Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-16577 | |
Entity Registrant Name | Flagstar Bancorp, Inc. | |
Entity Central Index Key | 0001033012 | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 38-3150651 | |
Entity Address, Address Line One | 5151 Corporate Drive, | |
Entity Address, City or Town | Troy, | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48098-2639 | |
City Area Code | 248 | |
Local Phone Number | 312-2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common stock | |
Trading Symbol | FBC | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding (in shares) | 56,511,717 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash | $ 234 | $ 260 |
Interest-earning deposits | 119 | 148 |
Total cash and cash equivalents | 353 | 408 |
Investment securities available-for-sale | 1,697 | 2,142 |
Investment securities held-to-maturity | 635 | 703 |
Loans held-for-sale ($4,122 and $3,732 measured at fair value, respectively) | 4,196 | 3,869 |
Loans held-for-investment ($10 and $10 measured at fair value, respectively) | 12,548 | 9,088 |
Loans with government guarantees | 607 | 392 |
Less: allowance for loan losses | (110) | (128) |
Total loans held-for-investment and loans with government guarantees, net | 13,045 | 9,352 |
Mortgage servicing rights | 285 | 290 |
Net deferred tax asset | 68 | 103 |
Federal Home Loan Bank stock | 303 | 303 |
Premises and equipment, net | 417 | 390 |
Goodwill and intangible assets | 174 | 190 |
Other assets | 875 | 781 |
Total assets | 22,048 | 18,531 |
Liabilities and Stockholders’ Equity | ||
Noninterest-bearing deposits | 5,649 | 2,989 |
Interest-bearing deposits | 10,096 | 9,391 |
Total deposits | 15,745 | 12,380 |
Short-term Federal Home Loan Bank advances and other | 2,329 | 3,244 |
Long-term Federal Home Loan Bank advances | 650 | 150 |
Other long-term debt | 496 | 495 |
Other liabilities ($35 and $60 measured at fair value, respectively) | 1,094 | 692 |
Total liabilities | 20,314 | 16,961 |
Stockholders’ Equity | ||
Common stock $0.01 par value, 80,000,000 and 80,000,000 shares authorized; 56,510,341 and 57,749,464 shares issued and outstanding, respectively | 1 | 1 |
Additional paid in capital | 1,481 | 1,522 |
Accumulated other comprehensive income (loss) | 5 | (47) |
Retained earnings | 247 | 94 |
Total stockholders’ equity | 1,734 | 1,570 |
Total liabilities and stockholders’ equity | $ 22,048 | $ 18,531 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Loans held-for-sale, fair value | $ 4,122 | $ 3,732 |
Loans held-for-investment, fair value | 10 | 10 |
Liabilities and Stockholders’ Equity | ||
Other liabilities, fair value | $ 35 | $ 60 |
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 56,510,341 | 57,749,464 |
Common stock, shares outstanding (in shares) | 56,510,341 | 57,749,464 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest Income | ||||
Loans | $ 185 | $ 161 | $ 517 | $ 436 |
Investment securities | 17 | 21 | 61 | 64 |
Interest-earning deposits and other | 1 | 1 | 3 | 2 |
Total interest income | 203 | 183 | 581 | 502 |
Interest Expense | ||||
Deposits | 38 | 27 | 102 | 65 |
Short-term Federal Home Loan Bank advances and other | 10 | 18 | 44 | 50 |
Long-term Federal Home Loan Bank advances | 2 | 7 | 4 | 21 |
Other long-term debt | 7 | 7 | 21 | 21 |
Total interest expense | 57 | 59 | 171 | 157 |
Net interest income | 146 | 124 | 410 | 345 |
Provision (benefit) for loan losses | 1 | (2) | 18 | (3) |
Net interest income after provision (benefit) for loan losses | 145 | 126 | 392 | 348 |
Noninterest Income | ||||
Net gain on loan sales | 110 | 43 | 234 | 166 |
Loan fees and charges | 29 | 23 | 70 | 67 |
Net return on mortgage servicing rights | (2) | 13 | 9 | 26 |
Loan administration income | 5 | 5 | 22 | 15 |
Deposit fees and charges | 10 | 5 | 28 | 15 |
Other noninterest income | 19 | 18 | 85 | 52 |
Total noninterest income | 171 | 107 | 448 | 341 |
Noninterest Expense | ||||
Compensation and benefits | 98 | 76 | 275 | 236 |
Occupancy and equipment | 40 | 31 | 118 | 91 |
Commissions | 38 | 21 | 76 | 64 |
Loan processing expense | 22 | 14 | 60 | 43 |
Legal and professional expense | 6 | 7 | 18 | 19 |
Federal insurance premiums | 5 | 6 | 14 | 18 |
Intangible asset amortization | 3 | 1 | 11 | 0 |
Other noninterest expense | 26 | 17 | 71 | 52 |
Total noninterest expense | 238 | 173 | 643 | 523 |
Income before income taxes | 78 | 60 | 197 | 166 |
Provision for income taxes | 15 | 12 | 37 | 33 |
Net income | $ 63 | $ 48 | $ 160 | $ 133 |
Net income per share | ||||
Basic (in dollars per share) | $ 1.12 | $ 0.84 | $ 2.83 | $ 2.32 |
Diluted (in dollars per share) | $ 1.11 | $ 0.83 | $ 2.80 | $ 2.28 |
Weighted average shares outstanding | ||||
Basic (in shares) | 56,484,499 | 57,600,360 | 56,607,944 | 57,483,802 |
Diluted (in shares) | 57,110,796 | 58,332,598 | 57,252,540 | 58,301,920 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 63 | $ 48 | $ 160 | $ 133 |
Other comprehensive income (loss), net of tax | ||||
Investment securities | 13 | (9) | 52 | (47) |
Derivatives and hedging activities | 0 | (1) | 0 | 21 |
Other comprehensive income (loss), net of tax | 13 | (10) | 52 | (26) |
Comprehensive income | $ 76 | $ 38 | $ 212 | $ 107 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | |
Beginning balance (in shares) at Dec. 31, 2017 | 57,321,228 | |||||
Beginning balance at Dec. 31, 2017 | $ 1,399 | $ 1 | $ 1,512 | $ (16) | $ (98) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 133 | 133 | ||||
Total other comprehensive income (loss) | (21) | (21) | ||||
Shares issued from Employee Stock Purchase Plan (in shares) | 88,566 | |||||
Shares issued from Employee Stock Purchase Plan | 0 | |||||
Reclassification of certain income tax effects | [1] | (5) | 5 | |||
Stock-based compensation (in shares) | 215,645 | |||||
Stock-based compensation | 7 | 7 | ||||
Ending balance (in shares) at Sep. 30, 2018 | 57,625,439 | |||||
Ending balance at Sep. 30, 2018 | 1,518 | $ 1 | 1,519 | (42) | 40 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 48 | |||||
Ending balance (in shares) at Sep. 30, 2018 | 57,625,439 | |||||
Ending balance at Sep. 30, 2018 | 1,518 | $ 1 | 1,519 | (42) | 40 | |
Beginning balance (in shares) at Dec. 31, 2018 | 57,749,464 | |||||
Beginning balance at Dec. 31, 2018 | 1,570 | $ 1 | 1,522 | (47) | 94 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 160 | 160 | ||||
Total other comprehensive income (loss) | 52 | 52 | ||||
Shares issued from Employee Stock Purchase Plan (in shares) | 84,036 | |||||
Shares issued from Employee Stock Purchase Plan | 0 | |||||
Dividends declared and paid (in shares) | 280 | |||||
Dividends declared and paid | (7) | (7) | ||||
Stock-based compensation (in shares) | 194,266 | |||||
Stock-based compensation | 9 | 9 | ||||
Repurchase of shares (in shares) | [2] | (1,517,705) | ||||
Repurchase of shares | [2] | (50) | (50) | |||
Ending balance (in shares) at Sep. 30, 2019 | 56,510,341 | |||||
Ending balance at Sep. 30, 2019 | 1,734 | $ 1 | 1,481 | 5 | 247 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 63 | |||||
Ending balance (in shares) at Sep. 30, 2019 | 56,510,341 | |||||
Ending balance at Sep. 30, 2019 | $ 1,734 | $ 1 | $ 1,481 | $ 5 | $ 247 | |
[1] | Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to the adoption of ASU 2018-02. | |||||
[2] | Includes dividend reinvestment shares |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Dividends declared (in dollars per share) | $ 0.04 |
Dividends paid (in dollars per share) | $ 0.04 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | ||
Operating Activities | |||
Net cash used in operating activities | $ (15,700) | $ (19,002) | |
Investing Activities | |||
Proceeds from sale of AFS securities including loans that have been securitized | 15,631 | 18,362 | |
Collection of principal on investment securities AFS | 129 | 152 | |
Purchase of investment securities AFS and other | (39) | (48) | |
Collection of principal on investment securities HTM | 68 | 72 | |
Proceeds received from the sale of LHFI | 167 | 4 | |
Net origination, purchase, and principal repayments of LHFI | (3,575) | (695) | |
Acquisition of premises and equipment, net of proceeds | (48) | (50) | |
Proceeds from the sale of MSRs | 56 | 267 | |
Other, net | (8) | (14) | |
Net cash provided by investing activities | 12,381 | 18,050 | |
Financing Activities | |||
Net change in deposit accounts | 3,365 | 2,040 | |
Net change in short-term FHLB borrowings and other short-term debt | (913) | (1,061) | |
Proceeds from increases in FHLB long-term advances and other debt | 550 | 200 | |
Repayment of FHLB long-term advances | (50) | (325) | |
Net receipt of payments of loans serviced for others | 366 | 140 | |
Accelerated share repurchase | (50) | 0 | |
Dividends declared and paid | (7) | 0 | |
Other | 14 | 19 | |
Net cash provided by financing activities | 3,275 | 1,013 | |
Net increase in cash, cash equivalents and restricted cash | [1] | (44) | 61 |
Beginning cash, cash equivalents and restricted cash | [1] | 432 | 223 |
Ending cash, cash equivalents and restricted cash | [1] | 388 | 284 |
Supplemental disclosure of cash flow information | |||
Interest paid on deposits and other borrowings | 173 | 0 | |
Non-cash reclassification of investment securities HTM to AFS | 0 | 144 | |
Non-cash reclassification of loans originated LHFI to LHFS | 101 | 6 | |
Non-cash reclassification of mortgage loans originated LHFS to LHFI | 0 | 0 | |
Non-cash reclassification of LHFS to AFS securities | 15,198 | 18,360 | |
Beneficial interest retained in securitization | 0 | 0 | |
MSRs resulting from sale or securitization of loans | 203 | 283 | |
Operating section supplemental disclosures | |||
Cash proceeds from sales of LHFS | 7,714 | 7,028 | |
Origination, premium paid and purchase of LHFS, net of principal repayments | $ (23,249) | $ (26,038) | |
[1] | For further information on restricted cash, see Note 8 - Derivatives. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements of Flagstar Bancorp, Inc. ("Flagstar," or the "Company"), including its wholly owned principal subsidiary, Flagstar Bank, FSB (the "Bank"), have been prepared using U.S. GAAP for interim financial statements. Where we say "we," "us," "our," the "Company," "Bancorp" or "Flagstar," we usually mean Flagstar Bancorp, Inc. However, in some cases, a reference to "we," "us," "our," the "Company" or "Flagstar" will include the Bank. These consolidated financial statements do not include all of the information and footnotes required by GAAP for a full year presentation and certain disclosures have been condensed or omitted in accordance with rules and regulations of the SEC. These interim financial statements are unaudited and include, in our opinion, all adjustments necessary for a fair statement of the results for the periods indicated, which are not necessarily indicative of results which may be expected for the full year. These consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities The following table presents our investment securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Dollars in millions) September 30, 2019 Available-for-sale securities Agency - Commercial $ 964 $ 7 $ (2 ) $ 969 Agency - Residential 604 3 (3 ) 604 Corporate debt obligations 63 1 — 64 Municipal obligations 31 — — 31 Other MBS 28 — — 28 Certificate of deposits 1 — — 1 Total available-for-sale securities (1) $ 1,691 $ 11 $ (5 ) $ 1,697 Held-to-maturity securities Agency - Commercial $ 325 $ 1 $ (1 ) $ 325 Agency - Residential 310 4 — 314 Total held-to-maturity securities (1) $ 635 $ 5 $ (1 ) $ 639 December 31, 2018 Available-for-sale securities Agency - Commercial $ 1,413 $ 4 $ (43 ) $ 1,374 Agency - Residential 686 — (24 ) 662 Corporate debt obligations 41 — — 41 Municipal obligations 33 — (1 ) 32 Other MBS 32 — — 32 Certificate of Deposits 1 — — 1 Total available-for-sale securities (1) $ 2,206 $ 4 $ (68 ) $ 2,142 Held-to-maturity securities Agency - Commercial $ 349 $ — $ (13 ) $ 336 Agency - Residential 354 — (9 ) 345 Total held-to-maturity securities (1) $ 703 $ — $ (22 ) $ 681 (1) There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10 percent of stockholders’ equity at September 30, 2019 or December 31, 2018 . We evaluate AFS and HTM investment securities for OTTI on a quarterly basis. An OTTI is considered to have occurred when the fair value of a debt security is below its amortized costs and we (1) have the intent to sell the security, (2) will more likely than not be required to sell the security before recovery of its amortized cost, or (3) do not expect to recover the entire amortized cost basis of the security. Investments that have an OTTI are written down through a charge to earnings for the amount representing the credit loss on the security. Gains and losses related to all other factors are recognized in other comprehensive income. Agency securities, which are either explicitly or implicitly backed by the federal government, comprised 95 percent of our total securities at September 30, 2019 . This factor is considered when evaluating our investment securities for OTTI. During the three and nine months ended September 30, 2019 and September 30, 2018 , we had no OTTI. Available-for-sale securities Securities available-for-sale are carried at fair value. Unrealized gains and losses on AFS securities, to the extent they are temporary in nature, are reported as a component of other comprehensive income. We purchased $16 million and $39 million of AFS securities, which were comprised of U.S. government sponsored agency MBS, certificate of deposits, and corporate debt obligations during the three and nine months ended September 30, 2019 , respectively. We purchased $43 million and $48 million of AFS securities, which included U.S. government sponsored agency MBS, corporate debt obligations, and municipal obligations during the three and nine months ended September 30, 2018 , respectively. There were $0 and $432 million in sales of AFS securities during the three and nine months ended September 30, 2019 , respectively. These sales resulted in a realized gain of $7 million , reported in other noninterest income in the Consolidated Statements of Operations. These sales did not include those related to mortgage loans that had been securitized for sale in the normal course of business. There were no sales of AFS securities during the three and nine months ended September 30, 2018 . Held-to-maturity securities Investment securities HTM are carried at amortized cost and adjusted for amortization of premiums and accretion of discounts using the interest method. Unrealized losses are not recorded to the extent they are temporary in nature. There were no purchases or sales of HTM securities during both the three and nine months ended September 30, 2019 and September 30, 2018 . The following table summarizes available-for-sale and held-to-maturity securities, by duration, the unrealized loss positions on investment securities: Unrealized Loss Position with Duration 12 Months and Over Unrealized Loss Position with Duration Under 12 Months Fair Value Number of Securities Unrealized Loss Fair Value Number of Securities Unrealized Loss (Dollars in millions) September 30, 2019 Available-for-sale securities Agency - Commercial $ 204 22 $ (2 ) $ 21 3 $ — Agency - Residential 280 27 (3 ) 61 9 — Municipal obligations 8 3 — 1 1 — Corporate debt obligations — — — — — — Other MBS — — — 13 2 — Held-to-maturity securities Agency - Commercial $ 159 13 $ (1 ) $ — — $ — Agency - Residential 46 9 — 9 5 — December 31, 2018 Available-for-sale securities Agency - Commercial $ 1,025 74 $ (43 ) $ 1 1 $ — Agency - Residential 647 79 (24 ) 14 5 — Municipal obligations 28 16 (1 ) 1 2 — Corporate debt obligations — — — 7 2 — Held-to-maturity securities Agency - Commercial $ 336 26 $ (13 ) $ — — $ — Agency - Residential 345 60 (9 ) — — — The following table shows the amortized cost and estimated fair value of securities by contractual maturity: Investment Securities Available-for-Sale Investment Securities Held-to-maturity Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in millions) September 30, 2019 Due in one year or less $ 2 $ 2 1.83 % $ — $ — — % Due after one year through five years 12 12 2.63 % 10 10 2.55 % Due after five years through 10 years 90 92 4.33 % 9 9 2.26 % Due after 10 years 1,587 1,591 2.40 % 616 620 2.45 % Total $ 1,691 $ 1,697 $ 635 $ 639 We pledge investment securities, primarily agency collateralized and municipal taxable mortgage obligations, to collateralize lines of credit and/or borrowings. At both September 30, 2019 and December 31, 2018 , we had pledged investment securities of $0.4 billion and $1.9 billion , respectively. |
Loans Held-for-Sale
Loans Held-for-Sale | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Loans Held-for-Sale | Loans Held-for-Sale The majority of our mortgage loans originated as LHFS are ultimately sold into the secondary market on a whole loan basis or by securitizing the loans into agency, government, or private label mortgage-backed securities. LHFS totaled $4.2 billion and $3.9 billion at September 30, 2019 and December 31, 2018 , respectively. For the three and nine months ended September 30, 2019 we had net gain on loan sales associated with LHFS of $110 million and $232 million , respectively, as compared to $43 million and $166 million for the three and nine months ended September 30, 2018 , respectively. At September 30, 2019 and December 31, 2018 , $74 million and $137 million , respectively, of LHFS were recorded at lower of cost or fair value. We elected the fair value option for the remainder of the loans in the portfolio. |
Loans Held-for-Investment
