Bank Loans and Related Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019	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)	$	10,607	$	20	$	2	$	11	$	33	$	10,640	$	10	$	10,630
HELOCs (1,2)	1,208		3		1		8		12		1,220		4		1,216
Pledged asset lines	4,876		2		—		—		2		4,878		—		4,878
Other	172		—		—		2		2		174		3		171
Total bank loans	$	16,863	$	25	$	3	$	21	$	49	$	16,912	$	17	$	16,895
December 31, 2018
First Mortgages (1,2)	$	10,349	$	21	$	2	$	12	$	35	$	10,384	$	14	$	10,370
HELOCs (1,2)	1,493		3		1		8		12		1,505		5		1,500
Pledged asset lines	4,558		3		—		—		3		4,561		—		4,561
Other	180		—		—		—		—		180		2		178
Total bank loans	$	16,580	$	27	$	3	$	20	$	50	$	16,630	$	21	$	16,609

⁽¹⁾ First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $71 million and $73 million at September 30, 2019 and December 31, 2018, respectively.

⁽²⁾ At September 30, 2019 and December 31, 2018, 46% and 47%, 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, 2019 or December 31, 2018.

Changes in Allowance for Loan Losses

Changes in the allowance for loan losses were as follows:

	September 30, 2019											September 30, 2018
Three Months Ended	First Mortgages			HELOCs			Other		Total (1)			First Mortgages		HELOCs			Other		Total (1)
Balance at beginning of period	$	12		$	5		$	2	$	19		$	17	$	7		$	2	$	26
Charge-offs	—			—			—		—			—		—			—		—
Recoveries	—			—			—		—			—		1			—		1
Provision for loan losses	(2		)	(1		)	1		(2		)	—		(1		)	—		(1		)
Balance at end of period	$	10		$	4		$	3	$	17		$	17	$	7		$	2	$	26

	September 30, 2019											September 30, 2018
Nine Months Ended	First Mortgages			HELOCs			Other		Total (1)			First Mortgages		HELOCs			Other			Total (1)
Balance at beginning of period	$	14		$	5		$	2	$	21		$	16	$	8		$	2		$	26
Charge-offs	—			—			—		—			—		—			(1		)	(1		)
Recoveries	1			1			—		2			—		2			—			2
Provision for loan losses	(5		)	(2		)	1		(6		)	1		(3		)	1			(1		)
Balance at end of period	$	10		$	4		$	3	$	17		$	17	$	7		$	2		$	26

⁽¹⁾ All PALs were fully collateralized by securities with fair values in excess of borrowings as of each period presented.

Impaired Bank Loan Related Assets

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

	September 30, 2019		December 31, 2018
Nonaccrual loans (1)	$	21	$	21
Other real estate owned (2)	2		3
Total nonperforming assets	23		24
Troubled debt restructurings	2		4
Total impaired assets	$	25	$	28

⁽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, 2019	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,574	776	0.03	%
>70% – <90%	1,061		770	0.28	%
>90% – <100%	4		756	—
>100%	1		768	—
Total	$	10,640	776	0.05	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,157	769	0.25	%
>70% – <90%	58		751	0.83	%
>90% – <100%	3		716	5.06	%
>100%	2		659	—
Total	$	1,220	768	0.29	%
Pledged asset lines
Weighted-Average LTV (1)
=70%	$	4,878	767	—

December 31, 2018	Balance		Weighted Average Updated FICO	Percent of Loans that are on Nonaccrual Status
First Mortgages
Estimated Current LTV
<70%	$	9,396	776	0.04	%
>70% – <90%	985		769	0.41	%
>90% – <100%	2		717	—
>100%	1		753	—
Total	$	10,384	775	0.07	%
HELOCs
Estimated Current LTV (1)
<70%	$	1,416	770	0.13	%
>70% – <90%	80		752	0.60	%
>90% – <100%	6		729	3.36	%
>100%	3		702	—
Total	$	1,505	769	0.17	%
Pledged asset lines
Weighted-Average LTV (1)
=70%	$	4,561	766	—

⁽¹⁾ Represents the LTV for the full line of credit (drawn and undrawn).

September 30, 2019	First Mortgages		HELOCs
Year of origination
Pre-2015	$	1,815	$	872
2015	889		85
2016	2,382		82
2017	2,137		90
2018	1,611		67
2019	1,806		24
Total	$	10,640	$	1,220
Origination FICO
<620	$	4	$	—
620 – 679	76		6
680 – 739	1,624		236
>740	8,936		978
Total	$	10,640	$	1,220
Origination LTV
<70%	$	7,980	$	869
>70% – <90%	2,656		346
>90% – <100%	4		5
Total	$	10,640	$	1,220

December 31, 2018	First Mortgages		HELOCs
Year of origination
Pre-2015	$	2,387	$	1,140
2015	1,050		106
2016	2,606		95
2017	2,366		99
2018	1,975		65
Total	$	10,384	$	1,505
Origination FICO
<620	$	5	$	—
620 – 679	83		8
680 – 739	1,626		282
>740	8,670		1,215
Total	$	10,384	$	1,505
Origination LTV
<70%	$	7,815	$	1,064
>70% – <90%	2,564		434
>90% – <100%	5		7
Total	$	10,384	$	1,505

Converting to Amortizing Loans

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

September 30, 2019	Balance
Converted to an amortizing loan by period end	$	551
Within 1 year	52
> 1 year – 3 years	84
> 3 years – 5 years	170
> 5 years	363
Total	$	1,220