Delaware | 94-2844166 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer x | Accelerated filer | ¨ | |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
PART I | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | Enhance digital and offline customer experience |
• | Capitalize on value of corporate services channel |
• | Utilize balance sheet to enhance returns |
• | Put capital to work for shareholders |
• | customer demand for financial products and services; |
• | performance, volume and volatility of the equity and capital markets; |
• | the level and volatility of interest rates; |
• | our ability to move capital to our parent company from our subsidiaries subject to regulatory approvals or notifications; |
• | changes to the rules and regulations governing the financial services industry; |
• | the performance of the residential real estate and credit markets; and |
• | market demand and liquidity in the secondary market for agency mortgage-backed securities. |
• | interest expense related to corporate debt and interest income related to corporate cash reclassified from other income (expense) to net interest income; |
• | losses on early extinguishment of debt, net reclassified from other income (expense) to non-interest expense; and |
• | other income (expense) reclassified from other income (expense) to gains (losses) on securities and other, net. |
• | On September 12, 2016, we completed the acquisition of Aperture New Holdings, Inc., the ultimate parent company of OptionsHouse, an online brokerage, for $725 million. We funded the transaction through the issuance of fixed-to-floating rate non-cumulative perpetual preferred stock for gross proceeds of $400 million, and the remainder with existing corporate cash. For additional information, see Note 2—Business Acquisition. |
• | During the third quarter of 2016, we converted $4.1 billion of customer cash to our sweep deposit account program. This conversion, along with the acquisition of OptionsHouse, increased the total amount of customer cash that will be available to bring back on to our balance sheet to approximately $11 billion. We expect to cross the $50 billion consolidated assets regulatory threshold during the first half of 2017 and anticipate ending the second quarter of 2017 with approximately $56 billion of total consolidated assets. We are continuing to monitor and prepare for the incremental regulatory and reporting requirements that may become applicable. |
• | E*TRADE Bank paid a dividend of $40 million to the parent company during the third quarter of 2016. |
• | E*TRADE Clearing paid a dividend of $28 million to the parent company during the third quarter of 2016. |
• | E*TRADE Securities paid a dividend of $57 million to the parent company during the third quarter of 2016. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||
2016(1) | 2015 | 2016 vs. 2015 | 2016(1) | 2015 | 2016 vs. 2015 | ||||||||||||||||
Customer Activity Metrics: | |||||||||||||||||||||
Daily average revenue trades ("DARTs") | 151,905 | 155,985 | (3 | )% | 156,368 | 158,326 | (1 | )% | |||||||||||||
Derivative DARTs % | 26 | % | 25 | % | 1 | % | 25 | % | 24 | % | 1 | % | |||||||||
Average commission per trade | $ | 10.97 | $ | 10.87 | 1 | % | $ | 10.81 | $ | 10.92 | (1 | )% | |||||||||
Customer margin balances (dollars in billions) | $ | 6.8 | $ | 7.9 | (14 | )% | $ | 6.8 | $ | 7.9 | (14 | )% | |||||||||
End of period brokerage accounts(2) | 3,438,975 | 3,203,531 | 7 | % | 3,438,975 | 3,203,531 | 7 | % | |||||||||||||
Net new brokerage accounts(2) | 161,885 | 2,205 | * | 225,434 | 59,608 | * | |||||||||||||||
Brokerage account attrition rate(2) | 8.0 | % | 11.4 | % | (3.4 | )% | 8.1 | % | 10.0 | % | (1.9 | )% | |||||||||
Customer assets (dollars in billions) | $ | 306.8 | $ | 276.6 | 11 | % | $ | 306.8 | $ | 276.6 | 11 | % | |||||||||
Net new brokerage assets (dollars in billions) | $ | 5.4 | $ | 2.1 | 157 | % | $ | 9.9 | $ | 6.5 | 52 | % | |||||||||
Brokerage related cash (dollars in billions) | $ | 48.3 | $ | 40.2 | 20 | % | $ | 48.3 | $ | 40.2 | 20 | % | |||||||||
Company Metrics: | |||||||||||||||||||||
Operating margin | 46 | % | (403 | )% | * | 44 | % | (7 | )% | * | |||||||||||
Adjusted operating margin(3) | 34 | % | 32 | % | 2 | % | 35 | % | 31 | % | 4 | % | |||||||||
Cash and equivalents (dollars in millions) | $ | 1,467 | $ | 1,453 | 1 | % | $ | 1,467 | $ | 1,453 | 1 | % | |||||||||
Corporate cash (dollars in millions)(4) | $ | 306 | $ | 432 | (29 | )% | $ | 306 | $ | 432 | (29 | )% | |||||||||
E*TRADE Financial Tier 1 leverage ratio | 7.3 | % | 8.5 | % | (1.2 | )% | 7.3 | % | 8.5 | % | (1.2 | )% | |||||||||
E*TRADE Bank Tier 1 leverage ratio(5) | 8.5 | % | 9.2 | % | (0.7 | )% | 8.5 | % | 9.2 | % | (0.7 | )% | |||||||||
Special mention loan delinquencies (dollars in millions) | $ | 107 | $ | 113 | (5 | )% | $ | 107 | $ | 113 | (5 | )% | |||||||||
Allowance for loan losses (dollars in millions) | $ | 235 | $ | 376 | (38 | )% | $ | 235 | $ | 376 | (38 | )% | |||||||||
Net interest margin (basis points) | 259 | 247 | 5 | % | 267 | 242 | 10 | % | |||||||||||||
Interest-earning assets (average dollars in billions) | $ | 44.5 | $ | 40.5 | 10 | % | $ | 42.9 | $ | 41.4 | 4 | % | |||||||||
Total employees (period end) | 3,655 | 3,310 | 10 | % | 3,655 | 3,310 | 10 | % |
* | Percentage not meaningful. |
(1) | Includes OptionsHouse activity from the September 12, 2016 acquisition date, as follows, for the three and nine months ended September 30, 2016: DARTs of 6,492 and 2,198, respectively; addition to derivatives as a percentage of total DARTs of 2% and 1%, respectively; customer margin balances of $0.3 billion; net new and end of period brokerage accounts of 147,761; customer assets and net new brokerage assets of $3.7 billion; and brokerage related cash of $1.5 billion. |
(2) | Net new and end of period brokerage accounts for the nine months ended September 30, 2016 were impacted by the closure of 4,430 accounts related to the shutdown of the Company's Hong Kong and Singapore operations. Excluding the impact of these closed accounts, brokerage account attrition rate was 8.0% for the nine months ended September 30, 2016. Net new brokerage accounts and end of period brokerage accounts for the nine months ended September 30, 2015 were impacted by the closure of 3,484 accounts related to the escheatment of unclaimed property and 16,818 and 20,143 accounts during the three and nine months ended September 30, 2015, respectively, related to the shutdown of the Company's global trading platform. Excluding the impact of these items, brokerage account attrition rate was 9.3% and 9.0% for the three and nine months ended September 30, 2015, respectively. |
(3) | See Earnings Overview for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure. |
(4) | See Liquidity and Capital Resources for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure. |
(5) | E*TRADE Securities and E*TRADE Clearing were moved out from under E*TRADE Bank in February 2015 and July 2015, respectively. |
• | DARTs are the predominant driver of commissions revenue from our customers. Derivative DARTs include options and futures. |
• | Average commission per trade is an indicator of changes in our customer mix, product mix and/or product pricing. |
• | Customer margin balances represent credit extended to customers to finance their purchases of securities by borrowing against securities they own. Customer margin includes margin receivables held on the Company's balance sheet, which are a key driver of net interest income. It also includes margin receivables of OptionsHouse customers that are held by a third party clearing firm. |
• | End of period brokerage accounts, net new brokerage accounts and brokerage account attrition rate are indicators of our ability to attract and retain brokerage customers. The brokerage account attrition rate is calculated by dividing attriting brokerage accounts by total brokerage accounts at the previous period end, and is presented on an annualized basis. Attriting brokerage accounts are derived by subtracting net new brokerage accounts from gross new brokerage accounts. |
• | Changes in customer assets are an indicator of the value of our relationship with the customer. An increase in customer assets generally indicates that the use of our products and services by existing and new customers is expanding. Changes in this metric are also driven by changes in the valuations of our customers’ underlying securities. |
• | Net new brokerage assets are total inflows to all new and existing brokerage accounts less total outflows from all closed and existing brokerage accounts and are a general indicator of the use of our products and services by new and existing brokerage customers. |
• | Brokerage related cash is an indicator of the level of engagement with our brokerage customers and is a key driver of net interest income as well as fees and service charges revenue, which includes fees earned on customer cash held by third parties. |
• | Operating margin is the percentage of net revenue that results in income before income taxes. The percentage is calculated by dividing income before income taxes by total net revenue. |
• | Adjusted operating margin is a non-GAAP measure calculated by dividing adjusted income before income taxes by adjusted total net revenue. Adjusted income before income taxes excludes the loss on termination of legacy wholesale funding obligations recognized in the gains (losses) on securities and other, net line item, provision (benefit) for loan losses and the losses on early extinguishment of debt, net line item. Adjusted total net revenue excludes the loss on termination of legacy wholesale funding obligations from total net revenue. Adjusted operating margin provides a useful measure of our ongoing operating performance and is used by management for this purpose as these adjustments are not viewed as key factors governing our investments in the business. See Earnings Overview for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure. |
• | Corporate cash is a component of cash and equivalents and is the primary source of capital above and beyond the capital deployed in our regulated subsidiaries. See Liquidity and Capital Resources for a reconciliation of this non-GAAP measure to the most directly comparable GAAP measure. |
• | Tier 1 leverage ratio is an indication of capital adequacy for E*TRADE Financial and E*TRADE Bank. Tier 1 leverage ratio is Tier 1 capital divided by adjusted average assets for leverage capital purposes. See Liquidity and Capital Resources for additional information, including the calculation of regulatory capital ratios. |
• | Special mention loan delinquencies are loans 30-89 days past due and are an indicator of the expected trend for charge-offs in future periods as these loans have a greater propensity to migrate into nonaccrual status and to ultimately be charged-off. |
• | Allowance for loan losses is an estimate of probable losses inherent in the loan portfolio as of the balance sheet date, as well as the forecasted losses, including economic concessions to borrowers, over the estimated remaining life of loans modified as troubled debt restructurings ("TDRs"). |
• | Net interest margin is a measure of the net yield on our average interest-bearing assets. Net interest margin is calculated for a given period by dividing the annualized sum of net interest income by average interest-bearing assets. |
• | Interest-earning assets, in conjunction with our net interest margin, are indicators of our ability to generate net interest income. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||
2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||||
2016 | 2015 | Amount | % | 2016 | 2015 | Amount | % | ||||||||||||||||||||||
Net interest income | $ | 287 | $ | 249 | $ | 38 | 15 | % | $ | 860 | $ | 751 | $ | 109 | 15 | % | |||||||||||||
Total non-interest income (loss) | 199 | (188 | ) | 387 | * | 572 | 180 | 392 | 218 | % | |||||||||||||||||||
Total net revenue | 486 | 61 | 425 | 697 | % | 1,432 | 931 | 501 | 54 | % | |||||||||||||||||||
Provision (benefit) for loan losses | (62 | ) | (25 | ) | (37 | ) | 148 | % | (131 | ) | (17 | ) | (114 | ) | 671 | % | |||||||||||||
Total non-interest expense | 323 | 332 | (9 | ) | (3 | )% | 930 | 1,014 | (84 | ) | (8 | )% | |||||||||||||||||
Income (loss) before income tax expense (benefit) | 225 | (246 | ) | 471 | * | 633 | (66 | ) | 699 | * | |||||||||||||||||||
Income tax expense (benefit) | 86 | (93 | ) | 179 | * | 208 | (245 | ) | 453 | * | |||||||||||||||||||
Net income (loss) | $ | 139 | $ | (153 | ) | $ | 292 | * | $ | 425 | $ | 179 | $ | 246 | 137 | % | |||||||||||||
Diluted earnings (loss) per share | $ | 0.51 | $ | (0.53 | ) | $ | 1.04 | * | $ | 1.52 | $ | 0.61 | $ | 0.91 | 149 | % |
* | Percentage not meaningful. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||
2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||||
2016 | 2015 | Amount | % | 2016 | 2015 | Amount | % | ||||||||||||||||||||||
Net interest income | $ | 287 | $ | 249 | $ | 38 | 15 | % | $ | 860 | $ | 751 | $ | 109 | 15 | % | |||||||||||||
Commissions | 107 | 108 | (1 | ) | (1 | )% | 320 | 325 | (5 | ) | (2 | )% | |||||||||||||||||
Fees and service charges | 68 | 52 | 16 | 31 | % | 188 | 159 | 29 | 18 | % | |||||||||||||||||||
Gains (losses) on securities and other, net | 14 | (358 | ) | 372 | * | 34 | (333 | ) | 367 | * | |||||||||||||||||||
Other revenues | 10 | 10 | — | — | % | 30 | 29 | 1 | 3 | % | |||||||||||||||||||
Total non-interest income | 199 | (188 | ) | 387 | * | 572 | 180 | 392 | 218 | % | |||||||||||||||||||
Total net revenue | $ | 486 | $ | 61 | $ | 425 | 697 | % | $ | 1,432 | $ | 931 | $ | 501 | 54 | % |
* | Percentage not meaningful. |
Three Months Ended September 30, (1) | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Interest Inc./Exp. | Average Yield/ Cost | Average Balance | Interest Inc./Exp. | Average Yield/ Cost | ||||||||||||||||
Cash and equivalents | $ | 1,989 | $ | 2 | 0.42 | % | $ | 1,806 | $ | 1 | 0.18 | % | |||||||||
Cash required to be segregated under federal or other regulation | 1,885 | 2 | 0.33 | % | 318 | 1 | 0.18 | % | |||||||||||||
Available-for-sale securities | 13,301 | 66 | 1.99 | % | 12,584 | 57 | 1.83 | % | |||||||||||||
Held-to-maturity securities | 15,937 | 109 | 2.73 | % | 11,879 | 85 | 2.84 | % | |||||||||||||
Margin receivables | 6,479 | 60 | 3.68 | % | 7,984 | 70 | 3.51 | % | |||||||||||||
Loans (2) | 4,202 | 46 | 4.44 | % | 5,453 | 58 | 4.25 | % | |||||||||||||
Broker-related receivables and other | 696 | — | 0.13 | % | 461 | — | 0.69 | % | |||||||||||||
Subtotal interest-earning assets | 44,489 | 285 | 2.56 | % | 40,485 | 272 | 2.68 | % | |||||||||||||
Other interest revenue (3) | — | 24 | — | 25 | |||||||||||||||||
Total interest-earning assets | 44,489 | 309 | 2.77 | % | 40,485 | 297 | 2.93 | % | |||||||||||||
Total non-interest-earning assets (4) | 4,793 | 4,220 | |||||||||||||||||||
Total assets | $ | 49,282 | $ | 44,705 | |||||||||||||||||
Deposits | $ | 32,285 | $ | 1 | 0.01 | % | $ | 25,659 | $ | 1 | 0.01 | % | |||||||||
Customer payables | 7,592 | 2 | 0.06 | % | 6,348 | 2 | 0.07 | % | |||||||||||||
Broker-related payables and other | 1,258 | — | 0.00 | % | 1,749 | — | 0.00 | % | |||||||||||||
Other borrowings (5) | 409 | 4 | 4.15 | % | 3,582 | 30 | 3.38 | % | |||||||||||||
Corporate debt | 993 | 13 | 5.40 | % | 1,023 | 13 | 5.23 | % | |||||||||||||
Subtotal interest-bearing liabilities | 42,537 | 20 | 0.19 | % | 38,361 | 46 | 0.48 | % | |||||||||||||
Other interest expense (6) | — | 2 | — | 2 | |||||||||||||||||
Total interest-bearing liabilities | 42,537 | 22 | 0.20 | % | 38,361 | 48 | 0.49 | % | |||||||||||||
Total non-interest-bearing liabilities (7) | 719 | 573 | |||||||||||||||||||
Total liabilities | 43,256 | 38,934 | |||||||||||||||||||
Total shareholders' equity | 6,026 | 5,771 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 49,282 | $ | 44,705 | |||||||||||||||||
Excess of interest earning assets over interest bearing liabilities/net interest income/net interest margin | $ | 1,952 | $ | 287 | 2.59 | % | $ | 2,124 | $ | 249 | 2.47 | % |
(1) | Beginning in 2016, interest expense related to corporate debt and interest income related to corporate cash are presented within net interest income. Prior periods have been reclassified to conform with current period presentation. |
(2) | Nonaccrual loans are included in the average loan balances. Interest payments received on nonaccrual loans are recognized on a cash basis in interest income until it is doubtful that full payment will be collected, at which point payments are applied to principal. |
(3) | Represents interest income on securities loaned. |
(4) | Non-interest earning assets consist of property and equipment, net, goodwill, other intangibles, net and other assets that do not generate interest income. |
(5) | In September 2015, we terminated $4.4 billion of legacy wholesale funding obligations. |
(6) | Represents interest expense on securities borrowed. |
(7) | Non-interest bearing liabilities consist of other liabilities that do not generate interest expense. |
Nine Months Ended September 30, (1) | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Interest Inc./Exp. | Average Yield/ Cost | Average Balance | Interest Inc./Exp. | Average Yield/ Cost | ||||||||||||||||
Cash and equivalents | $ | 1,730 | $ | 5 | 0.40 | % | $ | 1,692 | $ | 2 | 0.17 | % | |||||||||
Cash required to be segregated under federal or other regulation | 1,540 | 4 | 0.33 | % | 335 | 1 | 0.14 | % | |||||||||||||
Available-for-sale securities | 13,149 | 198 | 2.01 | % | 12,838 | 189 | 1.97 | % | |||||||||||||
Held-to-maturity securities | 14,993 | 319 | 2.84 | % | 12,173 | 259 | 2.83 | % | |||||||||||||
Margin receivables | 6,553 | 185 | 3.77 | % | 7,997 | 208 | 3.48 | % | |||||||||||||
Loans (2) | 4,505 | 146 | 4.33 | % | 5,838 | 177 | 4.04 | % | |||||||||||||
Broker-related receivables and other | 470 | 1 | 0.21 | % | 575 | 2 | 0.68 | % | |||||||||||||
Subtotal interest-earning assets | 42,940 | 858 | 2.67 | % | 41,448 | 838 | 2.70 | % | |||||||||||||
Other interest revenue (3) | — | 65 | — | 85 | |||||||||||||||||
Total interest-earning assets | 42,940 | 923 | 2.87 | % | 41,448 | 923 | 2.97 | % | |||||||||||||
Total non-interest-earning assets (4) | 4,882 | 4,528 | |||||||||||||||||||
Total assets | $ | 47,822 | $ | 45,976 | |||||||||||||||||
Deposits | $ | 31,243 | $ | 3 | 0.01 | % | $ | 25,667 | $ | 4 | 0.02 | % | |||||||||
Customer payables | 6,988 | 4 | 0.07 | % | 6,438 | 4 | 0.08 | % | |||||||||||||
Broker-related payables and other | 1,351 | — | 0.00 | % | 1,779 | — | 0.00 | % | |||||||||||||
Other borrowings (5) | 418 | 13 | 4.23 | % | 4,514 | 112 | 3.35 | % | |||||||||||||
Corporate debt | 994 | 40 | 5.40 | % | 1,103 | 46 | 5.70 | % | |||||||||||||
Subtotal interest-bearing liabilities | 40,994 | 60 | 0.19 | % | 39,501 | 166 | 0.57 | % | |||||||||||||
Other interest expense (6) | — | 3 | — | 6 | |||||||||||||||||
Total interest-bearing liabilities | 40,994 | 63 | 0.20 | % | 39,501 | 172 | 0.57 | % | |||||||||||||
Total non-interest-bearing liabilities (7) | 1,010 | 874 | |||||||||||||||||||
Total liabilities | 42,004 | 40,375 | |||||||||||||||||||
Total shareholders' equity | 5,818 | 5,601 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 47,822 | $ | 45,976 | |||||||||||||||||
Excess of interest earning assets over interest bearing liabilities/net interest income/net interest margin | $ | 1,946 | $ | 860 | 2.67 | % | $ | 1,947 | $ | 751 | 2.42 | % |
(1) | Beginning in 2016, interest expense related to corporate debt and interest income related to corporate cash are presented within net interest income. Prior periods have been reclassified to conform with current period presentation. |
(2) | Nonaccrual loans are included in the average loan balances. Interest payments received on nonaccrual loans are recognized on a cash basis in interest income until it is doubtful that full payment will be collected, at which point payments are applied to principal. |
(3) | Represents interest income on securities loaned. |
(4) | Non-interest earning assets consist of property and equipment, net, goodwill, other intangibles, net and other assets that do not generate interest income. |
(5) | In September 2015, we terminated $4.4 billion of legacy wholesale funding obligations. |
(6) | Represents interest expense on securities borrowed. |
(7) | Non-interest bearing liabilities consist of other liabilities that do not generate interest expense. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||
2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||||
2016 | 2015 | Amount | % | 2016 | 2015 | Amount | % | ||||||||||||||||||||||
Order flow revenue | $ | 24 | $ | 21 | $ | 3 | 14 | % | $ | 68 | $ | 65 | $ | 3 | 5 | % | |||||||||||||
Money market funds and sweep deposits revenue(1) | 13 | 7 | 6 | 86 | % | 31 | 18 | 13 | 72 | % | |||||||||||||||||||
Mutual fund service fees | 9 | 7 | 2 | 29 | % | 27 | 19 | 8 | 42 | % | |||||||||||||||||||
Advisor management fees | 8 | 6 | 2 | 33 | % | 21 | 20 | 1 | 5 | % | |||||||||||||||||||
Foreign exchange revenue | 6 | 3 | 3 | 100 | % | 15 | 12 | 3 | 25 | % | |||||||||||||||||||
Reorganization fees | 4 | 3 | 1 | 33 | % | 11 | 8 | 3 | 38 | % | |||||||||||||||||||
Other fees and service charges | 4 | 5 | (1 | ) | (20 | )% | 15 | 17 | (2 | ) | (12 | )% | |||||||||||||||||
Total fees and service charges | $ | 68 | $ | 52 | $ | 16 | 31 | % | $ | 188 | $ | 159 | $ | 29 | 18 | % |
(1) | Includes revenue earned on average customer cash held by third parties based on the federal funds rate or LIBOR plus a negotiated spread or other contractual arrangements with the third party institutions. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||
2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||||
2016 | 2015 | Amount | % | 2016 | 2015 | Amount | % | ||||||||||||||||||||||
Reclassification of deferred losses on cash flow hedges | $ | — | $ | (370 | ) | $ | 370 | (100 | )% | $ | — | $ | (370 | ) | $ | 370 | (100 | )% | |||||||||||
Gains on available-for-sale securities, net: | |||||||||||||||||||||||||||||
Gains on available-for-sale securities | 17 | 30 | (13 | ) | (43 | )% | 46 | 48 | (2 | ) | (4 | )% | |||||||||||||||||
Losses on available-for-sale securities | — | (19 | ) | 19 | (100 | )% | — | (19 | ) | 19 | (100 | )% | |||||||||||||||||
Subtotal | 17 | 11 | 6 | 55 | % | 46 | 29 | 17 | 59 | % | |||||||||||||||||||
Hedge ineffectiveness | (4 | ) | (2 | ) | (2 | ) | 100 | % | (8 | ) | — | (8 | ) | * | |||||||||||||||
Equity method investment income (loss) and other | 1 | 3 | (2 | ) | (67 | )% | (4 | ) | 8 | (12 | ) | * | |||||||||||||||||
Gains (losses) on securities and other, net | $ | 14 | $ | (358 | ) | $ | 372 | * | $ | 34 | $ | (333 | ) | $ | 367 | * |
* | Percentage not meaningful. |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||
2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||||
2016 | 2015 | Amount | % | 2016 | 2015 | Amount | % | ||||||||||||||||||||||
Compensation and benefits | $ | 123 | $ | 123 | $ | — | — | % | $ | 374 | $ | 354 | $ | 20 | 6 | % | |||||||||||||
Advertising and market development | 27 | 23 | 4 | 17 | % | 100 | 89 | 11 | 12 | % | |||||||||||||||||||
Clearing and servicing | 26 | 23 | 3 | 13 | % | 75 | 72 | 3 | 4 | % | |||||||||||||||||||
Professional services | 26 | 24 | 2 | 8 | % | 70 | 77 | (7 | ) | (9 | )% | ||||||||||||||||||
Occupancy and equipment | 24 | 21 | 3 | 14 | % | 71 | 64 | 7 | 11 | % | |||||||||||||||||||
Communications | 22 | 24 | (2 | ) | (8 | )% | 65 | 62 | 3 | 5 | % | ||||||||||||||||||
Depreciation and amortization | 20 | 21 | (1 | ) | (5 | )% | 60 | 61 | (1 | ) | (2 | )% | |||||||||||||||||
FDIC insurance premiums | 6 | 7 | (1 | ) | (14 | )% | 18 | 36 | (18 | ) | (50 | )% | |||||||||||||||||
Amortization of other intangibles | 5 | 5 | — | — | % | 15 | 15 | — | — | % | |||||||||||||||||||
Restructuring and acquisition-related activities | 25 | 2 | 23 | * | 28 | 8 | 20 | 250 | % | ||||||||||||||||||||
Losses on early extinguishment of debt, net | — | 39 | (39 | ) | (100 | )% | — | 112 | (112 | ) | (100 | )% | |||||||||||||||||
Other non-interest expenses | 19 | 20 | (1 | ) | (5 | )% | 54 | 64 | (10 | ) | (16 | )% | |||||||||||||||||
Total non-interest expense | $ | 323 | $ | 332 | $ | (9 | ) | (3 | )% | $ | 930 | $ | 1,014 | $ | (84 | ) | (8 | )% |
* | Percentage not meaningful. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Amount | Operating Margin % | Amount | Operating Margin % | Amount | Operating Margin % | Amount | Operating Margin % | ||||||||||||||||
Income (loss) before income tax expense (benefit) / operating margin | $ | 225 | 46% | $ | (246 | ) | (403)% | $ | 633 | 44% | $ | (66 | ) | (7)% | |||||||||
Add back impact of pre-tax items: | |||||||||||||||||||||||
Loss included in Gains (losses) on securities and other, net | — | 370 | — | 370 | |||||||||||||||||||
Provision (benefit) for loan losses | (62 | ) | (25 | ) | (131 | ) | (17 | ) | |||||||||||||||
Losses on early extinguishment of debt, net(1) | — | 39 | — | 112 | |||||||||||||||||||
Subtotal | (62 | ) | 384 | (131 | ) | 465 | |||||||||||||||||
Adjusted income before income tax expense (benefit) / adjusted operating margin | $ | 163 | 34% | $ | 138 | 32% | $ | 502 | 35% | $ | 399 | 31% |
(1) | Includes $43 million losses on early extinguishment of debt related to the termination of legacy wholesale funding obligations, partially offset by $4 million gain on the extinguishment of certain trust preferred securities for both the three and nine months ended September 30, 2015. The nine months ended September 30, 2015 also includes $73 million losses on early extinguishment of debt. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total net revenue | $ | 486 | $ | 61 | $ | 1,432 | $ | 931 | |||||||
Add back impact of termination of legacy wholesale funding obligations: | |||||||||||||||
Loss included in Gains (losses) on securities and other, net | — | 370 | — | 370 | |||||||||||
Adjusted total net revenue | $ | 486 | $ | 431 | $ | 1,432 | $ | 1,301 |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Assets: | ||||||||||||||
Cash and equivalents | $ | 1,467 | $ | 2,233 | $ | (766 | ) | (34 | )% | |||||
Segregated cash | 2,159 | 1,057 | 1,102 | 104 | % | |||||||||
Securities(1) | 29,682 | 25,602 | 4,080 | 16 | % | |||||||||
Margin receivables | 6,552 | 7,398 | (846 | ) | (11 | )% | ||||||||
Loans receivable, net | 3,832 | 4,613 | (781 | ) | (17 | )% | ||||||||
Receivables from brokers, dealers and clearing organizations(2) | 1,118 | 520 | 598 | 115 | % | |||||||||
Goodwill and other intangibles, net | 2,698 | 1,966 | 732 | 37 | % | |||||||||
Deferred tax assets, net | 725 | 1,033 | (308 | ) | (30 | )% | ||||||||
Other(3) | 966 | 1,005 | (39 | ) | (4 | )% | ||||||||
Total assets | $ | 49,199 | $ | 45,427 | $ | 3,772 | 8 | % | ||||||
Liabilities and shareholders’ equity: | ||||||||||||||
Deposits | $ | 31,697 | $ | 29,445 | $ | 2,252 | 8 | % | ||||||
Customer payables | 7,827 | 6,544 | 1,283 | 20 | % | |||||||||
Payables to brokers, dealers and clearing organizations(4) | 1,227 | 1,576 | (349 | ) | (22 | )% | ||||||||
Other borrowings | 409 | 491 | (82 | ) | (17 | )% | ||||||||
Corporate debt | 994 | 997 | (3 | ) | — | % | ||||||||
Other liabilities | 729 | 575 | 154 | 27 | % | |||||||||
Total liabilities | 42,883 | 39,628 | 3,255 | 8 | % | |||||||||
Shareholders’ equity | 6,316 | 5,799 | 517 | 9 | % | |||||||||
Total liabilities and shareholders’ equity | $ | 49,199 | $ | 45,427 | $ | 3,772 | 8 | % |
(1) | Includes balance sheet line items available-for-sale and held-to-maturity securities. |
(2) | Includes deposits paid for securities borrowed of $657 million and $120 million as of September 30, 2016 and December 31, 2015, respectively. |
(3) | Includes balance sheet line items property and equipment, net and other assets. |
(4) | Includes deposits received for securities loaned of $1.2 billion and $1.5 billion as of September 30, 2016 and December 31, 2015, respectively. |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Available-for-sale securities: | ||||||||||||||
Debt securities: | ||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 12,180 | $ | 11,763 | $ | 417 | 4 | % | ||||||
Other debt securities | 1,280 | 794 | 486 | 61 | % | |||||||||
Total debt securities | 13,460 | 12,557 | 903 | 7 | % | |||||||||
Publicly traded equity securities(1) | 33 | 32 | 1 | 3 | % | |||||||||
Total available-for-sale securities | $ | 13,493 | $ | 12,589 | $ | 904 | 7 | % | ||||||
Held-to-maturity securities: | ||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 13,176 | $ | 10,353 | $ | 2,823 | 27 | % | ||||||
Other debt securities | 3,013 | 2,660 | 353 | 13 | % | |||||||||
Total held-to-maturity securities | $ | 16,189 | $ | 13,013 | $ | 3,176 | 24 | % | ||||||
Total investments in securities | $ | 29,682 | $ | 25,602 | $ | 4,080 | 16 | % |
(1) | Consists of investments in a mutual fund related to the Community Reinvestment Act. |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
One- to four-family | $ | 2,094 | $ | 2,488 | $ | (394 | ) | (16 | )% | |||||
Home equity | 1,685 | 2,114 | (429 | ) | (20 | )% | ||||||||
Consumer | 271 | 341 | (70 | ) | (21 | )% | ||||||||
Total loans receivable | 4,050 | 4,943 | (893 | ) | (18 | )% | ||||||||
Unamortized premiums, net | 17 | 23 | (6 | ) | (26 | )% | ||||||||
Allowance for loan losses | (235 | ) | (353 | ) | 118 | (33 | )% | |||||||
Total loans receivable, net | $ | 3,832 | $ | 4,613 | $ | (781 | ) | (17 | )% |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Sweep deposits | $ | 26,464 | $ | 24,018 | $ | 2,446 | 10 | % | ||||||
Complete savings deposits | 3,182 | 3,357 | (175 | ) | (5 | )% | ||||||||
Checking deposits | 1,252 | 1,239 | 13 | 1 | % | |||||||||
Other money market and savings deposits | 765 | 792 | (27 | ) | (3 | )% | ||||||||
Time deposits | 34 | 39 | (5 | ) | (13 | )% | ||||||||
Total deposits | $ | 31,697 | $ | 29,445 | $ | 2,252 | 8 | % |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Sweep deposits(1) | $ | 26,464 | $ | 24,018 | $ | 2,446 | 10 | % | ||||||