Loans Held-for-Investment | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Loans Held-for-Investment | Loans Held-for-Investment The following table presents our loans held-for-investment: September 30, 2019 December 31, 2018 (Dollars in millions) Consumer loans Residential first mortgage $ 3,258 $ 2,999 Home equity 985 731 Other 693 314 Total consumer loans 4,936 4,044 Commercial loans Commercial real estate 2,697 2,152 Commercial and industrial 1,700 1,433 Warehouse lending 3,215 1,459 Total commercial loans 7,612 5,044 Total loans held-for-investment $ 12,548 $ 9,088 The following table presents the UPB of our loan sales and purchases in the loans held-for-investment portfolio: Nine Months Ended September 30, 2019 2018 (Dollars in millions) Loans Sold (1) Performing loans $ 166 $ 4 Total loans sold $ 166 $ 4 Net gain associated with loan sales (2) $ 2 $ — Loans Purchased Home equity 199 — Other consumer (3) 51 — Total loans purchased $ 250 $ — Premium associated with loans purchased $ 9 $ — (1) Upon a change in our intent, the loans were transferred to LHFS and subsequently sold. (2) Recorded in net gain on loan sales on Consolidated Statements of Operations. (3) Does not include Greensky flow consumer loans. We have pledged certain LHFI, LHFS, and loans with government guarantees to collateralize lines of credit and/or borrowings with the FHLB of Indianapolis and the FRB of Chicago. At September 30, 2019 we had pledged loans of $7.9 billion , compared to $6.8 billion at December 31, 2018 . Allowance for Loan Losses We determine the estimate of the ALLL on at least a quarterly basis. Refer to Note 1- Description of Business, Basis of Presentation, and Summary of Significant Accounting Standards to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2018 for a description of the methodology. The ALLL, other than for loans that have been identified for individual evaluation for impairment, is determined on a loan pool basis by grouping loan types with common risk characteristics to determine our best estimate of incurred losses. The following table presents changes in ALLL, by class of loan: Residential First Mortgage (1) Home Equity Other Consumer Commercial Real Estate Commercial and Industrial Warehouse Lending Total (Dollars in millions) Three Months Ended September 30, 2019 Beginning balance ALLL $ 26 $ 16 $ 5 $ 35 $ 23 $ 5 $ 110 Charge-offs (1 ) (1 ) (2 ) — — — (4 ) Recoveries 1 1 — — 1 — 3 Provision (benefit) 2 — 3 (2 ) (2 ) — 1 Ending balance ALLL $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 Three Months Ended September 30, 2018 Beginning balance ALLL $ 45 $ 19 $ 1 $ 45 $ 21 $ 6 $ 137 Charge-offs (2 ) — — — — — (2 ) Recoveries 1 — — — — — 1 Provision (benefit) (4 ) 1 1 1 (1 ) — (2 ) Ending balance ALLL $ 40 $ 20 $ 2 $ 46 $ 20 $ 6 $ 134 Nine Months Ended September 30, 2019 Beginning balance ALLL $ 38 $ 15 $ 3 $ 48 $ 18 $ 6 $ 128 Charge-offs (3 ) (1 ) (5 ) — (31 ) — (40 ) Recoveries 1 2 — — 1 — 4 Provision (benefit) (8 ) — 8 (15 ) 34 (1 ) 18 Ending balance ALLL $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 Nine Months Ended September 30, 2018 Beginning balance ALLL $ 47 $ 22 $ 1 $ 45 $ 19 $ 6 $ 140 Charge-offs (3 ) (2 ) (1 ) — — — (6 ) Recoveries 1 2 — — — — 3 Provision (benefit) (5 ) (2 ) 2 1 1 — (3 ) Ending balance ALLL $ 40 $ 20 $ 2 $ 46 $ 20 $ 6 $ 134 (1) Includes loans with government guarantees. The ALLL was $110 million at September 30, 2019 and $134 million at September 30, 2018 . The decrease is attributable to our strong asset quality, as loan growth in both the consumer and commercial loan portfolios consists of high credit quality assets, combined with sustained low delinquency and charge-off levels outside of the $29 million net charge off of the Live Well loan which has been fully resolved . The following table sets forth the method of evaluation, by class of loan: Residential First Mortgage (1) Home Equity Other Consumer Commercial Real Estate Commercial and Industrial Warehouse Lending Total (Dollars in millions) September 30, 2019 Loans held-for-investment (2) Individually evaluated $ 33 $ 21 $ 1 $ — $ — $ — $ 55 Collectively evaluated 3,217 961 692 2,697 1,701 3,215 12,483 Total loans $ 3,250 $ 982 $ 693 $ 2,697 $ 1,701 $ 3,215 $ 12,538 Allowance for loan losses (2) Individually evaluated $ 5 $ 8 $ 1 $ — $ — $ — $ 14 Collectively evaluated 23 8 5 33 22 5 96 Total allowance for loan losses $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 December 31, 2018 Loans held-for-investment (2) Individually evaluated $ 32 $ 23 $ — $ — $ — $ — $ 55 Collectively evaluated 2,959 706 314 2,152 1,433 1,459 9,023 Total loans $ 2,991 $ 729 $ 314 $ 2,152 $ 1,433 $ 1,459 $ 9,078 Allowance for loan losses (2) Individually evaluated $ 4 $ 7 $ — $ — $ — $ — $ 11 Collectively evaluated 34 8 3 48 18 6 117 Total allowance for loan losses $ 38 $ 15 $ 3 $ 48 $ 18 $ 6 $ 128 (1) Includes allowance related to loans with government guarantees. (2) Excludes loans carried under the fair value option. Loans are considered to be past due when any payment of principal or interest is 30 days past the scheduled payment date. While it is the goal of management to collect on loans, we attempt to work out a satisfactory repayment schedule or modification with past due borrowers and will undertake foreclosure proceedings if the delinquency is not satisfactorily resolved. Our practices regarding past due loans are designed to both assist borrowers in meeting their contractual obligations and minimize losses incurred by the Bank. We cease the accrual of interest on all classes of consumer and commercial loans upon the earlier of, becoming 90 days past due, or when doubt exists as to the ultimate collection of principal or interest (classified as nonaccrual or nonperforming loans). When a loan is placed on nonaccrual status, the accrued interest income is reversed and the loan may only return to accrual status when principal and interest become current and are anticipated to be fully collectible. The following table sets forth the LHFI aging analysis of past due and current loans: 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due (1) Total Past Due Current Total LHFI (Dollars in millions) September 30, 2019 Consumer loans Residential first mortgage $ 6 $ 1 $ 22 $ 29 $ 3,229 $ 3,258 Home equity 1 1 3 5 980 985 Other 2 1 1 4 689 693 Total consumer loans 9 3 26 38 4,898 4,936 Commercial loans Commercial real estate — — — — 2,697 2,697 Commercial and industrial (1) — — — — 1,700 1,700 Warehouse lending — — — — 3,215 3,215 Total commercial loans — — — — 7,612 7,612 Total loans (2) $ 9 $ 3 $ 26 $ 38 $ 12,510 $ 12,548 December 31, 2018 Consumer loans Residential first mortgage $ 4 $ 2 $ 19 $ 25 $ 2,974 $ 2,999 Home Equity 1 — 3 4 727 731 Other — — — — 314 314 Total consumer loans 5 2 22 29 4,015 4,044 Commercial loans Commercial real estate — — — — 2,152 2,152 Commercial and industrial — — — — 1,433 1,433 Warehouse lending — — — — 1,459 1,459 Total commercial loans — — — — 5,044 5,044 Total loans (2) $ 5 $ 2 $ 22 $ 29 $ 9,059 $ 9,088 (1) Includes less than 90 day past due performing loans which are deemed nonaccrual. Interest is not being accrued on these loans. (2) Includes $4 million and $3 million of past due loans accounted for under the fair value option for September 30, 2019 and December 31, 2018 , respectively. Interest income is recognized on nonaccrual loans using a cash basis method. Interest that would have been accrued on impaired loans was less than $1 million and $1 million during the three and nine months ended September 30, 2019 and September 30, 2018 , respectively. At September 30, 2019 and December 31, 2018 , we had no loans 90 days past due and still accruing interest. Troubled Debt Restructurings We may modify certain loans in both our consumer and commercial loan portfolios to retain customers or to maximize collection of the outstanding loan balance. Troubled debt restructurings ("TDRs") are modified loans in which a borrower demonstrates financial difficulties and for which a concession has been granted as a result. Nonperforming TDRs are included in nonaccrual loans. TDRs remain in nonperforming status until a borrower has made payments and is current for at least six consecutive months. Performing TDRs are not considered to be nonaccrual so long as we believe that all contractual principal and interest due under the restructured terms will be collected. Performing and nonperforming TDRs remain impaired as interest and principal will not be received in accordance with the original contractual terms of the loan agreement. Refer to Note 1- Description of Business, Basis of Presentation, and Summary of Significant Accounting Standards to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2018 for a description of the methodology used to determine TDRs. Some loan modifications classified as TDRs may not ultimately result in the full collection of principal and interest, as modified, but may give rise to potential incremental losses. We measure impairments using a discounted cash flow method for performing TDRs and measure impairment based on collateral values for nonperforming TDRs. The following table provides a summary of TDRs by type and performing status: TDRs Performing Nonperforming Total (Dollars in millions) September 30, 2019 Consumer loans Residential first mortgage $ 20 $ 8 $ 28 Home equity 19 2 21 Total TDRs (1)(2) $ 39 $ 10 $ 49 December 31, 2018 Consumer loans Residential first mortgage $ 22 $ 8 $ 30 Home Equity 22 2 24 Total TDRs (1)(2) $ 44 $ 10 $ 54 (1) The ALLL on TDR loans totaled $8 million and $10 million at September 30, 2019 and December 31, 2018 , respectively. (2) Includes $3 million and $3 million of TDR loans accounted for under the fair value option at September 30, 2019 and December 31, 2018 , respectively. The following table provides a summary of newly modified TDRs: New TDRs Number of Accounts Pre-Modification Unpaid Principal Balance Post-Modification Unpaid Principal Balance (1) Increase in Allowance at Modification (Dollars in millions) Three Months Ended September 30, 2019 Residential first mortgages $ 4 $ 1 $ 1 $ — Home equity (2)(3) — $ — $ — $ — Total TDR loans $ 4 $ 1 $ 1 $ — Three Months Ended September 30, 2018 Residential first mortgages $ 2 $ — $ — $ — Home equity (2)(3) 6 1 1 — Total TDR loans $ 8 $ 1 $ 1 $ — Nine Months Ended September 30, 2019 Residential first mortgages $ 6 $ 1 $ 1 $ — Home equity (2)(3) 4 1 1 — Total TDR loans $ 10 $ 2 $ 2 $ — Nine Months Ended September 30, 2018 Residential first mortgages $ 13 $ 2 $ 2 $ — Home equity (2)(3) 14 1 1 — Total TDR loans $ 27 $ 3 $ 3 $ — (1) Post-modification balances include past due amounts that are capitalized at modification date. (2) Home equity post-modification UPB reflects write downs. (3) Includes loans carried at the fair value option. There were no residential first mortgage loans modified in the previous 12 months that subsequently defaulted during the three and nine months ended September 30, 2019 and September 30, 2018. All TDR classes within the consumer and commercial portfolios are considered subsequently defaulted when they are greater than 90 days past due within 12 months of the restructuring date. Impaired Loans The following table presents individually evaluated impaired loans and the associated allowance: September 30, 2019 December 31, 2018 Recorded Investment Net Unpaid Principal Balance Related Allowance Recorded Investment Net Unpaid Principal Balance Related Allowance (Dollars in millions) With no related allowance recorded Consumer loans Residential first mortgage $ 17 $ 21 $ — $ 13 $ 16 $ — Home equity 1 5 — 1 4 — Other consumer — 1 — — — — Total loans with no related allowance recorded $ 18 $ 27 $ — $ 14 $ 20 $ — With an allowance recorded Consumer loans Residential first mortgage $ 16 $ 16 $ 3 $ 19 $ 20 $ 4 Home equity 19 19 6 22 23 7 Other consumer 1 1 1 — — — Total loans with an allowance recorded $ 36 $ 36 $ 10 $ 41 $ 43 $ 11 Total Impaired loans Consumer Loans Residential first mortgage $ 33 $ 37 $ 3 $ 32 $ 36 $ 4 Home equity 20 24 6 23 27 7 Other consumer 1 2 1 — — — Commercial loans Commercial and industrial — — — — — — Total impaired loans $ 54 $ 63 $ 10 $ 55 $ 63 $ 11 The following table presents average impaired loans and the interest income recognized: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized (Dollars in millions) Consumer loans Residential first mortgage $ 46 $ — $ 34 $ 1 $ 38 $ — $ 34 $ 1 Home equity 7 — 24 — 17 — 25 1 Other consumer 1 — — — 1 — — — Total impaired consumer loans 54 — 58 1 56 — 59 2 Commercial loans Commercial real estate — — — — — — — — Commercial and industrial 25 — — — 20 — 2 — Warehouse — — — — — — — — Total impaired commercial loans 25 — — — 20 — 2 — Total impaired loans $ 79 $ — $ 58 $ 1 $ 76 $ — $ 61 $ 2 Credit Quality We utilize an internal risk rating system which is applied to all consumer and commercial loans. Descriptions of our internal risk ratings as they relate to credit quality follow the ratings used by the U.S. bank regulatory agencies as listed below. Pass. Pass assets are not impaired nor do they have any known deficiencies that could impact the quality of the asset. Watch. Watch assets are defined as pass rated assets that exhibit elevated risk characteristics or other factors that deserve management’s close attention and increased monitoring. However, the asset does not exhibit a potential or well-defined weakness that would warrant a downgrade to criticized or adverse classification. Special mention. Assets identified as special mention possess credit deficiencies or potential weaknesses deserving management's close attention. Special mention assets have a potential weakness or pose an unwarranted financial risk that, if not corrected, could weaken the assets and increase risk in the future. Special mention assets are criticized, but do not expose an institution to sufficient risk to warrant adverse classification. Substandard . Assets identified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the full collection or liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. For home equity loans and other consumer loans, we evaluate credit quality based on the aging and status of payment activity and any other known credit characteristics that call into question full repayment of the asset. Substandard loans may be placed on either accrual or non-accrual status. Doubtful . An asset classified as doubtful has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. A doubtful asset has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Due to the high probability of loss, doubtful assets are placed on non-accrual. Loss. An asset classified as loss is considered uncollectible and of such little value that the continuance as a bankable asset is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but, rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be affected in the future. Consumer Loans Consumer loans consist of open and closed-end loans extended to individuals for household, family, and other personal expenditures, and includes consumer loans, and loans to individuals secured by their personal residence, including first mortgage, home equity, and home improvement loans. Because consumer loans are usually relatively small-balance, homogeneous exposures, consumer loans are rated primarily on payment performance. Payment performance is a proxy for the strength of repayment capacity and loans are generally classified based on their payment status rather than by an individual review of each loan. In accordance with regulatory guidance, we assign risk ratings to consumer loans in the following manner: • Consumer loans are classified as Watch once the loan becomes 60 days past due. • Open and closed-end consumer loans 90 days or more past due are classified Substandard. Commercial Loans Management conducts periodic examinations which serve as an independent verification of the accuracy of the ratings assigned. Loan grades are based on different factors within the borrowing relationship: entity sales, debt service coverage, debt/total net worth, liquidity, balance sheet and income statement trends, management experience, business stability, financing structure, and financial reporting requirements. The underlying collateral is also rated based on the specific type of collateral and corresponding LTV. The combination of the borrower and collateral risk ratings results in the final rating for the borrowing relationship. The following table presents the credit quality of our LHFI portfolio: September 30, 2019 Pass Watch Special Mention Substandard Total Loans (Dollars in millions) Consumer Loans Residential first mortgage $ 3,210 $ 25 $ — $ 23 $ 3,258 Home equity 962 20 — 3 985 Other consumer 691 1 — 1 693 Total consumer loans $ 4,863 $ 46 $ — $ 27 $ 4,936 Commercial Loans Commercial real estate $ 2,655 $ 33 $ 4 $ 5 $ 2,697 Commercial and industrial 1,624 44 27 5 1,700 Warehouse 3,033 165 17 — 3,215 Total commercial loans $ 7,312 $ 242 $ 48 $ 10 $ 7,612 December 31, 2018 Pass Watch Special Mention Substandard Total Loans (Dollars in millions) Consumer Loans Residential first mortgage $ 2,952 $ 28 $ — $ 19 $ 2,999 Home equity 705 23 — 3 731 Other consumer 314 — — — 314 Total consumer loans $ 3,971 $ 51 $ — $ 22 $ 4,044 Commercial Loans Commercial real estate $ 2,132 $ 14 $ 5 $ 1 $ 2,152 Commercial and industrial 1,351 53 29 — 1,433 Warehouse 1,324 120 15 — 1,459 Total commercial loans $ 4,807 $ 187 $ 49 $ 1 $ 5,044 |
Loans with Government Guarantee
Loans with Government Guarantees | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Loans with Government Guarantees | Loans with Government Guarantees Substantially all loans with government guarantees are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. FHA loans earn interest at a rate based upon the 10 -year U.S. Treasury note rate at the time the underlying loan becomes delinquent, which is not paid by the FHA or the U.S. Department of Veterans Affairs until claimed. Certain loans within our portfolio may be subject to indemnifications and insurance limits which expose us to limited credit risk. We have reserved for these risks within other assets and as a component of our ALLL on residential first mortgages. Repossessed assets and the associated claims related to government guaranteed loans are recorded in other assets and totaled $43 million and $50 million , at September 30, 2019 and December 31, 2018 , respectively. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Transfer of Securitizations or Asset-backed Financing Financial Assets Accounted for as Sale [Abstract] | |
Variable Interest Entities | Variable Interest Entities We have no consolidated VIEs as of September 30, 2019 and December 31, 2018 . In connection with our securitization activities, we have retained a five percent interest in the investment securities of certain trusts ("other MBS") and are contracted as the subservicer of the underlying loans, compensated based on market rates, which constitutes a continuing involvement in these trusts. Although we have a variable interest in these securitization trusts, we are not their primary beneficiary due to the relative size of our investment in comparison to the total amount of securities issued by the VIE and our inability to direct activities that most significantly impact the VIE’s economic performance. As a result, we have not consolidated the assets and liabilities of the VIE in our Consolidated Statements of Financial Condition. The Bank’s maximum exposure to loss is limited to our investment in the VIE, as well as the standard representations and warranties made in conjunction with the loan transfer. See Note 16 |
Mortgage Servicing Rights
Mortgage Servicing Rights | 9 Months Ended |
Sep. 30, 2019 | |
Transfers and Servicing [Abstract] | |
