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Loans Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2020

Loans and Leases Receivable Disclosure [Abstract]

The following table presents loans receivable disaggregated by delinquency status (dollars in millions):


			Days Past Due
	Current		30-89		90-179		180+		Total		Unamortized Premiums, Net		Allowance for Credit Losses⁽¹⁾		Loans Receivable, Net
June 30, 2020:
One- to four-family	$	614	$	47	$	20	$	33	$	714	$	4	$	36	$	754
Home equity	509		17		9		15		550		—		46		596

Securities-based lending⁽²⁾	258		—		—		—		258		—		—		258
Total loans receivable	$	1,381	$	64	$	29	$	48	$	1,522	$	4	$	82	$	1,608

			Days Past Due
	Current		30-89		90-179		180+		Total		Unamortized Premiums, Net		Allowance for Loan Losses⁽¹⁾		Loans Receivable, Net
December 31, 2019:
One- to four-family	$	718	$	39	$	11	$	35	$	803	$	5	$	(6)	$	802
Home equity	590		21		7		17		635		—		(11)		624
Securities-based lending⁽²⁾	169		—		—		—		169		—		—		169
Total loans receivable	$	1,477	$	60	$	18	$	52	$	1,607	$	5	$	(17)	$	1,595

(1)The Company adopted amended accounting guidance related to accounting for credit losses on January 1, 2020. Prior year amounts related to the allowance for loan losses were not restated as the amended accounting guidance was adopted on a modified retrospective basis. See Note 1—Organization, Basis of Presentation and Summary of Significant Accounting Policies for further details.

(2)E*TRADE Line of Credit is a securities-based lending product where customers can borrow against the market value of their securities pledged as collateral. The Company has no expectation of credit losses for these loans as they were fully collateralized by cash and securities with fair values in excess of borrowings at both June 30, 2020 and December 31, 2019, respectively. The unused credit line amount totaled $1.1 billion and $431 million as of June 30, 2020 and December 31, 2019, respectively, and were unconditionally cancellable by the Company.

Credit Quality Indicators for Loan Portfolio

The following tables present the distribution of the Company’s mortgage loan portfolios by credit quality indicator (dollars in millions):


	One- to Four-Family									Home Equity

	June 30,			December 31,			June 30,			December 31,
Current LTV/CLTV⁽¹⁾	2020			2019			2020			2019
<=80%	$	587		$	661		$	331		$	377
80%-100%	85			97			131			154
100%-120%	25			26			61			68
>120%	17			19			27			36
Total mortgage loans receivable	$	714		$	803		$	550		$	635
Average estimated current LTV/CLTV ⁽²⁾	61		%	61		%	76		%	76		%
Average LTV/CLTV at loan origination ⁽³⁾	70		%	70		%	82		%	82		%

(1)Current CLTV calculations for home equity loans are based on the maximum available line for HELOCs and outstanding principal balance for HEILs. 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 value estimates are updated on a quarterly basis.

(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, HEILs and the maximum available line for HELOCs.


	One- to Four-Family						Home Equity
	June 30,		December 31,		June 30,		December 31,
Current FICO	2020		2019		2020		2019
>=720	$	403	$	462	$	291	$	333
719 - 700	61		77		49		61
699 - 680	53		55		44		54
679 - 660	39		40		41		43
659 - 620	60		63		48		59
<620	98		106		77		85
Total mortgage loans receivable	$	714	$	803	$	550	$	635

The following table presents credit quality characteristics of the collateral-dependent loan population (dollars in millions):


	June 30, 2020
	One- to Four-Family			Home Equity
Unpaid principal balance	$	188		$	148
Recorded investment	$	141		$	55
Negative allowance for credit losses	$	37		$	63
Average estimated current LTV/CLTV	71		%	76		%
Average loan amount (dollars in thousands)	$	364		$	63

Loans by Delinquency Category and Non-Performing Loans

The following table presents nonperforming loans by loan portfolio (dollars in millions):



	June 30, 2020		December 31, 2019
One- to four-family	$	239	$	114
Home equity	104		54
Total nonperforming loans receivable	$	343	$	168

Loans Receivable, Allowance for Loan Losses

The following table presents a roll forward by loan portfolio of the allowance for credit losses (dollars in millions):


	Three Months Ended June 30, 2020
	One- to Four-Family		Home Equity		Total⁽¹⁾
Allowance for credit losses, beginning of period	$	35	$	51	$	86
(Provision) benefit for credit losses	1		—		1
Charge-offs⁽²⁾	—		—		—
Recoveries⁽²⁾	—		(5)		(5)
Net charge-offs (recoveries)	—		(5)		(5)
Allowance for credit losses, end of period	$	36	$	46	$	82


	Three Months Ended June 30, 2019
	One- to Four-Family		Home Equity		Consumer		Total⁽¹⁾
Allowance for loan losses, beginning of period⁽³⁾	$	(9)	$	(21)	$	(2)	$	(32)
(Provision) benefit for loan losses	1		8		(1)		8
Charge-offs⁽²⁾	—		—		1		1
Recoveries⁽²⁾	(1)		(6)		—		(7)
Net charge-offs (recoveries)	(1)		(6)		1		(6)
Allowance for loan losses, end of period	$	(9)	$	(19)	$	(2)	$	(30)

(1)Securities-based lending loans were fully collateralized by cash and securities with fair values in excess of borrowings for the three months ended June 30, 2020 and 2019, respectively, and were unconditionally cancellable by the Company.