Customer payables | 7,827 | 6,544 | 1,283 | 20 | % | |||||||||
Subtotal | 34,291 | 30,562 | 3,729 | 12 | % | |||||||||
Customer cash held by third parties(2) | 14,024 | 11,173 | 2,851 | 26 | % | |||||||||
Total brokerage related cash | $ | 48,315 | $ | 41,735 | $ | 6,580 | 16 | % |
(1) | Sweep deposits are held at bank subsidiaries and are included in the deposits line item on our consolidated balance sheet. |
(2) | Customer cash held by third parties is not reflected on our consolidated balance sheet and are not immediately available for liquidity purposes. |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Sweep deposits at unaffiliated financial institutions | $ | 12,336 | $ | 5,818 | $ | 6,518 | 112 | % | ||||||
Customer cash held at third party clearing firm(1) | 1,535 | — | 1,535 | 100 | % | |||||||||
Municipal funds and other | 153 | 3,599 | (3,446 | ) | (96 | )% | ||||||||
Money market fund | — | 1,756 | (1,756 | ) | (100 | )% | ||||||||
Customer cash held by third parties | $ | 14,024 | $ | 11,173 | $ | 2,851 | 26 | % |
(1) | Represents OptionsHouse's customer cash held by third party. |
Variance | ||||||||||||||
September 30, | December 31, | 2016 vs. 2015 | ||||||||||||
2016 | 2015 | Amount | % | |||||||||||
Trust preferred securities | $ | 409 | $ | 409 | $ | — | — | % | ||||||
Repurchase agreements | — | 82 | (82 | ) | (100 | )% | ||||||||
Total other borrowings | $ | 409 | $ | 491 | $ | (82 | ) | (17 | )% |
Face Value | Discount | Net | |||||||||
September 30, 2016 | |||||||||||
Interest-bearing notes: | |||||||||||
5 3/8% Notes, due 2022 | $ | 540 | $ | (4 | ) | $ | 536 | ||||
4 5/8% Notes, due 2023 | 460 | (5 | ) | 455 | |||||||
Total interest-bearing notes | 1,000 | (9 | ) | 991 | |||||||
Non-interest-bearing debt: | |||||||||||
0% Convertible debentures, due 2019 | 3 | — | 3 | ||||||||
Total corporate debt | $ | 1,003 | $ | (9 | ) | $ | 994 |
Face Value | Discount | Net | |||||||||
December 31, 2015 | |||||||||||
Interest-bearing notes: | |||||||||||
5 3/8% Notes, due 2022 | $ | 540 | $ | (6 | ) | $ | 534 | ||||
4 5/8% Notes, due 2023 | 460 | (5 | ) | 455 | |||||||
Total interest-bearing notes | 1,000 | (11 | ) | 989 | |||||||
Non-interest-bearing debt: | |||||||||||
0% Convertible debentures, due 2019 | 8 | — | 8 | ||||||||
Total corporate debt | $ | 1,008 | $ | (11 | ) | $ | 997 |
Preferred Stock | Common Stock / Additional Paid-In Capital | Accumulated Deficit / Other Comprehensive Income (Loss) | Total | |||||||||||
Beginning balance, December 31, 2015 | $ | — | $ | 7,359 | $ | (1,560 | ) | $ | 5,799 | |||||
Net income | — | — | 425 | 425 | ||||||||||
Net change from available-for-sale securities | — | — | 138 | 138 | ||||||||||
Issuance of preferred stock | 394 | — | — | 394 | ||||||||||
Repurchases of common stock | — | (452 | ) | — | (452 | ) | ||||||||
Other(1) | — | 12 | — | 12 | ||||||||||
Ending balance, September 30, 2016 | $ | 394 | $ | 6,919 | $ | (997 | ) | $ | 6,316 |
(1) | Other includes employee share-based compensation and conversions of convertible debentures. |
• | approval and timing of subsidiary dividends; |
• | debt service costs; |
• | non-cumulative preferred stock dividends; |
• | tax settlements and the reimbursement from the parent company's subsidiaries for the use of its deferred tax assets; |
• | other overhead cost sharing arrangements; |
• | share repurchases; and |
• | acquisitions and investments. |
September 30, | December 31, | September 30, | |||||||||
2016 | 2015 | 2015 | |||||||||
Consolidated cash and equivalents | $ | 1,467 | $ | 2,233 | $ | 1,453 | |||||
Less: Bank cash | (482 | ) | (1,264 | ) | (443 | ) | |||||
Less: U.S. broker-dealers' cash | (646 | ) | (497 | ) | (549 | ) | |||||
Less: Other cash | (33 | ) | (25 | ) | (29 | ) | |||||
Corporate cash | $ | 306 | $ | 447 | $ | 432 |
• | a 364-day, $400 million senior unsecured committed revolving credit facility with a syndicate of banks that matures in June 2017; |
• | secured committed lines of credit with two unaffiliated banks, aggregating to $175 million with a maturity date of June 2017; |
• | unsecured uncommitted lines of credit with two unaffiliated banks, aggregating to $100 million, of which $75 million was renewed and is scheduled to mature in June 2017 and the remaining line has no maturity date; and |
• | secured uncommitted lines of credit with several unaffiliated banks, aggregating to $375 million with no maturity date. |
• | $373 million from E*TRADE Bank, from earnings and excess capital as a result of regulatory approval to operate E*TRADE Bank at an 8.0% Tier 1 leverage ratio; and |
• | $335 million from our broker-dealers, from earnings and other sources of excess capital. |
September 30, | December 31, | September 30, | |||||||||
2016 | 2015 | 2015 | |||||||||
E*TRADE Financial shareholders’ equity | $ | 6,316 | $ | 5,799 | $ | 5,812 | |||||
Deduct: | |||||||||||
Preferred stock | (394 | ) | — | — | |||||||
E*TRADE Financial Common Equity Tier 1 capital before regulatory adjustments | $ | 5,922 | $ | 5,799 | $ | 5,812 | |||||
Add: | |||||||||||
(Gains) losses in other comprehensive income on available-for-sale debt securities, net of tax | (37 | ) | 101 | 14 | |||||||
Deduct: | |||||||||||
Goodwill and other intangible assets, net of deferred tax liabilities | (2,043 | ) | (1,419 | ) | (1,428 | ) | |||||
Disallowed deferred tax assets | (556 | ) | (838 | ) | (873 | ) | |||||
Other(1) | — | 104 | 105 | ||||||||
E*TRADE Financial Common Equity Tier 1 capital | 3,286 | 3,747 | 3,630 | ||||||||
Add: | |||||||||||
Preferred stock | 394 | — | — | ||||||||
Deduct: | |||||||||||
Disallowed deferred tax assets | (284 | ) | — | — | |||||||
E*TRADE Financial Tier 1 capital | $ | 3,396 | $ | 3,747 | $ | 3,630 | |||||
Add: | |||||||||||
Allowable allowance for loan losses | 128 | 129 | 126 | ||||||||
Non-qualifying capital instruments subject to phase-out (trust preferred securities)(1) | 414 | 310 | 314 | ||||||||
E*TRADE Financial total capital | $ | 3,938 | $ | 4,186 | $ | 4,070 | |||||
E*TRADE Financial average assets for leverage capital purposes | $ | 49,240 | $ | 44,016 | $ | 44,732 | |||||
Deduct: | |||||||||||
Goodwill and other intangible assets, net of deferred tax liabilities | (2,043 | ) | (1,419 | ) | (1,428 | ) | |||||
Disallowed deferred tax assets | (840 | ) | (839 | ) | (873 | ) | |||||
Other(1) | — | 104 | 105 | ||||||||
E*TRADE Financial adjusted average assets for leverage capital purposes | $ | 46,357 | $ | 41,862 | $ | 42,536 | |||||
E*TRADE Financial total risk-weighted assets(2) | $ | 9,678 | $ | 9,536 | $ | 9,196 | |||||
E*TRADE Financial Tier 1 leverage ratio (Tier 1 capital / Adjusted average assets for leverage capital purposes) | 7.3 | % | 9.0 | % | 8.5 | % | |||||
E*TRADE Financial Common Equity Tier 1 capital / Total risk-weighted assets | 34.0 | % | 39.3 | % | 39.5 | % | |||||
E*TRADE Financial Tier 1 capital / Total risk-weighted assets | 35.1 | % | 39.3 | % | 39.5 | % | |||||
E*TRADE Financial total capital / Total risk-weighted assets | 40.7 | % | 43.9 | % | 44.3 | % |
(1) | As a result of applying the transition provisions under Basel III in 2015, the Company included 25% of the TRUPs in the calculation of E*TRADE Financial’s Tier 1 capital and 75% of the TRUPs in the calculation of E*TRADE Financial’s total capital. In accordance with the transition provisions, the TRUPs were fully phased out of E*TRADE Financial’s Tier 1 capital in 2016. |
(2) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. |
September 30, | December 31, | September 30, | |||||||||
2016 | 2015(1) | 2015(1) | |||||||||
E*TRADE Bank shareholder's equity | $ | 3,278 | $ | 3,181 | $ | 3,171 | |||||
Add: | |||||||||||
(Gains) losses in other comprehensive income on available-for-sale debt securities, net of tax | (37 | ) | 101 | 14 | |||||||
Deduct: | |||||||||||
Goodwill and other intangible assets, net of deferred tax liabilities | (38 | ) | (38 | ) | (38 | ) | |||||
Disallowed deferred tax assets | (134 | ) | (169 | ) | (187 | ) | |||||
E*TRADE Bank Common Equity Tier 1 capital / Tier 1 capital | 3,069 | 3,075 | 2,960 | ||||||||
Add: | |||||||||||
Allowable allowance for loan losses | 107 | 110 | 108 | ||||||||
E*TRADE Bank total capital | $ | 3,176 | $ | 3,185 | $ | 3,068 | |||||
E*TRADE Bank average assets for leverage capital purposes | $ | 36,300 | $ | 31,785 | $ | 32,466 | |||||
Deduct: | |||||||||||
Goodwill and other intangible assets, net of deferred tax liabilities | (38 | ) | (38 | ) | (38 | ) | |||||
Disallowed deferred tax assets | (134 | ) | (169 | ) | (187 | ) | |||||
E*TRADE Bank adjusted average assets for leverage capital purposes | $ | 36,128 | $ | 31,578 | $ | 32,241 | |||||
E*TRADE Bank total risk-weighted assets(1) | $ | 8,368 | $ | 8,424 | $ | 8,230 | |||||
E*TRADE Bank Tier 1 leverage ratio (Tier 1 capital / Adjusted average assets for leverage capital purposes) | 8.5 | % | 9.7 | % | 9.2 | % | |||||
E*TRADE Bank Common Equity Tier 1 capital / Total risk-weighted assets | 36.7 | % | 36.5 | % | 36.0 | % | |||||
E*TRADE Bank Tier 1 capital / Total risk-weighted assets | 36.7 | % | 36.5 | % | 36.0 | % | |||||
E*TRADE Bank total capital / Total risk-weighted assets | 38.0 | % | 37.8 | % | 37.3 | % |
(1) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. |
• | Credit Risk—the risk of loss arising from the failure of a borrower or counterparty to meet its credit obligations. For additional information, see Credit Risk Management below. |
• | Interest Rate Risk—the risk of adverse changes in earnings or market value arising from our balance sheet positions due to changes in interest rates. This includes convexity risk, which arises primarily from prepayment options on mortgages as well as the ability of customers to withdraw deposits. For additional information, see Item 3. Quantitative and Qualitative Disclosures about Market Risk. |
• | Liquidity Risk—the potential inability to meet contractual and contingent financial obligations, either on- or off-balance sheet, in a timely and cost-effective manner as they come due. For additional information, see Liquidity and Capital Resources. |
• | Market Risk—the risk that asset values or income streams will be adversely affected by changes in market conditions. For additional information, see Item 3. Quantitative and Qualitative Disclosures about Market Risk in this Form 10-Q and Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2015. |
• | Operational Risk—the risk of loss due to failure of people, processes, and systems, or damage to physical assets. |
• | Information Technology and Cybersecurity Risk—the risk of loss of customer or company data, integrity, or availability of systems through the compromise of our electronic digital media (e.g., computers, mobile devices, etc.). |
• | Strategic Risk—the risk of loss of market size, market share, or margin in any product, leading to lost revenues and potentially significant reductions to net income and/or market value. |
• | Reputational Risk—the potential that negative perceptions regarding our conduct or business practices, or capacity to conduct business, will adversely affect valuation, profitability, operations or the customer base, or require costly litigation or other measures. |
• | Legal, Regulatory and Compliance Risk—the current and prospective risk to earnings or capital arising from violations of, or nonconformance with, laws, rules, regulations, applicable guidance, internal policies and procedures, or ethical standards. |
• | We hold credit risk exposure in our loan portfolio. We are not currently originating or purchasing loans, and we are continuing our strategy of reducing balance sheet risk through loan portfolio run-off. |
• | We extend margin loans to our brokerage customers which exposes us to the risk of credit losses in the event adverse market conditions result in an unsecured margin balance that the customer is not able or willing to cover. |
• | We engage in financial transactions with counterparties which expose us to credit losses in the event a counterparty cannot meet its obligations. These financial transactions include our invested cash, securities lending, repurchase and reverse repurchase agreements, and derivatives portfolios, as well as the settlement of trades. |
Period of Conversion to Amortizing Loan | % of One- to Four-Family Portfolio | % of Home Equity Line of Credit Portfolio | |
Already amortizing | 69% | 73% | |
Through December 31, 2016 | 7% | 12% | |
Year ending December 31, 2017 | 24% | 14% | |
Year ending December 31, 2018 or later | —% | 1% |
September 30, 2016 | December 31, 2015 | ||||||
One- to four-family | $ | 230 | $ | 263 | |||
Home equity | 150 | 154 | |||||
Consumer | — | 1 | |||||
Total nonperforming loans receivable | 380 | 418 | |||||
Real estate owned and other repossessed assets, net | 31 | 29 | |||||
Total nonperforming assets, net | $ | 411 | $ | 447 | |||
Nonperforming loans receivable as a percentage of gross loans receivable | 9.4 | % | 8.5 | % | |||
One- to four-family allowance for loan losses as a percentage of one- to four-family nonperforming loans receivable | 20.4 | % | 15.3 | % | |||
Home equity allowance for loan losses as a percentage of home equity nonperforming loans receivable | 122.1 | % | 198.8 | % | |||
Consumer allowance for loan losses as a percentage of consumer nonperforming loans receivable | 1,483.2 | % | 667.0 | % | |||
Total allowance for loan losses as a percentage of total nonperforming loans receivable | 61.8 | % | 84.6 | % |
One- to Four-Family | Home Equity | Consumer | Total | ||||||||||||||||||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||
General reserve: | |||||||||||||||||||||||||||||||
Quantitative component | $ | 37 | $ | 28 | $ | 130 | $ | 245 | $ | 5 | $ | 6 | $ | 172 | $ | 279 | |||||||||||||||
Qualitative component | 4 | 3 | 2 | 10 | — | — | 6 | 13 | |||||||||||||||||||||||
Specific valuation allowance | 6 | 9 | 51 | 52 | — | — | 57 | 61 | |||||||||||||||||||||||
Total allowance for loan losses | $ | 47 | $ | 40 | $ | 183 | $ | 307 | $ | 5 | $ | 6 | $ | 235 | $ | 353 | |||||||||||||||
Allowance as a % of loans receivable(1) | 2.2 | % | 1.6 | % | 10.8 | % | 14.5 | % | 2.0 | % | 1.9 | % | 5.8 | % | 7.1 | % |
(1) | Allowance as a percentage of loans receivable is calculated based on the gross loans receivable including net unamortized premiums for each respective category. |
Charge-offs | Recoveries(1) | Net (Charge-Offs) Recoveries | % of Average Loans (Annualized) | |||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||
One- to four-family | $ | — | $ | 3 | $ | 3 | (0.54 | )% | ||||||
Home equity | (4 | ) | 6 | 2 | (0.41 | )% | ||||||||
Consumer | (1 | ) | — | (1 | ) | 0.95 | % | |||||||
Total | $ | (5 | ) | $ | 9 | $ | 4 | (0.39 | )% | |||||
Three Months Ended September 30, 2015 | ||||||||||||||
One- to four-family | $ | — | $ | — | $ | — | — | % | ||||||
Home equity | (7 | ) | 7 | — | 0.01 | % | ||||||||
Consumer | (2 | ) | 1 | (1 | ) | 0.97 | % | |||||||
Total | $ | (9 | ) | $ | 8 | $ | (1 | ) | 0.05 | % | ||||
Charge-offs | Recoveries(1) | Net (Charge-Offs) Recoveries | % of Average Loans (Annualized) | |||||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||
One- to four-family | $ | (1 | ) | $ | 6 | $ | 5 | (0.26 | )% | |||||
Home equity | (13 | ) | 23 | 10 | (0.70 | )% | ||||||||
Consumer | (5 | ) | 3 | (2 | ) | 1.00 | % | |||||||
Total | $ | (19 | ) | $ | 32 | $ | 13 | (0.36 | )% | |||||
Nine Months Ended September 30, 2015 | ||||||||||||||
One- to four-family | $ | (3 | ) | $ | — | $ | (3 | ) | 0.13 | % | ||||
Home equity | (26 | ) | 21 | (5 | ) | 0.25 | % | |||||||
Consumer | (8 | ) | 5 | (3 | ) | 0.86 | % | |||||||
Total | $ | (37 | ) | $ | 26 | $ | (11 | ) | 0.23 | % |
(1) | Recoveries include the impact of mortgage originator settlements. |
• | Interest-earning assets and interest-bearing liabilities may re-price at different times or by different amounts, creating a mismatch. |
• | The yield curve may steepen, flatten or otherwise change shape, which could affect the spread between short- and long-term rates. Widening or narrowing spreads could impact net interest income. |
• | Market interest rates may influence prepayments, resulting in maturity mismatches. In addition, prepayments could impact yields as premiums and discounts amortize. |
Instantaneous Parallel Change in Interest Rates (basis points) (1) | Economic Value of Equity | Earnings-at-Risk | ||||||||||||||||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||||
+200 | $ | (69 | ) | (1.2 | )% | $ | (148 | ) | (2.6 | )% | $ | 163 | 14.2 | % | $ | 178 | 15.8 | % | ||||||||||
+100 | $ | 128 | 2.3 | % | $ | 58 | 1.0 | % | $ | 106 | 9.2 | % | $ | 116 | 10.3 | % | ||||||||||||
-50 | $ | (155 | ) | (2.7 | )% | $ | (107 | ) | (1.9 | )% | $ | (67 | ) | (5.8 | )% | $ | (64 | ) | (5.7 | )% |
(1) | These scenario analyses assume a balance sheet size as of the dates indicated. Any changes in size would cause the amounts to vary. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue: | |||||||||||||||
Interest income | $ | 309 | $ | 297 | $ | 923 | $ | 923 | |||||||
Interest expense | (22 | ) | (48 | ) | (63 | ) | (172 | ) | |||||||
Net interest income | 287 | 249 | 860 | 751 | |||||||||||
Commissions | 107 | 108 | 320 | 325 | |||||||||||
Fees and service charges | 68 | 52 | 188 | 159 | |||||||||||
Gains (losses) on securities and other, net | 14 | (358 | ) | 34 | (333 | ) | |||||||||
Other revenue | 10 | 10 | 30 | 29 | |||||||||||
Total non-interest income (loss) | 199 | (188 | ) | 572 | 180 | ||||||||||
Total net revenue | 486 | 61 | 1,432 | 931 | |||||||||||
Provision (benefit) for loan losses | (62 | ) | (25 | ) | (131 | ) | (17 | ) | |||||||
Non-interest expense: | |||||||||||||||
Compensation and benefits | 123 | 123 | 374 | 354 | |||||||||||
Advertising and market development | 27 | 23 | 100 | 89 | |||||||||||
Clearing and servicing | 26 | 23 | 75 | 72 | |||||||||||
Professional services | 26 | 24 | 70 | 77 | |||||||||||
Occupancy and equipment | 24 | 21 | 71 | 64 | |||||||||||
Communications | 22 | 24 | 65 | 62 | |||||||||||
Depreciation and amortization | 20 | 21 | 60 | 61 | |||||||||||
FDIC insurance premiums | 6 | 7 | 18 | 36 | |||||||||||
Amortization of other intangibles | 5 | 5 | 15 | 15 | |||||||||||
Restructuring and acquisition-related activities | 25 | 2 | 28 | 8 | |||||||||||
Losses on early extinguishment of debt, net | — | 39 | — | 112 | |||||||||||
Other non-interest expenses | 19 | 20 | 54 | 64 | |||||||||||
Total non-interest expense | 323 | 332 | 930 | 1,014 | |||||||||||
Income (loss) before income tax expense (benefit) | 225 | (246 | ) | 633 | (66 | ) | |||||||||
Income tax expense (benefit) | 86 | (93 | ) | 208 | (245 | ) | |||||||||
Net income (loss) | $ | 139 | $ | (153 | ) | $ | 425 | $ | 179 | ||||||
Basic earnings (loss) per share | $ | 0.51 | $ | (0.53 | ) | $ | 1.53 | $ | 0.62 | ||||||
Diluted earnings (loss) per share | $ | 0.51 | $ | (0.53 | ) | $ | 1.52 | $ | 0.61 | ||||||
Shares used in computation of per share data: | |||||||||||||||
Basic (in thousands) | 274,362 | 290,480 | 278,864 | 290,105 | |||||||||||
Diluted (in thousands) | 275,472 | 290,480 | 280,136 | 294,998 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 139 | $ | (153 | ) | $ | 425 | $ | 179 | ||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Unrealized gains (losses), net | 3 | 17 | 166 | (3 | ) | ||||||||||
Reclassification into earnings, net | (10 | ) | (7 | ) | (28 | ) | (18 | ) | |||||||
Net change from available-for-sale securities | (7 | ) | 10 | 138 | (21 | ) | |||||||||
Cash flow hedging instruments: | |||||||||||||||
Unrealized losses, net | — | (5 | ) | — | (10 | ) | |||||||||
Reclassification into earnings, net | — | 239 | — | 271 | |||||||||||
Net change from cash flow hedging instruments | — | 234 | — | 261 | |||||||||||
Other comprehensive income (loss) | (7 | ) | 244 | 138 | 240 | ||||||||||
Comprehensive income | $ | 132 | $ | 91 | $ | 563 | $ | 419 |
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Cash and equivalents | $ | 1,467 | $ | 2,233 | |||
Cash required to be segregated under federal or other regulations | 2,159 | 1,057 | |||||
Available-for-sale securities | 13,493 | 12,589 | |||||
Held-to-maturity securities (fair value of $16,670 and $13,123 at September 30, 2016 and December 31, 2015, respectively) | 16,189 | 13,013 | |||||
Margin receivables | 6,552 | 7,398 | |||||
Loans receivable, net (net of allowance for loan losses of $235 and $353 at September 30, 2016 and December 31, 2015, respectively) | 3,832 | 4,613 | |||||
Receivables from brokers, dealers and clearing organizations | 1,118 | 520 | |||||
Property and equipment, net | 231 | 236 | |||||
Goodwill | 2,370 | 1,792 | |||||
Other intangibles, net | 328 | 174 | |||||
Deferred tax assets, net | 725 | 1,033 | |||||
Other assets | 735 | 769 | |||||
Total assets | $ | 49,199 | $ | 45,427 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Deposits | $ | 31,697 | $ | 29,445 | |||
Customer payables | 7,827 | 6,544 | |||||
Payables to brokers, dealers and clearing organizations | 1,227 | 1,576 | |||||
Other borrowings | 409 | 491 | |||||
Corporate debt | 994 | 997 | |||||
Other liabilities | 729 | 575 | |||||
Total liabilities | 42,883 | 39,628 | |||||
Commitments and contingencies (see Note 17) | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $0.01 par value, $1,000 liquidation preference, shares authorized: 1,000,000 at September 30, 2016 and December 31, 2015; shares issued and outstanding: 400,000 at September 30, 2016 and none at December 31, 2015 | 394 | — | |||||
Common stock, $0.01 par value, shares authorized: 400,000,000 at September 30, 2016 and December 31, 2015; shares issued and outstanding: 273,810,222 and 291,335,241 at September 30, 2016 and December 31, 2015, respectively | 3 | 3 | |||||
Additional paid-in-capital | 6,916 | 7,356 | |||||
Accumulated deficit | (1,036 | ) | (1,461 | ) | |||
Accumulated other comprehensive income (loss) | 39 | (99 | ) | ||||
Total shareholders’ equity | 6,316 | 5,799 | |||||
Total liabilities and shareholders’ equity | $ | 49,199 | $ | 45,427 |
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||||||||
Preferred Stock | Common Stock | |||||||||||||||||||||||||
Amount | Shares | Amount | ||||||||||||||||||||||||
Balance at December 31, 2015 | $ | — | 291 | $ | 3 | $ | 7,356 | $ | (1,461 | ) | $ | (99 | ) | $ | 5,799 | |||||||||||
Net income | — | — | — | — | 425 | — | 425 | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 138 | 138 | |||||||||||||||||||
Conversion of convertible debentures | — | 1 | — | 5 | — | — | 5 | |||||||||||||||||||
Exercise of stock options and related tax effects | — | — | — | 3 | — | — | 3 | |||||||||||||||||||
Issuance of preferred stock | 394 | — | — | — | — | — | 394 | |||||||||||||||||||
Repurchases of common stock | — | (19 | ) | — | (452 | ) | — | — | (452 | ) | ||||||||||||||||
Issuance of restricted stock, net of forfeitures and retirements to pay taxes | — | 1 | — | (17 | ) | — | — | (17 | ) | |||||||||||||||||
Share-based compensation | — | — | — | 21 | — | — | 21 | |||||||||||||||||||
Balance at September 30, 2016 | $ | 394 | 274 | $ | 3 | $ | 6,916 | $ | (1,036 | ) | $ | 39 | $ | 6,316 | ||||||||||||
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | |||||||||||||||||||||||
Preferred Stock | Common Stock | |||||||||||||||||||||||||
Amount | Shares | Amount | ||||||||||||||||||||||||
Balance at December 31, 2014 | $ | — | 289 | $ | 3 | $ | 7,350 | $ | (1,729 | ) | $ | (249 | ) | $ | 5,375 | |||||||||||
Net income | — | — | — | — | 179 | — | 179 | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 240 | 240 | |||||||||||||||||||
Conversion of convertible debentures | — | — | — | 4 | — | — | 4 | |||||||||||||||||||
Exercise of stock options and related tax effects | — | — | — | 2 | — | — | 2 | |||||||||||||||||||
Issuance of restricted stock, net of forfeitures and retirements to pay taxes | — | 1 | — | (11 | ) | — | — | (11 | ) | |||||||||||||||||
Share-based compensation | — | — | — | 23 | — | — | 23 | |||||||||||||||||||
Balance at September 30, 2015 | $ | — | 290 | $ | 3 | $ | 7,368 | $ | (1,550 | ) | $ | (9 | ) | $ | 5,812 |
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In millions) (Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 425 | $ | 179 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision (benefit) for loan losses | (131 | ) | (17 | ) | |||
Depreciation and amortization (including discount amortization and accretion) | 174 | 271 | |||||
(Gains) losses on securities and other, net | (34 | ) | 333 | ||||
Losses on early extinguishment of debt, net | — | 37 | |||||
Share-based compensation | 21 | 23 | |||||
Deferred tax expense (benefit) | 190 | (242 | ) | ||||
Other | (4 | ) | — | ||||
Net effect of changes in assets and liabilities: | |||||||
(Increase) decrease in cash required to be segregated under federal or other regulations | (1,101 | ) | 412 | ||||
(Increase) decrease in receivables from brokers, dealers and clearing organizations | (591 | ) | 353 | ||||
Decrease (increase) in margin receivables | 846 | (258 | ) | ||||
Decrease in other assets | 27 | 12 | |||||
(Decrease) increase in payables to brokers, dealers and clearing organizations | (349 | ) | 30 | ||||
Increase (decrease) in customer payables | 1,283 | (415 | ) | ||||
Decrease in other liabilities | (28 | ) | (50 | ) | |||
Net cash provided by operating activities | 728 | 668 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (4,490 | ) | (3,550 | ) | |||
Proceeds from sales of available-for-sale securities | 2,494 | 3,725 | |||||
Proceeds from maturities of and principal payments on available-for-sale securities | 1,111 | 1,370 | |||||
Purchases of held-to-maturity securities | (4,221 | ) | (898 | ) | |||
Proceeds from maturities of and principal payments on held-to-maturity securities | 1,476 | 1,483 | |||||
Proceeds from sale of loans | — | 40 | |||||
Decrease in loans receivable | 888 | 1,030 | |||||
Capital expenditures for property and equipment | (51 | ) | (52 | ) | |||
Proceeds from sale of real estate owned and repossessed assets | 15 | 24 | |||||
Acquisition of OptionsHouse, net of cash acquired | (723 | ) | — | ||||
Net cash flow from derivative contracts | (107 | ) | 1 | ||||
Other | 3 | 75 | |||||
Net cash (used in) provided by investing activities | (3,605 | ) | 3,248 |
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS—(Continued) (In millions) | |||||||
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from financing activities: | |||||||
Net increase in deposits | $ | 2,252 | $ | 720 | |||
Net decrease in securities sold under agreements to repurchase | (82 | ) | (3,672 | ) | |||
Advances from FHLB | — | 810 | |||||
Payments on advances from FHLB | — | (1,730 | ) | ||||
Proceeds from issuance of senior notes | — | 460 | |||||
Payments on senior notes | — | (800 | ) | ||||
Repurchases of trust preferred securities | — | (10 | ) | ||||
Proceeds from issuance of preferred stock | 400 | — | |||||
Repurchases of common stock | (452 | ) | — | ||||
Net cash flow from derivatives hedging liabilities | — | (16 | ) | ||||
Other | (7 | ) | (8 | ) | |||
Net cash provided by (used in) financing activities | 2,111 | (4,246 | ) | ||||
Decrease in cash and equivalents | (766 | ) | (330 | ) | |||
Cash and equivalents, beginning of period | 2,233 | 1,783 | |||||
Cash and equivalents, end of period | $ | 1,467 | $ | 1,453 | |||
Supplemental disclosures: | |||||||
Cash paid for interest | $ | 58 | $ | 189 | |||
Cash paid for income taxes, net of refunds | $ | 6 | $ | 4 | |||
Non-cash investing and financing activities: | |||||||
Transfers of loans held-for-investment to loans held-for-sale | $ | — | $ | 39 | |||
Transfers from loans to other real estate owned and repossessed assets | $ | 23 | $ | 20 | |||
Conversion of convertible debentures to common stock | $ | 5 | $ | 4 | |||
Transfer of available-for-sale securities to held-to-maturity securities | $ | 492 | $ | — |
• | interest expense related to corporate debt and interest income related to corporate cash reclassified from other income (expense) to net interest income; |
• | losses on early extinguishment of debt, net reclassified from other income (expense) to non-interest expense; and |
• | other income (expense) reclassified from other income (expense) to gains (losses) on securities and other, net. |
September 12, 2016 | |||
Purchase price | $ | 725 | |
Purchased cash adjustment | 26 | ||
Working capital adjustment | (2 | ) | |
Total cash consideration paid | $ | 749 | |
Fair value of net assets acquired | $ | 171 | |
Provisional goodwill | $ | 578 |
September 12, 2016 | |||
Assets | |||
Cash and equivalents | $ | 26 | |
Identifiable intangible assets | 169 | ||
Property and equipment | 6 | ||
Other assets | 12 | ||
Total assets acquired | $ | 213 | |
Liabilities | |||
Deferred tax liabilities, net | $ | 31 | |
Accrued expenses and other liabilities | 11 | ||
Total liabilities assumed | $ | 42 | |
Net assets acquired | $ | 171 |
Estimated Fair Value | Estimated Useful Life (In Years) | ||||
Customer relationships | $ | 118 | 14 | ||
Technology | 48 | 7 | |||
Trade name | 3 | 2 | |||
Total intangible assets | $ | 169 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Restructuring activities | $ | 18 | $ | 2 | $ | 21 | $ | 8 | |||||||
Acquisition-related costs | 7 | — | 7 | — | |||||||||||
Total restructuring and acquisition-related activities | $ | 25 | $ | 2 | $ | 28 | $ | 8 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest income: | |||||||||||||||
Cash and equivalents | $ | 2 | $ | 1 | $ | 5 | $ | 2 | |||||||
Cash required to be segregated under federal or other regulation | 2 | 1 | 4 | 1 | |||||||||||
Available-for-sale securities | 66 | 57 | 198 | 189 | |||||||||||
Held-to-maturity securities | 109 | 85 | 319 | 259 | |||||||||||
Margin receivables | 60 | 70 | 185 | 208 | |||||||||||
Loans | 46 | 58 | 146 | 177 | |||||||||||
Broker-related receivables and other | — | — | 1 | 2 | |||||||||||
Subtotal interest income | 285 | 272 | 858 | 838 | |||||||||||
