
Risk rating:
Pass$21$62$30$20$29$43$19,485$19,690
Special mention (1)
——————8585
Substandard
————————
Doubtful————————
Total SBL$21$62$30$20$29$43$19,570$19,775
Gross charge-offs
$—$—$—$—$—$—$—$—
C&I loans
Risk rating:
Pass$746$743$366$1,016$849$3,495$3,455$10,670
Special mention——161——320
Substandard—1——2642087
Doubtful
————————
Total C&I loans$746$744$382$1,017$851$3,559$3,478$10,777
Gross charge-offs
$—$—$—$—$—$32$1$33
CRE loans
Risk rating:
Pass$1,333$789$1,023$1,698$599$1,473$612$7,527
Special mention——2590—7—122
Substandard——2786—55—168
Doubtful—————23—23
Total CRE loans$1,333$789$1,075$1,874$599$1,558$612$7,840
Gross charge-offs
$—$—$—$—$—$11$1$12
REIT loans
Risk rating:
Pass$289$128$158$59$113$241$570$1,558
Special mention————————
Substandard——19—113——132
Doubtful————————
Total REIT loans$289$128$177$59$226$241$570$1,690
Gross charge-offs
$—$—$—$—$—$—$—$—
Residential mortgage loans
Risk rating:
Pass$1,810$1,206$1,465$2,511$1,389$1,849$42$10,272
Special mention———113—5
Substandard———6—12—18
Doubtful————————
Total residential mortgage loans$1,810$1,206$1,465$2,518$1,390$1,864$42$10,295
Gross charge-offs
$—$—$—$—$—$1$—$1
Tax-exempt loans
Risk rating:
Pass$49$62$57$215$144$699$—$1,226
Special mention————————
Substandard————————
Doubtful————————
Total tax-exempt loans$49$62$57$215$144$699$—$1,226
Gross charge-offs
$—$—$—$—$—$—$—$—

(1)As of September 30, 2025, this balance related to a loan which was collateralized by private securities.
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.
March 31, 2026
Loans by origination fiscal year
$ in millions20262025202420232022PriorRevolving loansTotal
FICO score:
Below 600$2$5$4$11$16$24$—$62
600 - 69964745760901203468
700 - 7997911,3646987621,3661,657286,666
800 +2082863535369551,24273,587
FICO score not available1—2——3—6
Total$1,066$1,729$1,114$1,369$2,427$3,046$38$10,789
LTV ratio:
Below 80%$708$1,212$804$968$1,864$2,364$37$7,957
80%+35851731040156368212,832
Total$1,066$1,729$1,114$1,369$2,427$3,046$38$10,789

September 30, 2025
Loans by origination fiscal year
$ in millions20252024202320222021PriorRevolving loansTotal
FICO score:
Below 600$5$5$11$17$7$18$—$63
600 - 6997460669643905434
700 - 7991,4247478151,4197441,026296,204
800 +30639257298659472783,585
FICO score not available121—23—9
Total$1,810$1,206$1,465$2,518$1,390$1,864$42$10,295
LTV ratio:
Below 80%$1,271$874$1,037$1,926$1,100$1,432$41$7,681
80%+53933242859229043212,614
Total$1,810$1,206$1,465$2,518$1,390$1,864$42$10,295
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 loans
CRE loans (1)
REIT loans (1)
Residential mortgage loansTax-exempt loansTotal
Three months ended March 31, 2026     
Balance at beginning of period
$7 $146 $176 $48 $62 $1 $440 
Provision/(benefit) for credit losses(1)(2)36 (29)1 — 5 
Net (charge-offs)/recoveries:
      
Charge-offs— — (6)— — — (6)
Recoveries— — — — 1 — 1 
Net (charge-offs)/recoveries
— — (6)— 1 — (5)
Foreign exchange translation adjustment
— — — — — — — 
Balance at end of period
$6 $144 $206 $19 $64 $1 $440 
Six months ended March 31, 2026
Balance at beginning of period
$8 $148 $182 $52 $61 $1 $452 
Provision/(benefit) for credit losses(2)(3)38 (33)2 — 2 
Net (charge-offs)/recoveries:
     
