Bank Loans and Related Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2023

Composition of Bank Loans and Delinquency Analysis by Loan Segment

The composition of bank loans and delinquency analysis by portfolio segment and class of financing receivable is as follows:


September 30, 2023	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 credit losses		Total bank loans – net
Residential real estate:
First Mortgages (1,2)	$	26,022	$	25	$	1	$	8	$	34	$	26,056	$	47	$	26,009
HELOCs (1,2)	487		1		—		5		6		493		2		491
Total residential real estate	26,509		26		1		13		40		26,549		49		26,500
Pledged asset lines	13,525		10		2		1		13		13,538		—		13,538
Other	294		—		—		—		—		294		5		289
Total bank loans	$	40,328	$	36	$	3	$	14	$	53	$	40,381	$	54	$	40,327

December 31, 2022
Residential real estate:
First Mortgages (1,2)	$	25,157	$	25	$	2	$	14	$	41	$	25,198	$	66	$	25,132
HELOCs (1,2)	590		2		—		5		7		597		4		593
Total residential real estate	25,747		27		2		19		48		25,795		70		25,725
Pledged asset lines	14,584		4		—		4		8		14,592		—		14,592
Other	191		—		—		—		—		191		3		188
Total bank loans	$	40,522	$	31	$	2	$	23	$	56	$	40,578	$	73	$	40,505

(1) First Mortgages and HELOCs include unamortized premiums and discounts and direct origination costs of $100 million and $98 million at September 30, 2023 and December 31, 2022, respectively.

(2) At both September 30, 2023 and December 31, 2022, 43% 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, 2023 or December 31, 2022.

Changes in Allowance for Credit Losses on Bank Loans

Changes in the allowance for credit losses on bank loans were as follows:


Three Months Ended
September 30, 2023	First Mortgages		HELOCs		Total residential real estate		Pledged asset lines		Other		Total
Balance at beginning of period	$	68	$	3	$	71	$	—	$	4	$	75
Charge-offs	—		—		—		—		—		—
Recoveries	—		—		—		—		—		—
Provision for credit losses	(21)		(1)		(22)		—		1		(21)
Balance at end of period	$	47	$	2	$	49	$	—	$	5	$	54

September 30, 2022
Balance at beginning of period	$	31	$	3	$	34	$	—	$	3	$	37
Charge-offs	—		—		—		(4)		—		(4)
Recoveries	—		1		1		—		—		1
Provision for credit losses	11		—		11		4		—		15
Balance at end of period	$	42	$	4	$	46	$	—	$	3	$	49


Nine Months Ended
September 30, 2023	First Mortgages		HELOCs		Total residential real estate		Pledged asset lines		Other		Total
Balance at beginning of period	$	66	$	4	$	70	$	—	$	3	$	73
Charge-offs	—		—		—		—		—		—
Recoveries	—		—		—		—		—		—
Provision for credit losses	(19)		(2)		(21)		—		2		(19)
Balance at end of period	$	47	$	2	$	49	$	—	$	5	$	54

September 30, 2022
Balance at beginning of period	$	13	$	2	$	15	$	—	$	3	$	18
Charge-offs	—		—		—		(4)		—		(4)
Recoveries	—		1		1		—		—		1
Provision for credit losses	29		1		30		4		—		34
Balance at end of period	$	42	$	4	$	46	$	—	$	3	$	49

Bank Loan-related Nonperforming Assets

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


	September 30, 2023		December 31, 2022
Nonaccrual loans (1)	$	14	$	23
Other real estate owned (2)	—		2


Total nonperforming assets	$	14	$	25

(1) Nonaccrual loans include nonaccrual troubled debt restructurings recorded prior to the adoption of ASU 2022-02.

(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:


	First Mortgages Amortized Cost Basis by Origination Year
September 30, 2023	2023			2022			2021			2020			2019			pre-2019			Total First Mortgages			Revolving HELOCs amortized cost basis			HELOCs converted to term loans			Total HELOCs
Origination FICO
<620	$	—		$	3		$	1		$	—		$	—		$	1		$	5		$	—		$	—		$	—
620 – 679	3			27			30			20			2			13			95			—			1			1
680 – 739	243			795			1,177			400			108			206			2,929			53			39			92
≥740	1,951			5,336			10,563			3,618			760			799			23,027			264			136			400
Total	$	2,197		$	6,161		$	11,771		$	4,038		$	870		$	1,019		$	26,056		$	317		$	176		$	493
Origination LTV
≤70%	$	1,481		$	4,561		$	10,197		$	3,357		$	703		$	759		$	21,058		$	282		$	123		$	405
>70% – ≤90%	716			1,600			1,574			681			167			258			4,996			35			52			87
>90% – ≤100%	—			—			—			—			—			2			2			—			1			1
Total	$	2,197		$	6,161		$	11,771		$	4,038		$	870		$	1,019		$	26,056		$	317		$	176		$	493
Updated FICO
<620	$	4		$	10		$	11		$	6		$	2		$	12		$	45		$	2		$	5		$	7
620 – 679	26			68			91			30			11			35			261			6			8			14
680 – 739	259			585			961			329			62			118			2,314			45			30			75
≥740	1,908			5,498			10,708			3,673			795			854			23,436			264			133			397
Total	$	2,197		$	6,161		$	11,771		$	4,038		$	870		$	1,019		$	26,056		$	317		$	176		$	493
Estimated Current LTV (1)
≤70%	$	1,517		$	4,858		$	11,511		$	4,026		$	868		$	1,018		$	23,798		$	315		$	175		$	490
>70% – ≤90%	680			1,283			257			12			2			1			2,235			2			1			3
>90% – ≤100%	—			19			3			—			—			—			22			—			—			—
>100%	—			1			—			—			—			—			1			—			—			—
Total	$	2,197		$	6,161		$	11,771		$	4,038		$	870		$	1,019		$	26,056		$	317		$	176		$	493
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Percent of Loans on Nonaccrual Status	0.01		%	0.03		%	0.02		%	0.01		%	0.01		%	0.33		%	0.03		%	0.28		%	2.03		%	1.01		%

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


	First Mortgages Amortized Cost Basis by Origination Year
December 31, 2022	2022			2021			2020			2019			pre-2019			Total First Mortgages			Revolving HELOCs amortized cost basis			HELOCs converted to term loans			Total HELOCs
Origination FICO
<620	$	3		$	1		$	—		$	—		$	1		$	5		$	—		$	—		$	—
620 – 679	28			31			21			2			15			97			—			2			2
680 – 739	820			1,224			430			116			243			2,833			59			47			106
≥740	5,593			11,037			3,819			811			1,003			22,263			323			166			489
Total	$	6,444		$	12,293		$	4,270		$	929		$	1,262		$	25,198		$	382		$	215		$	597
Origination LTV
≤70%	$	4,771		$	10,641		$	3,549		$	749		$	940		$	20,650		$	332		$	153		$	485
>70% – ≤90%	1,673			1,652			721			180			320			4,546			50			61			111
>90% – ≤100%	—			—			—			—			2			2			—			1			1
Total	$	6,444		$	12,293		$	4,270		$	929		$	1,262		$	25,198		$	382		$	215		$	597
Updated FICO
<620	$	11		$	12		$	7		$	2		$	13		$	45		$	2		$	5		$	7
620 – 679	87			127			42			10			43			309			6			10			16
680 – 739	711			1,079			378			89			161			2,418			52			35			87
≥740	5,635			11,075			3,843			828			1,045			22,426			322			165			487
Total	$	6,444		$	12,293		$	4,270		$	929		$	1,262		$	25,198		$	382		$	215		$	597
Estimated Current LTV (1)
≤70%	$	4,574		$	11,751		$	4,255		$	928		$	1,257		$	22,765		$	380		$	214		$	594
>70% – ≤90%	1,845			542			15			1			5			2,408			2			1			3
>90% – ≤100%	25			—			—			—			—			25			—			—			—
>100%	—			—			—			—			—			—			—			—			—
Total	$	6,444		$	12,293		$	4,270		$	929		$	1,262		$	25,198		$	382		$	215		$	597
Percent of Loans on Nonaccrual Status	0.02		%	0.03		%	0.09		%	0.02		%	0.43		%	0.06		%	0.34		%	1.90		%	0.84		%

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

Converting to Amortizing Loans

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


September 30, 2023	Balance
Converted to an amortizing loan by period end (1)	$	176
Within 1 year	23
> 1 year – 3 years	39
> 3 years – 5 years	51
> 5 years	204
Total	$	493

(1) Includes $6 million and $15 million of HELOCs converted to amortizing loans during the three and nine months ended September 30, 2023, respectively.