Other interest revenue(1) | 24 | 25 | 65 | 85 | |||||||||||
Total interest income | 309 | 297 | 923 | 923 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | (1 | ) | (1 | ) | (3 | ) | (4 | ) | |||||||
Customer payables | (2 | ) | (2 | ) | (4 | ) | (4 | ) | |||||||
Other borrowings(2) | (4 | ) | (30 | ) | (13 | ) | (112 | ) | |||||||
Corporate debt | (13 | ) | (13 | ) | (40 | ) | (46 | ) | |||||||
Subtotal interest expense | (20 | ) | (46 | ) | (60 | ) | (166 | ) | |||||||
Other interest expense(3) | (2 | ) | (2 | ) | (3 | ) | (6 | ) | |||||||
Total interest expense | (22 | ) | (48 | ) | (63 | ) | (172 | ) | |||||||
Net interest income(4) | $ | 287 | $ | 249 | $ | 860 | $ | 751 |
(1) | Represents interest income on securities loaned. |
(2) | In September 2015, the Company terminated $4.4 billion of legacy wholesale funding obligations. |
(3) | Represents interest expense on securities borrowed. |
(4) | Beginning in 2016, interest expense related to corporate debt and interest income related to corporate cash are presented within net interest income. Prior periods have been reclassified to conform with current period presentation. |
• | Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company. |
• | Level 2—Quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
• | Level 3—Unobservable inputs that are significant to the fair value of the assets or liabilities. |
Weighted Average Coupon Rate | ||
Agency mortgage-backed securities | 2.83 | % |
Agency CMOs | 3.27 | % |
Unobservable Inputs | Average | Range | |||||
September 30, 2016 | |||||||
Loans receivable: | |||||||
One- to four-family | Appraised value | $ | 440,700 | $39,800-$1,954,000 | |||
Home equity | Appraised value | $ | 303,700 | $6,000-$2,450,000 | |||
Real estate owned | Appraised value | $ | 330,300 | $17,000-$1,900,000 | |||
December 31, 2015 | |||||||
Loans receivable: | |||||||
One- to four-family | Appraised value | $ | 422,900 | $8,500-$1,900,000 | |||
Home equity | Appraised value | $ | 274,100 | $9,000-$1,300,000 | |||
Real estate owned | Appraised value | $ | 330,700 | $26,500-$1,250,000 |
Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
September 30, 2016: | |||||||||||||||
Recurring fair value measurements: | |||||||||||||||
Assets | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Debt securities: | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | — | $ | 12,180 | $ | — | $ | 12,180 | |||||||
Agency debentures | — | 850 | — | 850 | |||||||||||
U.S. Treasuries | — | 311 | — | 311 | |||||||||||
Agency debt securities | — | 81 | — | 81 | |||||||||||
Municipal bonds | — | 34 | — | 34 | |||||||||||
Corporate bonds | — | 4 | — | 4 | |||||||||||
Total debt securities | — | 13,460 | — | 13,460 | |||||||||||
Publicly traded equity securities | 33 | — | — | 33 | |||||||||||
Total available-for-sale securities | 33 | 13,460 | — | 13,493 | |||||||||||
Other assets: | |||||||||||||||
Derivative assets(1) | — | 4 | — | 4 | |||||||||||
Total assets measured at fair value on a recurring basis(2) | $ | 33 | $ | 13,464 | $ | — | $ | 13,497 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities(1) | $ | — | $ | 131 | $ | — | $ | 131 | |||||||
Total liabilities measured at fair value on a recurring basis(2) | $ | — | $ | 131 | $ | — | $ | 131 | |||||||
Nonrecurring fair value measurements: | |||||||||||||||
Loans receivable: | |||||||||||||||
One- to four-family | $ | — | $ | — | $ | 24 | $ | 24 | |||||||
Home equity | — | — | 19 | 19 | |||||||||||
Total loans receivable | — | — | 43 | 43 | |||||||||||
Real estate owned | — | — | 28 | 28 | |||||||||||
Total assets measured at fair value on a nonrecurring basis(3) | $ | — | $ | — | $ | 71 | $ | 71 |
(1) | All derivative assets and liabilities were interest rate contracts at September 30, 2016. Information related to derivative instruments is detailed in Note 9—Derivative Instruments and Hedging Activities. |
(2) | Assets and liabilities measured at fair value on a recurring basis represented 27% and less than 1% of the Company’s total assets and total liabilities, respectively, at September 30, 2016. |
(3) | Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at September 30, 2016, and for which a fair value measurement was recorded during the period. |
Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
December 31, 2015: | |||||||||||||||
Recurring fair value measurements: | |||||||||||||||
Assets | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Debt securities: | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | — | $ | 11,763 | $ | — | $ | 11,763 | |||||||
Agency debentures | — | 557 | — | 557 | |||||||||||
U.S. Treasuries | — | 143 | — | 143 | |||||||||||
Agency debt securities | — | 55 | — | 55 | |||||||||||
Municipal bonds | — | 35 | — | 35 | |||||||||||
Corporate bonds | — | 4 | — | 4 | |||||||||||
Total debt securities | — | 12,557 | — | 12,557 | |||||||||||
Publicly traded equity securities | 32 | — | — | 32 | |||||||||||
Total available-for-sale securities | 32 | 12,557 | — | 12,589 | |||||||||||
Other assets: | |||||||||||||||
Derivative assets(1) | — | 10 | — | 10 | |||||||||||
Total assets measured at fair value on a recurring basis(2) | $ | 32 | $ | 12,567 | $ | — | $ | 12,599 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities(1) | $ | — | $ | 55 | $ | — | $ | 55 | |||||||
Total liabilities measured at fair value on a recurring basis(2) | $ | — | $ | 55 | $ | — | $ | 55 | |||||||
Nonrecurring fair value measurements: | |||||||||||||||
Loans receivable: | |||||||||||||||
One- to four-family | $ | — | $ | — | $ | 41 | $ | 41 | |||||||
Home equity | — | — | 22 | 22 | |||||||||||
Total loans receivable | — | — | 63 | 63 | |||||||||||
Real estate owned | — | — | 26 | 26 | |||||||||||
Total assets measured at fair value on a nonrecurring basis(3) | $ | — | $ | — | $ | 89 | $ | 89 |
(1) | All derivative assets and liabilities were interest rate contracts at December 31, 2015. Information related to derivative instruments is detailed in Note 9—Derivative Instruments and Hedging Activities. |
(2) | Assets and liabilities measured at fair value on a recurring basis represented 28% and less than 1% of the Company’s total assets and total liabilities, respectively, at December 31, 2015. |
(3) | Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at December 31, 2015, and for which a fair value measurement was recorded during the period. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
One- to four-family | $ | 1 | $ | 1 | $ | 3 | $ | 6 | |||||||
Home equity | 2 | 4 | 9 | 12 | |||||||||||
Total losses on loans receivable measured at fair value | $ | 3 | $ | 5 | $ | 12 | $ | 18 | |||||||
Losses (gains) on real estate owned measured at fair value | $ | (1 | ) | $ | — | $ | — | $ | 1 |
September 30, 2016 | |||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||||||
Assets | |||||||||||||||||||
Cash and equivalents | $ | 1,467 | $ | 1,467 | $ | — | $ | — | $ | 1,467 | |||||||||
Cash required to be segregated under federal or other regulations | $ | 2,159 | $ | 2,159 | $ | — | $ | — | $ | 2,159 | |||||||||
Held-to-maturity securities: | |||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 13,176 | $ | — | $ | 13,564 | $ | — | $ | 13,564 | |||||||||
Agency debentures | 119 | — | 120 | — | 120 | ||||||||||||||
Agency debt securities | 2,894 | — | 2,986 | — | 2,986 | ||||||||||||||
Total held-to-maturity securities | $ | 16,189 | $ | — | $ | 16,670 | $ | — | $ | 16,670 | |||||||||
Margin receivables | $ | 6,552 | $ | — | $ | 6,552 | $ | — | $ | 6,552 | |||||||||
Loans receivable, net: | |||||||||||||||||||
One- to four-family | $ | 2,061 | $ | — | $ | — | $ | 2,061 | $ | 2,061 | |||||||||
Home equity | 1,503 | — | — | 1,446 | 1,446 | ||||||||||||||
Consumer | 268 | — | — | 273 | 273 | ||||||||||||||
Total loans receivable, net(1) | $ | 3,832 | $ | — | $ | — | $ | 3,780 | $ | 3,780 | |||||||||
Receivables from brokers, dealers and clearing organizations | $ | 1,118 | $ | — | $ | 1,118 | $ | — | $ | 1,118 | |||||||||
Liabilities | |||||||||||||||||||
Deposits | $ | 31,697 | $ | — | $ | 31,697 | $ | — | $ | 31,697 | |||||||||
Customer payables | $ | 7,827 | $ | — | $ | 7,827 | $ | — | $ | 7,827 | |||||||||
Payables to brokers, dealers and clearing organizations | $ | 1,227 | $ | — | $ | 1,227 | $ | — | $ | 1,227 | |||||||||
Trust preferred securities | $ | 409 | $ | — | $ | — | $ | 285 | $ | 285 | |||||||||
Corporate debt | $ | 994 | $ | — | $ | 1,068 | $ | — | $ | 1,068 |
(1) | The carrying value of loans receivable, net includes the allowance for loan losses of $235 million and loans that are recorded at fair value on a nonrecurring basis at September 30, 2016. |
December 31, 2015 | |||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||||||
Assets | |||||||||||||||||||
Cash and equivalents | $ | 2,233 | $ | 2,233 | $ | — | $ | — | $ | 2,233 | |||||||||
Cash required to be segregated under federal or other regulations | $ | 1,057 | $ | 1,057 | $ | — | $ | — | $ | 1,057 | |||||||||
Held-to-maturity securities: | |||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 10,353 | $ | — | $ | 10,444 | $ | — | $ | 10,444 | |||||||||
Agency debentures | 127 | — | 125 | — | 125 | ||||||||||||||
Agency debt securities | 2,523 | — | 2,544 | — | 2,544 | ||||||||||||||
Other non-agency debt securities | 10 | — | — | 10 | 10 | ||||||||||||||
Total held-to-maturity securities | $ | 13,013 | $ | — | $ | 13,113 | $ | 10 | $ | 13,123 | |||||||||
Margin receivables | $ | 7,398 | $ | — | $ | 7,398 | $ | — | $ | 7,398 | |||||||||
Loans receivable, net: | |||||||||||||||||||
One- to four-family | $ | 2,465 | $ | — | $ | — | $ | 2,409 | $ | 2,409 | |||||||||
Home equity | 1,810 | — | — | 1,660 | 1,660 | ||||||||||||||
Consumer | 338 | — | — | 343 | 343 | ||||||||||||||
Total loans receivable, net(1) | $ | 4,613 | $ | — | $ | — | $ | 4,412 | $ | 4,412 | |||||||||
Receivables from brokers, dealers and clearing organizations | $ | 520 | $ | — | $ | 520 | $ | — | $ | 520 | |||||||||
Liabilities | |||||||||||||||||||
Deposits | $ | 29,445 | $ | — | $ | 29,444 | $ | — | $ | 29,444 | |||||||||
Customer Payables | $ | 6,544 | $ | — | $ | 6,544 | $ | — | $ | 6,544 | |||||||||
Payables to brokers, dealers and clearing organizations | $ | 1,576 | $ | — | $ | 1,576 | $ | — | $ | 1,576 | |||||||||
Other borrowings: | |||||||||||||||||||
Securities sold under agreements to repurchase | $ | 82 | $ | — | $ | 82 | $ | — | $ | 82 | |||||||||
Trust preferred securities | 409 | — | — | 252 | 252 | ||||||||||||||
Total other borrowings | $ | 491 | $ | — | $ | 82 | $ | 252 | $ | 334 | |||||||||
Corporate debt | $ | 997 | $ | — | $ | 1,055 | $ | — | $ | 1,055 |
(1) | The carrying value of loans receivable, net includes the allowance for loan losses of $353 million and loans that are recorded at fair value on a nonrecurring basis at December 31, 2015. |
Gross Amounts Not Offset in the Consolidated Balance Sheet | ||||||||||||||||||||||||||
Gross Amounts of Recognized Assets and Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts Presented in the Consolidated Balance Sheet (1)(2) | Financial Instruments | Collateral Received or Pledged (Including Cash) | Net Amount | |||||||||||||||||||||
September 30, 2016 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Deposits paid for securities borrowed (3) | $ | 657 | $ | — | $ | 657 | $ | (195 | ) | $ | (449 | ) | $ | 13 | ||||||||||||
Total | $ | 657 | $ | — | $ | 657 | $ | (195 | ) | $ | (449 | ) | $ | 13 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deposits received for securities loaned (4) | $ | 1,188 | $ | — | $ | 1,188 | $ | (195 | ) | $ | (922 | ) | $ | 71 | ||||||||||||
Derivative liabilities (5)(6) | 32 | — | 32 | — | (32 | ) | — | |||||||||||||||||||
Total | $ | 1,220 | $ | — | $ | 1,220 | $ | (195 | ) | $ | (954 | ) | $ | 71 | ||||||||||||
December 31, 2015 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Deposits paid for securities borrowed (3) | $ | 120 | $ | — | $ | 120 | $ | (94 | ) | $ | (18 | ) | $ | 8 | ||||||||||||
Total | $ | 120 | $ | — | $ | 120 | $ | (94 | ) | $ | (18 | ) | $ | 8 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deposits received for securities loaned (4) | $ | 1,535 | $ | — | $ | 1,535 | $ | (94 | ) | $ | (1,314 | ) | $ | 127 | ||||||||||||
Repurchase agreements (6) | 82 | — | 82 | — | (81 | ) | 1 | |||||||||||||||||||
Derivative liabilities (5)(6) | 11 | — | 11 | — | (11 | ) | — | |||||||||||||||||||
Total | $ | 1,628 | $ | — | $ | 1,628 | $ | (94 | ) | $ | (1,406 | ) | $ | 128 |
(1) | Net amount of deposits paid for securities borrowed are reflected in the receivables from brokers, dealers and clearing organizations line item in the consolidated balance sheet. |
(2) | Net amount of deposits received for securities loaned, repurchase agreements and derivative liabilities are reflected in the payables to brokers, dealers and clearing organizations, other borrowings and other liabilities line items in the consolidated balance sheet, respectively. |
(3) | Included in the gross amounts of deposits paid for securities borrowed was $359 million and $34 million at September 30, 2016 and December 31, 2015, respectively, transacted through a program with a clearing organization, which guarantees the return of cash to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements. |
(4) | Included in the gross amounts of deposits received for securities loaned was $703 million and $722 million at September 30, 2016 and December 31, 2015, respectively, transacted through a program with a clearing organization, which guarantees the return of securities to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements. |
(5) | Excludes net accrued interest payable of $1 million and $3 million at September 30, 2016 and December 31, 2015, respectively. |
(6) | The Company pledges available-for-sale and held-to-maturity securities as collateral for amounts due on repurchase agreements and derivative liabilities. The collateral pledged included available-for-sale securities at fair value and held-to-maturity securities at amortized cost for September 30, 2016 and available-for-sale securities at fair value for December 31, 2015. |
Amortized Cost | Gross Unrealized / Unrecognized Gains | Gross Unrealized / Unrecognized Losses | Fair Value | ||||||||||||
September 30, 2016: | |||||||||||||||
Available-for-sale securities:(1) | |||||||||||||||
Debt securities: | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 12,064 | $ | 140 | $ | (24 | ) | $ | 12,180 | ||||||
Agency debentures | 794 | 59 | (3 | ) | 850 | ||||||||||
U.S. Treasuries | 300 | 15 | (4 | ) | 311 | ||||||||||
Agency debt securities | 79 | 2 | — | 81 | |||||||||||
Municipal bonds | 33 | 1 | — | 34 | |||||||||||
Corporate bonds | 5 | — | (1 | ) | 4 | ||||||||||
Total debt securities | 13,275 | 217 | (32 | ) | 13,460 | ||||||||||
Publicly traded equity securities(2) | 33 | — | — | 33 | |||||||||||
Total available-for-sale securities | $ | 13,308 | $ | 217 | $ | (32 | ) | $ | 13,493 | ||||||
Held-to-maturity securities:(1) | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 13,176 | $ | 406 | $ | (18 | ) | $ | 13,564 | ||||||
Agency debentures | 119 | 1 | — | 120 | |||||||||||
Agency debt securities | 2,894 | 92 | — | 2,986 | |||||||||||
Total held-to-maturity securities | $ | 16,189 | $ | 499 | $ | (18 | ) | $ | 16,670 | ||||||
December 31, 2015: | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Debt securities: | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 11,888 | $ | 41 | $ | (166 | ) | $ | 11,763 | ||||||
Agency debentures | 551 | 18 | (12 | ) | 557 | ||||||||||
U.S. Treasuries | 147 | — | (4 | ) | 143 | ||||||||||
Agency debt securities | 55 | — | — | 55 | |||||||||||
Municipal bonds | 35 | — | — | 35 | |||||||||||
Corporate bonds | 5 | — | (1 | ) | 4 | ||||||||||
Total debt securities | 12,681 | 59 | (183 | ) | 12,557 | ||||||||||
Publicly traded equity securities(2) | 33 | — | (1 | ) | 32 | ||||||||||
Total available-for-sale securities | $ | 12,714 | $ | 59 | $ | (184 | ) | $ | 12,589 | ||||||
Held-to-maturity securities: | |||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 10,353 | $ | 149 | $ | (58 | ) | $ | 10,444 | ||||||
Agency debentures | 127 | — | (2 | ) | 125 | ||||||||||
Agency debt securities | 2,523 | 34 | (13 | ) | 2,544 | ||||||||||
Other non-agency debt securities | 10 | — | — | 10 | |||||||||||
Total held-to-maturity securities | $ | 13,013 | $ | 183 | $ | (73 | ) | $ | 13,123 |
(1) | During the three months ended June 30, 2016, securities with a fair value of approximately $492 million were transferred from available-for-sale securities to held-to-maturity securities pursuant to an evaluation of our investment strategy and an assessment by management about our intent and ability to hold those particular securities until maturity. See Note 14—Shareholders' Equity for information on the impact to accumulated other comprehensive income. |
(2) | Consists of investments in a mutual fund related to the Community Reinvestment Act. |
Amortized Cost | Fair Value | ||||||
Available-for-sale debt securities: | |||||||
Due within one year | $ | — | $ | — | |||
Due within one to five years | 11 | 11 | |||||
Due within five to ten years | 3,756 | 3,835 | |||||
Due after ten years | 9,508 | 9,614 | |||||
Total available-for-sale debt securities | $ | 13,275 | $ | 13,460 | |||
Held-to-maturity debt securities: | |||||||
Due within one year | $ | — | $ | — | |||
Due within one to five years | 1,382 | 1,440 | |||||
Due within five to ten years | 4,615 | 4,783 | |||||
Due after ten years | 10,192 | 10,447 | |||||
Total held-to-maturity debt securities | $ | 16,189 | $ | 16,670 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized / Unrecognized Losses | Fair Value | Unrealized / Unrecognized Losses | Fair Value | Unrealized / Unrecognized Losses | ||||||||||||||||||
September 30, 2016: | |||||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 2,911 | $ | (15 | ) | $ | 1,186 | $ | (9 | ) | $ | 4,097 | $ | (24 | ) | ||||||||
Agency debentures | 128 | (3 | ) | — | — | 128 | (3 | ) | |||||||||||||||
U.S. Treasuries | 150 | (4 | ) | — | — | 150 | (4 | ) | |||||||||||||||
Corporate bonds | — | — | 4 | (1 | ) | 4 | (1 | ) | |||||||||||||||
Total temporarily impaired available-for-sale securities | $ | 3,189 | $ | (22 | ) | $ | 1,190 | $ | (10 | ) | $ | 4,379 | $ | (32 | ) | ||||||||
Held-to-maturity securities: | |||||||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 529 | $ | (2 | ) | $ | 1,311 | $ | (16 | ) | $ | 1,840 | $ | (18 | ) | ||||||||
Agency debt securities | 77 | — | 18 | — | 95 | — | |||||||||||||||||
Total temporarily impaired held-to-maturity securities | $ | 606 | $ | (2 | ) | $ | 1,329 | $ | (16 | ) | $ | 1,935 | $ | (18 | ) | ||||||||
December 31, 2015: | |||||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 6,832 | $ | (88 | ) | $ | 2,496 | $ | (78 | ) | $ | 9,328 | $ | (166 | ) | ||||||||
Agency debentures | 329 | (12 | ) | 9 | — | 338 | (12 | ) | |||||||||||||||
U.S. Treasuries | 143 | (4 | ) | — | — | 143 | (4 | ) | |||||||||||||||
Agency debt securities | 55 | — | — | — | 55 | — | |||||||||||||||||
Municipal bonds | — | — | 15 | — | 15 | — | |||||||||||||||||
Corporate bonds | — | — | 4 | (1 | ) | 4 | (1 | ) | |||||||||||||||
Publicly traded equity securities | 32 | (1 | ) | — | — | 32 | (1 | ) | |||||||||||||||
Total temporarily impaired available-for-sale securities | $ | 7,391 | $ | (105 | ) | $ | 2,524 | $ | (79 | ) | $ | 9,915 | $ | (184 | ) | ||||||||
Held-to-maturity securities: | |||||||||||||||||||||||
Agency mortgage-backed securities and CMOs | $ | 2,807 | $ | (25 | ) | $ | 1,495 | $ | (33 | ) | $ | 4,302 | $ | (58 | ) | ||||||||
Agency debentures | 114 | (2 | ) | — | — | 114 | (2 | ) | |||||||||||||||
Agency debt securities | 1,006 | (10 | ) | 134 | (3 | ) | 1,140 | (13 | ) | ||||||||||||||
Total temporarily impaired held-to-maturity securities | $ | 3,927 | $ | (37 | ) | $ | 1,629 | $ | (36 | ) | $ | 5,556 | $ | (73 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Reclassification of deferred losses on cash flow hedges | $ | — | $ | (370 | ) | $ | — | $ | (370 | ) | |||||
Gains on available-for-sale securities, net: | |||||||||||||||
Gains on available-for-sale securities | 17 | 30 | 46 | 48 | |||||||||||
Losses on available-for-sale securities | — | (19 | ) | — | (19 | ) | |||||||||
Subtotal | 17 | 11 | 46 | 29 | |||||||||||
Hedge ineffectiveness | (4 | ) | (2 | ) | (8 | ) | — | ||||||||
Equity method investment income (loss) and other | 1 | 3 | (4 | ) | 8 | ||||||||||
Gains (losses) on securities and other, net | $ | 14 | $ | (358 | ) | $ | 34 | $ | (333 | ) |
September 30, 2016 | December 31, 2015 | ||||||
One- to four-family | $ | 2,094 | $ | 2,488 | |||
Home equity | 1,685 | 2,114 | |||||
Consumer | 271 | 341 | |||||
Total loans receivable | 4,050 | 4,943 | |||||
Unamortized premiums, net | 17 | 23 | |||||
Allowance for loan losses | (235 | ) | (353 | ) | |||
Total loans receivable, net | $ | 3,832 | $ | 4,613 |
Recorded Investment | Allowance for Loan Losses | ||||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||||
Collectively evaluated for impairment: | |||||||||||||||
One- to four-family | $ | 1,850 | $ | 2,219 | $ | 41 | $ | 31 | |||||||
Home equity | 1,484 | 1,915 | 132 | 255 | |||||||||||
Consumer | 273 | 344 | 5 | 6 | |||||||||||
Total collectively evaluated for impairment | 3,607 | 4,478 | 178 | 292 | |||||||||||
Individually evaluated for impairment: | |||||||||||||||
One- to four-family | 258 | 286 | 6 | 9 | |||||||||||
Home equity | 202 | 202 | 51 | 52 | |||||||||||
Total individually evaluated for impairment | 460 | 488 | 57 | 61 | |||||||||||
Total | $ | 4,067 | $ | 4,966 | $ | 235 | $ | 353 |
One- to Four-Family | Home Equity | ||||||||||||||
Current LTV/CLTV (1) | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | |||||||||||
<=80% | $ | 1,368 | $ | 1,519 | $ | 721 | $ | 843 | |||||||
80%-100% | 462 | 609 | 448 | 549 | |||||||||||
100%-120% | 162 | 227 | 308 | 420 | |||||||||||
>120% | 102 | 133 | 208 | 302 | |||||||||||
Total mortgage loans receivable | $ | 2,094 | $ | 2,488 | $ | 1,685 | $ | 2,114 | |||||||
Average estimated current LTV/CLTV (2) | 74 | % | 77 | % | 88 | % | 90 | % | |||||||
Average LTV/CLTV at loan origination (3) | 71 | % | 71 | % | 81 | % | 81 | % |
(1) | Current CLTV calculations for home equity loans are based on the maximum available line for HELOCs and outstanding principal balance for home equity installment loans. For home equity loans in the second lien position, the original balance of the first lien loan at origination date and updated valuations on the property underlying the loan are used to calculate CLTV. Current property values are updated on a quarterly basis using the most recent property value data available to the Company. For properties in which the Company did not have an updated valuation, home price indices were utilized to estimate the current property value. |
(2) | The average estimated current LTV/CLTV ratio reflects the outstanding balance at the balance sheet date and the maximum available line for HELOCs, divided by the estimated current value of the underlying property. |
(3) | Average LTV/CLTV at loan origination calculations are based on LTV/CLTV at time of purchase for one- to four-family purchased loans and home equity installment loans and maximum available line for HELOCs. |
One- to Four-Family | Home Equity | ||||||||||||||
Current FICO (1) | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | |||||||||||
>=720 | $ | 1,224 | $ | 1,423 | $ | 852 | $ | 1,069 | |||||||
719 - 700 | 189 | 246 | 163 | 222 | |||||||||||
699 - 680 | 149 | 198 | 145 | 183 | |||||||||||
679 - 660 | 132 | 150 | 125 | 152 | |||||||||||
659 - 620 | 166 | 198 | 161 | 203 | |||||||||||
<620 | 234 | 273 | 239 | 285 | |||||||||||
Total mortgage loans receivable | $ | 2,094 | $ | 2,488 | $ | 1,685 | $ | 2,114 |
(1) | FICO scores are updated on a quarterly basis; however, there were approximately $31 million and $39 million of one- to four-family loans at September 30, 2016 and December 31, 2015, respectively, and $2 million and $3 million of home equity loans at September 30, 2016 and December 31, 2015, respectively, for which the updated FICO scores were not available. For these loans, the current FICO distribution included the most recent FICO scores where available, otherwise the original FICO score was used. |
Period of Conversion to Amortizing Loan | % of One- to Four-Family Portfolio | % of Home Equity Line of Credit Portfolio | |
Already amortizing | 69% | 73% | |
Through December 31, 2016 | 7% | 12% | |
Year ending December 31, 2017 | 24% | 14% | |
Year ending December 31, 2018 or later | —% | 1% |
Current | 30-89 Days Delinquent | 90-179 Days Delinquent | 180+ Days Delinquent | Total | |||||||||||||||
September 30, 2016 | |||||||||||||||||||
One- to four-family | $ | 1,913 | $ | 65 | $ | 19 | $ | 97 | $ | 2,094 | |||||||||
Home equity | 1,568 | 38 | 24 | 55 | 1,685 | ||||||||||||||
Consumer | 267 | 4 | — | — | 271 | ||||||||||||||
Total loans receivable | $ | 3,748 | $ | 107 | $ | 43 | $ | 152 | $ | 4,050 | |||||||||
December 31, 2015 | |||||||||||||||||||
One- to four-family | $ | 2,279 | $ | 72 | $ | 26 | $ | 111 | $ | 2,488 | |||||||||
Home equity | 1,978 | 52 | 31 | 53 | 2,114 | ||||||||||||||
Consumer | 334 | 6 | 1 | — | 341 | ||||||||||||||
Total loans receivable | $ | 4,591 | $ | 130 | $ | 58 | $ | 164 | $ | 4,943 |
September 30, 2016 | December 31, 2015 | ||||||
One- to four-family | $ | 230 | $ | 263 | |||
Home equity | 150 | 154 | |||||
Consumer | — | 1 | |||||
Total nonperforming loans receivable | $ | 380 | $ | 418 |
Three Months Ended September 30, 2016 | |||||||||||||||
One- to Four-Family | Home Equity | Consumer | Total | ||||||||||||
Allowance for loan losses, beginning of period | $ | 42 | $ | 245 | $ | 6 | $ | 293 | |||||||
Provision (benefit) for loan losses | 2 | (64 | ) | — | (62 | ) | |||||||||
Charge-offs | — | (4 | ) | (1 | ) | (5 | ) | ||||||||
Recoveries | 3 | 6 | — | 9 | |||||||||||
Net (charge-offs) recoveries | 3 | 2 | (1 | ) | 4 | ||||||||||
Allowance for loan losses, end of period | $ | 47 | $ | 183 | $ | 5 | $ | 235 | |||||||
Three Months Ended September 30, 2015 | |||||||||||||||
One- to Four-Family | Home Equity | Consumer | Total | ||||||||||||
Allowance for loan losses, beginning of period | $ | 49 | $ | 345 | $ | 8 | $ | 402 | |||||||
Provision (benefit) for loan losses | (10 | ) | (15 | ) | — | (25 | ) | ||||||||
Charge-offs | — | (7 | ) | (2 | ) | (9 | ) | ||||||||
Recoveries | — | 7 | 1 | 8 | |||||||||||
Net (charge-offs) recoveries | — | — | (1 | ) | (1 | ) | |||||||||
Allowance for loan losses, end of period | $ | 39 | $ | 330 | $ | 7 | $ | 376 | |||||||
Nine Months Ended September 30, 2016 | |||||||||||||||
One- to Four-Family | Home Equity | Consumer | Total | ||||||||||||
Allowance for loan losses, beginning of period | $ | 40 | $ | 307 | $ | 6 | $ | 353 | |||||||
Provision (benefit) for loan losses | 2 | (134 | ) | 1 | (131 | ) | |||||||||
Charge-offs | (1 | ) | (13 | ) | (5 | ) | (19 | ) | |||||||
Recoveries | 6 | 23 | 3 | 32 | |||||||||||
Net (charge-offs) recoveries | 5 | 10 | (2 | ) | 13 | ||||||||||
Allowance for loan losses, end of period | $ | 47 | $ | 183 | $ | 5 | $ | 235 |
Nine Months Ended September 30, 2015 | |||||||||||||||
One- to Four-Family | Home Equity | Consumer | Total | ||||||||||||
Allowance for loan losses, beginning of period | $ | 27 | $ | 367 | $ | 10 | $ | 404 | |||||||
Provision (benefit) for loan losses | 15 | (32 | ) | — | (17 | ) | |||||||||
Charge-offs | (3 | ) | (26 | ) | (8 | ) | (37 | ) | |||||||
Recoveries | — | 21 | 5 | 26 | |||||||||||
Net (charge-offs) recoveries | (3 | ) | (5 | ) | (3 | ) | (11 | ) | |||||||
Allowance for loan losses, end of period | $ | 39 | $ | 330 | $ | 7 | $ | 376 |
Nonaccrual TDRs | |||||||||||||||||||||||
Accrual TDRs(1) | Current(2) | 30-89 Days Delinquent | 90-179 Days Delinquent | 180+ Days Delinquent | Total Recorded Investment in TDRs (3)(4) | ||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||
One- to four-family | $ | 100 | $ | 96 | $ | 18 | $ | 4 | $ | 40 | $ | 258 | |||||||||||
Home equity | 116 | 50 | 8 | 5 | 23 | 202 | |||||||||||||||||
Total | $ | 216 | $ | 146 | $ | 26 | $ | 9 | $ | 63 | $ | 460 | |||||||||||
December 31, 2015 | |||||||||||||||||||||||
One- to four-family | $ | 106 | $ | 106 | $ | 19 | $ | 8 | $ | 47 | $ | 286 | |||||||||||
Home equity | 120 | 42 | 11 | 8 | 21 | 202 | |||||||||||||||||
Total | $ | 226 | $ | 148 | $ | 30 | $ | 16 | $ | 68 | $ | 488 |
(1) | Represents loans modified as TDRs that are current and have made six or more consecutive payments. |
(2) | Represents loans modified as TDRs that are current but have not yet made six consecutive payments, bankruptcy loans and certain junior lien TDRs that have a delinquent senior lien. |
(3) | The unpaid principal balance in one- to four-family TDRs was $256 million and $283 million at September 30, 2016 and December 31, 2015, respectively. For home equity loans, the recorded investment in TDRs represents the unpaid principal balance. |
(4) | Total recorded investment in TDRs at September 30, 2016 consisted of $325 million of loans modified as TDRs and $135 million of loans that have been charged off due to bankruptcy notification. Total recorded investment in TDRs at December 31, 2015 consisted of $334 million of loans modified as TDRs and $154 million of loans that have been charged off due to bankruptcy notification. |
Average Recorded Investment | Interest Income Recognized | ||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
One- to four-family | $ | 264 | $ | 300 | $ | 2 | $ | 3 | |||||||
Home equity | 205 | 212 | 5 | 4 | |||||||||||
Total | $ | 469 | $ | 512 | $ | 7 | $ | 7 | |||||||
Average Recorded Investment | Interest Income Recognized | ||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
One- to four-family | $ | 275 | $ | 307 | $ | 7 | $ | 7 | |||||||
Home equity | 205 | 216 | 13 | 13 | |||||||||||
Total | $ | 480 | $ | 523 | $ | 20 | $ | 20 |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Recorded Investment in TDRs | Specific Valuation Allowance | Net Investment in TDRs | Recorded Investment in TDRs | Specific Valuation Allowance | Net Investment in TDRs | ||||||||||||||||||
