Morgan Stanley 2015 Annual Report Download - page 73

Supplemental Financial Information and Disclosures.
Legal.
The Company incurred legal expenses of $563 million in 2015, $3,364 million in 2014 and $1,941 million in 2013. Legal
expenses are included in Other expenses in the consolidated statements of income.
Legal expenses incurred in 2015 were primarily related to increases in reserves for the settlement of a credit default swap
antitrust litigation matter and for legacy residential mortgage-backed securities matters. The legal expenses incurred in 2014
and 2013 were principally due to reserve additions and settlements related to legacy residential mortgage-backed securities
and credit crisis related matters, including in 2014 the Company’s $2,600 million agreement with the United States
Department of Justice, Civil Division, which was reached on February 25, 2015 and finalized on February 10, 2016 (see
“Contingencies—Legal” in Note 12 to the consolidated financial statements in Item 8).
The Company’s future legal expenses may fluctuate from period to period given the current environment regarding
government investigations and private litigation affecting global financial services firms, including the Company.
U.S. Bank Subsidiaries.
The Company provides loans to a variety of customers, from large corporate and institutional clients to high net worth
individuals, primarily through its U.S. Bank Subsidiaries. The lending activities in the Institutional Securities business
segment include corporate lending activities, in which the Company provides loans or lending commitments to certain
corporate clients, and other lending activities. The lending activities in the Wealth Management business segment primarily
include securities-based lending that allows clients to borrow money against the value of qualifying securities and also
include residential real estate loans. The Company expects its lending activities to continue to grow through further
penetration of the Institutional Securities and Wealth Management business segments’ client base. For a further discussion of
credit risks, see “Quantitative and Qualitative Disclosures about Market Risk—Credit Risk” in Item 7A. Also see Notes 7
and 12 to the consolidated financial statements in Item 8 for additional information about loans and lending commitments,
respectively.
U.S. Bank Subsidiaries’ Supplemental Financial Information Excluding Transactions with Affiliated Entities.
At December 31, 2015 At December 31, 2014
(dollars in billions)
U.S. Bank Subsidiaries assets ............................................ $ 174.2 $ 151.2
U.S. Bank Subsidiaries investment securities portfolio(1) ...................... $ 57.9 $ 57.3
Wealth Management U.S. Bank Subsidiaries data:
Securities-based lending and other loans(2) ............................... $ 28.6 $ 22.0
Residential real estate loans ............................................ 20.9 15.8
Total .......................................................... $ 49.5 $ 37.8
Institutional Securities U.S. Bank Subsidiaries data:
Corporate Lending ................................................... $ 10.0 $ 9.6
Other lending(3):
Corporate loans ................................................... $ 12.9 $ 8.0
Wholesale real estate loans and other loans .............................. 8.9 8.6
Total other loans ................................................. $ 21.8 $ 16.6
Total .......................................................... $ 31.8 $ 26.2
(1) The U.S. Bank Subsidiaries investment securities portfolio includes AFS investment securities of $53.0 billion at December 31, 2015 and $57.2 billion at
December 31, 2014. The remaining balance represents HTM investment securities.
(2) Other loans primarily include tailored lending.
(3) Other lending includes activities related to commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the secondary
market, financing extended to equities and commodities customers, and loans to municipalities.
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