(2)Includes benefits resulting from recoveries of partial charge-offs due to principal paydowns or payoffs for the periods presented. The benefits included in the charge-offs line item exceeded other charge-offs for both one-to-four family and home equity loans during the three months ended June 30, 2020 and 2019, respectively.

(3)The Company adopted amended accounting guidance related to accounting for credit losses on January 1, 2020. Prior year amounts related to the allowance for loan losses were not restated as the amended accounting guidance was adopted on a modified retrospective basis. See Note 1—Organization, Basis of Presentation and Summary of Significant Accounting Policies for further details.


	Six Months Ended June 30, 2020
	One- to Four-Family		Home Equity		Total⁽¹⁾
Allowance for loan losses, beginning of period⁽²⁾	$	(6)	$	(11)	$	(17)
Impact of CECL adoption⁽²⁾⁽³⁾	43		71		114
(Provision) benefit for loan losses	—		(5)		(5)
Charge-offs⁽⁴⁾	—		—		—
Recoveries⁽⁴⁾	(1)		(9)		(10)
Net charge-offs (recoveries)	(1)		(9)		(10)
Allowance for credit losses, end of period⁽³⁾	$	36	$	46	$	82


	Six Months Ended June 30, 2019
	One- to Four-Family		Home Equity		Consumer		Total⁽¹⁾
Allowance for loan losses, beginning of period⁽²⁾	$	(9)	$	(26)	$	(2)	$	(37)
(Provision) benefit for loan losses	3		18		(1)		20
Charge-offs⁽⁴⁾	—		—		2		2
Recoveries⁽⁴⁾	(3)		(11)		(1)		(15)
Net charge-offs (recoveries)	(3)		(11)		1		(13)
Allowance for loan losses, end of period	$	(9)	$	(19)	$	(2)	$	(30)

(1)Securities-based lending loans were fully collateralized by cash and securities with fair values in excess of borrowings for the six months ended June 30, 2020 and 2019, respectively, and were unconditionally cancellable by the Company.

(2)The Company adopted amended accounting guidance related to accounting for credit losses on January 1, 2020. Prior year amounts related to the allowance for loan losses were not restated as the amended accounting guidance was adopted on a modified retrospective basis. At January 1, 2020, the Company had a net "negative allowance" for credit losses of $37 million for its one-to-four-family portfolio and a net "negative allowance" of $60 million for its home equity portfolio. See Note 1—Organization, Basis of Presentation and Summary of Significant Accounting Policies for further details.

(3)The benefit recognized as a "negative allowance" at adoption is primarily related to the increases in fair value of the underlying collateral for mortgage loans determined to be collateral-dependent compared to prior period charge-offs associated with these loans. This fair value appreciation resulted in a benefit of $39 million for the one- to four-family portfolio and a benefit of $70 million for the home equity portfolio at adoption.

(4)Includes benefits resulting from recoveries of partial charge-offs due to principal paydowns or payoffs for the periods presented. The benefits included in the charge-offs line item exceeded other charge-offs for both one-to-four family and home equity loans during the six months ended June 30, 2020 and 2019, respectively.

Troubled Debt Restructurings - Modifications

The following table presents the number of loans and post-modification balances immediately after being modified by major class (dollars in millions):


	Three Months Ended
		Interest Rate Reduction
	Number of Loans	Re-age/ Extension/ Interest Capitalization		Other⁽¹⁾		Total
June 30, 2020:
One- to four-family	6	$	1	$	1	$	2
Home equity	1	—		—		—
Total	7	$	1	$	1	$	2

June 30, 2019:
One- to four-family	7	$	1	$	2	$	3
Home equity	9	—		—		—
Total	16	$	1	$	2	$	3

	Six Months Ended
		Interest Rate Reduction
	Number of Loans	Re-age/ Extension/ Interest Capitalization		Other⁽¹⁾		Total
June 30, 2020:
One- to four-family	10	$	3	$	1	$	4
Home equity	9	1		—		1
Total	19	$	4	$	1	$	5

June 30, 2019:
One- to four-family	16	$	2	$	3	$	5
Home equity	20	1		—		1
Total	36	$	3	$	3	$	6

(1)Amounts represent loans whose terms were modified in a manner that did not result in an interest rate reduction, including re-aged loans, extensions, and loans with capitalized interest.