With a recorded allowance: | |||||||||||||||||||||||
One- to four-family | $ | 61 | $ | 6 | $ | 55 | $ | 72 | $ | 9 | $ | 63 | |||||||||||
Home equity | $ | 112 | $ | 51 | $ | 61 | $ | 111 | $ | 52 | $ | 59 | |||||||||||
Without a recorded allowance:(1) | |||||||||||||||||||||||
One- to four-family | $ | 197 | $ | — | $ | 197 | $ | 214 | $ | — | $ | 214 | |||||||||||
Home equity | $ | 90 | $ | — | $ | 90 | $ | 91 | $ | — | $ | 91 | |||||||||||
Total: | |||||||||||||||||||||||
One- to four-family | $ | 258 | $ | 6 | $ | 252 | $ | 286 | $ | 9 | $ | 277 | |||||||||||
Home equity | $ | 202 | $ | 51 | $ | 151 | $ | 202 | $ | 52 | $ | 150 |
(1) | Represents loans where the discounted cash flow analysis or collateral value is equal to or exceeds the recorded investment in the loan. |
Modifications Current | Modifications 30-89 Days Delinquent | Modifications 90-179 Days Delinquent | Modifications 180+ Days Delinquent | Total Recorded Investment in Modifications(1) | |||||||||||||||
September 30, 2016 | |||||||||||||||||||
One- to four-family | $ | 130 | $ | 10 | $ | 2 | $ | 14 | $ | 156 | |||||||||
Home equity | 146 | 6 | 4 | 13 | 169 | ||||||||||||||
Total | $ | 276 | $ | 16 | $ | 6 | $ | 27 | $ | 325 | |||||||||
December 31, 2015 | |||||||||||||||||||
One- to four-family | $ | 138 | $ | 11 | $ | 5 | $ | 16 | $ | 170 | |||||||||
Home equity | 139 | 8 | 6 | 11 | 164 | ||||||||||||||
Total | $ | 277 | $ | 19 | $ | 11 | $ | 27 | $ | 334 |
(1) | Includes loans modified as TDRs that also had received a bankruptcy notification of $44 million and $42 million at September 30, 2016 and December 31, 2015, respectively. |
Recorded Investment in Modifications before Charge-offs | Charge-offs | Recorded Investment in Modifications | Specific Valuation Allowance | Net Investment in Modifications | Specific Valuation Allowance as a % of Modifications | Total Expected Losses | |||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||
One- to four-family | $ | 200 | $ | (44 | ) | $ | 156 | $ | (6 | ) | $ | 150 | 4 | % | 25 | % | |||||||||
Home equity | 279 | (110 | ) | 169 | (51 | ) | 118 | 30 | % | 57 | % | ||||||||||||||
Total | $ | 479 | $ | (154 | ) | $ | 325 | $ | (57 | ) | $ | 268 | 17 | % | 44 | % | |||||||||
December 31, 2015 | |||||||||||||||||||||||||
One- to four-family | $ | 216 | $ | (46 | ) | $ | 170 | $ | (9 | ) | $ | 161 | 5 | % | 25 | % | |||||||||
Home equity | 284 | (120 | ) | 164 | (52 | ) | 112 | 32 | % | 61 | % | ||||||||||||||
Total | $ | 500 | $ | (166 | ) | $ | 334 | $ | (61 | ) | $ | 273 | 18 | % | 45 | % |
Three Months Ended September 30, 2016 | ||||||||||||||||||
Interest Rate Reduction | ||||||||||||||||||
Number of Loans | Re-age/ Extension/ Interest Capitalization | Other with Interest Rate Reduction | Other(1) | Total | ||||||||||||||
One- to four-family | 11 | $ | 2 | $ | — | $ | 2 | $ | 4 | |||||||||
Home equity | 102 | 2 | — | 5 | 7 | |||||||||||||
Total | 113 | $ | 4 | $ | — | $ | 7 | $ | 11 | |||||||||
Three Months Ended September 30, 2015 | ||||||||||||||||||
Interest Rate Reduction | ||||||||||||||||||
Number of Loans | Re-age/ Extension/ Interest Capitalization | Other with Interest Rate Reduction | Other | Total | ||||||||||||||
One- to four-family | 12 | $ | 4 | $ | — | $ | 1 | $ | 5 | |||||||||
Home equity | 40 | 1 | 1 | 1 | 3 | |||||||||||||
Total | 52 | $ | 5 | $ | 1 | $ | 2 | $ | 8 | |||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||
Interest Rate Reduction | ||||||||||||||||||
Number of Loans | Re-age/ Extension/ Interest Capitalization | Other with Interest Rate Reduction | Other(1) | Total | ||||||||||||||
One- to four-family | 32 | $ | 8 | $ | — | $ | 4 | $ | 12 | |||||||||
Home equity | 459 | 7 | 3 | 23 | 33 | |||||||||||||
Total | 491 | $ | 15 | $ | 3 | $ | 27 | $ | 45 |
Nine Months Ended September 30, 2015 | ||||||||||||||||||
Interest Rate Reduction | ||||||||||||||||||
Number of Loans | Re-age/ Extension/ Interest Capitalization | Other with Interest Rate Reduction | Other(1) | Total | ||||||||||||||
One- to four-family | 28 | $ | 7 | $ | — | $ | 2 | $ | 9 | |||||||||
Home equity | 293 | 3 | 2 | 17 | 22 | |||||||||||||
Total | 321 | $ | 10 | $ | 2 | $ | 19 | $ | 31 |
(1) | Includes TDRs that resulted from a loan modification program being offered to a subset of borrowers with HELOCs whose original loan terms provided the borrowers the option to accelerate their date of conversion to amortizing loans. As certain terms of the Company's offer represented economic concessions, such as longer amortization periods than were in the original loan agreements, to certain borrowers experiencing financial difficulty, this program resulted in less than $1 million and $15 million of TDRs during the three and nine months ended September 30, 2016, respectively, and $14 million of TDRs during the nine months ended September 30, 2015. |
Three Months Ended September 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
One- to four-family(1) | 1 | $ | — | 2 | $ | 1 | |||||||
Home equity(2) | 19 | 1 | 11 | 1 | |||||||||
Total | 20 | $ | 1 | 13 | $ | 2 | |||||||
Nine Months Ended September 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
One- to four-family(1) | 8 | $ | 3 | 4 | $ | 2 | |||||||
Home equity(2)(3) | 49 | 3 | 79 | 4 | |||||||||
Total | 57 | $ | 6 | 83 | $ | 6 |
(1) | For the three and nine months ended September 30, 2016, less than $1 million and 1 million, respectively, of the recorded investment in one- to four-family loans had a payment default in the trailing 12 months that was classified as current, compared to less than $1 million for both the three and nine months ended September 30, 2015. |
(2) | For the three and nine months ended September 30, 2016, $1 million and $2 million, respectively, of the recorded investment in home equity loans had a payment default in the trailing 12 months that was classified as current, compared to less than $1 million and $3 million for the three and nine months ended September 30, 2015, respectively. |
(3) | The majority of these home equity modifications during the nine months ended September 30, 2015 experienced servicer transfers during this same period. |
Fair Value | |||||||||||||||
Notional | Asset(1) | Liability(2) | Net(3) | ||||||||||||
September 30, 2016 | |||||||||||||||
Interest rate contracts: | |||||||||||||||
Fair value hedges | $ | 2,295 | $ | 4 | $ | (131 | ) | $ | (127 | ) | |||||
Total derivatives designated as hedging instruments(4) | $ | 2,295 | $ | 4 | $ | (131 | ) | $ | (127 | ) | |||||
December 31, 2015 | |||||||||||||||
Interest rate contracts: | |||||||||||||||
Fair value hedges | $ | 2,204 | $ | 10 | $ | (55 | ) | $ | (45 | ) | |||||
Total derivatives designated as hedging instruments(4) | $ | 2,204 | $ | 10 | $ | (55 | ) | $ | (45 | ) |
(1) | Reflected in the other assets line item on the consolidated balance sheet. |
(2) | Reflected in the other liabilities line item on the consolidated balance sheet. |
(3) | Represents net fair value of derivative instruments for disclosure purposes only. |
(4) | All derivatives were designated as hedging instruments at September 30, 2016 and December 31, 2015. |
Three Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||
Hedging Instrument | Hedged Item | Hedge Ineffectiveness(1) | Hedging Instrument | Hedged Item | Hedge Ineffectiveness(1) | ||||||||||||||||||
Agency debentures | $ | 1 | $ | (3 | ) | $ | (2 | ) | $ | (30 | ) | $ | 30 | $ | — | ||||||||
Agency mortgage-backed securities | 14 | (16 | ) | (2 | ) | (72 | ) | 70 | (2 | ) | |||||||||||||
Total gains (losses) included in earnings | $ | 15 | $ | (19 | ) | $ | (4 | ) | $ | (102 | ) | $ | 100 | $ | (2 | ) | |||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||
Hedging Instrument | Hedged Item | Hedge Ineffectiveness(1) | Hedging Instrument | Hedged Item | Hedge Ineffectiveness(1) | ||||||||||||||||||
Agency debentures | $ | (89 | ) | $ | 85 | $ | (4 | ) | $ | (15 | ) | $ | 15 | $ | — | ||||||||
Agency mortgage-backed securities | (100 | ) | 96 | (4 | ) | (32 | ) | 32 | — | ||||||||||||||
Total gains (losses) included in earnings | $ | (189 | ) | $ | 181 | $ | (8 | ) | $ | (47 | ) | $ | 47 | $ | — |
(1) | Reflected in the gains (losses) on securities and other, net line item on the consolidated statement of income (loss). |
Amount | Weighted-Average Rate | ||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||
Sweep deposits | $ | 26,464 | $ | 24,018 | 0.01 | % | 0.01 | % | |||||
Complete savings deposits | 3,182 | 3,357 | 0.01 | % | 0.01 | % | |||||||
Checking deposits | 1,252 | 1,239 | 0.03 | % | 0.03 | % | |||||||
Other money market and savings deposits | 765 | 792 | 0.01 | % | 0.01 | % | |||||||
Time deposits(1) | 34 | 39 | 0.18 | % | 0.38 | % | |||||||
Total deposits(2) | $ | 31,697 | $ | 29,445 | 0.01 | % | 0.01 | % |
(1) | Time deposits represent certificates of deposit as of September 30, 2016 and December 31, 2015, and include brokered certificates of deposit as of December 31, 2015. |
(2) | As of September 30, 2016 and December 31, 2015, the Company had $172 million and $173 million in non-interest bearing deposits, respectively. |
September 30, 2016 | December 31, 2015 | ||||||
Trust preferred securities(1) | $ | 409 | $ | 409 | |||
Repurchase agreements(2) | — | 82 | |||||
Total other borrowings | $ | 409 | $ | 491 |
(1) | The Company's TRUPs begin maturing in 2031. |
(2) | The maximum amount at any month end for repurchase agreements was $3.8 billion for the year ended December 31, 2015. |
• | a 364-day, $400 million senior unsecured committed revolving credit facility with a syndicate of banks that matures in June 2017; |
• | secured committed lines of credit with two unaffiliated banks, aggregating to $175 million with a maturity date of June 2017; |
• | unsecured uncommitted lines of credit with two unaffiliated banks aggregating to $100 million, of which $75 million was renewed and is scheduled to mature in June 2017 and the remaining line has no maturity date; and |
• | secured uncommitted lines of credit with several unaffiliated banks aggregating to $375 million with no maturity date. |
Face Value | Discount | Net | |||||||||
September 30, 2016 | |||||||||||
Interest-bearing notes: | |||||||||||
5 3/8% Notes, due 2022 | $ | 540 | $ | (4 | ) | $ | 536 | ||||
4 5/8% Notes, due 2023 | 460 | (5 | ) | 455 | |||||||
Total interest-bearing notes | 1,000 | (9 | ) | 991 | |||||||
Non-interest-bearing debt: | |||||||||||
0% Convertible debentures, due 2019 | 3 | — | 3 | ||||||||
Total corporate debt | $ | 1,003 | $ | (9 | ) | $ | 994 |
Face Value | Discount | Net | |||||||||
December 31, 2015 | |||||||||||
Interest-bearing notes: | |||||||||||
5 3/8% Notes, due 2022 | $ | 540 | $ | (6 | ) | $ | 534 | ||||
4 5/8% Notes, due 2023 | 460 | (5 | ) | 455 | |||||||
Total interest-bearing notes | 1,000 | (11 | ) | 989 | |||||||
Non-interest-bearing debt: | |||||||||||
0% Convertible debentures, due 2019 | 8 | — | 8 | ||||||||
Total corporate debt | $ | 1,008 | $ | (11 | ) | $ | 997 |
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
Total deferred tax assets | $ | 1,266 | $ | 1,548 | |||
Valuation allowance | (42 | ) | (82 | ) | |||
Total deferred tax assets, net of valuation allowance | 1,224 | 1,466 | |||||
Total deferred tax liabilities | (499 | ) | (433 | ) | |||
Deferred tax assets, net | $ | 725 | $ | 1,033 |
Available-for-Sale Securities(1) | Cash Flow Hedging Instruments | Foreign Currency Translation | Total | ||||||||||||
Balance, December 31, 2015 | $ | (101 | ) | $ | — | $ | 2 | $ | (99 | ) | |||||
Other comprehensive income before reclassifications | 94 | — | — | 94 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | (9 | ) | — | — | (9 | ) | |||||||||
Net change | 85 | — | — | 85 | |||||||||||
Balance, March 31, 2016 | $ | (16 | ) | $ | — | $ | 2 | $ | (14 | ) | |||||
Other comprehensive income before reclassifications | 69 | — | — | 69 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | (9 | ) | — | — | (9 | ) | |||||||||
Net change | 60 | — | — | 60 | |||||||||||
Balance, June 30, 2016 | $ | 44 | $ | — | $ | 2 | $ | 46 | |||||||
Other comprehensive income before reclassifications | 3 | — | — | 3 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | (10 | ) | — | — | (10 | ) | |||||||||
Net change | (7 | ) | — | — | (7 | ) | |||||||||
Balance, September 30, 2016 | $ | 37 | $ | — | $ | 2 | $ | 39 |
(1) | Includes unamortized unrealized losses of approximately $8 million at September 30, 2016, related to available-for-sale securities that were transferred to held-to-maturity during the three months ended June 30, 2016. See Note 7—Available-for-Sale and Held-to-Maturity Securities for additional information. |
Available-for-Sale Securities | Cash Flow Hedging Instruments | Foreign Currency Translation | Total | ||||||||||||
Balance, December 31, 2014 | $ | 7 | $ | (261 | ) | $ | 5 | $ | (249 | ) | |||||
Other comprehensive income (loss) before reclassifications | 39 | (11 | ) | — | 28 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | (6 | ) | 16 | — | 10 | ||||||||||
Net change | 33 | 5 | — | 38 | |||||||||||
Balance, March 31, 2015 | $ | 40 | $ | (256 | ) | $ | 5 | $ | (211 | ) | |||||
Other comprehensive income (loss) before reclassifications | (59 | ) | 6 | — | (53 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | (5 | ) | 16 | — | 11 | ||||||||||
Net change | (64 | ) | 22 | — | (42 | ) | |||||||||
Balance, June 30, 2015 | $ | (24 | ) | $ | (234 | ) | $ | 5 | $ | (253 | ) | ||||
Other comprehensive income (loss) before reclassifications | 17 | (5 | ) | — | 12 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | (7 | ) | 239 | — | 232 | ||||||||||
Net change | 10 | 234 | — | 244 | |||||||||||
Balance, September 30, 2015 | $ | (14 | ) | $ | — | $ | 5 | $ | (9 | ) |
Three Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||
Before Tax | Tax Effect | After Tax | Before Tax | Tax Effect | After Tax | ||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Unrealized gains, net | $ | 5 | $ | (2 | ) | $ | 3 | $ | 28 | $ | (11 | ) | $ | 17 | |||||||||
Reclassification into earnings, net | (17 | ) | 7 | (10 | ) | (11 | ) | 4 | (7 | ) | |||||||||||||
Net change from available-for-sale securities | (12 | ) | 5 | (7 | ) | 17 | (7 | ) | 10 | ||||||||||||||
Cash flow hedging instruments: | |||||||||||||||||||||||
Unrealized losses, net | — | — | — | (8 | ) | 3 | (5 | ) | |||||||||||||||
Reclassification into earnings, net | — | — | — | 387 | (148 | ) | 239 | ||||||||||||||||
Net change from cash flow hedging instruments | — | — | — | 379 | (145 | ) | 234 | ||||||||||||||||
Other comprehensive income (loss) | $ | (12 | ) | $ | 5 | $ | (7 | ) | $ | 396 | $ | (152 | ) | $ | 244 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||
Before Tax | Tax Effect | After Tax | Before Tax | Tax Effect | After Tax | ||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Unrealized gains (losses), net | $ | 269 | $ | (103 | ) | $ | 166 | $ | (5 | ) | $ | 2 | $ | (3 | ) | ||||||||
Reclassification into earnings, net | (46 | ) | 18 | (28 | ) | (29 | ) | 11 | (18 | ) | |||||||||||||
Net change from available-for-sale securities | 223 | (85 | ) | 138 | (34 | ) | 13 | (21 | ) | ||||||||||||||
Cash flow hedging instruments: | |||||||||||||||||||||||
Unrealized losses, net | — | — | — | (17 | ) | 7 | (10 | ) | |||||||||||||||
Reclassification into earnings, net | — | — | — | 439 | (168 | ) | 271 | ||||||||||||||||
Net change from cash flow hedging instruments | — | — | — | 422 | (161 | ) | 261 | ||||||||||||||||
Other comprehensive income | $ | 223 | $ | (85 | ) | $ | 138 | $ | 388 | $ | (148 | ) | $ | 240 |
Accumulated Other Comprehensive Income (Loss) Components | Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Items in the Consolidated Statement of Income (Loss) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Available-for-sale securities: | ||||||||||||||||||
$ | 17 | $ | 11 | $ | 46 | $ | 29 | Gains (losses) on securities and other, net | ||||||||||
(7 | ) | (4 | ) | (18 | ) | (11 | ) | Tax expense | ||||||||||
$ | 10 | $ | 7 | $ | 28 | $ | 18 | Reclassification into earnings, net | ||||||||||
Cash flow hedging instruments: | ||||||||||||||||||
$ | — | $ | (370 | ) | $ | — | $ | (370 | ) | Gains (losses) on securities and other, net | ||||||||
— | (17 | ) | — | (69 | ) | Interest expense | ||||||||||||
— | (387 | ) | — | (439 | ) | Reclassification into earnings, before tax | ||||||||||||
— | 148 | — | 168 | Tax benefit | ||||||||||||||
$ | — | $ | (239 | ) | $ | — | $ | (271 | ) | Reclassification into earnings, net |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic: | |||||||||||||||
Net income (loss) | $ | 139 | $ | (153 | ) | $ | 425 | $ | 179 | ||||||
Basic weighted-average shares outstanding (in thousands) | 274,362 | 290,480 | 278,864 | 290,105 | |||||||||||
Basic earnings (loss) per share | $ | 0.51 | $ | (0.53 | ) | $ | 1.53 | $ | 0.62 | ||||||
Diluted: | |||||||||||||||
Net income (loss) | $ | 139 | $ | (153 | ) | $ | 425 | $ | 179 | ||||||
Basic weighted-average shares outstanding (in thousands) | 274,362 | 290,480 | 278,864 | 290,105 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Weighted-average convertible debentures (in thousands) | 318 | — | 411 | 3,517 | |||||||||||
Weighted-average options and restricted stock issued to employees (in thousands) | 792 | — | 861 | 1,376 | |||||||||||
Diluted weighted-average shares outstanding (in thousands) | 275,472 | 290,480 | 280,136 | 294,998 | |||||||||||
Diluted earnings (loss) per share | $ | 0.51 | $ | (0.53 | ) | $ | 1.52 | $ | 0.61 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Weighted-average shares excluded as a result of the Company's net loss: | |||||||||||
Convertible debentures | — | 3.3 | — | — | |||||||
Stock options and restricted stock awards and units | — | 1.3 | — | — | |||||||
Stock options and restricted stock awards and units | 0.2 | 0.1 | 0.1 | 0.1 | |||||||
Total | 0.2 | 4.7 | 0.1 | 0.1 |
Required Net Capital | Net Capital | Excess Net Capital | |||||||||
September 30, 2016: | |||||||||||
E*TRADE Clearing(1)(2) | $ | 151 | $ | 884 | $ | 733 | |||||
E*TRADE Securities(1)(3) | 1 | 75 | 74 | ||||||||
OptionsHouse(4) | 1 | 15 | 14 | ||||||||
Other broker-dealer | — | 17 | 17 | ||||||||
Total | $ | 153 | $ | 991 | $ | 838 | |||||
December 31, 2015: | |||||||||||
E*TRADE Clearing(1) | $ | 161 | $ | 1,007 | $ | 846 | |||||
E*TRADE Securities(1) | — | 49 | 49 | ||||||||
Other broker-dealers | 1 | 15 | 14 | ||||||||
Total | $ | 162 | $ | 1,071 | $ | 909 |
(1) | Elected to use the Alternative method to compute net capital. E*TRADE Securities' minimum net capital requirement was $250,000 as of December 31, 2015 and $1 million as of September 30, 2016 as a result of its registration as a Futures Commission Merchant during the three months ended September 30, 2016. |
(2) | E*TRADE Clearing paid dividends of $227 million to the parent company during the nine months ended September 30, 2016. Effective October 1, 2016, E*TRADE Clearing was merged into E*TRADE Securities. |
(3) | E*TRADE Securities paid dividends of $108 million to the parent company during the nine months ended September 30, 2016. |
(4) | The Company completed the acquisition of OptionsHouse on September 12, 2016. OptionsHouse elected to use the Aggregate Indebtedness method to compute net capital; however, as OptionsHouse is an FCM, the prescribed fixed-dollar minimum capital requirement is $1 million. |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||||||
Actual | Well Capitalized Minimum Capital | Excess Capital | Actual | Well Capitalized Minimum Capital | Excess Capital | ||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Amount | Ratio | Amount | Ratio | Amount | ||||||||||||||||||||||||||
E*TRADE Financial(1) | |||||||||||||||||||||||||||||||||||
Tier 1 leverage | $ | 3,396 | 7.3 | % | $ | 2,318 | 5.0 | % | $ | 1,078 | $ | 3,747 | 9.0 | % | $ | 2,093 | 5.0 | % | $ | 1,654 | |||||||||||||||
Common equity Tier 1 capital | $ | 3,286 | 34.0 | % | $ | 629 | 6.5 | % | $ | 2,657 | $ | 3,747 | 39.3 | % | $ | 620 | 6.5 | % | $ | 3,127 | |||||||||||||||
Tier 1 risk-based capital | $ | 3,396 | 35.1 | % | $ | 774 | 8.0 | % | $ | 2,622 | $ | 3,747 | 39.3 | % | $ | 763 | 8.0 | % | $ | 2,984 | |||||||||||||||
Total risk-based capital | $ | 3,938 | 40.7 | % | $ | 968 | 10.0 | % | $ | 2,970 | $ | 4,186 | 43.9 | % | $ | 954 | 10.0 | % | $ | 3,232 |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||||||
Actual | Well Capitalized Minimum Capital | Excess Capital | Actual | Well Capitalized Minimum Capital | Excess Capital | ||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Amount | Ratio | Amount | Ratio | Amount | ||||||||||||||||||||||||||
E*TRADE Bank(1)(2) | |||||||||||||||||||||||||||||||||||
Tier 1 leverage | $ | 3,069 | 8.5 | % | $ | 1,806 | 5.0 | % | $ | 1,263 | $ | 3,075 | 9.7 | % | $ | 1,579 | 5.0 | % | $ | 1,496 | |||||||||||||||
Common equity Tier 1 capital | $ | 3,069 | 36.7 | % | $ | 544 | 6.5 | % | $ | 2,525 | $ | 3,075 | 36.5 | % | $ | 548 | 6.5 | % | $ | 2,527 | |||||||||||||||
Tier 1 risk-based capital | $ | 3,069 | 36.7 | % | $ | 669 | 8.0 | % | $ | 2,400 | $ | 3,075 | 36.5 | % | $ | 674 | 8.0 | % | $ | 2,401 | |||||||||||||||
Total risk-based capital | $ | 3,176 | 38.0 | % | $ | 837 | 10.0 | % | $ | 2,339 | $ | 3,185 | 37.8 | % | $ | 842 | 10.0 | % | $ | 2,343 |
(1) | The Basel III final rule introduces a capital conservation buffer that limits a banking organization’s ability to make capital distributions and discretionary bonus payments to executive officers if a banking organization fails to maintain a Common Equity Tier 1 capital conservation buffer of more than 2.5%, on a fully phased-in basis, of total risk-weighted assets above each of the following minimum risk-based capital ratio requirements: Common Equity Tier 1 (4.5%), Tier 1 (6.0%), and total risk-based capital (8.0%). This requirement was effective beginning on January 1, 2016, and will be fully phased-in by 2019. Certain new regulatory deductions and adjustments are subject to a phase-in period over a four year period, beginning at 40% in 2015 and fully implemented at 100% in 2018. |
(2) | E*TRADE Bank paid dividends of $373 million to the parent company during the nine months ended September 30, 2016. |
(a) | Based on an evaluation under the supervision and with the participation of our management, our Chief Executive Officer and our Chief Financial Officer have concluded that the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. |
(b) | There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2016, identified in connection with management's evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. |
• | We may experience significant attrition in the acquired accounts or experience other issues that would prevent us from achieving the expected synergies within the anticipated timeframe, or at all; |
• | Our retention of customers’ assets may be impacted by our ability to successfully integrate the acquired operations, products (including pricing) and personnel; |
• | Attempts to retain key personnel may not succeed; |
• | We could be subject to undisclosed liabilities that could be material or become subject to litigation or regulatory risks as a result of the acquisition; |
• | Management’s attention may be diverted from other business concerns; |
• | Unanticipated restructuring costs may be incurred; |
• | There may be negative changes in general economic conditions in the regions or the industries in which the combined businesses operate; and |
• | We will have less cash available for other purposes, including for use in acquisitions of other technologies or businesses. |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of the Publicly Announced Plan(3) | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan(3) | ||||||||||
July 1, 2016 - July 31, 2016 | 2,873 | $ | 28.82 | — | $ | 297.9 | ||||||||
August 1, 2016 - August 31, 2016 | 7,410 | 25.54 | — | 297.9 | ||||||||||
September 1, 2016 - September 30, 2016 | 128,800 | 28.06 | — | 297.9 | ||||||||||
Total | 139,083 | 27.94 | — |
(1) | Includes 139,083 shares withheld to satisfy tax withholding obligations associated with restricted shares. |
(2) | Excludes commission paid. |
(3) | On November 19, 2015, the Company publicly announced that its Board of Directors authorized the repurchase of up to $800 million of shares of the Company's common stock through March 31, 2017. The timing and exact amount of any common stock repurchases will depend on various factors, including market conditions and the Company’s capital position. The Company’s share repurchase program does not include specific price targets, may be executed through open market purchases or privately negotiated transactions, may utilize Rule 10b5-1 plans, and may be suspended or terminated at any time at the Company’s discretion. |
Exhibit Number | Description | |
3.1 | Certificate of Designations of Preferences and Rights of the Fixed-to-Floating Rate Non- Cumulative Perpetual Preferred Stock, Series A of E*TRADE Financial Corporation, effective as of August 25, 2016 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on August 25, 2016) | |
*3.2 | Amended and Restated Bylaws of E*TRADE Financial Corporation, effective as of August 25, 2016 | |
4.1 | Certificate of Designations of Preferences and Rights of the Fixed-to-Floating Rate Non- Cumulative Perpetual Preferred Stock, Series A of E*TRADE Financial Corporation, effective as of August 25, 2016 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on August 25, 2016) | |
4.2 | Form of Certificate Evidencing Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A of E*TRADE Financial Corporation (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on August 25, 2016) | |
*10.1 | Employment Agreement dated September 12, 2016 between E*TRADE Financial Corporation and Rodger A. Lawson | |
*10.2 | Employment Agreement dated September 12, 2016 between E*TRADE Financial Corporation and Karl A. Roessner | |
*31.1 | Certification—Section 302 of the Sarbanes-Oxley Act of 2002 | |
*31.2 | Certification—Section 302 of the Sarbanes-Oxley Act of 2002 | |
*32.1 | Certification—Section 906 of the Sarbanes-Oxley Act of 2002 | |
*101.INS | XBRL Instance Document | |
*101.SCH | XBRL Taxonomy Extension Schema Document | |
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
*101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
E*TRADE Financial Corporation (Registrant) | ||
By | /S/ KARL A. ROESSNER | |
Karl A. Roessner | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
By | /S/ MICHAEL A. PIZZI | |
Michael A. Pizzi | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
By | /S/ BRENT B. SIMONICH | |
Brent B. Simonich | ||
Corporate Controller | ||
(Principal Accounting Officer) |
• | Executive acts in any manner that the Compensation Committee of the Board determines is contrary or materially harmful to the interests of the Company or any of its subsidiaries; |
• | Executive encourages or solicits any employee, consultant, or contractor of the Company or its affiliates to leave or diminish their relationship with the Company for any reason or to accept employment, consultancy or a contracting relationship with any other company |
• | Executive, directly or indirectly, encourages or solicits or attempts to encourage or solicit any customers, clients, partners or affiliates of the Company to terminate or diminish their relationship with the Company; |
• | Executive disparages the Company or its officers, directors, employees, products or services; |
• | Executive misuses or discloses the Company’s confidential or Proprietary Information, breaches any proprietary information, confidentiality agreement or any other agreement between Executive and the Company (or any of its affiliates), or breaches the Release; |
• | Executive fails or refuses to reasonably cooperate with or assist the Company in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Company is a subject, target or party and as to which Executive may have pertinent information; or |
• | the Company determines that Executive’s employment could have been terminated for Cause (regardless of any “cure” periods) or that Executive’s actions or omissions during employment caused a restatement of the Company’s financial statements or constituted a violation of the Company’s policies and standards |
Dated: September 12, 2016 | /s/ Rodger A. Lawson ___________________________________ Rodger A. Lawson |
1. | Release: |
a. | In exchange for the benefits described in Section __ of the Employment Agreement by and between the Company and Executive, dated September 12, 2016 (the “Employment Agreement”), Executive, on behalf of himself and his heirs, executors, administrators and assigns, releases and absolutely discharges the Company (including its subsidiaries and other affiliated entities, and each of their respective shareholders, directors, employees, agents, attorneys, and each of their legal successors and assigns) (the “Company Parties”) from any and all claims, actions and causes of action, whether now known or unknown, which Executive now has, or at any other time had, or shall or may have, against the Company Parties arising out of or relating to any matter, cause, fact, thing, act or omission whatsoever occurring or existing at any time to and including the date of execution of this Release Agreement by Executive, including, but not limited to, claims relating to the Employment Agreement or any other offer letter or written or oral, express or implied, agreement or understanding between Executive and the Company and/or any awards, policies, plans, programs or practices of the Company that may apply to Executive or in which Executive may participate, including, but not limited to, any rights under bonus plans or programs of the Company and/or any other short-term or long-term equity-based or cash-based incentive plans or programs of the Company, the parties’ employment relationship, the termination of that relationship, the Executive’s purchase or right to purchase shares of the Company’s stock, and any claims of breach of contract, infliction of emotional distress, fraud, defamation, personal injury, wrongful discharge or age, sex, race, national origin, industrial injury, physical or mental disability, medical condition, sexual orientation or other discrimination, harassment or retaliation, claims under the federal Americans with Disabilities Act, Title VII of the federal Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act (“ADEA”), 42 U.S.C. Section 1981, the federal Fair Labor Standards Act, the federal Employee Retirement Income Security Act, the federal Worker Adjustment and Retraining Notification Act, the federal Family and Medical Leave Act, the National Labor Relations Act, the Civil Rights Act |
