Bank Loans and Related Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

Composition of Bank Loans and Delinquency Analysis by Loan Segment

The composition of bank loans and delinquency analysis by loan type is as follows:

September 30, 2018	Current		30-59 days past due		60-89 days past due		>90 days past due and other nonaccrual loans (3)		Total past due and other nonaccrual loans		Total loans		Allowance for loan losses		Total bank loans – net
First Mortgages (1,2)	$	10,217	$	24	$	2	$	13	$	39	$	10,256	$	17	$	10,239
HELOCs (1,2)	1,589		2		1		10		13		1,602		7		1,595
Pledged asset lines	4,552		3		1		—		4		4,556		—		4,556
Other	176		—		—		—		—		176		2		174
Total bank loans	$	16,534	$	29	$	4	$	23	$	56	$	16,590	$	26	$	16,564
December 31, 2017
First Mortgages (1,2)	$	9,983	$	14	$	2	$	17	$	33	$	10,016	$	16	$	10,000
HELOCs (1,2)	1,928		—		3		12		15		1,943		8		1,935
Pledged asset lines	4,361		4		4		—		8		4,369		—		4,369
Other	176		—		—		—		—		176		2		174
Total bank loans	$	16,448	$	18	$	9	$	29	$	56	$	16,504	$	26	$	16,478

⁽¹⁾ First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $73 million and $77 million at September 30, 2018 and December 31, 2017, respectively.

⁽²⁾ At September 30, 2018 and December 31, 2017, 47% and 48%, respectively, of the First Mortgage and HELOC portfolios were concentrated in California. These loans have performed in a manner consistent with the portfolio as a whole.

⁽³⁾ There were no loans accruing interest that were contractually 90 days or more past due at September 30, 2018 or December 31, 2017.

Changes in Allowance for Loan Losses

Changes in the allowance for loan losses were as follows:

	September 30, 2018										September 30, 2017
Three Months Ended	First Mortgages		HELOCs			Other		Total (1)			First Mortgages			HELOCs		Other		Total (1)
Balance at beginning of period	$	17	$	7		$	2	$	26		$	17		$	8	$	1	$	26
Charge-offs	—		—			—		—			(1		)	—		—		(1		)
Recoveries	—		1			—		1			—			—		1		1
Provision for loan losses	—		(1		)	—		(1		)	—			—		—		—
Balance at end of period	$	17	$	7		$	2	$	26		$	16		$	8	$	2	$	26

Nine Months Ended
Balance at beginning of period	$	16	$	8		$	2		$	26		$	17		$	8		$	1	$	26
Charge-offs	—		—			(1		)	(1		)	(2		)	(1		)	—		(3		)
Recoveries	—		2			—			2			1			1			1		3
Provision for loan losses	1		(3		)	1			(1		)	—			—			—		—
Balance at end of period	$	17	$	7		$	2		$	26		$	16		$	8		$	2	$	26

⁽¹⁾ All pledged asset lines (PALs) were fully collateralized by securities with fair values in excess of borrowings at September 30, 2018 and December 31, 2017.

Impaired Bank Loan Related Assets

A summary of impaired bank loan-related assets is as follows:

	September 30, 2018		December 31, 2017
Nonaccrual loans (1)	$	23	$	28
Other real estate owned (2)	3		3
Total nonperforming assets	26		31
Troubled debt restructurings	4		11
Total impaired assets	$	30	$	42

⁽¹⁾ Nonaccrual loans include nonaccrual troubled debt restructurings.

⁽²⁾ Included in other assets on the condensed consolidated balance sheets.

Credit Quality Indicators of Bank Loan Portfolio

The credit quality indicators of the Company’s bank loan portfolio are detailed below:

September 30, 2018	Balance		Weighted Average Updated FICO	Utilization Rate (1)		Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,383	777	N/A		0.05	%
>70% – <90%	868		771	N/A		0.24	%
>90% – <100%	4		713	N/A		8.70	%
>100%	1		742	N/A		—
Total	$	10,256	776	N/A		0.07	%
HELOCs
Estimated Current LTV (2)
<70%	$	1,509	771	31	%	0.18	%
>70% – <90%	84		752	47	%	0.90	%
>90% – <100%	5		746	77	%	0.90	%
>100%	4		704	81	%	5.28	%
Total	$	1,602	770	31	%	0.24	%
Pledged asset lines
Weighted-Average LTV (2)
=70%	$	4,556	766	36	%	—

December 31, 2017	Balance		Weighted Average Updated FICO	Utilization Rate (1)		Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,046	775	N/A		0.09	%
>70% – <90%	961		769	N/A		0.46	%
>90% – <100%	5		714	N/A		10.49	%
>100%	4		713	N/A		6.23	%
Total	$	10,016	775	N/A		0.14	%
HELOCs
Estimated Current LTV (2)
<70%	$	1,773	772	32	%	0.18	%
>70% – <90%	148		755	47	%	0.84	%
>90% – <100%	14		742	64	%	2.85	%
>100%	8		718	72	%	4.91	%
Total	$	1,943	770	33	%	0.27	%
Pledged asset lines
Weighted-Average LTV (2)
=70%	$	4,369	765	41	%	—

⁽¹⁾ The Utilization Rate is calculated using the outstanding balance divided by the associated total line of credit.

⁽²⁾ Represents the LTV for the full line of credit (drawn and undrawn).

N/A Not applicable.

September 30, 2018	First Mortgages		HELOCs
Year of origination
Pre-2014	$	2,144	$	1,156
2014	436		93
2015	1,087		110
2016	2,662		96
2017	2,420		101
2018	1,507		46
Total	$	10,256	$	1,602
Origination FICO
<620	$	5	—
620 – 679	83		8
680 – 739	1,595		305
>740	8,573		1,289
Total	$	10,256	$	1,602
Origination LTV
<70%	$	7,737	$	1,127
>70% – <90%	2,514		468
>90% – <100%	5		7
Total	$	10,256	$	1,602

December 31, 2017	First Mortgages		HELOCs
Year of origination
Pre-2014	$	2,804	$	1,496
2014	530		116
2015	1,218		128
2016	2,886		111
2017	2,578		92
Total	$	10,016	$	1,943
Origination FICO
<620	$	6	$	1
620 – 679	89		10
680 – 739	1,569		365
>740	8,352		1,567
Total	$	10,016	$	1,943
Origination LTV
<70%	$	7,569	$	1,360
>70% – <90%	2,441		574
>90% – <100%	6		9
Total	$	10,016	$	1,943

Converting to Amortizing Loans

The following table presents when current outstanding HELOCs will convert to amortizing loans:

September 30, 2018	Balance
Converted to an amortizing loan by period end	$	640
Within 1 year	186
> 1 year – 3 years	133
> 3 years – 5 years	163
> 5 years	480
Total	$	1,602