Mortgage Servicing Rights | Mortgage Servicing Rights We have investments in MSRs that result from the sale of loans to the secondary market for which we retain the servicing. We account for MSRs at their fair value. A primary risk associated with MSRs is the potential reduction in fair value as a result of higher than anticipated prepayments due to loan refinancing prompted, in part, by declining interest rates or government intervention. Conversely, these assets generally increase in value in a rising interest rate environment to the extent that prepayments are slower than anticipated. We utilize derivatives as economic hedges to offset changes in the fair value of the MSRs resulting from the actual or anticipated changes in prepayments stemming from changing interest rate environments. There is also a risk of valuation decline due to higher than expected increases in default rates, which we do not believe can be effectively managed using derivatives. For further information regarding the derivative instruments utilized to manage our MSR risks, see Note 8 - Derivative Financial Instruments. Changes in the fair value of residential first mortgage MSRs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Balance at beginning of period $ 316 $ 257 $ 290 $ 291 Additions from loans sold with servicing retained 39 100 203 283 Reductions from sales (12 ) (51 ) (57 ) (273 ) Changes in fair value due to (1): Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (30 ) (3 ) (60 ) (12 ) Changes in estimates of fair value due to interest rate risk (2) (28 ) 10 (91 ) 24 Fair value of MSRs at end of period $ 285 $ 313 $ 285 $ 313 (1) Changes in fair value are included within net return on mortgage servicing rights on the Consolidated Statements of Operations. (2) Represents estimated MSR value change resulting primarily from market-driven changes which we manage through the use of derivatives. The following table summarizes the hypothetical effect on the fair value of servicing rights using adverse changes of 10 percent and 20 percent to the weighted average of certain significant assumptions used in valuing these assets: September 30, 2019 December 31, 2018 Fair value Fair value Actual 10% adverse change 20% adverse change Actual 10% adverse change 20% adverse change (Dollars in millions) Option adjusted spread 5.41 % $ 280 $ 276 5.42 % $ 284 $ 280 Constant prepayment rate 11.24 % 265 248 9.57 % 278 268 Weighted average cost to service per loan $ 84.62 282 279 $ 85.57 286 283 The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. To isolate the effect of the specified change, the fair value shock analysis is consistent with the identified adverse change, while holding all other assumptions constant. In practice, a change in one assumption generally impacts other assumptions, which may either magnify or counteract the effect of the change. For further information on the fair value of MSRs, see Note 16 - Fair Value Measurements. Contractual servicing and subservicing fees . Contractual servicing and subservicing fees, including late fees and other ancillary income are presented below. Contractual servicing fees are included within net return on mortgage servicing rights on the Consolidated Statements of Operations. Contractual subservicing fees, including late fees and other ancillary income are included within loan administration income on the Consolidated Statements of Operations. Subservicing fee income is recorded for fees earned on subserviced loans, net of third party subservicing costs. The following table summarizes income and fees associated with owned mortgage servicing rights: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Net return on mortgage servicing rights Servicing fees, ancillary income and late fees (1) $ 25 $ 17 $ 70 $ 46 Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (30 ) (3 ) (60 ) (12 ) Changes in estimates of fair value due to interest rate risk (28 ) 10 (91 ) 24 Gain (loss) on MSR derivatives (2) 31 (11 ) 92 (27 ) Net transaction costs on sale of MSR assets — — (2 ) (5 ) Total return included in net return on mortgage servicing rights $ (2 ) $ 13 $ 9 $ 26 (1) Servicing fees are recorded on an accrual basis. Ancillary income and late fees are recorded on a cash basis. (2) Changes in the derivatives utilized as economic hedges to offset changes in fair value of the MSRs. The following table summarizes income and fees associated with our mortgage loans subserviced for others: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Loan administration income on mortgage loans subserviced Servicing fees and late fees (1) $ 27 $ 14 $ 77 $ 36 Charges on subserviced custodial balances (2) (20 ) (9 ) (50 ) (20 ) Other servicing charges (2 ) — (5 ) (1 ) Total income on mortgage loans subserviced, included in loan administration $ 5 $ 5 $ 22 $ 15 (1) Servicing fees are recorded on an accrual basis. Late fees are recorded on cash basis. (2) Charges on subserviced custodial balances represent interest due to MSR owner. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Derivative financial instruments are recorded at fair value in other assets and other liabilities on the Consolidated Statements of Financial Condition. Our policy is to present its derivative assets and derivative liabilities on the Consolidated Statement of Financial Condition on a gross basis, even when provisions allowing for set-off are in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by the counterparties to our various derivative financial instruments. A majority of our derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in our remaining derivative contracts is minimal based on credit standards and the collateral provisions of the derivative agreements. Derivatives not designated as hedging instruments: We maintain a derivative portfolio of interest rate swaps, futures and forward commitments used to manage exposure to changes in interest rates, MSR asset values and to meet the needs of customers. We also enter into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage LHFS is managed using corresponding forward sale commitments. Changes in fair value of derivatives not designated as hedging instruments are recognized in the Consolidated Statements of Operations. Derivatives designated as hedging instruments: We have designated certain interest rate swaps as fair value hedges of fixed rate FHLB advances and investment securities available for sale using the last-of-layer method. Derivatives that are designated in hedging relationships are assessed for effectiveness using regression analysis at inception and qualitatively thereafter, unless regression analysis is deemed necessary. All designated hedge relationships were and are expected to be highly effective as of September 30, 2019 . Cash flows and the profit impact associated with designated hedges are reported in the same category as the underlying hedged item. The following table presents the notional amount, estimated fair value and maturity of our derivative financial instruments: September 30, 2019 (1) Notional Amount Fair Value (2) Expiration Dates (Dollars in millions) Derivatives in fair value hedge relationships: Assets Interest rate swap on AFS Securities $ 100 $ — 2022 Liabilities Interest rate swaps on AFS securities $ 200 $ — 2020 Derivatives not designated as hedging instruments: Assets Futures $ 224 $ — 2019-2023 Mortgage-backed securities forwards 3,658 11 2019 Rate lock commitments 5,036 51 2019-2020 Interest rate swaps and swaptions 737 34 2019-2029 Total derivative assets $ 9,655 $ 96 Liabilities Futures $ 242 $ — 2020-2023 Mortgage-backed securities forwards 4,699 11 2019 Rate lock commitments 275 1 2019-2020 Interest rate swaps 1,628 5 2019-2049 Total derivative liabilities $ 6,844 $ 17 (1) Variation margin pledged to or received from a Central Counterparty Clearing House is considered settlement of the derivative position for accounting purposes. (2) Derivative assets and liabilities are included in other assets and other liabilities on the Consolidated Statements of Financial Condition, respectively. December 31, 2018 (1) Notional Amount Fair Value (2) Expiration Dates (Dollars in millions) Derivatives in fair value hedge relationships: Assets Interest rate swaps on CDs $ 20 $ — 2019 Liabilities Interest rate swaps on CDs $ 10 $ — 2019 Derivatives not designated as hedging instruments: Assets Futures $ 248 $ — 2019-2023 Mortgage backed securities forwards 362 4 2019 Rate lock commitments 2,221 20 2019 Interest rate swaps and swaptions 1,662 23 2019-2049 Total derivative assets $ 4,493 $ 47 Liabilities Futures $ 1,513 $ 1 2019-2023 Mortgage backed securities forwards 4,625 31 2019 Rate lock commitments 45 — 2019 Interest rate swaps 755 7 2019-2028 Total derivative liabilities $ 6,938 $ 39 (1) Variation margin pledged to or received from a Central Counterparty Clearing House to cover the prior day's fair value of open positions, is considered settlement of the derivative position for accounting purposes. (2) Derivative assets and liabilities are included in other assets and other liabilities on the Consolidated Statements of Financial Condition, respectively. The following tables present the derivatives subject to a master netting arrangement, including the cash pledged as collateral: Gross Amounts Netted in the Statements of Financial Condition Net Amount Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statements of Financial Condition Gross Amount Financial Instruments Cash Collateral (Dollars in millions) September 30, 2019 Derivatives not designated as hedging instruments: Assets Mortgage backed securities forwards $ 11 $ — $ 11 $ — $ 3 Interest rate swaps and swaptions (1) 34 — 34 — — Total derivative assets $ 45 $ — $ 45 $ — $ 3 Liabilities Futures $ — $ — $ — $ — $ — Mortgage backed securities forwards 11 — 11 — 16 Interest rate swaps (1) 5 — 5 — 41 Total derivative liabilities $ 16 $ — $ 16 $ — $ 57 December 31, 2018 Derivatives not designated as hedging instruments: Assets Mortgage-backed securities forwards $ 4 $ — $ 4 $ — $ — Interest rate swaps and swaptions (1) 23 — 23 — 14 Total derivative assets $ 27 $ — $ 27 $ — $ 14 Liabilities Futures $ 1 $ — $ 1 $ — $ 1 Mortgage-backed securities forwards 31 — 31 — 29 Interest rate swaps (1) 7 — 7 — 23 Total derivative liabilities $ 39 $ — $ 39 $ — $ 53 (1) Variation margin pledged to or received from a Central Counterparty Clearing House to cover the prior day's fair value of open positions, is considered settlement of the derivative position for accounting purposes. The fair value basis adjustment on our hedged AFS securities is included in investment securities available for sale on our Consolidated Statements of Financial Condition. The carrying amount of our hedged securities was $293 million at September 30, 2019 and zero at December 31, 2018 of which $2 million and zero respectively, was due to the fair value hedge relationship. The closed portfolio of AFS securities designated in this last layer method hedge was $295 million (amortized cost of $292 million ) at September 30, 2019 and zero at December 31, 2018 of which we have designated $100 million . The carrying amount of hedged FHLB advances was $200 million at September 30, 2019 and zero at December 31, 2018. The fair value hedge relationship had a de minimis impact at September 30, 2019 and zero at December 31, 2018. At September 30, 2019 , we pledged a total of $57 million related to derivative financial instruments, consisting of $23 million of cash collateral on derivative liabilities and $34 million of maintenance margin on centrally cleared derivatives and had an obligation to return cash of $3 million on derivative assets at September 30, 2019. We pledged a total of $53 million related to derivative financial instruments, consisting of $30 million of cash collateral on derivatives and $23 million of maintenance margin on centrally cleared derivatives and had an obligation to return cash of $14 million on derivative assets at December 31, 2018 . Within the Consolidated Statements of Financial Condition, the collateral related to derivative activity is included in other assets and other liabilities and the cash pledged as maintenance margin is restricted and included in other assets. The following table presents the net gain (loss) recognized on designated instruments, net of the impact of offsetting positions: Amount Recorded in Net Interest Income (1) Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Gain on cash flow hedging relationships in interest contracts: Amount of loss reclassified from AOCI into income $ — $ 1 $ — $ — Total loss on hedges $ — $ 1 $ — $ — (1) The loss on fair value hedging relationships in interest contracts was de minimis for the three and nine months ended September 30, 2019 , and the three and nine months ended September 30, 2018 . During the second quarter of 2018, we de-designated all of our remaining cash flow hedge relationships. The following table presents net gain (loss) recognized in income on derivative instruments, net of the impact of offsetting positions: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Derivatives not designated as hedging instruments: Location of Gain (Loss) Futures Net return on mortgage servicing rights $ — $ (1 ) $ (2 ) $ (4 ) Interest rate swaps and swaptions Net return on mortgage servicing rights 28 (8 ) 71 (16 ) Mortgage-backed securities forwards Net return on mortgage servicing rights 3 (2 ) 23 (6 ) Rate lock commitments and forward agency and loan sales Net gain on loan sales 27 21 57 12 Forward commitments Other noninterest income — — 2 — Interest rate swaps (1) Other noninterest income 2 1 3 2 Total derivative gain (loss) $ 60 $ 11 $ 154 $ (12 ) (1) Includes customer-initiated commercial interest rate swaps. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Federal Home Loan Bank Advances The following is a breakdown of our FHLB advances outstanding: September 30, 2019 December 31, 2018 Amount Rate Amount Rate (Dollars in millions) Short-term fixed rate term advances $ 2,325 1.89 % $ 2,993 2.52 % Other short-term borrowings 4 2.32 % 251 2.87 % Total short-term Federal Home Loan Bank advances and other borrowings 2,329 3,244 Long-term Federal Home Loan Bank fixed rate advances (1) 650 1.45 % 150 1.53 % Total Federal Home Loan Bank advances $ 2,979 $ 3,394 (1) Includes the current portion of fixed rate advances of $0 and $50 million at September 30, 2019 and December 31, 2018 . The following table contains detailed information on our FHLB advances and other borrowings: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Maximum outstanding at any month end $ 2,979 $ 5,085 $ 3,391 $ 5,740 Average outstanding balance 2,446 4,745 2,769 4,996 Average remaining borrowing capacity 4,957 2,165 3,932 1,830 Weighted average interest rate 2.10 % 2.08 % 2.33 % 1.88 % The following table outlines the maturity dates of our FHLB advances and other borrowings: September 30, 2019 (Dollars in millions) 2019 $ 2,329 2020 — 2021 — 2022 — Thereafter 650 Total $ 2,979 Parent Company Senior Notes and Trust Preferred Securities The following table presents long-term debt, net of debt issuance costs: September 30, 2019 December 31, 2018 Amount Interest Rate Amount Interest Rate (Dollars in millions) Senior Notes Senior notes, matures 2021 $ 249 6.125 % $ 248 6.125 % Trust Preferred Securities Floating Three Month LIBOR Plus: 3.25%, matures 2032 $ 26 5.36 % $ 26 6.07 % 3.25%, matures 2033 26 5.55 % 26 5.69 % 3.25%, matures 2033 26 5.57 % 26 6.05 % 2.00%, matures 2035 26 4.30 % 26 4.44 % 2.00%, matures 2035 26 4.30 % 26 4.44 % 1.75%, matures 2035 51 3.87 % 51 4.54 % 1.50%, matures 2035 25 3.80 % 25 3.94 % 1.45%, matures 2037 25 3.57 % 25 4.24 % 2.50%, matures 2037 16 4.62 % 16 5.29 % Total Trust Preferred Securities 247 247 Total other long-term debt $ 496 $ 495 Senior Notes On July 11, 2016, we issued $250 million of senior notes (“Senior Notes”) which mature on July 15, 2021. Prior to June 15, 2021, we may redeem some or all of the Senior Notes at a redemption price equal to the greater of 100 percent of the aggregate principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payments discounted to the redemption date on a semi-annual basis using a discount rate equal to the Treasury Rate plus 0.50 percent , plus, in each case accrued and unpaid interest. Trust Preferred Securities We sponsor nine trust subsidiaries, which issued preferred stock to third party investors. We issued junior subordinated debt securities to those trusts, which we have included in long-term debt. The junior subordinated debt securities are the sole assets of those trusts. The trust preferred securities are callable by us at any time. Interest is payable quarterly; however, we may defer interest payments for up to 20 quarters without default or penalty. As of September 30, 2019 , we had no deferred interest. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table sets forth the components in accumulated other comprehensive income (loss): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Investment securities Beginning balance $ (8 ) $ (56 ) $ (47 ) $ (18 ) Unrealized gain (loss) 18 (11 ) 61 (55 ) Less: Tax provision (benefit) 5 (2 ) 15 (13 ) Net unrealized gain (loss) 13 (9 ) 46 (42 ) Reclassifications out of AOCI (1) — — 7 — Less: Tax provision — — 1 — Net unrealized gain reclassified out of AOCI — — 6 — Reclassification of certain income tax effects (2) — — — (5 ) Other comprehensive income (loss), net of tax 13 (9 ) 52 (47 ) Ending balance $ 5 $ (65 ) $ 5 $ (65 ) Cash Flow Hedges Beginning balance $ — $ 24 $ — $ 2 Unrealized gain — — — 28 Less: Tax provision — — — 7 Net unrealized gain — — — 21 Reclassifications out of AOCI (3) — (1 ) — — Net unrealized gain reclassified out of AOCI — (1 ) — — Other comprehensive income, net of tax — (1 ) — 21 Ending balance $ — $ 23 $ — $ 23 (1) Reclassifications are reported in noninterest income on the Consolidated Statements of Operations. (2) Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to early adoption of ASU 2018-02. (3) Reclassifications are reported in interest expense on the Consolidated Statements of Operations. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share, excluding dilution, is computed by dividing earnings applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock or resulted in the issuance of common stock that could then share in our earnings. The following table sets forth the computation of basic and diluted earnings per share of common stock: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions, except share data) Net income $ 63 $ 48 $ 160 $ 133 Weighted Average Shares Weighted average common shares outstanding 56,484,499 57,600,360 56,607,944 57,483,802 Effect of dilutive securities Stock-based awards 626,297 732,238 644,596 818,118 Weighted average diluted common shares 57,110,796 58,332,598 57,252,540 58,301,920 Earnings per common share Basic earnings per common share $ 1.12 $ 0.84 $ 2.83 $ 2.32 Effect of dilutive securities Stock-based awards (0.01 ) (0.01 ) (0.03 ) (0.04 ) Diluted earnings per common share $ 1.11 $ 0.83 $ 2.80 $ 2.28 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation We had stock-based compensation expense of $4 million and $9 million for the three and nine months ended September 30, 2019 and $4 million and $8 million for the three and nine months ended September 30, 2018 , respectively. Restricted Stock and Restricted Stock Units The following table summarizes restricted stock and restricted stock units activity: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Shares Weighted — Average Grant-Date Fair Value per Share Shares Weighted — Average Grant-Date Fair Value per Share Restricted Stock and Restricted Stock Units Non-vested balance at beginning of period 1,612,174 $ 29.11 1,620,568 $ 27.27 Granted — — 325,209 31.88 Vested (2,719 ) 33.64 (227,818 ) 23.91 Canceled and forfeited (18,140 ) 32.48 (126,644 ) 22.58 Non-vested balance at end of period 1,591,315 $ 29.06 1,591,315 $ 29.06 2017 Employee Stock Purchase Plan A total of 800,000 shares of the Company’s common stock were reserved and authorized for issuance for purchase under the Employee Stock Purchase Plan (ESPP) of which 553,547 remain as of September 30, 2019 . There were 24,373 and 84,036 shares issued under the ESPP during the three and nine months ended September 30, 2019 and the associated compensation expense was de minimis. |