b. | The Release does not apply to claims which cannot be released as a matter of law or indemnification of Executive provided by the Company’s bylaws, charter, other corporate or organizational documents or other agreement concerning indemnification (including the Company’s insurance policies). The rights of Executive to indemnification and D&O insurance coverage with respect to all matters, events or transactions occurring or effected during Executive’s period of employment with the Company shall survive the termination of Executive’s employment. Executive acknowledges and agrees that, but for providing this waiver and release, Executive would not be receiving the economic benefits being provided under the terms of the Employment Agreement. |
c. | Executive understands that Executive is releasing claims that Executive may not know about and that it is Executive’s knowing and voluntary intent even though Executive recognizes that someday Executive may regret having signed this Release. Nevertheless, Executive is assuming that risk and agrees that this Release shall remain effective in all respects in any such case. Executive expressly waives all rights Executive might have under any law that is intended to protect Executive from waiving unknown claims. |
d. | Executive represents that Executive has no complaints, charges or lawsuits currently pending against any of the Company Parties arising out of or relating to Executive’s employment. Executive further covenants and agrees that neither Executive nor Executive’s heirs, executors, administrators, successors or assigns will be entitled to any personal recovery in any proceeding of any nature whatsoever against any of the Company Parties arising out of any of the matters released in Section 1(a). |
2. | Older Workers Benefit Protection Act: In accordance with the Older Workers Benefit Protection Act, Executive understands and acknowledges that Executive has been advised of Executive’s opportunity to consult an attorney before |
• | Executive acts in any manner that the Compensation Committee of the Board determines is contrary or materially harmful to the interests of the Company or any of its subsidiaries; |
• | Executive fails to comply with the covenants in Section 6 hereof; provided that such covenants shall be of no further force or effect as of the twelve (12) month anniversary of the termination of Executive’s employment; |
• | Executive encourages or solicits any employee, consultant, or contractor of the Company or its affiliates to leave or diminish their relationship with the Company for any reason or to accept employment, consultancy or a contracting relationship with any other company |
• | Executive, directly or indirectly, encourages or solicits or attempts to encourage or solicit any customers, clients, partners or affiliates of the Company to terminate or diminish their relationship with the Company; |
• | Executive disparages the Company or its officers, directors, employees, products or services; |
• | Executive misuses or discloses the Company’s confidential or Proprietary Information, breaches any proprietary information, confidentiality agreement or any other agreement between Executive and the Company (or any of its affiliates), or breaches the Release; |
• | Executive fails or refuses to reasonably cooperate with or assist the Company in a timely manner in connection with any investigation, regulatory matter, lawsuit or arbitration in which the Company is a subject, target or party and as to which Executive may have pertinent information; or |
• | the Company determines that Executive’s employment could have been terminated for Cause (regardless of any “cure” periods) or that Executive’s actions or omissions during employment caused a restatement of the Company’s financial statements or constituted a violation of the Company’s policies and standards. |
Dated: September 12, 2016 | /s/ Karl A. Roessner ___________________________________ Karl A. Roessner |
1. | Release: |
a. | In exchange for the benefits described in Section __ of the Employment Agreement by and between the Company and Executive, dated September 12, 2016 (the “Employment Agreement”), Executive, on behalf of himself and his heirs, executors, administrators and assigns, releases and absolutely discharges the Company (including its subsidiaries and other affiliated entities, and each of their respective shareholders, directors, employees, agents, attorneys, and each of their legal successors and assigns) (the “Company Parties”) from any and all claims, actions and causes of action, whether now known or unknown, which Executive now has, or at any other time had, or shall or may have, against the Company Parties arising out of or relating to any matter, cause, fact, thing, act or omission whatsoever occurring or existing at any time to and including the date of execution of this Release Agreement by Executive, including, but not limited to, claims relating to the Employment Agreement or any other offer letter or written or oral, express or implied, agreement or understanding between Executive and the Company and/or any awards, policies, plans, programs or practices of the Company that may apply to Executive or in which Executive may participate, including, but not limited to, any rights under bonus plans or programs of the Company and/or any other short-term or long-term equity-based or cash-based incentive plans or programs of the Company, the parties’ employment relationship, the termination of that relationship, the Executive’s purchase or right to purchase shares of the Company’s stock, and any claims of breach of contract, infliction of emotional distress, fraud, defamation, personal injury, wrongful discharge or age, sex, race, national origin, industrial injury, physical or mental disability, medical condition, sexual orientation or other discrimination, harassment or retaliation, claims under the federal Americans with Disabilities Act, Title VII of the federal Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act (“ADEA”), 42 U.S.C. Section 1981, the federal Fair Labor Standards Act, the federal Employee Retirement Income Security Act, the federal Worker Adjustment and Retraining Notification Act, the federal Family and Medical Leave Act, the National Labor Relations Act, the Civil Rights Act |
b. | The Release does not apply to claims which cannot be released as a matter of law or indemnification of Executive provided by the Company’s bylaws, charter, other corporate or organizational documents or other agreement concerning indemnification (including the Company’s insurance policies). The rights of Executive to indemnification and D&O insurance coverage with respect to all matters, events or transactions occurring or effected during Executive’s period of employment with the Company shall survive the termination of Executive’s employment. Executive acknowledges and agrees that, but for providing this waiver and release, Executive would not be receiving the economic benefits being provided under the terms of the Employment Agreement. |
c. | Executive understands that Executive is releasing claims that Executive may not know about and that it is Executive’s knowing and voluntary intent even though Executive recognizes that someday Executive may regret having signed this Release. Nevertheless, Executive is assuming that risk and agrees that this Release shall remain effective in all respects in any such case. Executive expressly waives all rights Executive might have under any law that is intended to protect Executive from waiving unknown claims. |
d. | Executive represents that Executive has no complaints, charges or lawsuits currently pending against any of the Company Parties arising out of or relating to Executive’s employment. Executive further covenants and agrees that neither Executive nor Executive’s heirs, executors, administrators, successors or assigns will be entitled to any personal recovery in any proceeding of any nature whatsoever against any of the Company Parties arising out of any of the matters released in Section 1(a). |
2. | Older Workers Benefit Protection Act: In accordance with the Older Workers Benefit Protection Act, Executive understands and acknowledges that Executive has been advised of Executive’s opportunity to consult an attorney before |
1. | I have reviewed this Quarterly Report on Form 10-Q of E*TRADE Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
E*TRADE Financial Corporation (Registrant) | ||
By | /S/ KARL A. ROESSNER | |
Karl A. Roessner Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of E*TRADE Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
E*TRADE Financial Corporation (Registrant) | ||
By | /S/ MICHAEL A. PIZZI | |
Michael A. Pizzi Chief Financial Officer (Principal Financial Officer) |
1. | the Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
2. | the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of E*TRADE Financial Corporation. |
/S/ KARL A. ROESSNER |
Karl A. Roessner Chief Executive Officer (Principal Executive Officer) |
/S/ MICHAEL A. PIZZI |
Michael A. Pizzi Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Entity Registrant Name | E TRADE FINANCIAL CORP | |
Entity Central Index Key | 0001015780 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Well-known Seasoned Issuer | Yes | |
Common stock shares outstanding | 273,812,280 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 139 | $ (153) | $ 425 | $ 179 |
Available-for-sale securities: | ||||
Unrealized gains (losses), net | 3 | 17 | 166 | (3) |
Reclassification into earnings, net | (10) | (7) | (28) | (18) |
Net change from available-for-sale securities | (7) | 10 | 138 | (21) |
Cash flow hedging instruments: | ||||
Unrealized losses, net | 0 | (5) | 0 | (10) |
Reclassification into earnings, net | 0 | 239 | 0 | 271 |
Net change from cash flow hedging instruments | 0 | 234 | 0 | 261 |
Other comprehensive income (loss) | (7) | 244 | 138 | 240 |
Comprehensive income | $ 132 | $ 91 | $ 563 | $ 419 |
CONSOLIDATED BALANCE SHEET (Parentheticals) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
ASSETS | ||
Held-to-maturity securities, fair value | $ 16,670 | $ 13,123 |
Allowance for loan losses | $ 235 | $ 353 |
Shareholders’ equity: | ||
Preferred stock, par value | $ 0.01 | |
Preferred stock, liquidation preference | $ 1,000 | |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 400,000 | 0 |
Preferred stock, shares outstanding | 400,000 | 0 |
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock shares issued (in shares) | 273,810,222 | 291,335,241 |
Common stock shares outstanding (in shares) | 273,810,222 | 291,335,241 |
Organization, Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization—E*TRADE Financial Corporation is a financial services company that provides brokerage and related products and services primarily to individual retail investors under the brand "E*TRADE Financial." The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. Basis of Presentation—The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries as determined under the voting interest model. Entities in which the Company has the ability to exercise significant influence but in which the Company does not possess control are generally accounted for by the equity method. Entities in which the Company does not have the ability to exercise significant influence are generally carried at cost. However, investments in marketable equity securities where the Company does not have the ability to exercise significant influence over the entities are accounted for as available-for-sale equity securities. The Company also evaluates its initial and continuing involvement with certain entities to determine if the Company is required to consolidate the entities under the variable interest entity ("VIE") model. This evaluation is based on a qualitative assessment of whether the Company is the primary beneficiary of the VIE, which requires the Company to possess both: 1) the power to direct the activities that most significantly impact the economic performance of the VIE; and 2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company's consolidated financial statements are prepared in accordance with GAAP. Intercompany accounts and transactions are eliminated in consolidation. These consolidated financial statements reflect all adjustments, which are all normal and recurring in nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2015. Beginning January 1, 2016, the Company changed its segment reporting structure to align with the manner in which the Chief Operating Decision Maker now reviews business performance and makes resource allocation decisions. As the Chief Operating Decision Maker's business performance assessments and resource allocation decisions are based on consolidated operating margin, the Company no longer has separate operating segments and, accordingly, no longer presents disaggregated segment financial results. The Company also updated the presentation of its consolidated statement of income (loss) to reflect how business performance is now measured and prior periods have been reclassified to conform to the current period presentation as follows:
Use of Estimates—Preparing the Company's consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes for the periods presented. Actual results could differ from management’s estimates. Certain significant accounting policies are critical because they are based on estimates and assumptions that require complex and subjective judgments by management. Changes in these estimates or assumptions could materially impact the Company’s financial condition and results of operations. Material estimates in which management believes changes could reasonably occur include: allowance for loan losses; asset impairment, including goodwill impairment and OTTI; estimates of effective tax rates, deferred taxes and valuation allowance; accounting for derivative instruments; and fair value measurements. Financial Statement Descriptions and Related Accounting Policies Margin Receivables—Margin receivables represent credit extended to customers to finance their purchases of securities by borrowing against securities the customers own. Securities owned by customers are held as collateral for amounts due on the margin receivables, the value of which is not reflected in the consolidated balance sheet. The Company is permitted to sell or re-pledge these securities held as collateral and to use the securities to enter into securities lending transactions, to collateralize borrowings or for delivery to counterparties to cover customer short positions. The fair value of securities that the Company received as collateral in connection with margin receivables and securities borrowing activities, where the Company is permitted to sell or re-pledge the securities, was approximately $9.4 billion and $10.1 billion at September 30, 2016 and December 31, 2015, respectively. Of this amount, $2.1 billion and $2.5 billion had been pledged or sold in connection with securities loans and deposits with clearing organizations at September 30, 2016 and December 31, 2015, respectively. New Accounting and Disclosure Guidance—Below is the new accounting and disclosure guidance that relates to activities in which the Company is engaged. Adoption of New Accounting Standards Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern In August 2014, the FASB amended the guidance related to an entity’s evaluations and disclosures of going concern uncertainties. The new guidance requires management to perform interim and annual assessments of the entity’s ability to continue as a going concern within one year of the date the financial statements are issued, and to provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. Consolidation In February 2015, the FASB amended the guidance on consolidation of certain legal entities. The amended guidance modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, and clarifies how to determine whether a group of equity holders has power over an entity. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016 on a modified retrospective basis. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. Accounting for Customer Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB amended the accounting guidance on customer fees paid in a cloud computing arrangement. The amended guidance requires that internal-use software accessed by a customer in cloud computing arrangements be accounted for as software licenses if specific criteria are met; otherwise they should be accounted for as service contracts. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016 on a prospective basis. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. New Accounting Standards Not Yet Adopted Revenue Recognition on Contracts with Customers In May 2014, the FASB amended the guidance on revenue recognition on contracts with customers. The new standard outlines a single comprehensive model for entities to apply in accounting for revenue arising from contracts with customers. The FASB issued supplemental amendments to the new standard to clarify certain accounting guidance and provide narrow scope improvements and practical expedients in the first half of 2016. The amended guidance will be effective for annual and interim periods beginning on January 1, 2018 for the Company and may be applied on either a full retrospective or modified retrospective basis. The Company is currently evaluating the impact of the new accounting guidance and expects to complete this evaluation in 2017; however, the adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Classification and Measurement of Financial Instruments In January 2016, the FASB amended the accounting and disclosure guidance on the classification and measurement of financial instruments. Relevant changes in the amended guidance include the requirement that equity investments, excluding those accounted for under the equity method of accounting or those resulting in consolidation of the investee, be measured at fair value in the consolidated balance sheet with changes in fair value recognized in net income. For disclosure purposes, the Company will no longer be required to disclose the methods and significant assumptions used to estimate fair value for financial instruments measured at amortized cost in the consolidated balance sheet. The amended guidance will be effective for interim and annual periods beginning on January 1, 2018 for the Company and is required to be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the consolidated balance sheet on that date. While the Company is currently evaluating the impact of the new accounting guidance, the adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Accounting for Leases In February 2016, the FASB amended the guidance on accounting for leases. The new standard requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all qualifying leases with terms of more than twelve months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains substantially unchanged and depends on classification as a finance or operating lease. The new standard also requires additional quantitative and qualitative disclosures that provide additional information about the amounts related to leasing arrangements recorded in the financial statements. The new guidance will be effective for interim and annual periods beginning on January 1, 2019 for the Company and is required to be applied on a modified retrospective basis to the earliest period presented, which includes practical expedient options in certain circumstances. The Company is currently evaluating the impact of the new accounting guidance on the Company's financial condition, results of operations and cash flows. Accounting for Employee Share-based Payments In March 2016, the FASB amended the accounting guidance on employee shared-based payments. Relevant changes in the amended guidance include the requirement to recognize all excess tax benefits and deficiencies upon exercise or vesting as income tax expense or benefit in the income statement; to treat excess tax benefits and deficiencies as discrete items in the reporting period they occur; to not delay recognition of excess tax benefits until the tax benefit is realized through a reduction in current taxes payable; and to make an accounting policy election to either estimate forfeitures or account for forfeiture as they occur. The new guidance will be effective for interim and annual periods beginning on January 1, 2017 for the Company and application methods vary based on the amended guidance. Early adoption in interim periods is permitted. The adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Accounting for Credit Losses In June 2016, the FASB amended the accounting guidance on accounting for credit losses. The amended guidance requires measurement of all expected credit losses for financial instruments and other commitments to extend credit held at the reporting date. For financial assets measured at amortized cost, factors such as historical experience, current conditions, and reasonable and supportable forecasts will be used to estimate expected credit losses. The amended guidance will also change the manner in which credit losses are recognized on debt securities classified as available-for-sale. The new guidance will be effective for interim and annual periods beginning January 1, 2020 for the Company. Early adoption is permitted. The Company is currently evaluating the impact of the new accounting guidance on the Company's financial condition, results of operations and cash flows. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB amended the guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows to eliminate current diversity in practice. The new guidance will be effective for interim and annual periods beginning January 1, 2018 for the Company and must be applied using a retrospective transition method to each period presented. Early adoption is permitted. The Company is currently evaluating the impact of the new accounting guidance. |
Business Acquisition |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS ACQUISITION | BUSINESS ACQUISITION OptionsHouse Acquisition On September 12, 2016, the Company completed its acquisition of all of the outstanding equity of Aperture New Holdings, Inc., the ultimate parent company of OptionsHouse, from Aperture Holdings, L.P. for $725 million. OptionsHouse is an online brokerage firm focused on serving active traders through its derivatives platform. The acquisition will enhance E*TRADE's derivatives capabilities and offerings to current customers while providing the benefit of an expanded breadth of offerings, including 24 hour customer service, long-term investing tools, and mobile experience, for current OptionsHouse customers. The results of OptionsHouse's operations have been included in the Company's consolidated statement of income (loss) for the three and nine months ended September 30, 2016 from the date of the acquisition. OptionsHouse's net revenue from September 12, 2016 through September 30, 2016 was $6 million. Supplemental pro forma financial information related to the acquisition is not included because the impact on the Company's consolidated statement of income (loss) is not material. The following table summarizes the provisional allocation of the purchase price to the net assets of OptionsHouse as of September 12, 2016 (dollars in millions):
The following table summarizes the provisional fair values of the assets acquired and liabilities assumed as of the acquisition date. The allocation of the purchase price is provisional and subject to further adjustment as information relative to the acquisition date fair value of intangible assets is finalized. We do not expect that any adjustments to the provisional fair value will be material to the Company's consolidated financial statements (dollars in millions):
The provisional goodwill of $578 million, which is allocated to the retail brokerage reporting unit, is composed primarily of the synergies expected to result from combining operations with OptionsHouse and coupling its derivatives platform with the Company's existing product offerings. Approximately $122 million of this goodwill will be deductible for tax purposes. The Company recorded provisional intangible assets of $169 million, which are subject to amortization over their estimated useful lives. Approximately $63 million of the intangible assets will be deductible for tax purposes. The provisional fair value of the intangible assets was determined under the income approach. The following table summarizes the provisional estimated fair value and estimated useful lives of the intangible assets (dollars in millions):
|
Restructuring and Acquisition-Related Activities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Acquisition-Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Disclosure | RESTRUCTURING AND ACQUISITION-RELATED ACTIVITIES The following table shows the components of restructuring and acquisition-related activities expense for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The Company incurred $7 million of acquisition-related costs in connection with its purchase of OptionsHouse, which was completed on September 12, 2016. Restructuring activities during the three and nine months ended September 30, 2016 includes approximately $16 million of costs, primarily related to employee severance, from the realignment of our core brokerage business and organizational structure. The liability for restructuring activities at September 30, 2016 was $11 million. |
Interest Income and Interest Expense |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income and Interest Expense Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTEREST INCOME AND INTEREST EXPENSE | INTEREST INCOME AND INTEREST EXPENSE The following table shows the components of interest income and interest expense for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Fair Value Disclosures |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company may use various valuation approaches, including market, income and/or cost approaches. The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is a market-based measure considered from the perspective of a market participant. Accordingly, even when market assumptions are not readily available, the Company’s own assumptions reflect those that market participants would use in pricing the asset or liability at the measurement date. The fair value measurement accounting guidance describes the following three levels used to classify fair value measurements:
The availability of observable inputs can vary and in certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to a fair value measurement requires judgment and consideration of factors specific to the asset or liability. Recurring Fair Value Measurement Techniques Mortgage-backed Securities The Company’s mortgage-backed securities portfolio is primarily comprised of agency mortgage-backed securities and collateralized mortgage obligations ("CMOs"). Agency mortgage-backed securities and CMOs are guaranteed by U.S. government sponsored enterprises and federal agencies. The weighted average coupon rates for the available-for-sale mortgage-backed securities at September 30, 2016 are shown in the following table:
The fair value of agency mortgage-backed securities was determined using a market approach with quoted market prices, recent market transactions and spread data for similar instruments. The fair value of agency CMOs was determined using market and income approaches along with the Company’s own trading activities for identical or similar instruments. Agency mortgage-backed securities and CMOs were categorized in Level 2 of the fair value hierarchy. Other Debt Securities The Company's fair value level classification of U.S. Treasuries is based on the original maturity dates of the securities and whether the securities are the most recent issuances of a given maturity. U.S. Treasuries with original maturities less than one year are classified as Level 1. U.S. Treasuries with original maturities longer than one year are classified as Level 1 if they represent the most recent issuance of a given maturity; otherwise, these securities are classified as Level 2. The fair value measurements of agency debentures and agency debt securities were determined using market and income approaches along with the Company’s own trading activities for identical or similar instruments and were categorized in Level 2 of the fair value hierarchy. The Company’s municipal bonds are revenue bonds issued by state and other local government agencies. The valuation of corporate bonds is impacted by the credit worthiness of the corporate issuer. All of the Company’s municipal bonds and corporate bonds were rated investment grade at September 30, 2016. These securities were valued using a market approach with pricing service valuations corroborated by recent market transactions for identical or similar bonds. Municipal bonds and corporate bonds were categorized in Level 2 of the fair value hierarchy. Publicly Traded Equity Securities The fair value measurements of the Company's publicly traded equity securities were classified as Level 1 of the fair value hierarchy as they were based on quoted market prices in active markets. Derivative Instruments Interest rate swap and option contracts were valued with an income approach using pricing models that are commonly used by the financial services industry. The market observable inputs used in the pricing models include the swap curve, the volatility surface, and prime or overnight indexed swap basis from a financial data provider. The Company does not consider these models to involve significant judgment on the part of management, and the Company corroborated the fair value measurements with counterparty valuations. The Company’s derivative instruments were categorized in Level 2 of the fair value hierarchy. The consideration of credit risk, the Company’s or the counterparty’s, did not result in an adjustment to the valuation of its derivative instruments in the periods presented. Nonrecurring Fair Value Measurement Techniques Certain other assets are recorded at fair value on a nonrecurring basis: 1) one- to four-family and home equity loans in which the amount of the loan balance in excess of the estimated current value of the underlying property less estimated selling costs has been charged-off; and 2) real estate owned that is carried at the lower of the property’s carrying value or fair value less estimated selling costs. The Company evaluates and reviews assets that have been subject to fair value measurement requirements on a quarterly basis in accordance with policies and procedures that were designed to be in compliance with guidance from the Company’s regulators. These policies and procedures govern the frequency of the review, the use of acceptable valuation methods, and the consideration of estimated selling costs. Loans Receivable Loans that have been delinquent for 180 days or that are in bankruptcy and certain TDR loan modifications are charged-off based on the estimated current value of the underlying property less estimated selling costs. Property valuations for these one- to four-family and home equity loans are based on the most recent "as is" property valuation data available, which may include appraisals, broker price opinions ("BPOs"), automated valuation models or updated values using home price indices. Subsequent to the recording of an initial fair value measurement, these loans continue to be measured at fair value on a nonrecurring basis, utilizing the estimated value of the underlying property less estimated selling costs. These property valuations are updated on a monthly, quarterly or semi-annual basis depending on the type of valuation initially used. If the value of the underlying property has declined, an additional charge-off is recorded. If the value of the underlying property has increased, previously charged-off amounts are not reversed. If the valuation data obtained is significantly different from the valuation previously received, the Company reviews additional property valuation data to corroborate or update the valuation. BPOs are a type of valuation input used to determine the estimated property values of our collateral dependent mortgage loans. In addition, when available, BPOs are used in various loss mitigation, default management and portfolio monitoring efforts, allowance for loan losses modeling and CLTV estimates. The Company validates BPOs through quality control measures, including comparison to tax records, comparable sale and listing data, prior BPO values and original appraisals. The Company does not adjust BPO values but will only utilize BPOs that pass validation. Real Estate Owned Property valuations for real estate owned are based on the lowest value of the most recent property valuation data available, which may include appraisals, listing prices or approved offer prices. Nonrecurring fair value measurements on one- to four-family and home equity loans and real estate owned were classified as Level 3 of the fair value hierarchy as the valuations included unobservable inputs that were significant to the fair value. The following table presents additional information about significant unobservable inputs used in the valuation of assets measured at fair value on a nonrecurring basis that were categorized in Level 3 of the fair value hierarchy at September 30, 2016 and December 31, 2015:
Recurring and Nonrecurring Fair Value Measurements Assets and liabilities measured at fair value at September 30, 2016 and December 31, 2015 are summarized in the following tables (dollars in millions):
The following table presents losses recognized on assets measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
Transfers Between Levels 1 and 2 For assets and liabilities measured at fair value on a recurring basis, the Company’s transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period on a quarterly basis. The Company had no transfers between Level 1 and 2 during the nine months ended September 30, 2016 and 2015. Recurring Fair Value Measurements Categorized within Level 3 For the periods presented, no assets or liabilities measured at fair value on a recurring basis were categorized within Level 3 of the fair value hierarchy. Fair Value of Financial Instruments Not Carried at Fair Value The following table summarizes the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not carried at fair value on the consolidated balance sheet at September 30, 2016 and December 31, 2015 (dollars in millions):
The fair value measurement techniques for financial instruments not carried at fair value on the consolidated balance sheet at September 30, 2016 and December 31, 2015 are summarized as follows: Cash and equivalents, cash required to be segregated under federal or other regulations, margin receivables, receivables from brokers, dealers and clearing organizations, customer payables and payables to brokers, dealers and clearing organizations—Due to their short term nature, fair value is estimated to be carrying value. Held-to-maturity securities—The held-to-maturity securities portfolio included agency mortgage-backed securities and CMOs, agency debentures, agency debt securities, and other non-agency debt securities. The fair value of agency mortgage-backed securities is determined using market and income approaches with quoted market prices, recent market transactions and spread data for similar instruments. The fair value of agency CMOs and agency debt securities is determined using market and income approaches along with the Company’s own trading activities for identical or similar instruments. The fair value of agency debentures is based on quoted market prices that were derived from assumptions observable in the marketplace. Fair value of other non-agency debt securities is estimated to be carrying value. Loans receivable, net—Fair value is estimated using a discounted cash flow model. Loans are differentiated based on their individual portfolio characteristics, such as product classification, loan category and pricing features. Assumptions for expected losses, prepayments, cash flows and discount rates are adjusted to reflect the individual characteristics of the loans, such as credit risk, coupon, lien position, and payment characteristics, as well as the secondary market conditions for these types of loans. Although the market for one- to four-family and home equity loan portfolios has improved, given the lack of observability of valuation inputs, these fair value measurements cannot be determined with precision and changes in the underlying assumptions used, including discount rates, could significantly affect the results of current or future fair value estimates. In addition, the amount that would be realized in a forced liquidation, an actual sale or immediate settlement could be lower than both the carrying value and the estimated fair value of the portfolio. Deposits—Fair value is the amount payable on demand at the reporting date for sweep deposits, complete savings deposits, other money market and savings deposits and checking deposits. For certificates of deposit, fair value is estimated by discounting future cash flows using discount factors derived from current observable rates implied for other similar instruments with similar remaining maturities. Securities sold under agreements to repurchase—Fair value for securities sold under agreements to repurchase was determined by discounting future cash flows using discount factors derived from current observable rates implied for other similar instruments with similar remaining maturities. Trust preferred securities—For subordinated debentures, fair value is estimated by discounting future cash flows at the yield implied by dealer pricing quotes. Corporate debt—For interest-bearing corporate debt, fair value is estimated using dealer pricing quotes. The fair value of the non-interest-bearing convertible debentures is directly correlated to the intrinsic value of the Company’s underlying stock; therefore, as the price of the Company’s stock increases relative to the conversion price, the fair value of the convertible debentures increases. Fair Value of Commitments and Contingencies In the normal course of business, the Company makes various commitments to extend credit and incur contingent liabilities that are not reflected in the consolidated balance sheet. Changes in the economy or interest rates may influence the impact that these commitments and contingencies have on the Company in the future. The Company does not estimate the fair value of those commitments. The Company has the right to cancel these commitments in certain circumstances and has closed a significant amount of customer HELOCs in the past eight years. At September 30, 2016, the Company had approximately $32 million of unfunded commitments to extend credit. Information related to such commitments and contingent liabilities is included in Note 17—Commitments, Contingencies and Other Regulatory Matters. |
Offsetting Assets and Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities [Text Block] | OFFSETTING ASSETS AND LIABILITIES For financial statement purposes, the Company does not offset derivative instruments, repurchase agreements, or securities borrowing and securities lending transactions. These activities are generally transacted under master agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. The following table presents information about these transactions to enable the users of the Company’s financial statements to evaluate the potential effect of rights of set-off between these recognized assets and recognized liabilities at September 30, 2016 and December 31, 2015 (dollars in millions):
Derivative Transactions Certain types of derivatives that the Company utilizes in its hedging activities are subject to derivatives clearing agreements ("cleared derivatives contracts") under the Dodd-Frank Act. These cleared derivatives contracts enable clearing by a derivatives clearing organization through a clearing member. Under the contracts, the clearing member typically has a one-way right to offset all contracts in the event of the Company’s default or bankruptcy. Collateral exchanged under these contracts is not included in the table above as the contracts may not qualify as master netting agreements. At September 30, 2016 and December 31, 2015, the Company had $4 million and $10 million, respectively, of cleared derivative contract assets. At September 30, 2016 and December 31, 2015, the Company had $99 million and $44 million, respectively, of cleared derivative contract liabilities. Securities Lending Transactions Deposits paid for securities borrowed and deposits received for securities loaned are recorded at the amount of cash collateral advanced or received. Deposits paid for securities borrowing transactions require the Company to deposit cash with the lender whereas deposits received for securities loaned result in the Company receiving collateral in the form of cash in an amount generally in excess of the market value of the securities loaned. Securities lending transactions have overnight or continuous remaining contractual maturities. Securities lending transactions expose the Company to counterparty credit risk and market risk. To manage the counterparty risk, the Company maintains internal standards for approving counterparties, reviews and analyzes the credit rating of each counterparty, and monitors its positions with each counterparty on an ongoing basis. In addition, for certain of the Company's securities lending transactions, the Company uses a program with a clearing organization that guarantees the return of securities. The Company monitors the market value of the securities borrowed and loaned using collateral arrangements that require additional collateral to be obtained from or excess collateral to be returned to the counterparties based on changes in market value, to maintain specified collateral levels. |
Available-for-Sale and Held-to-Maturity Securities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES | AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2016 and December 31, 2015 are shown in the following tables (dollars in millions):
Contractual Maturities The contractual maturities of all available-for-sale and held-to-maturity debt securities at September 30, 2016 are shown in the following table (dollars in millions):
At September 30, 2016, the Company pledged $6 million of available-for-sale debt securities and $0.6 billion of held-to-maturity debt securities as collateral for derivatives and other purposes. At December 31, 2015, the Company pledged $17 million of available-for-sale debt securities and $0.7 billion of held-to-maturity debt securities as collateral for derivatives and other purposes. Investments with Unrealized or Unrecognized Losses The following tables show the fair value and unrealized or unrecognized losses on available-for-sale and held-to-maturity securities, aggregated by investment category, and the length of time that individual securities have been in a continuous unrealized or unrecognized loss position at September 30, 2016 and December 31, 2015 (dollars in millions):
The Company does not believe that any individual unrealized loss in the available-for-sale portfolio or unrecognized loss in the held-to-maturity portfolio as of September 30, 2016 represents a credit loss. The Company does not intend to sell the debt securities in an unrealized or unrecognized loss position as of the balance sheet date and it is not more likely than not that the Company will be required to sell the debt securities before the anticipated recovery of its remaining amortized cost of the debt securities in an unrealized or unrecognized loss position at September 30, 2016. There were no impairment losses recognized in earnings on available-for-sale or held-to-maturity securities during the nine months ended September 30, 2016 and 2015, respectively. Included within the Company's securities portfolios are securities that have been written-down to a zero carrying value. The credit loss component of debt securities held by the Company that had a noncredit loss component previously recognized in other comprehensive income decreased to $136 million at September 30, 2016 from $152 million at December 31, 2015, as a result of the sale and pay off of our remaining impaired securities during the third quarter of 2016. Of these amounts, $136 million and $123 million at September 30, 2016 and December 31, 2015, respectively, relate to debt securities that have been factored to zero, but the Company still holds legal title to these securities until maturity or until they are sold. Gains (Losses) on Securities and Other, Net The following table shows the components of the gains (losses) on securities and other, net line items on the consolidated statement of income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Loans Receivable, Net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS RECEIVABLE, NET | LOANS RECEIVABLE, NET Loans receivable, net at September 30, 2016 and December 31, 2015 are summarized as follows (dollars in millions):
At September 30, 2016, the Company pledged $3.4 billion and $0.3 billion of loans as collateral to the FHLB and Federal Reserve Bank, respectively. At December 31, 2015, the Company pledged $4.2 billion and $0.3 billion of loans as collateral to the FHLB and Federal Reserve Bank, respectively. The following table presents the total recorded investment in loans receivable and allowance for loan losses by loans that have been collectively evaluated for impairment and those that have been individually evaluated for impairment by loan class at September 30, 2016 and December 31, 2015 (dollars in millions):
Credit Quality and Concentrations of Credit Risk The Company tracks and reviews factors to predict and monitor credit risk in its mortgage loan portfolio on an ongoing basis. These factors include: loan type, estimated current LTV/CLTV ratios, delinquency history, borrowers’ current credit scores, housing prices, loan vintage and geographic location of the property. The Company believes LTV/CLTV ratios and credit scores are the key factors in determining future loan performance. The factors are updated on at least a quarterly basis. The Company tracks and reviews delinquency status to predict and monitor credit risk in the consumer loan portfolio on at least a quarterly basis. Credit Quality The following tables show the distribution of the Company’s mortgage loan portfolios by credit quality indicator at September 30, 2016 and December 31, 2015 (dollars in millions):
Concentrations of Credit Risk One- to four-family loans include loans for a five to ten year interest-only period, followed by an amortizing period ranging from 20 to 25 years. At September 30, 2016, 31% of the Company's one- to four-family portfolio was not yet amortizing. During the trailing twelve months ended September 30, 2016, borrowers of approximately 15% of the portfolio made voluntary annual principal payments of at least $2,500 and of this population, nearly half made principal payments that were $10,000 or greater. The home equity loan portfolio is primarily second lien loans on residential real estate properties, which have a higher level of credit risk than first lien mortgage loans. Approximately 13% of the home equity portfolio was in the first lien position and the Company holds both the first and second lien positions in less than 1% of the home equity loan portfolio at September 30, 2016. The home equity loan portfolio consists of approximately 18% of home equity installment loans and approximately 82% of HELOCs at September 30, 2016. Home equity installment loans are primarily fixed rate and fixed term, fully amortizing loans that do not offer the option of an interest-only payment. The majority of HELOCs convert to amortizing loans at the end of the draw period, which typically ranges from five to ten years. At September 30, 2016, approximately 1% of this portfolio will require the borrowers to repay the loan in full at the end of the draw period in a future period. At September 30, 2016, 27% of the HELOC portfolio had not converted from the interest-only draw period and had not begun amortizing. During the trailing twelve months ended September 30, 2016, borrowers of approximately 40% of the portfolio made annual principal payments of at least $500 on their HELOCs and slightly under half reduced their principal balance by at least $2,500. The following table outlines when one- to four-family and HELOCs convert to amortizing by percentage of the one- to four-family portfolio and HELOC portfolios, respectively, at September 30, 2016:
The average age of our mortgage loans receivable was 10.6 and 9.9 years at September 30, 2016 and December 31, 2015, respectively. Approximately 36% and 37% of the Company’s mortgage loans receivable were concentrated in California at September 30, 2016 and December 31, 2015, respectively. No other state had concentrations of mortgage loans that represented 10% or more of the Company’s mortgage loans receivable at September 30, 2016 and December 31, 2015. Delinquent Loans The following table shows total loans receivable by delinquency category at September 30, 2016 and December 31, 2015 (dollars in millions):
Loans delinquent 180 days and greater have been written down to their expected recovery value. Loans delinquent 90 to 179 days generally have not been written down to their expected recovery value (unless they are in process of bankruptcy or are modifications for which there is substantial doubt as to the borrower’s ability to repay the loan), but present a risk of future charge-off. Additional charge-offs on loans delinquent 180 days and greater are possible if home prices decline beyond current estimates. The Company monitors loans in which a borrower’s current credit history casts doubt on their ability to repay a loan. Loans are classified as special mention when they are between 30 and 89 days past due. The trend in special mention loan balances is generally indicative of the expected trend for charge-offs in future periods, as these loans have a greater propensity to migrate into nonaccrual status and ultimately charge-off. One- to four-family loans are generally secured in a first lien position by real estate assets, reducing the potential loss when compared to an unsecured loan. Home equity loans are generally secured by real estate assets; however, the majority of these loans are secured in a second lien position, which substantially increases the potential loss when compared to a first lien position. The loss severity of our second lien home equity loans was approximately 92% for a trailing twelve-month period as of September 30, 2016. Nonperforming Loans The Company classifies loans as nonperforming when they are no longer accruing interest, which includes loans that are 90 days and greater past due, TDRs that are on nonaccrual status for all classes of loans (including loans in bankruptcy) and certain junior liens that have a delinquent senior lien. The following table shows the comparative data for nonperforming loans at September 30, 2016 and December 31, 2015 (dollars in millions):
Real Estate Owned and Loans with Formal Foreclosure Proceedings in Process At September 30, 2016 and December 31, 2015, the Company held $30 million and $27 million, respectively, of real estate owned that were acquired through foreclosure or through a deed in lieu of foreclosure or similar legal agreement. The Company also held $104 million and $108 million of loans for which formal foreclosure proceedings were in process at September 30, 2016 and December 31, 2015, respectively. Allowance for Loan Losses The following table provides a roll forward by loan portfolio of the allowance for loan losses for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
Total loans receivable designated as held-for-investment decreased $0.8 billion during the nine months ended September 30, 2016. The allowance for loan losses was $235 million, or 5.8% of total loans receivable, as of September 30, 2016 compared to $353 million, or 7.1% of total loans receivable, as of December 31, 2015. The benefit for loan losses was $62 million and $131 million for the three and nine months ended September 30, 2016. The quantitative allowance methodology continues to include the identification of higher risk mortgage loans and the period of forecasted loan losses captured within the general allowance includes the total probable loss over the remaining life of these loans. The current period provision benefit of $62 million includes approximately $40 million resulting from updated performance expectations based on the sustained outperformance of a substantial volume of the high-risk HELOCs. The current period benefit also reflected recoveries in excess of prior expectations, including recoveries of previous charge-offs that were not included in our loss estimates, as well as payoffs on loans converting to amortizing. Impaired Loans—Troubled Debt Restructurings TDRs include two categories of loans: (1) loan modifications completed under the Company’s programs that involve granting an economic concession to a borrower experiencing financial difficulty, and (2) loans that have been charged off based on the estimated current value of the underlying property less estimated selling costs due to bankruptcy notification. Delinquency status is the primary measure the Company uses to evaluate the performance of loans modified as TDRs. As mentioned above, the Company classifies loans as nonperforming when they are no longer accruing interest, which includes loans that are 90 days and greater past due, TDRs that are on nonaccrual status for all classes of loans, including loans in bankruptcy, and certain junior liens that have a delinquent senior lien. The following table shows a summary of the Company’s recorded investment in TDRs that were on accrual and nonaccrual status, further disaggregated by delinquency status, in addition to the recorded investment in TDRs at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows the average recorded investment and interest income recognized both on a cash and accrual basis for the Company’s TDRs during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
Included in the allowance for loan losses was a specific valuation allowance of $57 million and $61 million that was established for TDRs at September 30, 2016 and December 31, 2015, respectively. The specific allowance for these individually impaired loans represents the forecasted losses over the estimated remaining life of the loans, including the economic concessions granted to the borrowers. The following table shows detailed information related to the Company’s TDRs at September 30, 2016 and December 31, 2015 (dollars in millions):
Troubled Debt Restructurings — Loan Modifications The Company has loan modification programs that focus on the mitigation of potential losses in the one- to four-family and home equity mortgage loan portfolio. The Company currently does not have an active loan modification program for consumer loans. The various types of economic concessions that may be granted in a loan modification typically consist of interest rate reductions, maturity date extensions, principal forgiveness or a combination of these concessions. The Company uses specialized servicers that focus on loan modifications and pursue trial modifications for loans that are more than 180 days delinquent. Trial modifications are classified immediately as TDRs and continue to be reported as delinquent until the successful completion of the trial period, which is typically 90 days. The loan then becomes a permanent modification reported as current but remains on nonaccrual status until six consecutive payments have been made. The following table shows loans modified as TDRs by delinquency category at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows loans modified as TDRs and the specific valuation allowance by loan portfolio as well as the percentage of total expected losses at September 30, 2016 and December 31, 2015 (dollars in millions):
The recorded investment in loans modified as TDRs includes the charge-offs related to certain loans that were written down to the estimated current value of the underlying property less estimated selling costs. These charge-offs were recorded on modified loans that were delinquent in excess of 180 days, in bankruptcy, or when certain characteristics of the loan, including CLTV, borrower’s credit and type of modification, cast substantial doubt on the borrower’s ability to repay the loan. The total expected loss on loans modified as TDRs includes both the previously recorded charge-offs and the specific valuation allowance. The vast majority of the Company’s loans modified as TDRs include an interest rate reduction in combination with another type of concession. The Company prioritizes the interest rate reduction modifications in combination with the other modification categories. Each class is mutually exclusive in that if a modification had an interest rate reduction with an extension and other modification, the modification would only be presented in the extension column in the table below. The following tables provide the number of loans and post-modification balances immediately after being modified by major class during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The Company considers modifications that become 30 days past due to have experienced a payment default. The following table shows the recorded investment in modifications that experienced a payment default within 12 months after the modification for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Derivative Instruments and Hedging Activities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company enters into derivative transactions primarily to protect against interest rate risk on the value of certain assets, liabilities and future cash flows. Each derivative instrument is recorded on the consolidated balance sheet at fair value as a freestanding asset or liability. The following table summarizes the fair value of derivatives as reported in the consolidated balance sheet at September 30, 2016 and December 31, 2015 (dollars in millions):