Charge-offs— (1)(14)— — — (15)
Recoveries— — — — 1 — 1 
Net (charge-offs)/recoveries
— (1)(14)— 1 — (14)
Foreign exchange translation adjustment
— — — — — — — 
Balance at end of period
$6 $144 $206 $19 $64 $1 $440 
ACL by loan portfolio segment as a % of total ACL1.4 %32.8 %46.8 %4.3 %14.5 %0.2 %100.0 %
Three months ended March 31, 2025
Balance at beginning of period
$5 $176 $177 $27 $65 $2 $452 
Provision/(benefit) for credit losses2 4 11 5 (5)(1)16 
Net (charge-offs)/recoveries:
     
Charge-offs— (9)(8)— — — (17)
Recoveries— 1 1 — — — 2 
Net (charge-offs)/recoveries— (8)(7)— — — (15)
Foreign exchange translation adjustment
(1)— — — — (1)
Balance at end of period
$7 $171 $181 $32 $60 $1 $452 
Six months ended March 31, 2025
Balance at beginning of period
$6 $173 $188 $23 $65 $2 $457 
Provision/(benefit) for credit losses1 11 1 9 (5)(1)16 
Net (charge-offs)/recoveries:
    
Charge-offs— (13)(8)— — (21)
Recoveries— 1 1 — — 2 
Net charge-offs
— (12)(7)— — — (19)
Foreign exchange translation adjustment
— (1)(1)— — (2)
Balance at end of period
$7 $171 $181 $32 $60 $1 $452 
ACL by loan portfolio segment as a % of total ACL1.5 %37.9 %40.0 %7.1 %13.3 %0.2 %100.0 %

(1) During the three and six months ended March 31, 2026, a certain loan was reassigned from the REIT loan portfolio to the CRE loan portfolio based on changes in the loan characteristics during the period.

The allowance for credit losses on held for investment bank loans remained flat during the three months ended March 31, 2026, primarily resulting from a $5 million bank loan provision for credit losses, offset by net charge-offs. The allowance for credit losses on held for investment bank loans decreased $12 million during the six months ended March 31, 2026, primarily resulting from net charge-offs during the period, partially offset by a $2 million bank loan provision for credit losses. The bank loan provision for credit losses for the three months ended March 31, 2026 primarily reflected the impacts of a weakened economic outlook towards the end of the period, specific reserves on certain CRE loans, and loan downgrades primarily related to our CRE and C&I loan portfolios, partially offset by net paydowns of certain loans in our corporate loan portfolio. The bank loan provision for credit losses for the six months ended March 31, 2026, primarily reflected the impacts of specific reserves
and loan downgrades in our CRE and C&I loan portfolios, partially offset by net paydowns of certain loans in our corporate loan portfolio.

The allowance for credit losses on unfunded lending commitments, which is included in “Other payables” on our Condensed Consolidated Statements of Financial Condition, was $23 million as of March 31, 2026 and $24 million at both December 31, 2025 and September 30, 2025.
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 2025 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 millionsMarch 31, 2026September 30, 2025
Affiliated with the firm as of period-end (1)
$1,932 $1,658 
No longer affiliated with the firm as of period-end (2)
7 7 
Total loans to financial advisors1,939 1,665 
Allowance for credit losses(45)(39)
Loans to financial advisors, net$1,894 $1,626 
Accrued interest receivable on loans to financial advisors (included in “Other receivables, net”)
$16 $12 
Allowance for credit losses as a percent of total loans to financial advisors
2.32 %2.34 %

(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.
The increase in the allowance for credit losses as of March 31, 2026 compared with September 30, 2025 was primarily due to loan growth.