Legal Proceedings, Contingencie
Legal Proceedings, Contingencies and Commitments | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings, Contingencies and Commitments | Legal Proceedings, Contingencies and Commitments Legal Proceedings We and our subsidiaries are subject to various pending or threatened legal proceedings arising out of the normal course of business operations. In addition, the Bank is routinely named in civil actions throughout the country by borrowers and former borrowers relating to the origination, purchase, sale, and servicing of mortgage loans. From time to time, governmental agencies also conduct investigations or examinations of various practices of the Bank. In the course of such investigations or examinations, the Bank cooperates with such agencies and provides information as requested. We assess the liabilities and loss contingencies in connection with pending or threatened legal and regulatory proceedings on at least a quarterly basis and establish accruals when we believe it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, litigation accruals are adjusted, as appropriate, in light of additional information. At September 30, 2019 , we do not believe that the amount of any reasonably possible losses in excess of any amounts accrued with respect to ongoing proceedings or any other known claims will be material to our financial statements, or that the ultimate outcome of these actions will have a material adverse effect on our financial condition, results of operations or cash flows. DOJ Liability On February 24, 2012, the Bank entered into a Settlement Agreement with the DOJ under which we agreed to make future payments totaling $118 million in annual increments of up to $25 million upon meeting all of the following conditions which are evaluated quarterly and include: (a) the reversal of the DTA valuation allowance, which occurred at the end of 2013; (b) the repayment of the Fixed Rate Cumulative Perpetual Preferred Stock, Series C (the "TARP Preferred"), which occurred in July 2016; and (c) the Bank having a Tier 1 Leverage Capital Ratio of 11 percent or greater as filed in the Call Report with the OCC. At September 30, 2019 , the Company had a Tier 1 Leverage Capital Ratio of 8.35 percent. No payment would be required until six months after the Bank files its Call Report with the OCC first reporting that its Tier 1 Leverage Capital Ratio was 11 percent or greater. If all other conditions were then satisfied, an initial annual payment would be due at that time. The next annual payment is only made if such other conditions continue to be satisfied, otherwise payments are delayed until all such conditions are met. Further, making such a payment must not violate any material banking regulatory requirement, and the OCC must not object in writing. Consistent with most mid-size banks, our Tier 1 Leverage Capital Ratio is impacted by (a) future dividends from the Bank to Bancorp and (b) continued growth in earning assets at the Bank which could have an impact on the timing of expected cash flows under the Settlement Agreement. Consistent with our business and regulatory requirements, Flagstar shall seek in good faith to fulfill the conditions, and will not undertake any conduct or fail to take any action the purpose of which is to frustrate or delay our ability to fulfill any of the above conditions. Additionally, if the Bank and Bancorp become party to a business combination in which the Bank or Bancorp represent less than 33.3 percent of the resulting company’s assets, annual payments must commence twelve months after the date of that business combination. The settlement agreement meets the definition of a financial instrument for which we elected the fair value option. We consider the assumptions a market participant would make to transfer the liability and evaluate the potential ways we might be required to begin making DOJ Liability payments and our estimates of the likelihood of these outcomes, which may change over time. The fair value of the liability is subject to significant uncertainty and is impacted by forecasted estimates of the timing of potential payments some of which are impacted by inputs including estimates of equity, earnings, timing and amount of dividends and growth of the balance sheet and their related impacts on forecasted Tier 1 Leverage Capital Ratio, the likelihood of the Bank or Bancorp being a party to a business combination resulting in terms which would require payments to commence, or any other means by which a payment could be made. For further information on the fair value of the liability, see Note 16 - Fair Value Measurements. Other litigation accruals Excluding the DOJ Liability, our total accrual for contingent liabilities and settled litigation was $2 million at September 30, 2019 and December 31, 2018 . Commitments The following table is a summary of the contractual amount of significant commitments: September 30, 2019 December 31, 2018 (Dollars in millions) Commitments to extend credit Mortgage loans interest-rate lock commitments $ 5,325 $ 2,293 Warehouse loan commitments 1,579 2,334 Commercial and industrial commitments 1,034 918 Other commercial commitments 1,907 1,260 HELOC commitments 526 429 Other consumer commitments 227 108 Standby and commercial letters of credit 81 63 Commitments to extend credit are agreements to lend to a customer as long as there is not a violation of any condition established in the contract. Since many of these commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. Commitments generally have fixed expiration dates or other termination clauses. We evaluate each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us, upon extension of credit is based on management's credit evaluation of the counterparties. These instruments involve, to varying degrees, elements of credit and interest rate risk beyond the amount recognized on the Consolidated Statements of Financial Condition. Our exposure to credit losses in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. We utilize the same credit policies in making commitments and conditional obligations as we do for balance sheet instruments. The types of credit we extend are as follows: Mortgage loan interest-rate lock commitments. We enter into mortgage interest-rate lock commitments with our customers. These commitments are considered to be derivative instruments and the fair value of these commitments is recorded in the Consolidated Statements of Financial Condition in other assets. For further information, see Note 8 - Derivative Financial Instruments. Warehouse loan commitments. Lines of credit provided to mortgage originators to fund loans they originate and then sell. The proceeds of the sale of the loans are used to repay the draw on the line used to fund the loans. Commercial and industrial and other commercial commitments. Conditional commitments issued under various terms to lend funds to business and other entities. These commitments include revolving credit agreements, term loan commitments and short-term borrowing agreements. Many of these loan commitments have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements. HELOC commitments. Commitments to extend, originate or purchase credit are primarily lines of credit to consumers and have specified rates and maturity dates. Many of these commitments also have adverse change clauses, which allow us to cancel the commitment due to deterioration in the borrowers’ creditworthiness or a decline in the collateral value. Other consumer commitments. C onditional commitments issued to accommodate the financial needs of customers. The commitments are made under various terms to lend funds to consumers, which include revolving credit agreements, term loan commitments and short-term borrowing agreements. Standby and commercial letters of credit. Conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. These financial standby letters of credit irrevocably obligate the bank to pay a third party beneficiary when a customer fails to repay an outstanding loan or debt instrument. We maintain a reserve for the estimate of probable credit losses inherent in unfunded commitments to extend credit. Unfunded commitments to extend credit include unfunded loans with available balances, new commitments to lend that are not yet funded, and standby and commercial letters of credit. A reserve balance of $3 million at both September 30, 2019 and December 31, 2018 , is reflected in other liabilities on the Consolidated Statements of Financial Condition. Supplemental executive retirement plan with former CEO. The Company entered into a supplemental executive retirement plan (“SERP”) with a former CEO in 2009. Under the plan, the former CEO was to receive a $16 million payment in August 2018. The Company fully accrued for the SERP liability during that time period and no SERP payments have been made to the former CEO. Due to the condition of the Company at the time the former CEO’s employment ended, we believe that any payment under the SERP would be deemed to be a “Golden Parachute” payment and, therefore, is subject to certain banking regulations. As a result, we would need to make an application to the regulators to make a payment and certify to certain criteria. The Company does not believe that it can make such a certification. The former CEO has filed a lawsuit to compel us to make that certification and ultimately pay the liability. Final dispensation of the "SERP" is not within our control and the liability of $16 million at September 30, 2019 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes in interim periods requires us to make a best estimate of the effective tax rate expected to be applicable for the full year, adjusted for any discrete items for the applicable period. This estimated effective tax rate is then applied to interim consolidated pre-tax operating income to determine the interim provision for income taxes. The following table presents our provision for income tax and effective tax provision rate: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Provision for income taxes $ 15 $ 12 $ 37 $ 33 Effective tax provision rate 18.4 % 20.0 % 18.6 % 20.1 % We believe that it is unlikely that our unrecognized tax benefits will change by a material amount during the next 12 months . We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes. |
Regulatory Matters
Regulatory Matters | 9 Months Ended |
Sep. 30, 2019 | |
Banking and Thrift [Abstract] | |
Regulatory Matters | Regulatory Matters Regulatory Capital We, along with the Bank, must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that could have a material effect on the Consolidated Financial Statements. On January 1, 2015 , the Basel III rules became effective and included transition provisions through 2018. In preparation for the new capital simplification rules, the Basel III implementation phase-in has been halted, as the agencies issued a final rule that will maintain the capital rules’ 2017 transition provisions for several regulatory capital deductions and certain other requirements that are subject to multi-year phase-in schedules in the regulatory capital rules. To be categorized as "well-capitalized," the Company and the Bank must maintain minimum tangible capital, Tier 1 capital, common equity Tier 1, and total capital ratios as set forth in the table below. We, along with the Bank, are considered "well-capitalized" at both September 30, 2019 and December 31, 2018 . The following tables present the regulatory capital ratios as of the dates indicated: Flagstar Bancorp Actual For Capital Adequacy Purposes Well-Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in millions) September 30, 2019 Tier 1 leverage (to adjusted avg. total assets) $ 1,668 7.98 % $ 836 4.0 % $ 1,045 5.0 % Common equity Tier 1 capital (to RWA) 1,428 9.25 % 694 4.5 % 1,003 6.5 % Tier 1 capital (to RWA) 1,668 10.81 % 926 6.0 % 1,235 8.0 % Total capital (to RWA) 1,781 11.54 % 1,235 8.0 % 1,543 10.0 % December 31, 2018 Tier 1 leverage (to adjusted avg. total assets) $ 1,505 8.29 % $ 726 4.0 % $ 908 5.0 % Common equity Tier 1 capital (to RWA) 1,265 10.54 % 540 4.5 % 780 6.5 % Tier 1 capital (to RWA) $ 1,505 12.54 % $ 720 6.0 % $ 960 8.0 % Total capital (to RWA) $ 1,637 13.63 % $ 960 8.0 % $ 1201 10.0 % N/A - Not applicable Flagstar Bank Actual For Capital Adequacy Purposes Well-Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in millions) September 30, 2019 Tier 1 leverage (to adjusted avg. total assets) $ 1,747 8.35 % $ 837 4.0 % $ 1046 5.0 % Common equity tier 1 capital (to RWA) 1,747 11.33 % 694 4.5 % 1,002 6.5 % Tier 1 capital (to RWA) 1,747 11.33 % 925 6.0 % 1,233 8.0 % Total capital (to RWA) 1,860 12.06 % 1,233 8.0 % 1,542 10.0 % December 31, 2018 Tier 1 leverage (to adjusted avg. total assets) $ 1,574 8.67 % $ 726 4.0 % $ 908 5.0 % Common equity tier 1 capital (to RWA) 1,574 13.12 % 540 4.5 % 780 6.5 % Tier 1 capital (to RWA) 1,574 13.12 % 720 6.0 % 960 8.0 % Total capital (to RWA) 1,705 14.21 % 960 8.0 % 1,200 10.0 % N/A - Not applicable |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We utilize fair value measurements to record or disclose the fair value on certain assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability through an orderly transaction between market participants at the measurement date. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, we use present value techniques and other valuation methods to estimate the fair values of our financial instruments. These valuation models rely on market-based parameters when available, such as interest rate yield curves or credit spreads. Unobservable inputs may be based on management's judgment, assumptions and estimates related to credit quality, our future earnings, interest rates and other relevant inputs. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. Valuation Hierarchy U.S. GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The hierarchy is based on the transparency of the inputs used in the valuation process with the highest priority given to quoted prices available in active markets and the lowest priority to unobservable inputs where no active market exists, as discussed below. Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets in which we can participate as of the measurement date; Level 2 - Quoted prices for similar instruments in active markets, and other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and Level 3 - Unobservable inputs that reflect our own assumptions about the assumptions that market participants would use in pricing an asset or liability. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the overall fair value measurement. Transfers between levels of the fair value hierarchy are recognized at the end of the reporting period. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the financial instruments carried at fair value by caption on the Consolidated Statement of Financial Condition and by level in the valuation hierarchy. September 30, 2019 Level 1 Level 2 Level 3 Total Fair Value (Dollars in millions) Investment securities available-for-sale Agency - Commercial $ — $ 969 $ — $ 969 Agency - Residential — 604 — 604 Municipal obligations — 31 — 31 Corporate debt obligations — 64 — 64 Other MBS — 28 — 28 Certificate of Deposit — 1 — 1 Loans held-for-sale Residential first mortgage loans — 4,122 — 4,122 Commercial Loan — — — — Loans held-for-investment Residential first mortgage loans — 8 — 8 Home equity — — 2 2 Mortgage servicing rights — — 285 285 Derivative assets Rate lock commitments (fallout-adjusted) — — 51 51 Mortgage-backed securities forwards — 11 — 11 Interest rate swaps and swaptions — 34 — 34 Total assets at fair value $ — $ 5,872 $ 338 $ 6,210 Derivative liabilities Rate lock commitments (fallout-adjusted) $ — $ — $ (1 ) $ (1 ) Futures — — — — Mortgage backed securities forwards — (11 ) — (11 ) Interest rate swaps — (5 ) — (5 ) DOJ Liability — — (35 ) (35 ) Contingent consideration — — (8 ) (8 ) Total liabilities at fair value $ — $ (16 ) $ (44 ) $ (60 ) December 31, 2018 Level 1 Level 2 Level 3 Total Fair Value (Dollars in millions) Investment securities available-for-sale Agency - Commercial $ — $ 1,374 $ — $ 1,374 Agency - Residential — 662 — 662 Municipal obligations — 32 — 32 Corporate debt obligations — 42 — 42 Other MBS — 32 — 32 Loans held-for-sale Residential first mortgage loans — 3,732 — 3,732 Loans held-for-investment Residential first mortgage loans — 8 — 8 Home equity — — 2 2 Mortgage servicing rights — — 290 290 Derivative assets Rate lock commitments (fallout-adjusted) — — 20 20 Mortgage-backed securities forwards — 4 — 4 Interest rate swaps and swaptions — 23 — 23 Total assets at fair value $ — $ 5,909 $ 312 $ 6,221 Derivative liabilities Futures $ — $ (1 ) $ — $ (1 ) Mortgage-backed securities forwards — (31 ) — (31 ) Interest rate swaps — (7 ) — (7 ) DOJ Liability — — (60 ) (60 ) Contingent consideration — — (6 ) (6 ) Total liabilities at fair value $ — $ (39 ) $ (66 ) $ (105 ) Fair Value Measurements Using Significant Unobservable Inputs The following tables include a roll forward of the Consolidated Statements of Financial Condition amounts (including the change in fair value) for financial instruments classified by us within Level 3 of the valuation hierarchy: Balance at Beginning of Period Total Gains (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Period (Dollars in millions) Three Months Ended September 30, 2019 Assets Loans held-for-investment Home equity $ 2 $ — $ — $ — $ — $ — $ 2 Mortgage servicing rights (2) 316 (58 ) 39 (12 ) — — 285 Rate lock commitments (net) (2)(3) 50 20 113 — — (133 ) 50 Totals $ 368 $ (38 ) $ 152 $ (12 ) $ — $ (133 ) $ 337 Liabilities DOJ Liability $ (35 ) $ — $ — $ — $ — $ — $ (35 ) Contingent consideration (7 ) (4 ) — — 3 — (8 ) Totals $ (42 ) $ (4 ) $ — $ — $ 3 $ — $ (43 ) Three Months Ended September 30, 2018 Assets Loans held-for-investment Home equity $ 3 $ — $ — $ — $ — $ — $ 3 Mortgage servicing rights (2) 257 7 100 (51 ) — — 313 Rate lock commitments (net) (2)(3) 32 (5 ) 60 — — (68 ) 19 Totals $ 292 $ 2 $ 160 $ (51 ) $ — $ (68 ) $ 335 Liabilities DOJ Liability $ (60 ) $ — $ — $ — $ — $ — $ (60 ) Contingent consideration (18 ) 3 — — 4 — (11 ) Totals $ (78 ) $ 3 $ — $ — $ 4 $ — $ (71 ) (1) There were no unrealized