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## CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS 

Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information. 

## Consolidated balance sheets analysis 

The following is a discussion of the significant changes between December 31, 2020 and 2019. 

## Selected Consolidated balance sheets data 

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(a) In the third quarter of 2020, the Firm reclassified certain fair value option elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation. 

Cash and due from banks and deposits with banks  increased primarily as a result of significant deposit inflows, which also funded asset growth across the Firm, including investment securities and securities purchased under resale agreements. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks. 

Federal funds sold and securities purchased under resale agreements  increased as a result of higher deployment of cash in Treasury and CIO, as well as the impact of client activity and higher demand for securities to cover short positions in CIB. Refer to Liquidity Risk Management on pages 102–108 and Note 11 for additional information. 

Securities borrowed  increased driven by client-driven activities in CIB. Refer to Liquidity Risk Management on pages 102–108 and Note 11 for additional information. 

Trading assets  remained elevated at the end of 2020, due to stronger client-driven market-making activities in debt and equity instruments and higher derivative receivables as a result of market movements in CIB Markets. Refer to Notes 2 and 5 for additional information. 

Investment securities  increased, reflecting net purchases of U.S. Treasuries and U.S. GSE and government agency MBS in the available- for-sale (“AFS”) portfolio, driven by interest rate risk management activities and cash deployment. AFS securities of $164 billion were transferred to the held-to-maturity (“HTM”) portfolio, resulting in a decrease in AFS and a comparable increase in HTM securities. The transfers were executed for capital management purposes. Refer to 

Corporate segment results on pages 83–84, Investment Portfolio Risk Management on page 134 and Notes 2 and 10 for additional information on investment securities. 

Loans increased, reflecting: 

• growth in wholesale loans and mortgages in AWM and the impact of PPP loans in CBB and CB, as well as higher wholesale loans related to client-driven activities in CIB Markets 

largely offset by 

• lower loans in Home Lending primarily due to net paydowns; and lower loans in Card due to the decline in sales volumes that began in March as a result of the impact of the COVID-19 pandemic. 

The allowance for loan losses  increased primarily reflecting the deterioration and uncertainty in the macroeconomic environment, in particular in the first half of 2020, as a result of the impact of the COVID-19 pandemic, consisting of: 

• a net $7.4 billion addition in consumer, predominantly in the credit card portfolio, and 

• a net $3.6 billion addition in wholesale, across the LOBs, impacting multiple industries. 

The adoption of CECL on January 1, 2020, resulted in a $4.2 billion addition to the allowance for loan losses. 

There were also additions to the allowance for lending-related commitments, which is included in other liabilities on the consolidated balance sheets, of $1.1 billion related to the impact of the COVID-19 pandemic, and $98 million related to the adoption of CECL. Total additions to the allowance for 