Cash Flow Hedges The Company terminated $4.4 billion of legacy wholesale funding obligations during the third quarter of 2015 along with the cash flow hedges used to hedge the forecasted transactions related to these obligations. As the Company's intent changed and the hedged forecasted transactions became probable of not occurring, the Company reclassified $370 million of pre-tax losses on cash flow hedges from accumulated other comprehensive loss into earnings during the three months ended September 30, 2015. See Note 11— Other Borrowings for additional information. Fair Value Hedges Fair value hedges are used to offset exposure to changes in value of certain fixed-rate assets and liabilities. Fair value hedges are accounted for by recording the fair value of the derivative instrument and the fair value of the asset or liability being hedged on the consolidated balance sheet. Changes in the fair value of both the derivative instruments and the underlying assets or liabilities are recognized in the gains (losses) on securities and other, net line item in the consolidated statement of income (loss). To the extent that the hedge is ineffective, the changes in the fair values will not offset and the difference, or hedge ineffectiveness, is reflected in the gains (losses) on securities and other, net line item in the consolidated statement of income (loss). Hedge accounting is discontinued for fair value hedges if a derivative instrument is sold, terminated or otherwise de-designated. If fair value hedge accounting is discontinued, the previously hedged item is no longer adjusted for changes in fair value through the consolidated statement of income (loss) and the cumulative net gain or loss on the hedged asset or liability at the time of de-designation is amortized to interest income or interest expense using the effective interest method over the expected remaining life of the hedged item. Changes in the fair value of the derivative instruments after de-designation of fair value hedge accounting are recorded in the gains (losses) on securities and other, net line item in the consolidated statement of income (loss). The following table summarizes the effect of interest rate contracts designated as fair value hedges and related hedged items on the consolidated statement of income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Deposits |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS | DEPOSITS Deposits are summarized as follows (dollars in millions):
|
Other Borrowings |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Borrowings Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWINGS | OTHER BORROWINGS Other borrowings at September 30, 2016 and December 31, 2015 are summarized as follows (dollars in millions):
The Company terminated $4.4 billion of legacy wholesale funding obligations during the third quarter of 2015. In connection with this termination, the Company recorded a pre-tax charge of $413 million in consolidated statement of income (loss), including $43 million in the losses on early extinguishment of debt, net line item, and $370 million in the gains (losses) on securities and other, net line item that were reclassified from accumulated other comprehensive loss attributable to cash flow hedges. The Company repurchased $14 million of trust preferred securities in advance of maturity during the third quarter of 2015 and recorded a gain on early extinguishment of debt of $4 million. External Lines of Credit maintained at E*TRADE Clearing E*TRADE Clearing's external liquidity lines total approximately $1.1 billion as of September 30, 2016 and include the following:
The revolving credit facility contains maintenance covenants relating to E*TRADE Clearing's minimum consolidated tangible net worth and regulatory net capital ratio. There were no outstanding balances for these lines at September 30, 2016. |
Corporate Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CORPORATE DEBT | CORPORATE DEBT Corporate debt at September 30, 2016 and December 31, 2015 is outlined in the following table (dollars in millions):
4 5/8% Notes In March 2015, the Company issued an aggregate principal amount of $460 million in 4 5/8% Notes due September 2023. Interest is payable semi-annually and the notes may be called by the Company beginning March 15, 2018 at a premium, which declines over time. The Company used the net proceeds from the issuance of the 4 5/8% Notes, along with approximately $432 million of existing corporate cash to redeem all of the outstanding 6 3/8% Notes including paying the associated redemption premiums of $68 million, accrued interest and related fees and expenses. This resulted in $73 million in losses on early extinguishment of debt for the quarter ended March 31, 2015. Credit Facility In November 2014, the Company entered into a $200 million senior secured revolving credit facility and in February of 2015, entered into an amendment to increase commitments thereunder by $50 million. At September 30, 2016, there was no outstanding balance under the revolving credit facility and available capacity for borrowings was $250 million. The credit facility expires in November 2017. The Company has the ability to borrow against the credit facility for working capital and general corporate purposes. The credit facility contains certain maintenance covenants, including the requirement for the parent company to maintain unrestricted cash of $100 million. |
Income Taxes |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income Tax Expense (Benefit) Income tax expense was $86 million and $208 million for the three and nine months ended September 30, 2016, respectively, compared to an income tax benefit of $93 million and $245 million for the same periods in 2015. The effective tax rates were 38% and 33% for the three and nine months ended September 30, 2016, respectively, compared to 38% and 372% for the same periods in 2015. The effective tax rate of 33% for the nine months ended September 30, 2016 was primarily driven by the release of valuation allowances on certain state deferred tax assets. Effective January 1, 2016, the Company elected to treat its broker-dealers, E*TRADE Securities and E*TRADE Clearing, as single member LLCs for tax purposes. The election to be treated as single member LLCs and future income projections at the broker-dealers will result in the utilization of certain state deferred tax assets, primarily state NOLs, against which the Company had recorded valuation allowances. Accordingly, the Company recognized a tax benefit of $31 million during the three months ended March 31, 2016. The effective tax rate of 372% for the nine months ended September 30, 2015, was primarily driven by the settlement of an IRS examination of the Company's 2007, 2009, and 2010 federal tax returns, which resulted in the recognition of a $220 million income tax benefit in the second quarter of 2015. Deferred Taxes and Valuation Allowance Deferred income taxes are recorded when revenues and expenses are recognized in different periods for financial statement and tax return purposes. The Company maintains valuation allowances against the portion of deferred tax assets that it does not believe would be realized. The Company’s deferred tax asset, valuation allowance, and deferred tax liability balances at September 30, 2016 and December 31, 2015 are summarized in the following table (dollars in millions):
|
Shareholders' Equity |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDER'S EQUITY | SHAREHOLDERS' EQUITY The following tables present after-tax changes in each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The following tables present other comprehensive income (loss) activity and the related tax effect for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The following table presents the consolidated statement of income (loss) line items impacted by reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The Company terminated $4.4 billion of legacy wholesale funding obligations during the third quarter of 2015. In connection with this termination, the Company recorded a pre-tax charge of $413 million in the consolidated statement of income (loss), including $43 million in the losses on early extinguishment of debt, net line item, and $370 million in the gains (losses) on securities and other, net line item that were reclassified from accumulated other comprehensive loss attributable to cash flow hedges. Conversions of Convertible Debentures During the nine months ended September 30, 2016 and 2015, $5 million and $4 million of the Company’s convertible debentures were converted into 0.5 million and 0.3 million shares of common stock, respectively. Issuance of Preferred Stock On August 25, 2016, the Company issued 400,000 shares of Series A fixed-to-floating rate non-cumulative perpetual preferred stock for gross proceeds of $400 million. Net proceeds, after issuance cost, were approximately $394 million. The shares have a par value of $0.01 and a liquidation preference of $1,000 per share. Dividends are non-cumulative and are payable semi-annually at a rate of 5.875% from the original issue date to, but excluding, September 15, 2026. Dividends thereafter are payable at a floating rate equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 4.435%. As no preferred stock dividends were declared during the three months ended September 30, 2016, the Company has not presented net income available to common shareholders on the consolidated statement of income (loss). The Company used the proceeds of the issuance, along with existing corporate cash, to fund the acquisition of OptionsHouse. See Note 2—Business Acquisition for additional information. Share Repurchases On November 19, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $800 million of shares of the Company's common stock through March 31, 2017. During the six months ended June 30, 2016, the Company repurchased a total of $452 million, or 19.0 million shares, of common stock under this program which brings total repurchases to $502 million, or 20.6 million shares, since inception. As of September 30, 2016, $298 million remained available for additional repurchases. The Company accounts for share repurchases retired after repurchase by allocating the excess repurchase price over par to additional paid-in-capital. Due to the OptionsHouse acquisition, the Company did not repurchase shares during the third quarter of 2016. The Company will continue to assess the best use of corporate cash and anticipates resuming share repurchases in the second half of 2017. |
Earnings (Loss) Per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The following table presents a reconciliation of basic and diluted earnings (loss) per share (in millions, except share data and per share amounts):
The Company excluded the following shares from the calculation of diluted earnings (loss) per share as the effect would have been anti-dilutive (shares in millions):
|
Regulatory Requirements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY REQUIREMENTS | REGULATORY REQUIREMENTS Broker-Dealer Capital Requirements The Company’s U.S. broker-dealer subsidiaries are subject to the Uniform Net Capital Rule (the "Rule") under the Securities Exchange Act of 1934 administered by the SEC and FINRA, which requires the maintenance of minimum net capital. The minimum net capital requirements can be met under either the Aggregate Indebtedness method or the Alternative method. Under the Aggregate Indebtedness method, a broker-dealer is required to maintain minimum net capital of the greater of 6 2/3% of its aggregate indebtedness, as defined, or a minimum dollar amount. Under the Alternative method, a broker-dealer is required to maintain net capital equal to the greater of $250,000 or 2% of aggregate debit balances arising from customer transactions. The method used depends on the individual U.S. broker-dealer subsidiary. The Company’s U.S. broker-dealer subsidiaries are also subject to Commodity Futures Trading Commission (“CFTC”) regulations (“Reg. 1.17”) under the Commodity Exchange Act, which require the maintenance of minimum net capital equal to the greater of net capital requirement under Reg. 1.17 or the sum of 8% of the total risk margin requirements for all positions carried in client accounts and 8% of the total risk margin requirements for all positions carried in non-client accounts, as defined in Reg. 1.17. The Company’s international broker-dealer subsidiary is subject to capital requirements determined by its respective regulator. At September 30, 2016 and December 31, 2015, all of the Company’s broker-dealer subsidiaries met minimum net capital requirements. The tables below summarize the minimum capital requirements and excess capital for the Company’s broker-dealer subsidiaries at September 30, 2016 and December 31, 2015 (dollars in millions):
Bank Capital Requirements E*TRADE Financial and E*TRADE Bank are subject to various regulatory capital requirements administered by federal banking agencies. Beginning January 1, 2015, both E*TRADE Financial and E*TRADE Bank calculate regulatory capital under the Basel III framework using the Standardized Approach, subject to transition provisions. Failure to meet minimum capital requirements can trigger certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on E*TRADE Financial’s and E*TRADE Bank’s financial condition and results of operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, E*TRADE Financial and E*TRADE Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. In addition, E*TRADE Bank may not pay dividends to the parent company without the non-objection, or in certain cases the approval, of its regulators, and any loans by E*TRADE Bank to the parent company and its other non-bank subsidiaries are subject to various quantitative, arm’s length, collateralization and other requirements. E*TRADE Financial’s and E*TRADE Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require E*TRADE Financial and E*TRADE Bank to meet minimum Common equity Tier 1 capital, Tier 1 risk-based capital, Total risk-based capital, and Tier 1 leverage ratios. Events beyond management's control, such as deterioration in credit markets, could adversely affect future earnings and E*TRADE Financial’s and E*TRADE Bank’s ability to meet future capital requirements. E*TRADE Financial and E*TRADE Bank were categorized as "well capitalized" under the regulatory framework for prompt corrective action for the periods presented in the table below (dollars in millions):
|
Commitments, Contingencies and Other Regulatory Matters |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND OTHER REGULATORY MATTERS | COMMITMENTS, CONTINGENCIES AND OTHER REGULATORY MATTERS Legal Matters The Company reviews its lawsuits, regulatory inquiries and other legal proceedings on an ongoing basis and provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. The Company establishes an accrual for losses at management's best estimate when it assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The estimated liability is revised based on currently available information. Litigation Matters On October 27, 2000, Ajaxo, Inc. ("Ajaxo") filed a complaint in the Superior Court for the State of California, County of Santa Clara. Ajaxo sought damages and certain non-monetary relief for the Company’s alleged breach of a non-disclosure agreement with Ajaxo pertaining to certain wireless technology that Ajaxo offered the Company as well as damages and other relief against the Company for their alleged misappropriation of Ajaxo’s trade secrets. Following a jury trial, a judgment was entered in 2003 in favor of Ajaxo against the Company for $1 million for breach of the Ajaxo non-disclosure agreement. Although the jury found in favor of Ajaxo on its claim against the Company for misappropriation of trade secrets, the trial court subsequently denied Ajaxo’s requests for additional damages and relief. On December 21, 2005, the California Court of Appeal affirmed the above-described award against the Company for breach of the nondisclosure agreement but remanded the case to the trial court for the limited purpose of determining what, if any, additional damages Ajaxo may be entitled to as a result of the jury’s previous finding in favor of Ajaxo on its claim against the Company for misappropriation of trade secrets. Although the Company paid Ajaxo the full amount due on the above-described judgment, the case was remanded back to the trial court, and on May 30, 2008, a jury returned a verdict in favor of the Company denying all claims raised and demands for damages against the Company. Following the trial court’s entry of judgment in favor of the Company on September 5, 2008, Ajaxo filed post-trial motions for vacating this entry of judgment and requesting a new trial. The trial court denied these motions. On December 2, 2008, Ajaxo filed a notice of appeal with the Court of Appeal of the State of California for the Sixth District. On August 30, 2010, the Court of Appeal affirmed the trial court’s verdict in part and reversed the verdict in part, remanding the case. The Company petitioned the Supreme Court of California for review of the Court of Appeal decision. On December 16, 2010, the California Supreme Court denied the Company’s petition for review and remanded for further proceedings to the trial court. The testimonial phase of the third trial in this matter concluded on June 12, 2012. By order dated May 28, 2014, the Court determined to conduct a second phase of this bench trial to allow Ajaxo to attempt to prove entitlement to additional royalties. Hearings in phase two of the trial concluded January 8, 2015. In a Judgment and Statement of Decision filed September 16, 2015, the Court denied all claims for royalties by Ajaxo. Ajaxo’s post-trial motions were denied. Ajaxo has appealed to the Court of Appeal, Sixth District. There is no briefing schedule on this appeal. The Company will continue to defend itself vigorously. On May 16, 2011, Droplets Inc., the holder of two patents pertaining to user interface servers, filed a complaint in the U.S. District Court for the Eastern District of Texas against E*TRADE Financial Corporation, E*TRADE Securities, E*TRADE Bank and multiple other unaffiliated financial services firms. Plaintiff contends that the defendants engaged in patent infringement under federal law. Plaintiff seeks unspecified damages and an injunction against future infringements, plus royalties, costs, interest and attorneys’ fees. On March 28, 2012, a change of venue was granted and the case was transferred to the United States District Court for the Southern District of New York. The Company's motion for summary judgment on the grounds of non-infringement was granted by the U.S. District Court in a Decision and Order dated March 9, 2015. All remaining claims are stayed pending resolution of issues on Droplet's remaining patents under review by the Patent Trial and Appeal Board ("PTAB"). On July 6, 2015, the PTAB instituted an inter partes review of plaintiff's '115 patent. A hearing on the inter partes review was conducted on March 14, 2016. On June 23, 2016, the PTAB deemed Droplets’ putative '115 patent to be “unpatentable.” In a separate proceeding, the PTAB has also separately deemed Droplets’ putative '838 patent to be “unpatentable.” Droplets has appealed to the Circuit Court of Appeals for the District of Columbia. The Company will continue to defend itself vigorously in this matter. Several cases have been filed nationwide involving the April 2007 leveraged buyout ("LBO") of the Tribune Company ("Tribune") by Sam Zell, and the subsequent bankruptcy of Tribune. In William Niese et al. v. A.G. Edwards et al., in Superior Court of Delaware, New Castle County, former Tribune employees and retirees claimed that Tribune was actually insolvent at the time of the LBO and that the LBO constituted a fraudulent transaction that depleted the plaintiffs’ retirement plans, rendering them worthless. E*TRADE Clearing, along with numerous other financial institutions, is a named defendant in this case. One of the defendants removed the action to federal district court in Delaware on July 1, 2011. In Deutsche Bank Trust Company Americas et al. v. Adaly Opportunity Fund et al., filed in the Supreme Court of New York, New York County on June 3, 2011, the Trustees of certain notes issued by Tribune allege wrongdoing in connection with the LBO. In particular the Trustees claim that the LBO constituted a constructive fraudulent transfer under various state laws. G1 Execution Services, LLC (formerly known as E*TRADE Capital Markets, LLC), along with numerous other financial institutions, is a named defendant in this case. In Deutsche Bank et al. v. Ohlson et al., filed in the U.S. District Court for the Northern District of Illinois, noteholders of Tribune asserted claims of constructive fraud and G1 Execution Services, LLC is a named defendant in this case. Under the agreement governing the sale of G1 Execution Services, LLC to Susquehanna International Group, LLP, the Company remains responsible for any resulting actions taken against G1 Execution Services, LLC as a result of such investigation. In EGI-TRB LLC et al. v. ABN-AMRO et al., filed in the Circuit Court of Cook County Illinois, creditors of Tribune assert fraudulent conveyance claims against multiple shareholder defendants and E*TRADE Clearing is a named defendant in this case. These cases have been consolidated into a multi-district litigation. The Company’s time to answer or otherwise respond to the complaints has been stayed pending further orders of the Court. On September 18, 2013, the Court entered the Fifth Amended Complaint. On September 23, 2013, the Court granted the defendants’ motion to dismiss the individual creditors’ complaint. The individual creditors filed a notice of appeal. The steering committees for plaintiffs and defendants have submitted a joint plan for the next phase of litigation. The next phase of the action will involve individual motions to dismiss. On April 22, 2014, the Court issued its protocols for dismissal motions for those defendants who were "mere conduits" who facilitated the transactions at issue. The motion to dismiss Count I of the Fifth Amended Complaint for failure to state a cause of action was fully briefed on July 2, 2014, and the parties await decision on that motion. The Litigation Trustee for the Plaintiffs dismissed all claims against E*TRADE Clearing pursuant to a Stipulation confirmed by the Court on June 7, 2016. The only E*TRADE entity remaining in the case is the E*TRADE S&P 500 Fund. The claims against the E*TRADE S&P 500 Fund are not material in amount. Nevertheless, the Company will continue to defend itself vigorously in these matters. On April 30, 2013, a putative class action was filed by John Scranton, on behalf of himself and a class of persons similarly situated, against E*TRADE Financial Corporation and E*TRADE Securities in the Superior Court of California, County of Santa Clara, pursuant to the California procedures for a private Attorney General action. The complaint alleged that the Company misrepresented through its website that it would always automatically exercise options that were in-the-money by $0.01 or more on expiration date. Plaintiffs allege violations of the California Unfair Competition Law, the California Consumer Remedies Act, fraud, misrepresentation, negligent misrepresentation and breach of fiduciary duty. The case has been deemed complex within the meaning of the California Rules of Court, and a case management conference was held on September 13, 2013. The Company’s demurrer and motion to strike the complaint were granted by order dated December 20, 2013. The Court granted leave to amend the complaint. A second amended complaint was filed on January 31, 2014. On March 11, 2014, the Company moved to strike and for a demurrer to the second amended complaint. On October 20, 2014, the Court sustained the Company's demurrer, dismissing four counts of the second amended complaint with prejudice and two counts without prejudice. The plaintiffs filed a third amended complaint on November 10, 2014. The Company filed a third demurrer and motion to strike on December 12, 2014. By order dated March 18, 2015, the Superior Court entered a final order sustaining the Company's demurrer on all remaining claims with prejudice. Final judgment was entered in the Company's favor on April 8, 2015. Plaintiff filed a Notice of Appeal April 27, 2015. Briefing is scheduled to continue through 2016. The Company will continue to defend itself vigorously in this matter. On March 26, 2015, a putative class action was filed in the U.S. District Court for the Northern District of California by Ty Rayner, on behalf of himself and all others similarly situated, naming E*TRADE Financial Corporation and E*TRADE Securities as defendants. The complaint alleges that E*TRADE breached a fiduciary duty and unjustly enriched itself in connection with the routing of its customers’ orders to various market-makers and exchanges. Plaintiff seeks unspecified damages, declaratory relief, restitution, disgorgement of payments received by the Company, and attorneys’ fees. By stipulation, the parties have agreed to extend indefinitely the due date for a response to the claim. On July 23, 2016, a putative class action was filed in the U.S. District Court for the Southern District of New York by Craig L. Schwab, on behalf of himself and others similarly situated, naming E*TRADE Financial Corporation, E*TRADE Securities LLC, and former Company executives as defendants. The complaint alleges that E*TRADE violated federal securities laws in connection with the routing of its customers’ orders to various market-makers and exchanges. Plaintiff seeks unspecified damages, declaratory relief, restitution, disgorgement of payments received by the Company, and attorneys’ fees. By stipulation, the Rayner case has been consolidated with the Schwab case and both matters are now venued in the Southern District of New York. The Company will continue to defend itself vigorously in these matters. In addition to the matters described above, the Company is subject to various legal proceedings and claims that arise in the normal course of business. In each pending matter, the Company contests liability or the amount of claimed damages. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages, or where investigation or discovery have yet to be completed, the Company is unable to estimate a range of reasonably possible losses on its remaining outstanding legal proceedings; however, the Company believes any losses, both individually or in the aggregate, would not be reasonably likely to have a material adverse effect on the consolidated financial condition or results of operations of the Company. An unfavorable outcome in any matter could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. In addition, even if the ultimate outcomes are resolved in the Company’s favor, the defense of such litigation could entail considerable cost or the diversion of the efforts of management, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. Regulatory Matters The securities, futures, foreign currency and banking industries are subject to extensive regulation under federal, state and applicable international laws. From time to time, the Company has been threatened with or named as a defendant in lawsuits, arbitrations and administrative claims involving securities, banking and other matters. The Company is also subject to periodic regulatory examinations and inspections. Compliance and trading problems that are reported to regulators, such as the SEC, Federal Reserve Bank of Richmond, FINRA, CFTC, NFA or OCC by dissatisfied customers or others are investigated by such regulators, and may, if pursued, result in formal claims being filed against the Company by customers or disciplinary action being taken against the Company or its employees by regulators. Any such claims or disciplinary actions that are decided against the Company could have a material impact on the financial results of the Company or any of its subsidiaries. During 2012, the Company completed a review of order handling practices and pricing for order flow between E*TRADE Securities and G1 Execution Services, LLC. The Company implemented changes to its practices and procedures that were recommended during the review. Banking regulators and federal securities regulators were regularly updated during the course of the review. Subsequently, on July 11, 2013, FINRA notified E*TRADE Securities and G1 Execution Services, LLC that it was conducting an examination of both firms’ order handling practices. On March 19, 2015, the Company received a Wells notice from FINRA's Market Regulation Department relating to the adequacy of E*TRADE Securities' order-routing disclosures and supervisory process for reviewing execution quality during the period covered by the Company's 2012 internal review (July 2011 - June 2012). The Company cooperated fully with FINRA in the examination. In June 2016, E*TRADE Securities entered into a settlement with FINRA whereby it agreed to a censure and paid a $900,000 fine. Insurance The Company maintains insurance coverage that management believes is reasonable and prudent. The principal insurance coverage it maintains covers commercial general liability; property damage; hardware/software damage; cyber liability; directors and officers; employment practices liability; certain criminal acts against the Company; and errors and omissions. The Company believes that such insurance coverage is adequate for the purpose of its business. The Company’s ability to maintain this level of insurance coverage in the future, however, is subject to the availability of affordable insurance in the marketplace. Commitments In the normal course of business, the Company makes various commitments to extend credit and incur contingent liabilities that are not reflected in the consolidated balance sheet. Significant changes in the economy or interest rates may influence the impact that these commitments and contingencies have on the Company in the future. The Company’s equity method, cost method and other investments are generally limited liability investments in partnerships, companies and other similar entities, including tax credit partnerships and community development entities, which are not required to be consolidated. The Company had $51 million in unfunded commitments with respect to these investments at September 30, 2016. At September 30, 2016, the Company had approximately $24 million of certificates of deposit scheduled to mature in less than one year and approximately $32 million of unfunded commitments to extend credit. Guarantees In prior periods when the Company sold loans, the Company provided guarantees to investors purchasing mortgage loans, which are considered standard representations and warranties within the mortgage industry. The primary guarantees are that: the mortgage and the mortgage note have been duly executed and each is the legal, valid and binding obligation of the Company, enforceable in accordance with its terms; the mortgage has been duly acknowledged and recorded and is valid; and the mortgage and the mortgage note are not subject to any right of rescission, set-off, counterclaim or defense, including, without limitation, the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto. The Company is responsible for the guarantees on loans sold. If these claims prove to be untrue, the investor can require the Company to repurchase the loan and return all loan purchase and servicing release premiums. Management does not believe the potential liability exposure will have a material impact on the Company’s results of operations, cash flows or financial condition due to the nature of the standard representations and warranties, which have resulted in a minimal amount of loan repurchases. Prior to 2008, ETBH raised capital through the formation of trusts, which sold TRUPs in the capital markets. The capital securities must be redeemed in whole at the due date, which is generally 30 years after issuance. Each trust issued TRUPs at par, with a liquidation amount of $1,000 per capital security. The trusts used the proceeds from the sale of issuances to purchase subordinated debentures issued by ETBH. During the 30-year period prior to the redemption of the TRUPs, ETBH guarantees the accrued and unpaid distributions on these securities, as well as the redemption price of the securities and certain costs that may be incurred in liquidating, terminating or dissolving the trusts (all of which would otherwise be payable by the trusts). At September 30, 2016, management estimated that the maximum potential liability under this arrangement, including the current carrying value of the trusts, was equal to approximately $418 million or the total face value of these securities plus accrued interest payable, which may be unpaid at the termination of the trust arrangement. |