gains (losses) recorded in OCI during the three months ended September 30, 2019 and 2018 . (2) We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments. (3) Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets. Balance at Beginning of Period Total Gains (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Period (Dollars in millions) Nine Months Ended September 30, 2019 Assets Loans held-for-investment Home equity $ 2 $ — $ — $ — $ — $ — $ 2 Mortgage servicing rights (2) 290 (151 ) 203 (57 ) — — 285 Rate lock commitments (net) (2)(3) 20 75 245 — — (290 ) 50 Totals $ 312 $ (76 ) $ 448 $ (57 ) $ — $ (290 ) $ 337 Liabilities DOJ Liability $ (60 ) $ 25 $ — $ — $ — $ — $ (35 ) Contingent consideration (6 ) (5 ) — — 3 — (8 ) Totals $ (66 ) $ 20 $ — $ — $ 3 $ — $ (43 ) Nine Months Ended September 30, 2018 Assets Loans held-for-investment Home equity $ 4 $ — $ — $ — $ (1 ) $ — $ 3 Mortgage servicing rights (2) 291 12 283 (273 ) — — 313 Rate lock commitments (net) (2)(3) 24 (37 ) 191 — — (159 ) 19 Totals $ 319 $ (25 ) $ 474 $ (273 ) $ (1 ) $ (159 ) $ 335 Liabilities DOJ Liability $ (60 ) $ — $ — $ — $ — $ — $ (60 ) Contingent consideration (25 ) 8 — — 6 — (11 ) Totals $ (85 ) $ 8 $ — $ — $ 6 $ — $ (71 ) (1) There were no unrealized gains (losses) recorded in OCI during the nine months ended September 30, 2019 and 2018 . (2) We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments. (3) Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets. The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) September 30, 2019 Assets Loans held-for-investment Home equity $ 2 Discounted cash flows Discount rate 7.2% -10.8% (9.0%) (1) Mortgage servicing rights $ 285 Discounted cash flows Option adjusted spread 2.6% - 20.6% (5.4%) (1) Rate lock commitments (net) $ 50 Consensus pricing Origination pull-through rate 80.0% - 87.2% (81.9%) (1) Liabilities DOJ Liability $ (35 ) Discounted cash flows See description below See description below Contingent consideration $ (8 ) Discounted cash flows Beta 0.6 - 1.6 (1.1) (2) Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) December 31, 2018 Assets Loans held-for-investment Home equity $ 2 Discounted cash flows Discount rate 7.2% - 10.8% (9.0%) (1) Mortgage servicing rights $ 290 Discounted cash flows Option adjusted spread 2.1% - 25.9% (5.4%) (1) Rate lock commitments (net) $ 20 Consensus pricing Origination pull-through rate 75.0% - 87.2% (76.8%) (1) Liabilities DOJ Liability $ (60 ) Discounted cash flows See description below See description below Contingent consideration $ (6 ) Discounted cash flows Beta 0.6 - 1.6 (1.1) (2) (1) Unobservable inputs were weighted by their relative fair value of the instruments. (2) Unobservable inputs were not weighted as only one instrument exists. Recurring Significant Unobservable Inputs Home equity. The most significant unobservable inputs used in the fair value measurement of the home equity loans are discount rates, constant prepayment rates, and default rates. The constant prepayment and default rates are based on a 12 month historical average. Significant increases (decreases) in the discount rate in isolation result in a significantly lower (higher) fair value measurement. Increases (decreases) in prepay rates in isolation result in a higher (lower) fair value and increases (decreases) in default rates in isolation result in a lower (higher) fair value. MSRs. The significant unobservable inputs used in the fair value measurement of the MSRs are option adjusted spreads, prepayment rates, and cost to service. Significant increases (decreases) in all three assumptions in isolation result in a significantly lower (higher) fair value measurement. Weighted average life (in years) is used to determine the change in fair value of MSRs. For September 30, 2019 and December 31, 2018 , the weighted average life (in years) for the entire MSR portfolio was 3.7 and 5.2 , respectively. DOJ Liability. The significant unobservable inputs used in the fair value measurement of the DOJ Liability are the discount rate, asset growth rate, return on assets, dividend rate and the potential ways we might be required to begin making DOJ Liability payments and our estimates of the likelihood of these outcomes, as further discussed in Note 15 - Legal Proceedings, Contingencies and Commitments. The DOJ Liability had a fair value adjustment of $0 and $25 million for the three and nine months ended September 30, 2019 , respectively. This reduced the liability to $35 million based on changes in the probability of potential ways we might be required to begin making DOJ Liability payments and our estimates of the likelihood of these outcomes. Our assessment of these outcomes reflect a reduced likelihood, and longer timing, for potential future payments. Significant increases (decreases) in the discount rate, asset growth rate and dividend rate in isolation may result in a marginally lower (higher) fair value measurement. Significant increases (decreases) in the return on assets rate in isolation may result in a marginally higher (lower) fair value measurement. Additionally, significant changes in the probability of potential payment outcomes could also impact the fair value. For further information on the fair value inputs related to the DOJ Liability, see Note 15 - Legal Proceedings, Contingencies, and Commitments. Rate lock commitments. The significant unobservable input used in the fair value measurement of the rate lock commitments is the pull through rate. The pull through rate is a statistical analysis of our actual rate lock fallout history to determine the sensitivity of the residential mortgage loan pipeline compared to interest rate changes and other deterministic values. New market prices are applied based on updated loan characteristics and new fallout ratios (i.e., the inverse of the pull through rate) are applied accordingly. Significant increases (decreases) in the pull through rate in isolation result in a significantly higher (lower) fair value measurement. Contingent consideration. The significant unobservable input used in the fair value of the contingent consideration is future forecasted target production volumes and forecasted profitability of the division. An increase or decrease to these inputs results in an increase or decrease of the liability. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We also have assets that are subject to measurement at fair value on a nonrecurring basis under certain conditions. The following table presents assets measured at fair value on a nonrecurring basis: Total (1) Level 2 Level 3 Gains (Losses) (Dollars in millions) September 30, 2019 Loans held-for-sale (2) $ 6 $ 6 $ — $ (1 ) Impaired loans held-for-investment (2) Residential first mortgage loans 14 — 14 (5 ) Repossessed assets (3) 9 — 9 (3 ) Totals $ 29 $ 6 $ 23 $ (9 ) December 31, 2018 Loans held-for-sale (2) $ 5 $ 5 $ — $ (1 ) Impaired loans held-for-investment (2) Residential first mortgage loans 12 — 12 (4 ) Repossessed assets (3) 7 — 7 (3 ) Totals $ 24 $ 5 $ 19 $ (8 ) (1) The fair values are determined at various dates during the three months ended September 30, 2019 and the year ended December 31, 2018 , respectively. (2) Gains (losses) reflect fair value adjustments on assets for which we did not elect the fair value option. (3) Gains (losses) reflect write downs of repossessed assets based on the estimated fair value of the specific assets. The following table presents the quantitative information about nonrecurring Level 3 fair value financial instruments and the fair value measurements: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) September 30, 2019 Impaired loans held-for-investment Loans held-for-investment $ 14 Fair value of collateral Loss severity discount 25% - 30% (26.1%) (1) Repossessed assets $ 9 Fair value of collateral Loss severity discount 0% - 100% (21.1%) (1) December 31, 2018 Impaired loans held-for-investment Loans held-for-investment $ 12 Fair value of collateral Loss severity discount 25% - 30% (28.3%) (1) Repossessed assets $ 7 Fair value of collateral Loss severity discount 0% - 100% (25.8%) (1) (1) Unobservable inputs were weighted by their relative fair value of the instruments. Nonrecurring Significant Unobservable Inputs The significant unobservable inputs used in the fair value measurement of the impaired loans and repossessed assets are appraisals or other third-party price evaluations which incorporate measures such as recent sales prices for comparable properties. Fair Value of Financial Instruments The following table presents the carrying amount and estimated fair value of financial instruments that are carried either at fair value, cost, or amortized cost: September 30, 2019 Estimated Fair Value Carrying Value Total Level 1 Level 2 Level 3 (Dollars in millions) Assets Cash and cash equivalents $ 353 $ 353 $ 353 $ — $ — Investment securities available-for-sale 1,697 1,697 — 1,697 — Investment securities held-to-maturity 635 639 — 639 — Loans held-for-sale 4,196 4,196 — 4,196 — Loans held-for-investment 12,548 12,707 — 8 12,699 Loans with government guarantees 607 583 — 583 — Mortgage servicing rights 285 285 — — 285 Federal Home Loan Bank stock 303 303 — 303 — Bank owned life insurance 346 346 — 346 — Repossessed assets 9 9 — — 9 Other assets, foreclosure claims 43 43 — 43 — Derivative financial instruments, assets 96 96 — 45 51 Liabilities Retail deposits Demand deposits and savings accounts $ (6,760 ) $ (6,054 ) $ — $ (6,054 ) $ — Certificates of deposit (2,558 ) (2,577 ) — (2,577 ) — Wholesale deposits (635 ) (641 ) — (641 ) — Government deposits (1,414 ) (1,350 ) — (1,350 ) — Custodial deposits (4,378 ) (4,316 ) — (4,316 ) — Federal Home Loan Bank advances (2,979 ) (2,979 ) — (2,979 ) — Long-term debt (496 ) (458 ) — (458 ) — DOJ Liability (35 ) (35 ) — — (35 ) Contingent consideration (8 ) (8 ) — — (8 ) Derivative financial instruments, liabilities (17 ) (17 ) — (17 ) — December 31, 2018 Estimated Fair Value Carrying Value Total Level 1 Level 2 Level 3 (Dollars in millions) Assets Cash and cash equivalents $ 408 $ 408 $ 408 $ — $ — Investment securities available-for-sale 2,142 2,142 — 2,142 — Investment securities held-to-maturity 703 681 — 681 — Loans held-for-sale 3,869 3,870 — 3,870 — Loans held-for-investment 9,088 8,966 — 8 8,958 Loans with government guarantees 392 374 — 374 — Mortgage servicing rights 290 290 — — 290 Federal Home Loan Bank stock 303 303 — 303 — Bank owned life insurance 340 340 — 340 — Repossessed assets 7 7 — — 7 Other assets, foreclosure claims 50 50 — 50 — Derivative financial instruments, assets 47 47 — 27 20 Liabilities Retail deposits Demand deposits and savings accounts $ (6,467 ) $ (5,475 ) $ — $ (5,475 ) $ — Certificates of deposit (2,387 ) (2,379 ) — (2,379 ) — Wholesale deposits (583 ) (585 ) — (585 ) — Government deposits (1,202 ) (1,145 ) — (1,145 ) — Custodial deposits (1,741 ) (1,664 ) — (1,664 ) — Federal Home Loan Bank advances (3,394 ) (3,383 ) — (3,383 ) — Long-term debt (495 ) (463 ) — (463 ) — DOJ Liability (60 ) (60 ) — — (60 ) Contingent consideration (6 ) (6 ) — — (6 ) Derivative financial instruments, liabilities (39 ) (39 ) — (39 ) — Fair Value Option We elected the fair value option for certain items as discussed throughout the Notes to the Consolidated Financial Statements to more closely align the accounting method with the underlying economic exposure. Interest income on LHFS is accrued on the principal outstanding primarily using the "simple-interest" method. The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Assets Loans held-for-sale Net gain (loss) on loan sales $ 97 $ 7 $ 272 $ (61 ) Loans held-for-investment Other noninterest income $ 1 $ — $ 1 $ — Liabilities DOJ Litigation Settlement Other noninterest income $ — $ — $ 25 $ — The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected: September 30, 2019 December 31, 2018 UPB Fair Value Fair Value Over / (Under) UPB UPB Fair Value Fair Value Over / (Under) UPB (Dollars in millions) Assets Nonaccrual loans Loans held-for-sale $ 11 $ 12 $ 1 $ 6 $ 6 $ — Loans held-for-investment 5 5 — 4 3 (1 ) Total nonaccrual loans $ 16 $ 17 $ 1 $ 10 $ 9 $ (1 ) Other performing loans Loans held-for-sale $ 3,976 $ 4,110 $ 134 $ 3,601 $ 3,726 $ 125 Loans held-for-investment 7 5 (2 ) 8 7 (1 ) Total other performing loans $ 3,983 $ 4,115 $ 132 $ 3,609 $ 3,733 $ 124 Total loans Loans held-for-sale $ 3,987 $ 4,122 $ 135 $ 3,607 $ 3,732 $ 125 Loans held-for-investment 12 10 (2 ) 12 10 (2 ) Total loans $ 3,999 $ 4,132 $ 133 $ 3,619 $ 3,742 $ 123 Liabilities DOJ Liability (1) $ (118 ) $ (35 ) $ 83 $ (118 ) $ (60 ) $ 58 (1) We are obligated to pay $118 million in installment payments upon meeting certain performance conditions, as described in Note 15 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our operations are conducted through three operating segments: Community Banking, Mortgage Originations, and Mortgage Servicing. The Other segment includes the remaining reported activities. Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses are incurred for which discrete financial information is available that is evaluated regularly by executive management in deciding how to allocate resources and in assessing performance. The operating segments have been determined based on the products and services offered and reflect the manner in which financial information is currently evaluated by management. Each segment operates under the same banking charter, but is reported on a segmented basis for this report. Each of the operating segments is complementary to each other and because of the interrelationships of the segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. As a result of Management's evaluation of our segments, effective January 1, 2019, certain departments have been re-aligned between the Community Banking and Other segment. The income and expenses relating to these changes are reflected in our financial statements and all prior period segment financial information has been recast to conform to the current presentation. The Community Banking segment originates loans, provides deposits and fee based services to consumer, business, and mortgage lending customers through its Branch Banking, Business Banking and Commercial Banking, Government Banking, Warehouse Lending and LHFI Portfolio groups. Products offered through these groups include checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans, commercial loans, commercial real estate loans, equipment finance and leasing, home builder finance loans and warehouse lines of credit. Other financial services available include consumer and corporate card services, customized treasury management solutions, merchant services and capital markets services such as loan syndications, and investment and insurance products and services. Within the Community Banking segment, revenue from contracts with customers includes deposit account and other banking income, interchange fees and investment and insurance income. During the three and nine months ended September 30, 2019 , respectively, deposit account and other banking income, which includes fees for outgoing wires, overdrafts, stop payments and ATM fees totaled $7 million and $20 million , interchange fees totaled $3 million and $8 million , and investment and insurance income totaled $1 million and $4 million . These fees are recognized when obligations, under the terms of the contract with our customer, are satisfied, which generally occurs when services are performed. Revenue is measured as the amount of consideration we expect to receive in exchange for providing services. At September 30, 2019 and December 31, 2018 , we had no significant revenue related receivables or contract liabilities. The Mortgage Originations segment originates and acquires one-to-four family residential mortgage loans to sell or hold on our balance sheet. Loans originated-to-sell comprise the majority of the lending activity. These loans are originated through mortgage branches, call centers, the Internet and third party counterparties. The Mortgage Origination segment recognizes interest income on loans that are held for sale and the gains from sales associated with these loans, whereas the interest income on LHFI and a loss on sales for the purchase of these loans is recognized in the Community Banking segment. The Mortgage Servicing segment services and subservices mortgage and other consumer loans for others on a fee for service basis and may also collect ancillary fees and earn income through the use of noninterest-bearing escrows. Revenue for those serviced and subserviced loans is earned on a contractual fee basis, with the fees varying based on our responsibilities and the status of the underlying loans. The Mortgage Servicing segment also services loans for our LHFI portfolio in the Community Banking segment and our own LHFS portfolio in the Mortgage Originations segment, for which it earns revenue via an intercompany service fee allocation. The Other segment includes the treasury functions, which include the impact of interest rate risk management, balance sheet funding activities and the administration of the investment securities portfolios, as well as miscellaneous other expenses of a corporate nature. In addition, the Other segment includes revenue and expenses related to treasury and corporate assets and liabilities and equity not directly assigned or allocated to the Community Banking, Mortgage Originations or Mortgage Servicing operating segments. Revenues are comprised of net interest income (before the provision (benefit) for loan losses) and noninterest income. Noninterest expenses and provision (benefit) for income taxes, are fully allocated to each operating segment. Allocation methodologies may be subject to periodic adjustment as the internal management accounting system is revised and the business or product lines within the segments change. The following tables present financial information by business segment for the periods indicated: Three Months Ended September 30, 2019 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 115 $ 27 $ 5 $ (1 ) $ 146 Net gain (loss) on loan sales (8 ) 118 — — 110 Other noninterest income (loss) 17 15 40 (11 ) 61 Total net interest income and noninterest income (loss) 124 160 45 (12 ) 317 (Provision) benefit for loan losses — (1 ) — — (1 ) Compensation and benefits (26 ) (30 ) (7 ) (35 ) (98 ) Other noninterest expense and directly allocated overhead (44 ) (72 ) (24 ) — (140 ) Total noninterest expense (70 ) (102 ) (31 ) (35 ) (238 ) Income (loss) before indirect overhead allocations and income taxes 54 57 14 (47 ) 78 Overhead allocations (10 ) (10 ) (4 ) 24 — Provision (benefit) for income taxes 9 10 2 (6 ) 15 Net income (loss) $ 35 $ 37 $ 8 $ (17 ) $ 63 Intersegment (expense) revenue $ (6 ) $ 8 $ 6 $ (8 ) $ — Average balances Loans held-for-sale $ 20 $ 3,766 $ — $ — $ 3,786 Loans with government guarantees — 574 — — 574 Loans held-for-investment (2) 11,710 33 — — 11,743 Total assets 12,184 5,378 38 3,597 21,197 Deposits 10,513 — 4,556 748 15,817 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Three Months Ended September 30, 2018 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 81 $ 36 $ 2 $ 5 $ 124 Net gain (loss) on loan sales (3 ) 46 — — 43 Other noninterest income 10 30 24 — 64 Total net interest income and noninterest income 88 112 26 5 231 (Provision) benefit for loan losses (1 ) — — 3 2 Compensation and benefits (17 ) (26 ) (4 ) (29 ) (76 ) Other noninterest expense and directly allocated overhead (27 ) (41 ) (18 ) (11 ) (97 ) Total noninterest expense (44 ) (67 ) (22 ) (40 ) (173 ) Income (loss) before indirect overhead allocations and income taxes 43 45 4 (32 ) 60 Overhead allocations (9 ) (16 ) (5 ) 30 — Provision (benefit) for income taxes 7 6 — (1 ) $ 12 Net income (loss) $ 27 $ 23 $ (1 ) $ (1 ) $ 48 Intersegment (expense) revenue $ 1 $ 4 $ 5 $ (10 ) $ — Average balances Loans held-for-sale $ 10 $ 4,383 $ — $ — $ 4,393 Loans with government guarantees — 292 — — 292 Loans held-for-investment (2) 8,868 11 — 29 8,908 Total assets 9,028 5,676 29 3,878 18,611 Deposits 9,170 — 2,072 94 11,336 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Nine Months Ended September 30, 2019 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 326 $ 73 $ 11 $ — $ 410 Net gain (loss) on loan sales (23 ) 257 — — 234 Other noninterest income 44 49 113 8 214 Total net interest income and noninterest income 347 379 124 8 858 (Provision) benefit for loan losses (18 ) (1 ) — 1 (18 ) Compensation and benefits (74 ) (83 ) (19 ) (99 ) (275 ) Other noninterest expense and directly allocated overhead (131 ) (161 ) (73 ) (3 ) (368 ) Total noninterest expense (205 ) (244 ) (92 ) (102 ) (643 ) Income (loss) before indirect overhead allocations and income taxes 124 134 32 (93 ) 197 Overhead allocations (30 ) (30 ) (13 ) 73 — Provision (benefit) for income taxes 20 22 4 (9 ) 37 Net income (loss) $ 74 $ 82 $ 15 $ (11 ) $ 160 Intersegment (expense) revenue $ (18 ) $ 24 $ 19 $ (25 ) $ — Average balances Loans held-for-sale $ 37 $ 3,495 $ — $ — $ 3,532 Loans with government guarantees — 511 — — 511 Loans held-for-investment (2) 10,495 21 — — 10,516 Total assets 10,950 5,018 47 3,862 19,877 Deposits 10,247 — 3,536 522 14,305 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Nine Months Ended September 30, 2018 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 231 $ 100 $ 5 $ 9 $ 345 Net gain (loss) on loan sales (10 ) 176 — — 166 Other noninterest income 27 76 65 7 175 Total net interest income and noninterest income 248 352 70 16 686 (Provision) benefit for loan losses (2 ) (1 ) — 6 3 Compensation and benefits (51 ) (83 ) (13 ) (89 ) (236 ) Other noninterest expense and directly allocated overhead (81 ) (129 ) (49 ) (28 ) (287 ) Total noninterest expense (132 ) (212 ) (62 ) (117 ) (523 ) Income (loss) before indirect overhead allocations and income taxes 114 139 8 (95 ) 166 Overhead allocations (29 ) (51 ) (15 ) 95 — Provision (benefit) for income taxes 18 18 (2 ) (1 ) 33 Net income (loss) $ 67 $ 70 $ (5 ) $ 1 $ 133 Intersegment (expense) revenue $ (1 ) $ 6 $ 14 $ (19 ) $ — Average balances Loans held-for-sale $ 11 $ 4,254 $ — $ — $ 4,265 Loans with government guarantees — 288 — — 288 Loans held-for-investment (2) 8,250 9 — 29 8,288 Total assets 8,425 5,477 30 3,902 17,834 Deposits 8,581 — 1,800 — 10,381 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adoption of New Accounting Standards The following ASUs have been adopted which impact our significant accounting policies and/or have a significant financial impact: Leases - Effective January 1, 2019, we adopted the requirements of ASU 2016-02, Leases (Topic 842) and all related amendments. The Company elected to apply the practical expedient of forgoing the restatement of comparative periods. In addition, we elected the practical expedients permitted under transition guidance to not reassess leases entered into prior to adoption. As permitted under ASC 842, the Company made an accounting policy election to exempt leases with an initial term of twelve months or less from balance sheet recognition. Instead, short-term leases are expensed over the lease term with no impact to the balance sheet. At September 30, 2019 , our inventory of leases included various bank branches, ATM locations and retail home lending offices. Many of our leases contain options to extend or terminate early and we consider these options when evaluating the lease term to determine if they are reasonably certain to be exercised based on all relevant economic and financial factors. All leases are classified as operating leases based on their terms. The following table reflects information relating to our operating leases: September 30, 2019 (Dollars in millions) Operating Leases (1) Weighted-average remaining lease term (years) 3.9 Weighted-average discount rate 2.86 % Right-of-use asset (2) $ 21 Lease liability (3) $ 22 (1) For the three and nine months ended September 30, 2019, the lease expense on operating leases was $3 million and $9 million , respectively, which includes a de-minimis amount of short-term lease expense and variable lease expense. (2) Recorded in premises and equipment on the Consolidated Statements of Financial Condition (3) Recorded in other liabilities on the Consolidated Statements of Financial Condition. The following table presents our undiscounted cash flows on our operating lease liabilities as of September 30, 2019 and our minimum contractual obligations on our operating leases as of December 31, 2018 : September 30, 2019 December 31, 2018 (Dollars in millions) Within one year $ 9 $ 9 After one year and within two years 7 6 After two years and within three years 5 4 After three years and within four years 2 2 After four years and within five years 1 1 After five years 2 3 Total (1) $ 26 $ 25 (1) The difference between the total undiscounted cash payments on operating leases and the lease liability is solely the effect of discounting. We adopted the following accounting standard updates (ASU) during 2019 , none of which had a material impact to our financial statements: Standard Description Effective Date ASU 2019-07 SEC Final Rule Releases: Codification Updates July 26, 2019 ASU 2019-01 Leases (Topic 842): Codification Improvements January 1, 2019 ASU 2018-20 Leases (Topic 842): Narrow-Scope Improvements for Lessors January 1, 2019 ASU 2018-16 Derivatives and hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes January 1, 2019 ASU 2018-11 Leases (Topic 842): Targeted Improvements January 1, 2019 ASU 2018-10 Codification Improvements to Topic 842, Leases January 1, 2019 ASU 2018-07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting January 1, 2019 ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope. January 1, 2019 ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASU 2017-06 Plan Accounting - Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting January 1, 2019 Significant Accounting Standard Issued But Not Yet Adopted Credit Losses - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The ASU alters the current method for recognizing credit losses within the reserve account. Currently, we use the incurred loss method, whereas the new guidance requires financial assets to be presented at the net amount expected to be collected (i.e., net of expected credit losses). The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, for which the initial impact is recorded in equity and any adverse effects may be phased into regulatory capital over a three year transition period. Our cross-functional implementation team continues to execute on its project plan to adopt this standard in the first quarter of 2020. We designed and implemented our credit loss models using an industry leading vendor. These models are fully functional and we began running a parallel production process in the third quarter of 2019 which will continue through implementation. We have identified and designed our internal controls over financial reporting which are in place as part of our parallel runs. The new or modified controls are primarily focused on our new models, forecasting and data integrity. We continue to review, challenge and refine our models and process as we complete our implementation. Based on our current results and economic forecasts as of September 30, 2019, the estimated impact including our reserve for unfunded loan commitments is a pre-tax increase of 30 to 40 percent of our allowance for credit losses and reserve for unfunded commitments. We continue to evaluate our models, the qualitative framework, assumptions and judgment applied which could have an impact on our final CECL estimates at implementation. Additionally, that estimate may be impacted by economic conditions, credit characteristics of our portfolio and final asset balances at the time of adoption. We do not expect any material allowance on held to maturity securities since the majority of this portfolio consists of agency-backed securities that have an immaterial risk of credit loss. Insignificant Accounting Standards Issued But Not Yet Adopted The following ASUs have been issued and are not expected to have a material impact on our Consolidated Financial Statements and/or significant accounting policies outside of what has been disclosed in the prior section: Standard Description Effective Date ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief January 1, 2020 ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments January 1, 2020 ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses January 1, 2020 ASU 2018-18 Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 January 1, 2020 ASU 2018-17 Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities January 1, 2020 ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) January 1, 2020 ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 1, 2020 |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Credit Quality | Credit Quality We utilize an internal risk rating system which is applied to all consumer and commercial loans. Descriptions of our internal risk ratings as they relate to credit quality follow the ratings used by the U.S. bank regulatory agencies as listed below. Pass. Pass assets are not impaired nor do they have any known deficiencies that could impact the quality of the asset. Watch. Watch assets are defined as pass rated assets that exhibit elevated risk characteristics or other factors that deserve management’s close attention and increased monitoring. However, the asset does not exhibit a potential or well-defined weakness that would warrant a downgrade to criticized or adverse classification. Special mention. Assets identified as special mention possess credit deficiencies or potential weaknesses deserving management's close attention. Special mention assets have a potential weakness or pose an unwarranted financial risk that, if not corrected, could weaken the assets and increase risk in the future. Special mention assets are criticized, but do not expose an institution to sufficient risk to warrant adverse classification. Substandard . Assets identified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the full collection or liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. For home equity loans and other consumer loans, we evaluate credit quality based on the aging and status of payment activity and any other known credit characteristics that call into question full repayment of the asset. Substandard loans may be placed on either accrual or non-accrual status. Doubtful . An asset classified as doubtful has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. A doubtful asset has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral, and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Due to the high probability of loss, doubtful assets are placed on non-accrual. Loss. An asset classified as loss is considered uncollectible and of such little value that the continuance as a bankable asset is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but, rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be affected in the future. Consumer Loans Consumer loans consist of open and closed-end loans extended to individuals for household, family, and other personal expenditures, and includes consumer loans, and loans to individuals secured by their personal residence, including first mortgage, home equity, and home improvement loans. Because consumer loans are usually relatively small-balance, homogeneous exposures, consumer loans are rated primarily on payment performance. Payment performance is a proxy for the strength of repayment capacity and loans are generally classified based on their payment status rather than by an individual review of each loan. In accordance with regulatory guidance, we assign risk ratings to consumer loans in the following manner: • Consumer loans are classified as Watch once the loan becomes 60 days past due. • Open and closed-end consumer loans 90 days or more past due are classified Substandard. Commercial Loans Management conducts periodic examinations which serve as an independent verification of the accuracy of the ratings assigned. Loan grades are based on different factors within the borrowing relationship: entity sales, debt service coverage, debt/total net worth, liquidity, balance sheet and income statement trends, management experience, business stability, financing structure, and financial reporting requirements. The underlying collateral is also rated based on the specific type of collateral and corresponding LTV. The combination of the borrower and collateral risk ratings results in the final rating for the borrowing relationship. |
Derivative Financial Instruments | Derivative financial instruments are recorded at fair value in other assets and other liabilities on the Consolidated Statements of Financial Condition. Our policy is to present its derivative assets and derivative liabilities on the Consolidated Statement of Financial Condition on a gross basis, even when provisions allowing for set-off are in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by the counterparties to our various derivative financial instruments. A majority of our derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in our remaining derivative contracts is minimal based on credit standards and the collateral provisions of the derivative agreements. Derivatives not designated as hedging instruments: We maintain a derivative portfolio of interest rate swaps, futures and forward commitments used to manage exposure to changes in interest rates, MSR asset values and to meet the needs of customers. We also enter into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage LHFS is managed using corresponding forward sale commitments. Changes in fair value of derivatives not designated as hedging instruments are recognized in the Consolidated Statements of Operations. Derivatives designated as hedging instruments: We have designated certain interest rate swaps as fair value hedges of fixed rate FHLB advances and investment securities available for sale using the last-of-layer method. Derivatives that are designated in hedging relationships are assessed for effectiveness using regression analysis at inception and qualitatively thereafter, unless regression analysis is deemed necessary. All designated hedge relationships were and are expected to be highly effective as of September 30, 2019 . Cash flows and the profit impact associated with designated hedges are reported in the same category as the underlying hedged item. |
Fair Value Measurements | We utilize fair value measurements to record or disclose the fair value on certain assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability through an orderly transaction between market participants at the measurement date. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, we use present value techniques and other valuation methods to estimate the fair values of our financial instruments. These valuation models rely on market-based parameters when available, such as interest rate yield curves or credit spreads. Unobservable inputs may be based on management's judgment, assumptions and estimates related to credit quality, our future earnings, interest rates and other relevant inputs. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. |