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Organization (policy) | Organization—E*TRADE Financial Corporation is a financial services company that provides brokerage and related products and services primarily to individual retail investors under the brand "E*TRADE Financial." The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. |
||||||||||||
Basis of Presentation (policy) | Basis of Presentation—The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries as determined under the voting interest model. Entities in which the Company has the ability to exercise significant influence but in which the Company does not possess control are generally accounted for by the equity method. Entities in which the Company does not have the ability to exercise significant influence are generally carried at cost. However, investments in marketable equity securities where the Company does not have the ability to exercise significant influence over the entities are accounted for as available-for-sale equity securities. The Company also evaluates its initial and continuing involvement with certain entities to determine if the Company is required to consolidate the entities under the variable interest entity ("VIE") model. This evaluation is based on a qualitative assessment of whether the Company is the primary beneficiary of the VIE, which requires the Company to possess both: 1) the power to direct the activities that most significantly impact the economic performance of the VIE; and 2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company's consolidated financial statements are prepared in accordance with GAAP. Intercompany accounts and transactions are eliminated in consolidation. These consolidated financial statements reflect all adjustments, which are all normal and recurring in nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2015. Beginning January 1, 2016, the Company changed its segment reporting structure to align with the manner in which the Chief Operating Decision Maker now reviews business performance and makes resource allocation decisions. As the Chief Operating Decision Maker's business performance assessments and resource allocation decisions are based on consolidated operating margin, the Company no longer has separate operating segments and, accordingly, no longer presents disaggregated segment financial results. The Company also updated the presentation of its consolidated statement of income (loss) to reflect how business performance is now measured and prior periods have been reclassified to conform to the current period presentation as follows:
|
||||||||||||
Use of Estimates (policy) | Use of Estimates—Preparing the Company's consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes for the periods presented. Actual results could differ from management’s estimates. Certain significant accounting policies are critical because they are based on estimates and assumptions that require complex and subjective judgments by management. Changes in these estimates or assumptions could materially impact the Company’s financial condition and results of operations. Material estimates in which management believes changes could reasonably occur include: allowance for loan losses; asset impairment, including goodwill impairment and OTTI; estimates of effective tax rates, deferred taxes and valuation allowance; accounting for derivative instruments; and fair value measurements. |
||||||||||||
Margin receivables (policy) | Margin Receivables—Margin receivables represent credit extended to customers to finance their purchases of securities by borrowing against securities the customers own. Securities owned by customers are held as collateral for amounts due on the margin receivables, the value of which is not reflected in the consolidated balance sheet. The Company is permitted to sell or re-pledge these securities held as collateral and to use the securities to enter into securities lending transactions, to collateralize borrowings or for delivery to counterparties to cover customer short positions. The fair value of securities that the Company received as collateral in connection with margin receivables and securities borrowing activities, where the Company is permitted to sell or re-pledge the securities, was approximately $9.4 billion and $10.1 billion at September 30, 2016 and December 31, 2015, respectively. Of this amount, $2.1 billion and $2.5 billion had been pledged or sold in connection with securities loans and deposits with clearing organizations at September 30, 2016 and December 31, 2015, respectively. |
||||||||||||
New accounting and disclosure guidance (policy) | New Accounting and Disclosure Guidance—Below is the new accounting and disclosure guidance that relates to activities in which the Company is engaged. Adoption of New Accounting Standards Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern In August 2014, the FASB amended the guidance related to an entity’s evaluations and disclosures of going concern uncertainties. The new guidance requires management to perform interim and annual assessments of the entity’s ability to continue as a going concern within one year of the date the financial statements are issued, and to provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. Consolidation In February 2015, the FASB amended the guidance on consolidation of certain legal entities. The amended guidance modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, and clarifies how to determine whether a group of equity holders has power over an entity. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016 on a modified retrospective basis. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. Accounting for Customer Fees Paid in a Cloud Computing Arrangement In April 2015, the FASB amended the accounting guidance on customer fees paid in a cloud computing arrangement. The amended guidance requires that internal-use software accessed by a customer in cloud computing arrangements be accounted for as software licenses if specific criteria are met; otherwise they should be accounted for as service contracts. The Company adopted the amended guidance for annual and interim periods beginning on January 1, 2016 on a prospective basis. The adoption of the amended guidance did not impact the Company’s financial condition, results of operations or cash flows. New Accounting Standards Not Yet Adopted Revenue Recognition on Contracts with Customers In May 2014, the FASB amended the guidance on revenue recognition on contracts with customers. The new standard outlines a single comprehensive model for entities to apply in accounting for revenue arising from contracts with customers. The FASB issued supplemental amendments to the new standard to clarify certain accounting guidance and provide narrow scope improvements and practical expedients in the first half of 2016. The amended guidance will be effective for annual and interim periods beginning on January 1, 2018 for the Company and may be applied on either a full retrospective or modified retrospective basis. The Company is currently evaluating the impact of the new accounting guidance and expects to complete this evaluation in 2017; however, the adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Classification and Measurement of Financial Instruments In January 2016, the FASB amended the accounting and disclosure guidance on the classification and measurement of financial instruments. Relevant changes in the amended guidance include the requirement that equity investments, excluding those accounted for under the equity method of accounting or those resulting in consolidation of the investee, be measured at fair value in the consolidated balance sheet with changes in fair value recognized in net income. For disclosure purposes, the Company will no longer be required to disclose the methods and significant assumptions used to estimate fair value for financial instruments measured at amortized cost in the consolidated balance sheet. The amended guidance will be effective for interim and annual periods beginning on January 1, 2018 for the Company and is required to be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the consolidated balance sheet on that date. While the Company is currently evaluating the impact of the new accounting guidance, the adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Accounting for Leases In February 2016, the FASB amended the guidance on accounting for leases. The new standard requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all qualifying leases with terms of more than twelve months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains substantially unchanged and depends on classification as a finance or operating lease. The new standard also requires additional quantitative and qualitative disclosures that provide additional information about the amounts related to leasing arrangements recorded in the financial statements. The new guidance will be effective for interim and annual periods beginning on January 1, 2019 for the Company and is required to be applied on a modified retrospective basis to the earliest period presented, which includes practical expedient options in certain circumstances. The Company is currently evaluating the impact of the new accounting guidance on the Company's financial condition, results of operations and cash flows. Accounting for Employee Share-based Payments In March 2016, the FASB amended the accounting guidance on employee shared-based payments. Relevant changes in the amended guidance include the requirement to recognize all excess tax benefits and deficiencies upon exercise or vesting as income tax expense or benefit in the income statement; to treat excess tax benefits and deficiencies as discrete items in the reporting period they occur; to not delay recognition of excess tax benefits until the tax benefit is realized through a reduction in current taxes payable; and to make an accounting policy election to either estimate forfeitures or account for forfeiture as they occur. The new guidance will be effective for interim and annual periods beginning on January 1, 2017 for the Company and application methods vary based on the amended guidance. Early adoption in interim periods is permitted. The adoption of the amended guidance is not expected to have a material impact on the Company’s financial condition, results of operations or cash flows. Accounting for Credit Losses In June 2016, the FASB amended the accounting guidance on accounting for credit losses. The amended guidance requires measurement of all expected credit losses for financial instruments and other commitments to extend credit held at the reporting date. For financial assets measured at amortized cost, factors such as historical experience, current conditions, and reasonable and supportable forecasts will be used to estimate expected credit losses. The amended guidance will also change the manner in which credit losses are recognized on debt securities classified as available-for-sale. The new guidance will be effective for interim and annual periods beginning January 1, 2020 for the Company. Early adoption is permitted. The Company is currently evaluating the impact of the new accounting guidance on the Company's financial condition, results of operations and cash flows. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB amended the guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows to eliminate current diversity in practice. The new guidance will be effective for interim and annual periods beginning January 1, 2018 for the Company and must be applied using a retrospective transition method to each period presented. Early adoption is permitted. The Company is currently evaluating the impact of the new accounting guidance. |
Business Acquisition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the provisional allocation of the purchase price to the net assets of OptionsHouse as of September 12, 2016 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the provisional fair values of the assets acquired and liabilities assumed as of the acquisition date. The allocation of the purchase price is provisional and subject to further adjustment as information relative to the acquisition date fair value of intangible assets is finalized. We do not expect that any adjustments to the provisional fair value will be material to the Company's consolidated financial statements (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The following table summarizes the provisional estimated fair value and estimated useful lives of the intangible assets (dollars in millions):
|
Restructuring and Acquisition-Related Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Acquisition-Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table shows the components of restructuring and acquisition-related activities expense for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Interest Income and Interest Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income and Interest Expense Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income and Interest Expense Disclosure | The following table shows the components of interest income and interest expense for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Fair Value Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Inputs, Assets, Quantitative Information | The weighted average coupon rates for the available-for-sale mortgage-backed securities at September 30, 2016 are shown in the following table:
The following table presents additional information about significant unobservable inputs used in the valuation of assets measured at fair value on a nonrecurring basis that were categorized in Level 3 of the fair value hierarchy at September 30, 2016 and December 31, 2015:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | Assets and liabilities measured at fair value at September 30, 2016 and December 31, 2015 are summarized in the following tables (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains and Losses, Fair Value Measurements, Nonrecurring | The following table presents losses recognized on assets measured at fair value on a nonrecurring basis during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The following table summarizes the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not carried at fair value on the consolidated balance sheet at September 30, 2016 and December 31, 2015 (dollars in millions):
|
Offsetting Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities [Table Text Block] | The following table presents information about these transactions to enable the users of the Company’s financial statements to evaluate the potential effect of rights of set-off between these recognized assets and recognized liabilities at September 30, 2016 and December 31, 2015 (dollars in millions):
|
Available-for-Sale and Held-to-Maturity Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Securities | The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2016 and December 31, 2015 are shown in the following tables (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Classified by Contractual Maturity Date | The contractual maturities of all available-for-sale and held-to-maturity debt securities at September 30, 2016 are shown in the following table (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unrealized Loss on Investments | The following tables show the fair value and unrealized or unrecognized losses on available-for-sale and held-to-maturity securities, aggregated by investment category, and the length of time that individual securities have been in a continuous unrealized or unrecognized loss position at September 30, 2016 and December 31, 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) on Loans and Investments | The following table shows the components of the gains (losses) on securities and other, net line items on the consolidated statement of income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Loans Receivable, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Loans Receivable, Net [Table Text Block] | Loans receivable, net at September 30, 2016 and December 31, 2015 are summarized as follows (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable, Allowance for Loan Losses | The following table presents the total recorded investment in loans receivable and allowance for loan losses by loans that have been collectively evaluated for impairment and those that have been individually evaluated for impairment by loan class at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table provides a roll forward by loan portfolio of the allowance for loan losses for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Quality Indicators for Loan Portfolio | The following tables show the distribution of the Company’s mortgage loan portfolios by credit quality indicator at September 30, 2016 and December 31, 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk | The following table outlines when one- to four-family and HELOCs convert to amortizing by percentage of the one- to four-family portfolio and HELOC portfolios, respectively, at September 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans by Delinquency Category and Non-Performing Loans | The following table shows the comparative data for nonperforming loans at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows total loans receivable by delinquency category at September 30, 2016 and December 31, 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impaired Financing Receivables | The following table shows detailed information related to the Company’s TDRs at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows a summary of the Company’s recorded investment in TDRs that were on accrual and nonaccrual status, further disaggregated by delinquency status, in addition to the recorded investment in TDRs at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows the average recorded investment and interest income recognized both on a cash and accrual basis for the Company’s TDRs during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled Debt Restructurings - Modifications | The following table shows the recorded investment in modifications that experienced a payment default within 12 months after the modification for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The following tables provide the number of loans and post-modification balances immediately after being modified by major class during the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
The following table shows loans modified as TDRs and the specific valuation allowance by loan portfolio as well as the percentage of total expected losses at September 30, 2016 and December 31, 2015 (dollars in millions):
The following table shows loans modified as TDRs by delinquency category at September 30, 2016 and December 31, 2015 (dollars in millions):
|
Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Amounts of Derivatives Designated as Hedging Instruments | The following table summarizes the fair value of derivatives as reported in the consolidated balance sheet at September 30, 2016 and December 31, 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Hedging [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effect of Derivatives designated as Fair Value Hedges and Related Hedged Items | The following table summarizes the effect of interest rate contracts designated as fair value hedges and related hedged items on the consolidated statement of income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Deposits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Deposits By Type | Deposits are summarized as follows (dollars in millions):
|
Other Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Borrowings Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Maturities Summary Of Other Borrowings | Other borrowings at September 30, 2016 and December 31, 2015 are summarized as follows (dollars in millions):
|
Corporate Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Corporate Debt Instruments | Corporate debt at September 30, 2016 and December 31, 2015 is outlined in the following table (dollars in millions):
|
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | The Company’s deferred tax asset, valuation allowance, and deferred tax liability balances at September 30, 2016 and December 31, 2015 are summarized in the following table (dollars in millions):
|
Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables present after-tax changes in each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Comprehensive Income (Loss) | The following tables present other comprehensive income (loss) activity and the related tax effect for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following table presents the consolidated statement of income (loss) line items impacted by reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (dollars in millions):
|
Earnings (Loss) Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Reconciliation | The following table presents a reconciliation of basic and diluted earnings (loss) per share (in millions, except share data and per share amounts):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company excluded the following shares from the calculation of diluted earnings (loss) per share as the effect would have been anti-dilutive (shares in millions):
|
Regulatory Requirements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Subsidiary Compliance With Regulatory Capital Requirements | The tables below summarize the minimum capital requirements and excess capital for the Company’s broker-dealer subsidiaries at September 30, 2016 and December 31, 2015 (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | E*TRADE Financial and E*TRADE Bank were categorized as "well capitalized" under the regulatory framework for prompt corrective action for the periods presented in the table below (dollars in millions):
|
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Billions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Margin Receivables [Abstract] | ||
Margin receivables securities pledged as collateral | $ 9.4 | $ 10.1 |
Margin receivable securities sold or repledged | $ 2.1 | $ 2.5 |
Restructuring and Acquisition-Related Activities (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring activities | $ 18 | $ 2 | $ 21 | $ 8 |
Acquisition-related costs | 7 | 0 | 7 | 0 |
Total restructuring and acquisition-related activities | 25 | $ 2 | 28 | $ 8 |
Severance cost | 16 | 16 | ||
Restructuring reserve | 11 | $ 11 | ||
OptionsHouse Acquisition [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition-related costs | $ 7 |
Fair Value Disclosures (Details - Level 3) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Level 3 recurring assets | $ 0 | $ 0 |
Level 3 recurring liabilities | $ 0 | $ 0 |
Available-for-Sale and Held-to-Maturity Securities (Details - Other) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Investments, Debt and Equity Securities [Abstract] | |||||
Other-than-temporary impairment, credit losses recognized in earnings | $ 136 | $ 136 | $ 152 | ||
Other-than-temporary impairment, credit losses recognized in earnings for securities factored to zero | 136 | 136 | $ 123 | ||
Net impairment | 0 | $ 0 | |||
Components of gains (losses) on securities and other, net | |||||
Reclassification of deferred losses on cash flow hedges | 0 | $ (370) | 0 | (370) | |
Gains on available-for-sale securities | 17 | 30 | 46 | 48 | |
Losses on available-for-sale securities | 0 | (19) | 0 | (19) | |
Subtotal | 17 | 11 | 46 | 29 | |
Hedge ineffectiveness | (4) | (2) | (8) | 0 | |
Equity method investment income (loss) and other | 1 | 3 | (4) | 8 | |
Gains (losses) on securities and other, net | $ 14 | $ (358) | $ 34 | $ (333) |
Loans Receivable, Net (Details - TDRs Average Investment and Income) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Financing Receivable, Impaired [Line Items] | ||||
TDRs, Average Recorded Investment | $ 469 | $ 512 | $ 480 | $ 523 |
TDRs, Interest Income Recognized | 7 | 7 | 20 | 20 |
One- To Four-Family [Member] | ||||
Financing Receivable, Impaired [Line Items] | ||||
TDRs, Average Recorded Investment | 264 | 300 | 275 | 307 |
TDRs, Interest Income Recognized | 2 | 3 | 7 | 7 |
Home Equity [Member] | ||||
Financing Receivable, Impaired [Line Items] | ||||
TDRs, Average Recorded Investment | 205 | 212 | 205 | 216 |
TDRs, Interest Income Recognized | $ 5 | $ 4 | $ 13 | $ 13 |
Derivative Instruments and Hedging Activities (Details - Fair Value Hedge) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Fair Value Hedge, Hedging Instrument | $ 15 | $ (102) | $ (189) | $ (47) |
Fair Value Hedge, Hedged Item | (19) | 100 | 181 | 47 |
Fair Value Hedge, Hedge Ineffectiveness | (4) | (2) | (8) | 0 |
Agency Debentures [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Fair Value Hedge, Hedging Instrument | 1 | (30) | (89) | (15) |
Fair Value Hedge, Hedged Item | (3) | 30 | 85 | 15 |
Fair Value Hedge, Hedge Ineffectiveness | (2) | 0 | (4) | 0 |
Agency mortgage-backed securities [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Fair Value Hedge, Hedging Instrument | 14 | (72) | (100) | (32) |
Fair Value Hedge, Hedged Item | (16) | 70 | 96 | 32 |
Fair Value Hedge, Hedge Ineffectiveness | $ (2) | $ (2) | $ (4) | $ 0 |
Deposits (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deposits By Type [Abstract] | ||
Sweep deposits | $ 26,464 | $ 24,018 |
Complete savings deposits | 3,182 | 3,357 |
Checking deposits | 1,252 | 1,239 |
Other money market and savings deposits | 765 | 792 |
Time deposits | 34 | 39 |
Total deposits | $ 31,697 | $ 29,445 |
Deposits, Weighted Average Rates [Abstract] | ||
Sweep deposits, weighted-average rate | 0.01% | 0.01% |
Complete savings deposits, weighted-average rate | 0.01% | 0.01% |
Checking deposits, weighted-average rate | 0.03% | 0.03% |
Other money market and savings deposits, weighted-average rate | 0.01% | 0.01% |
Time deposits, weighted-average rate | 0.18% | 0.38% |
Total deposits, weighted-average rate | 0.01% | 0.01% |
Deposits Textuals [Abstract] | ||
Non-interest-bearing deposits | $ 172 | $ 173 |
Income Taxes (Details - Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||||||
Income tax expense (benefit) | $ 86 | $ (93) | $ 208 | $ (245) | ||
Effective tax rate | 38.00% | 38.00% | 33.00% | 372.00% | ||
Income tax expense (benefit) due to change in tax status | $ (31) | |||||
Tax Years 2007, 2009 and 2010 [Member] | ||||||
Income Tax Contingency [Line Items] | ||||||
Income Tax Benefit, Resulting from Settlements with Taxing Authorities | $ 220 |
Income Taxes (Details - Deferred Taxes and Valuation Allowance) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Components of Deferred Tax Assets and Liabilities [Abstract] | ||
Total deferred tax assets | $ 1,266 | $ 1,548 |
Valuation allowance | (42) | (82) |
Total deferred tax assets, net of valuation allowance | 1,224 | 1,466 |
Total deferred tax liabilities | (499) | (433) |
Deferred tax assets, net | $ 725 | $ 1,033 |
BEY>I.&6?'=OD)BX;L
M;CY%FPP!\[EHKV4#]V4^B<_ED?PNNV/5,NN-\KX-E(W<@5).^JC=Q[[XGOH_
M ..@)@ FMI"0
M12"$(K+[2?*[20I-$J3$,_2Y-\=[LC\#.H%O2.#/"?PY013A&MNE*Q8DHE0L
M1*820!&Y2@044="M(!V!04>@Z/#=D!2R,*%!B$K00E3")X70.9"0T" D5 P#HBK/%=W=EN0
X"H"Y;17().3Q2^3HP(4C$]&T8$J;2/:K*)[W+YN:3?4K MZ>EB'7_!329"$
MC(A?-;T.VGD@R;\R]B8O?NS7(9(<:$-W7*:HQ.&=EK1I9"8Q\A^5]/^8,E _
MOV7_-DY7T'^M!EJRYG>]YR?!%H7!GAZJ2\-?V/4[57-(9,(=:X;Q-]A=!L[:
M6T@8M-7'=*R[\7B=GF18A=D#0 7 /0#'W@"B LBG@&AB-L[K:\6KS:IGUZ"?
M7L:YDN\
.3(K8G()X$9$P0JVGD)LENFL:$R28,2FV84L>00JN'P23V
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M;"&?[UISW>.BXO,=,'S'\5V 8IZ*#GEP?!2(SYD(6B!E!