Recently Issued Accounting Pronouncements | Adoption of New Accounting Standards The following ASUs have been adopted which impact our significant accounting policies and/or have a significant financial impact: Leases - Effective January 1, 2019, we adopted the requirements of ASU 2016-02, Leases (Topic 842) and all related amendments. The Company elected to apply the practical expedient of forgoing the restatement of comparative periods. In addition, we elected the practical expedients permitted under transition guidance to not reassess leases entered into prior to adoption. As permitted under ASC 842, the Company made an accounting policy election to exempt leases with an initial term of twelve months or less from balance sheet recognition. Instead, short-term leases are expensed over the lease term with no impact to the balance sheet. At September 30, 2019 , our inventory of leases included various bank branches, ATM locations and retail home lending offices. Many of our leases contain options to extend or terminate early and we consider these options when evaluating the lease term to determine if they are reasonably certain to be exercised based on all relevant economic and financial factors. All leases are classified as operating leases based on their terms. The following table reflects information relating to our operating leases: September 30, 2019 (Dollars in millions) Operating Leases (1) Weighted-average remaining lease term (years) 3.9 Weighted-average discount rate 2.86 % Right-of-use asset (2) $ 21 Lease liability (3) $ 22 (1) For the three and nine months ended September 30, 2019, the lease expense on operating leases was $3 million and $9 million , respectively, which includes a de-minimis amount of short-term lease expense and variable lease expense. (2) Recorded in premises and equipment on the Consolidated Statements of Financial Condition (3) Recorded in other liabilities on the Consolidated Statements of Financial Condition. The following table presents our undiscounted cash flows on our operating lease liabilities as of September 30, 2019 and our minimum contractual obligations on our operating leases as of December 31, 2018 : September 30, 2019 December 31, 2018 (Dollars in millions) Within one year $ 9 $ 9 After one year and within two years 7 6 After two years and within three years 5 4 After three years and within four years 2 2 After four years and within five years 1 1 After five years 2 3 Total (1) $ 26 $ 25 (1) The difference between the total undiscounted cash payments on operating leases and the lease liability is solely the effect of discounting. We adopted the following accounting standard updates (ASU) during 2019 , none of which had a material impact to our financial statements: Standard Description Effective Date ASU 2019-07 SEC Final Rule Releases: Codification Updates July 26, 2019 ASU 2019-01 Leases (Topic 842): Codification Improvements January 1, 2019 ASU 2018-20 Leases (Topic 842): Narrow-Scope Improvements for Lessors January 1, 2019 ASU 2018-16 Derivatives and hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes January 1, 2019 ASU 2018-11 Leases (Topic 842): Targeted Improvements January 1, 2019 ASU 2018-10 Codification Improvements to Topic 842, Leases January 1, 2019 ASU 2018-07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting January 1, 2019 ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope. January 1, 2019 ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASU 2017-06 Plan Accounting - Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting January 1, 2019 Significant Accounting Standard Issued But Not Yet Adopted Credit Losses - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The ASU alters the current method for recognizing credit losses within the reserve account. Currently, we use the incurred loss method, whereas the new guidance requires financial assets to be presented at the net amount expected to be collected (i.e., net of expected credit losses). The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, for which the initial impact is recorded in equity and any adverse effects may be phased into regulatory capital over a three year transition period. Our cross-functional implementation team continues to execute on its project plan to adopt this standard in the first quarter of 2020. We designed and implemented our credit loss models using an industry leading vendor. These models are fully functional and we began running a parallel production process in the third quarter of 2019 which will continue through implementation. We have identified and designed our internal controls over financial reporting which are in place as part of our parallel runs. The new or modified controls are primarily focused on our new models, forecasting and data integrity. We continue to review, challenge and refine our models and process as we complete our implementation. Based on our current results and economic forecasts as of September 30, 2019, the estimated impact including our reserve for unfunded loan commitments is a pre-tax increase of 30 to 40 percent of our allowance for credit losses and reserve for unfunded commitments. We continue to evaluate our models, the qualitative framework, assumptions and judgment applied which could have an impact on our final CECL estimates at implementation. Additionally, that estimate may be impacted by economic conditions, credit characteristics of our portfolio and final asset balances at the time of adoption. We do not expect any material allowance on held to maturity securities since the majority of this portfolio consists of agency-backed securities that have an immaterial risk of credit loss. Insignificant Accounting Standards Issued But Not Yet Adopted The following ASUs have been issued and are not expected to have a material impact on our Consolidated Financial Statements and/or significant accounting policies outside of what has been disclosed in the prior section: Standard Description Effective Date ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief January 1, 2020 ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments January 1, 2020 ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses January 1, 2020 ASU 2018-18 Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 January 1, 2020 ASU 2018-17 Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities January 1, 2020 ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) January 1, 2020 ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 1, 2020 |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investment Securities | The following table presents our investment securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Dollars in millions) September 30, 2019 Available-for-sale securities Agency - Commercial $ 964 $ 7 $ (2 ) $ 969 Agency - Residential 604 3 (3 ) 604 Corporate debt obligations 63 1 — 64 Municipal obligations 31 — — 31 Other MBS 28 — — 28 Certificate of deposits 1 — — 1 Total available-for-sale securities (1) $ 1,691 $ 11 $ (5 ) $ 1,697 Held-to-maturity securities Agency - Commercial $ 325 $ 1 $ (1 ) $ 325 Agency - Residential 310 4 — 314 Total held-to-maturity securities (1) $ 635 $ 5 $ (1 ) $ 639 December 31, 2018 Available-for-sale securities Agency - Commercial $ 1,413 $ 4 $ (43 ) $ 1,374 Agency - Residential 686 — (24 ) 662 Corporate debt obligations 41 — — 41 Municipal obligations 33 — (1 ) 32 Other MBS 32 — — 32 Certificate of Deposits 1 — — 1 Total available-for-sale securities (1) $ 2,206 $ 4 $ (68 ) $ 2,142 Held-to-maturity securities Agency - Commercial $ 349 $ — $ (13 ) $ 336 Agency - Residential 354 — (9 ) 345 Total held-to-maturity securities (1) $ 703 $ — $ (22 ) $ 681 (1) There were no securities of a single issuer, which are not governmental or government-sponsored, that exceeded 10 percent of stockholders’ equity at September 30, 2019 or December 31, 2018 . |
Summary of Unrealized Loss Positions on Investment Securities - Held-to-Maturity | The following table summarizes available-for-sale and held-to-maturity securities, by duration, the unrealized loss positions on investment securities: Unrealized Loss Position with Duration 12 Months and Over Unrealized Loss Position with Duration Under 12 Months Fair Value Number of Securities Unrealized Loss Fair Value Number of Securities Unrealized Loss (Dollars in millions) September 30, 2019 Available-for-sale securities Agency - Commercial $ 204 22 $ (2 ) $ 21 3 $ — Agency - Residential 280 27 (3 ) 61 9 — Municipal obligations 8 3 — 1 1 — Corporate debt obligations — — — — — — Other MBS — — — 13 2 — Held-to-maturity securities Agency - Commercial $ 159 13 $ (1 ) $ — — $ — Agency - Residential 46 9 — 9 5 — December 31, 2018 Available-for-sale securities Agency - Commercial $ 1,025 74 $ (43 ) $ 1 1 $ — Agency - Residential 647 79 (24 ) 14 5 — Municipal obligations 28 16 (1 ) 1 2 — Corporate debt obligations — — — 7 2 — Held-to-maturity securities Agency - Commercial $ 336 26 $ (13 ) $ — — $ — Agency - Residential 345 60 (9 ) — — — |
Summary of Unrealized Loss Positions on Investment Securities - Available-for-Sale | The following table summarizes available-for-sale and held-to-maturity securities, by duration, the unrealized loss positions on investment securities: Unrealized Loss Position with Duration 12 Months and Over Unrealized Loss Position with Duration Under 12 Months Fair Value Number of Securities Unrealized Loss Fair Value Number of Securities Unrealized Loss (Dollars in millions) September 30, 2019 Available-for-sale securities Agency - Commercial $ 204 22 $ (2 ) $ 21 3 $ — Agency - Residential 280 27 (3 ) 61 9 — Municipal obligations 8 3 — 1 1 — Corporate debt obligations — — — — — — Other MBS — — — 13 2 — Held-to-maturity securities Agency - Commercial $ 159 13 $ (1 ) $ — — $ — Agency - Residential 46 9 — 9 5 — December 31, 2018 Available-for-sale securities Agency - Commercial $ 1,025 74 $ (43 ) $ 1 1 $ — Agency - Residential 647 79 (24 ) 14 5 — Municipal obligations 28 16 (1 ) 1 2 — Corporate debt obligations — — — 7 2 — Held-to-maturity securities Agency - Commercial $ 336 26 $ (13 ) $ — — $ — Agency - Residential 345 60 (9 ) — — — |
Amortized Cost and Estimated Fair Value of Securities by Contractual Maturity | The following table shows the amortized cost and estimated fair value of securities by contractual maturity: Investment Securities Available-for-Sale Investment Securities Held-to-maturity Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in millions) September 30, 2019 Due in one year or less $ 2 $ 2 1.83 % $ — $ — — % Due after one year through five years 12 12 2.63 % 10 10 2.55 % Due after five years through 10 years 90 92 4.33 % 9 9 2.26 % Due after 10 years 1,587 1,591 2.40 % 616 620 2.45 % Total $ 1,691 $ 1,697 $ 635 $ 639 |
Loans Held-for-Investment (Tabl
Loans Held-for-Investment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Summary of Loans Held-for-Investment and UPB of Loan Sales and Purchases in the Loans Held-for-Investment Portfolio | The following table presents our loans held-for-investment: September 30, 2019 December 31, 2018 (Dollars in millions) Consumer loans Residential first mortgage $ 3,258 $ 2,999 Home equity 985 731 Other 693 314 Total consumer loans 4,936 4,044 Commercial loans Commercial real estate 2,697 2,152 Commercial and industrial 1,700 1,433 Warehouse lending 3,215 1,459 Total commercial loans 7,612 5,044 Total loans held-for-investment $ 12,548 $ 9,088 The following table presents the UPB of our loan sales and purchases in the loans held-for-investment portfolio: Nine Months Ended September 30, 2019 2018 (Dollars in millions) Loans Sold (1) Performing loans $ 166 $ 4 Total loans sold $ 166 $ 4 Net gain associated with loan sales (2) $ 2 $ — Loans Purchased Home equity 199 — Other consumer (3) 51 — Total loans purchased $ 250 $ — Premium associated with loans purchased $ 9 $ — (1) Upon a change in our intent, the loans were transferred to LHFS and subsequently sold. (2) Recorded in net gain on loan sales on Consolidated Statements of Operations. (3) Does not include Greensky flow consumer loans. |
Changes in ALLL and Method of Evaluation by Class of Loan | The following table sets forth the method of evaluation, by class of loan: Residential First Mortgage (1) Home Equity Other Consumer Commercial Real Estate Commercial and Industrial Warehouse Lending Total (Dollars in millions) September 30, 2019 Loans held-for-investment (2) Individually evaluated $ 33 $ 21 $ 1 $ — $ — $ — $ 55 Collectively evaluated 3,217 961 692 2,697 1,701 3,215 12,483 Total loans $ 3,250 $ 982 $ 693 $ 2,697 $ 1,701 $ 3,215 $ 12,538 Allowance for loan losses (2) Individually evaluated $ 5 $ 8 $ 1 $ — $ — $ — $ 14 Collectively evaluated 23 8 5 33 22 5 96 Total allowance for loan losses $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 December 31, 2018 Loans held-for-investment (2) Individually evaluated $ 32 $ 23 $ — $ — $ — $ — $ 55 Collectively evaluated 2,959 706 314 2,152 1,433 1,459 9,023 Total loans $ 2,991 $ 729 $ 314 $ 2,152 $ 1,433 $ 1,459 $ 9,078 Allowance for loan losses (2) Individually evaluated $ 4 $ 7 $ — $ — $ — $ — $ 11 Collectively evaluated 34 8 3 48 18 6 117 Total allowance for loan losses $ 38 $ 15 $ 3 $ 48 $ 18 $ 6 $ 128 (1) Includes allowance related to loans with government guarantees. (2) Excludes loans carried under the fair value option. The following table presents changes in ALLL, by class of loan: Residential First Mortgage (1) Home Equity Other Consumer Commercial Real Estate Commercial and Industrial Warehouse Lending Total (Dollars in millions) Three Months Ended September 30, 2019 Beginning balance ALLL $ 26 $ 16 $ 5 $ 35 $ 23 $ 5 $ 110 Charge-offs (1 ) (1 ) (2 ) — — — (4 ) Recoveries 1 1 — — 1 — 3 Provision (benefit) 2 — 3 (2 ) (2 ) — 1 Ending balance ALLL $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 Three Months Ended September 30, 2018 Beginning balance ALLL $ 45 $ 19 $ 1 $ 45 $ 21 $ 6 $ 137 Charge-offs (2 ) — — — — — (2 ) Recoveries 1 — — — — — 1 Provision (benefit) (4 ) 1 1 1 (1 ) — (2 ) Ending balance ALLL $ 40 $ 20 $ 2 $ 46 $ 20 $ 6 $ 134 Nine Months Ended September 30, 2019 Beginning balance ALLL $ 38 $ 15 $ 3 $ 48 $ 18 $ 6 $ 128 Charge-offs (3 ) (1 ) (5 ) — (31 ) — (40 ) Recoveries 1 2 — — 1 — 4 Provision (benefit) (8 ) — 8 (15 ) 34 (1 ) 18 Ending balance ALLL $ 28 $ 16 $ 6 $ 33 $ 22 $ 5 $ 110 Nine Months Ended September 30, 2018 Beginning balance ALLL $ 47 $ 22 $ 1 $ 45 $ 19 $ 6 $ 140 Charge-offs (3 ) (2 ) (1 ) — — — (6 ) Recoveries 1 2 — — — — 3 Provision (benefit) (5 ) (2 ) 2 1 1 — (3 ) Ending balance ALLL $ 40 $ 20 $ 2 $ 46 $ 20 $ 6 $ 134 (1) Includes loans with government guarantees. |
Aging Analysis of Past Due and Current Loans | The following table sets forth the LHFI aging analysis of past due and current loans: 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due (1) Total Past Due Current Total LHFI (Dollars in millions) September 30, 2019 Consumer loans Residential first mortgage $ 6 $ 1 $ 22 $ 29 $ 3,229 $ 3,258 Home equity 1 1 3 5 980 985 Other 2 1 1 4 689 693 Total consumer loans 9 3 26 38 4,898 4,936 Commercial loans Commercial real estate — — — — 2,697 2,697 Commercial and industrial (1) — — — — 1,700 1,700 Warehouse lending — — — — 3,215 3,215 Total commercial loans — — — — 7,612 7,612 Total loans (2) $ 9 $ 3 $ 26 $ 38 $ 12,510 $ 12,548 December 31, 2018 Consumer loans Residential first mortgage $ 4 $ 2 $ 19 $ 25 $ 2,974 $ 2,999 Home Equity 1 — 3 4 727 731 Other — — — — 314 314 Total consumer loans 5 2 22 29 4,015 4,044 Commercial loans Commercial real estate — — — — 2,152 2,152 Commercial and industrial — — — — 1,433 1,433 Warehouse lending — — — — 1,459 1,459 Total commercial loans — — — — 5,044 5,044 Total loans (2) $ 5 $ 2 $ 22 $ 29 $ 9,059 $ 9,088 (1) Includes less than 90 day past due performing loans which are deemed nonaccrual. Interest is not being accrued on these loans. (2) Includes $4 million and $3 million of past due loans accounted for under the fair value option for September 30, 2019 and December 31, 2018 , respectively. |
Summary of TDRs by Type and Performing Status and Newly Modified TDRs | The following table provides a summary of TDRs by type and performing status: TDRs Performing Nonperforming Total (Dollars in millions) September 30, 2019 Consumer loans Residential first mortgage $ 20 $ 8 $ 28 Home equity 19 2 21 Total TDRs (1)(2) $ 39 $ 10 $ 49 December 31, 2018 Consumer loans Residential first mortgage $ 22 $ 8 $ 30 Home Equity 22 2 24 Total TDRs (1)(2) $ 44 $ 10 $ 54 (1) The ALLL on TDR loans totaled $8 million and $10 million at September 30, 2019 and December 31, 2018 , respectively. (2) Includes $3 million and $3 million of TDR loans accounted for under the fair value option at September 30, 2019 and December 31, 2018 , respectively. The following table provides a summary of newly modified TDRs: New TDRs Number of Accounts Pre-Modification Unpaid Principal Balance Post-Modification Unpaid Principal Balance (1) Increase in Allowance at Modification (Dollars in millions) Three Months Ended September 30, 2019 Residential first mortgages $ 4 $ 1 $ 1 $ — Home equity (2)(3) — $ — $ — $ — Total TDR loans $ 4 $ 1 $ 1 $ — Three Months Ended September 30, 2018 Residential first mortgages $ 2 $ — $ — $ — Home equity (2)(3) 6 1 1 — Total TDR loans $ 8 $ 1 $ 1 $ — Nine Months Ended September 30, 2019 Residential first mortgages $ 6 $ 1 $ 1 $ — Home equity (2)(3) 4 1 1 — Total TDR loans $ 10 $ 2 $ 2 $ — Nine Months Ended September 30, 2018 Residential first mortgages $ 13 $ 2 $ 2 $ — Home equity (2)(3) 14 1 1 — Total TDR loans $ 27 $ 3 $ 3 $ — (1) Post-modification balances include past due amounts that are capitalized at modification date. (2) Home equity post-modification UPB reflects write downs. (3) Includes loans carried at the fair value option. |
Impaired Loans | The following table presents individually evaluated impaired loans and the associated allowance: September 30, 2019 December 31, 2018 Recorded Investment Net Unpaid Principal Balance Related Allowance Recorded Investment Net Unpaid Principal Balance Related Allowance (Dollars in millions) With no related allowance recorded Consumer loans Residential first mortgage $ 17 $ 21 $ — $ 13 $ 16 $ — Home equity 1 5 — 1 4 — Other consumer — 1 — — — — Total loans with no related allowance recorded $ 18 $ 27 $ — $ 14 $ 20 $ — With an allowance recorded Consumer loans Residential first mortgage $ 16 $ 16 $ 3 $ 19 $ 20 $ 4 Home equity 19 19 6 22 23 7 Other consumer 1 1 1 — — — Total loans with an allowance recorded $ 36 $ 36 $ 10 $ 41 $ 43 $ 11 Total Impaired loans Consumer Loans Residential first mortgage $ 33 $ 37 $ 3 $ 32 $ 36 $ 4 Home equity 20 24 6 23 27 7 Other consumer 1 2 1 — — — Commercial loans Commercial and industrial — — — — — — Total impaired loans $ 54 $ 63 $ 10 $ 55 $ 63 $ 11 The following table presents average impaired loans and the interest income recognized: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized (Dollars in millions) Consumer loans Residential first mortgage $ 46 $ — $ 34 $ 1 $ 38 $ — $ 34 $ 1 Home equity 7 — 24 — 17 — 25 1 Other consumer 1 — — — 1 — — — Total impaired consumer loans 54 — 58 1 56 — 59 2 Commercial loans Commercial real estate — — — — — — — — Commercial and industrial 25 — — — 20 — 2 — Warehouse — — — — — — — — Total impaired commercial loans 25 — — — 20 — 2 — Total impaired loans $ 79 $ — $ 58 $ 1 $ 76 $ — $ 61 $ 2 |
Loan Credit Quality Indicators | The following table presents the credit quality of our LHFI portfolio: September 30, 2019 Pass Watch Special Mention Substandard Total Loans (Dollars in millions) Consumer Loans Residential first mortgage $ 3,210 $ 25 $ — $ 23 $ 3,258 Home equity 962 20 — 3 985 Other consumer 691 1 — 1 693 Total consumer loans $ 4,863 $ 46 $ — $ 27 $ 4,936 Commercial Loans Commercial real estate $ 2,655 $ 33 $ 4 $ 5 $ 2,697 Commercial and industrial 1,624 44 27 5 1,700 Warehouse 3,033 165 17 — 3,215 Total commercial loans $ 7,312 $ 242 $ 48 $ 10 $ 7,612 December 31, 2018 Pass Watch Special Mention Substandard Total Loans (Dollars in millions) Consumer Loans Residential first mortgage $ 2,952 $ 28 $ — $ 19 $ 2,999 Home equity 705 23 — 3 731 Other consumer 314 — — — 314 Total consumer loans $ 3,971 $ 51 $ — $ 22 $ 4,044 Commercial Loans Commercial real estate $ 2,132 $ 14 $ 5 $ 1 $ 2,152 Commercial and industrial 1,351 53 29 — 1,433 Warehouse 1,324 120 15 — 1,459 Total commercial loans $ 4,807 $ 187 $ 49 $ 1 $ 5,044 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Transfers and Servicing [Abstract] | |
Changes in the Fair Value of Residential First Mortgage MSRs | Changes in the fair value of residential first mortgage MSRs were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Balance at beginning of period $ 316 $ 257 $ 290 $ 291 Additions from loans sold with servicing retained 39 100 203 283 Reductions from sales (12 ) (51 ) (57 ) (273 ) Changes in fair value due to (1): Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (30 ) (3 ) (60 ) (12 ) Changes in estimates of fair value due to interest rate risk (2) (28 ) 10 (91 ) 24 Fair value of MSRs at end of period $ 285 $ 313 $ 285 $ 313 (1) Changes in fair value are included within net return on mortgage servicing rights on the Consolidated Statements of Operations. (2) Represents estimated MSR value change resulting primarily from market-driven changes which we manage through the use of derivatives. |
Summary of Adverse Changes to Weighted-Average Assumptions on the Fair Value of Servicing Rights | The following table summarizes the hypothetical effect on the fair value of servicing rights using adverse changes of 10 percent and 20 percent to the weighted average of certain significant assumptions used in valuing these assets: September 30, 2019 December 31, 2018 Fair value Fair value Actual 10% adverse change 20% adverse change Actual 10% adverse change 20% adverse change (Dollars in millions) Option adjusted spread 5.41 % $ 280 $ 276 5.42 % $ 284 $ 280 Constant prepayment rate 11.24 % 265 248 9.57 % 278 268 Weighted average cost to service per loan $ 84.62 282 279 $ 85.57 286 283 |
Summary of Income and Fees | The following table summarizes income and fees associated with owned mortgage servicing rights: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Net return on mortgage servicing rights Servicing fees, ancillary income and late fees (1) $ 25 $ 17 $ 70 $ 46 Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (30 ) (3 ) (60 ) (12 ) Changes in estimates of fair value due to interest rate risk (28 ) 10 (91 ) 24 Gain (loss) on MSR derivatives (2) 31 (11 ) 92 (27 ) Net transaction costs on sale of MSR assets — — (2 ) (5 ) Total return included in net return on mortgage servicing rights $ (2 ) $ 13 $ 9 $ 26 (1) Servicing fees are recorded on an accrual basis. Ancillary income and late fees are recorded on a cash basis. (2) Changes in the derivatives utilized as economic hedges to offset changes in fair value of the MSRs. The following table summarizes income and fees associated with our mortgage loans subserviced for others: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Loan administration income on mortgage loans subserviced Servicing fees and late fees (1) $ 27 $ 14 $ 77 $ 36 Charges on subserviced custodial balances (2) (20 ) (9 ) (50 ) (20 ) Other servicing charges (2 ) — (5 ) (1 ) Total income on mortgage loans subserviced, included in loan administration $ 5 $ 5 $ 22 $ 15 (1) Servicing fees are recorded on an accrual basis. Late fees are recorded on cash basis. (2) Charges on subserviced custodial balances represent interest due to MSR owner. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Notional Amount, Estimated Fair Value and Maturity and Net Gain (Loss) Recognized on Designated Instruments | The following table presents the notional amount, estimated fair value and maturity of our derivative financial instruments: September 30, 2019 (1) Notional Amount Fair Value (2) Expiration Dates (Dollars in millions) Derivatives in fair value hedge relationships: Assets Interest rate swap on AFS Securities $ 100 $ — 2022 Liabilities Interest rate swaps on AFS securities $ 200 $ — 2020 Derivatives not designated as hedging instruments: Assets Futures $ 224 $ — 2019-2023 Mortgage-backed securities forwards 3,658 11 2019 Rate lock commitments 5,036 51 2019-2020 Interest rate swaps and swaptions 737 34 2019-2029 Total derivative assets $ 9,655 $ 96 Liabilities Futures $ 242 $ — 2020-2023 Mortgage-backed securities forwards 4,699 11 2019 Rate lock commitments 275 1 2019-2020 Interest rate swaps 1,628 5 2019-2049 Total derivative liabilities $ 6,844 $ 17 (1) Variation margin pledged to or received from a Central Counterparty Clearing House is considered settlement of the derivative position for accounting purposes. (2) Derivative assets and liabilities are included in other assets and other liabilities on the Consolidated Statements of Financial Condition, respectively. December 31, 2018 (1) Notional Amount Fair Value (2) Expiration Dates (Dollars in millions) Derivatives in fair value hedge relationships: Assets Interest rate swaps on CDs $ 20 $ — 2019 Liabilities Interest rate swaps on CDs $ 10 $ — 2019 Derivatives not designated as hedging instruments: Assets Futures $ 248 $ — 2019-2023 Mortgage backed securities forwards 362 4 2019 Rate lock commitments 2,221 20 2019 Interest rate swaps and swaptions 1,662 23 2019-2049 Total derivative assets $ 4,493 $ 47 Liabilities Futures $ 1,513 $ 1 2019-2023 Mortgage backed securities forwards 4,625 31 2019 Rate lock commitments 45 — 2019 Interest rate swaps 755 7 2019-2028 Total derivative liabilities $ 6,938 $ 39 (1) Variation margin pledged to or received from a Central Counterparty Clearing House to cover the prior day's fair value of open positions, is considered settlement of the derivative position for accounting purposes. (2) Derivative assets and liabilities are included in other assets and other liabilities on the Consolidated Statements of Financial Condition, respectively. |
Derivatives Subject to a Master Netting Arrangement | The following tables present the derivatives subject to a master netting arrangement, including the cash pledged as collateral: Gross Amounts Netted in the Statements of Financial Condition Net Amount Presented in the Statements of Financial Condition Gross Amounts Not Offset in the Statements of Financial Condition Gross Amount Financial Instruments Cash Collateral (Dollars in millions) September 30, 2019 Derivatives not designated as hedging instruments: Assets Mortgage backed securities forwards $ 11 $ — $ 11 $ — $ 3 Interest rate swaps and swaptions (1) 34 — 34 — — Total derivative assets $ 45 $ — $ 45 $ — $ 3 Liabilities Futures $ — $ — $ — $ — $ — Mortgage backed securities forwards 11 — 11 — 16 Interest rate swaps (1) 5 — 5 — 41 Total derivative liabilities $ 16 $ — $ 16 $ — $ 57 December 31, 2018 Derivatives not designated as hedging instruments: Assets Mortgage-backed securities forwards $ 4 $ — $ 4 $ — $ — Interest rate swaps and swaptions (1) 23 — 23 — 14 Total derivative assets $ 27 $ — $ 27 $ — $ 14 Liabilities Futures $ 1 $ — $ 1 $ — $ 1 Mortgage-backed securities forwards 31 — 31 — 29 Interest rate swaps (1) 7 — 7 — 23 Total derivative liabilities $ 39 $ — $ 39 $ — $ 53 (1) Variation margin pledged to or received from a Central Counterparty Clearing House to cover the prior day's fair value of open positions, is considered settlement of the derivative position for accounting purposes. |
Net Gain (Loss) Recognized in Income on Derivative Instruments | The following table presents the net gain (loss) recognized on designated instruments, net of the impact of offsetting positions: Amount Recorded in Net Interest Income (1) Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Gain on cash flow hedging relationships in interest contracts: Amount of loss reclassified from AOCI into income $ — $ 1 $ — $ — Total loss on hedges $ — $ 1 $ — $ — (1) The loss on fair value hedging relationships in interest contracts was de minimis for the three and nine months ended September 30, 2019 , and the three and nine months ended September 30, 2018 . During the second quarter of 2018, we de-designated all of our remaining cash flow hedge relationships. The following table presents net gain (loss) recognized in income on derivative instruments, net of the impact of offsetting positions: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Derivatives not designated as hedging instruments: Location of Gain (Loss) Futures Net return on mortgage servicing rights $ — $ (1 ) $ (2 ) $ (4 ) Interest rate swaps and swaptions Net return on mortgage servicing rights 28 (8 ) 71 (16 ) Mortgage-backed securities forwards Net return on mortgage servicing rights 3 (2 ) 23 (6 ) Rate lock commitments and forward agency and loan sales Net gain on loan sales 27 21 57 12 Forward commitments Other noninterest income — — 2 — Interest rate swaps (1) Other noninterest income 2 1 3 2 Total derivative gain (loss) $ 60 $ 11 $ 154 $ (12 ) (1) Includes customer-initiated commercial interest rate swaps. |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Breakdown of FHLB Advances Outstanding | The following is a breakdown of our FHLB advances outstanding: September 30, 2019 December 31, 2018 Amount Rate Amount Rate (Dollars in millions) Short-term fixed rate term advances $ 2,325 1.89 % $ 2,993 2.52 % Other short-term borrowings 4 2.32 % 251 2.87 % Total short-term Federal Home Loan Bank advances and other borrowings 2,329 3,244 Long-term Federal Home Loan Bank fixed rate advances (1) 650 1.45 % 150 1.53 % Total Federal Home Loan Bank advances $ 2,979 $ 3,394 (1) Includes the current portion of fixed rate advances of $0 and $50 million at September 30, 2019 and December 31, 2018 . |
Detailed Information on FHLB Advances and Other Borrowings | The following table contains detailed information on our FHLB advances and other borrowings: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Maximum outstanding at any month end $ 2,979 $ 5,085 $ 3,391 $ 5,740 Average outstanding balance 2,446 4,745 2,769 4,996 Average remaining borrowing capacity 4,957 2,165 3,932 1,830 Weighted average interest rate 2.10 % 2.08 % 2.33 % 1.88 % |
Maturity Dates of FHLB Advances and Other Borrowings | The following table outlines the maturity dates of our FHLB advances and other borrowings: September 30, 2019 (Dollars in millions) 2019 $ 2,329 2020 — 2021 — 2022 — Thereafter 650 Total $ 2,979 |
Long-Term Debt, Net of Debt Issuance Costs | The following table presents long-term debt, net of debt issuance costs: September 30, 2019 December 31, 2018 Amount Interest Rate Amount Interest Rate (Dollars in millions) Senior Notes Senior notes, matures 2021 $ 249 6.125 % $ 248 6.125 % Trust Preferred Securities Floating Three Month LIBOR Plus: 3.25%, matures 2032 $ 26 5.36 % $ 26 6.07 % 3.25%, matures 2033 26 5.55 % 26 5.69 % 3.25%, matures 2033 26 5.57 % 26 6.05 % 2.00%, matures 2035 26 4.30 % 26 4.44 % 2.00%, matures 2035 26 4.30 % 26 4.44 % 1.75%, matures 2035 51 3.87 % 51 4.54 % 1.50%, matures 2035 25 3.80 % 25 3.94 % 1.45%, matures 2037 25 3.57 % 25 4.24 % 2.50%, matures 2037 16 4.62 % 16 5.29 % Total Trust Preferred Securities 247 247 Total other long-term debt $ 496 $ 495 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income (Loss) | The following table sets forth the components in accumulated other comprehensive income (loss): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Investment securities Beginning balance $ (8 ) $ (56 ) $ (47 ) $ (18 ) Unrealized gain (loss) 18 (11 ) 61 (55 ) Less: Tax provision (benefit) 5 (2 ) 15 (13 ) Net unrealized gain (loss) 13 (9 ) 46 (42 ) Reclassifications out of AOCI (1) — — 7 — Less: Tax provision — — 1 — Net unrealized gain reclassified out of AOCI — — 6 — Reclassification of certain income tax effects (2) — — — (5 ) Other comprehensive income (loss), net of tax 13 (9 ) 52 (47 ) Ending balance $ 5 $ (65 ) $ 5 $ (65 ) Cash Flow Hedges Beginning balance $ — $ 24 $ — $ 2 Unrealized gain — — — 28 Less: Tax provision — — — 7 Net unrealized gain — — — 21 Reclassifications out of AOCI (3) — (1 ) — — Net unrealized gain reclassified out of AOCI — (1 ) — — Other comprehensive income, net of tax — (1 ) — 21 Ending balance $ — $ 23 $ — $ 23 (1) Reclassifications are reported in noninterest income on the Consolidated Statements of Operations. (2) Income tax effects of the Tax Cuts and Jobs Act are reclassified from AOCI to retained earnings due to early adoption of ASU 2018-02. (3) Reclassifications are reported in interest expense on the Consolidated Statements of Operations. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share of Common Stock | The following table sets forth the computation of basic and diluted earnings per share of common stock: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions, except share data) Net income $ 63 $ 48 $ 160 $ 133 Weighted Average Shares Weighted average common shares outstanding 56,484,499 57,600,360 56,607,944 57,483,802 Effect of dilutive securities Stock-based awards 626,297 732,238 644,596 818,118 Weighted average diluted common shares 57,110,796 58,332,598 57,252,540 58,301,920 Earnings per common share Basic earnings per common share $ 1.12 $ 0.84 $ 2.83 $ 2.32 Effect of dilutive securities Stock-based awards (0.01 ) (0.01 ) (0.03 ) (0.04 ) Diluted earnings per common share $ 1.11 $ 0.83 $ 2.80 $ 2.28 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Restricted Stock Activity | The following table summarizes restricted stock and restricted stock units activity: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Shares Weighted — Average Grant-Date Fair Value per Share Shares Weighted — Average Grant-Date Fair Value per Share Restricted Stock and Restricted Stock Units Non-vested balance at beginning of period 1,612,174 $ 29.11 1,620,568 $ 27.27 Granted — — 325,209 31.88 Vested (2,719 ) 33.64 (227,818 ) 23.91 Canceled and forfeited (18,140 ) 32.48 (126,644 ) 22.58 Non-vested balance at end of period 1,591,315 $ 29.06 1,591,315 $ 29.06 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Tax and Effective Tax Provision Rate | The following table presents our provision for income tax and effective tax provision rate: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Provision for income taxes $ 15 $ 12 $ 37 $ 33 Effective tax provision rate 18.4 % 20.0 % 18.6 % 20.1 % |
Legal Proceedings, Contingenc_2
Legal Proceedings, Contingencies and Commitments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Contractual Amount of Significant Commitments | The following table is a summary of the contractual amount of significant commitments: September 30, 2019 December 31, 2018 (Dollars in millions) Commitments to extend credit Mortgage loans interest-rate lock commitments $ 5,325 $ 2,293 Warehouse loan commitments 1,579 2,334 Commercial and industrial commitments 1,034 918 Other commercial commitments 1,907 1,260 HELOC commitments 526 429 Other consumer commitments 227 108 Standby and commercial letters of credit 81 63 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Banking and Thrift [Abstract] | |
Regulatory Capital Ratios | The following tables present the regulatory capital ratios as of the dates indicated: Flagstar Bancorp Actual For Capital Adequacy Purposes Well-Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in millions) September 30, 2019 Tier 1 leverage (to adjusted avg. total assets) $ 1,668 7.98 % $ 836 4.0 % $ 1,045 5.0 % Common equity Tier 1 capital (to RWA) 1,428 9.25 % 694 4.5 % 1,003 6.5 % Tier 1 capital (to RWA) 1,668 10.81 % 926 6.0 % 1,235 8.0 % Total capital (to RWA) 1,781 11.54 % 1,235 8.0 % 1,543 10.0 % December 31, 2018 Tier 1 leverage (to adjusted avg. total assets) $ 1,505 8.29 % $ 726 4.0 % $ 908 5.0 % Common equity Tier 1 capital (to RWA) 1,265 10.54 % 540 4.5 % 780 6.5 % Tier 1 capital (to RWA) $ 1,505 12.54 % $ 720 6.0 % $ 960 8.0 % Total capital (to RWA) $ 1,637 13.63 % $ 960 8.0 % $ 1201 10.0 % N/A - Not applicable Flagstar Bank Actual For Capital Adequacy Purposes Well-Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in millions) September 30, 2019 Tier 1 leverage (to adjusted avg. total assets) $ 1,747 8.35 % $ 837 4.0 % $ 1046 5.0 % Common equity tier 1 capital (to RWA) 1,747 11.33 % 694 4.5 % 1,002 6.5 % Tier 1 capital (to RWA) 1,747 11.33 % 925 6.0 % 1,233 8.0 % Total capital (to RWA) 1,860 12.06 % 1,233 8.0 % 1,542 10.0 % December 31, 2018 Tier 1 leverage (to adjusted avg. total assets) $ 1,574 8.67 % $ 726 4.0 % $ 908 5.0 % Common equity tier 1 capital (to RWA) 1,574 13.12 % 540 4.5 % 780 6.5 % Tier 1 capital (to RWA) 1,574 13.12 % 720 6.0 % 960 8.0 % Total capital (to RWA) 1,705 14.21 % 960 8.0 % 1,200 10.0 % N/A - Not applicable |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments Carried at Fair Value | The following tables present the financial instruments carried at fair value by caption on the Consolidated Statement of Financial Condition and by level in the valuation hierarchy. September 30, 2019 Level 1 Level 2 Level 3 Total Fair Value (Dollars in millions) Investment securities available-for-sale Agency - Commercial $ — $ 969 $ — $ 969 Agency - Residential — 604 — 604 Municipal obligations — 31 — 31 Corporate debt obligations — 64 — 64 Other MBS — 28 — 28 Certificate of Deposit — 1 — 1 Loans held-for-sale Residential first mortgage loans — 4,122 — 4,122 Commercial Loan — — — — Loans held-for-investment Residential first mortgage loans — 8 — 8 Home equity — — 2 2 Mortgage servicing rights — — 285 285 Derivative assets Rate lock commitments (fallout-adjusted) — — 51 51 Mortgage-backed securities forwards — 11 — 11 Interest rate swaps and swaptions — 34 — 34 Total assets at fair value $ — $ 5,872 $ 338 $ 6,210 Derivative liabilities Rate lock commitments (fallout-adjusted) $ — $ — $ (1 ) $ (1 ) Futures — — — — Mortgage backed securities forwards — (11 ) — (11 ) Interest rate swaps — (5 ) — (5 ) DOJ Liability — — (35 ) (35 ) Contingent consideration — — (8 ) (8 ) Total liabilities at fair value $ — $ (16 ) $ (44 ) $ (60 ) December 31, 2018 Level 1 Level 2 Level 3 Total Fair Value (Dollars in millions) Investment securities available-for-sale Agency - Commercial $ — $ 1,374 $ — $ 1,374 Agency - Residential — 662 — 662 Municipal obligations — 32 — 32 Corporate debt obligations — 42 — 42 Other MBS — 32 — 32 Loans held-for-sale Residential first mortgage loans — 3,732 — 3,732 Loans held-for-investment Residential first mortgage loans — 8 — 8 Home equity — — 2 2 Mortgage servicing rights — — 290 290 Derivative assets Rate lock commitments (fallout-adjusted) — — 20 20 Mortgage-backed securities forwards — 4 — 4 Interest rate swaps and swaptions — 23 — 23 Total assets at fair value $ — $ 5,909 $ 312 $ 6,221 Derivative liabilities Futures $ — $ (1 ) $ — $ (1 ) Mortgage-backed securities forwards — (31 ) — (31 ) Interest rate swaps — (7 ) — (7 ) DOJ Liability — — (60 ) (60 ) Contingent consideration — — (6 ) (6 ) Total liabilities at fair value $ — $ (39 ) $ (66 ) $ (105 ) |
Roll Forward of Financial Instruments Classified as Level 3 | The following tables include a roll forward of the Consolidated Statements of Financial Condition amounts (including the change in fair value) for financial instruments classified by us within Level 3 of the valuation hierarchy: Balance at Beginning of Period Total Gains (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Period (Dollars in millions) Three Months Ended September 30, 2019 Assets Loans held-for-investment Home equity $ 2 $ — $ — $ — $ — $ — $ 2 Mortgage servicing rights (2) 316 (58 ) 39 (12 ) — — 285 Rate lock commitments (net) (2)(3) 50 20 113 — — (133 ) 50 Totals $ 368 $ (38 ) $ 152 $ (12 ) $ — $ (133 ) $ 337 Liabilities DOJ Liability $ (35 ) $ — $ — $ — $ — $ — $ (35 ) Contingent consideration (7 ) (4 ) — — 3 — (8 ) Totals $ (42 ) $ (4 ) $ — $ — $ 3 $ — $ (43 ) Three Months Ended September 30, 2018 Assets Loans held-for-investment Home equity $ 3 $ — $ — $ — $ — $ — $ 3 Mortgage servicing rights (2) 257 7 100 (51 ) — — 313 Rate lock commitments (net) (2)(3) 32 (5 ) 60 — — (68 ) 19 Totals $ 292 $ 2 $ 160 $ (51 ) $ — $ (68 ) $ 335 Liabilities DOJ Liability $ (60 ) $ — $ — $ — $ — $ — $ (60 ) Contingent consideration (18 ) 3 — — 4 — (11 ) Totals $ (78 ) $ 3 $ — $ — $ 4 $ — $ (71 ) (1) There were no unrealized gains (losses) recorded in OCI during the three months ended September 30, 2019 and 2018 . (2) We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments. (3) Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets. Balance at Beginning of Period Total Gains (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Period (Dollars in millions) Nine Months Ended September 30, 2019 Assets Loans held-for-investment Home equity $ 2 $ — $ — $ — $ — $ — $ 2 Mortgage servicing rights (2) 290 (151 ) 203 (57 ) — — 285 Rate lock commitments (net) (2)(3) 20 75 245 — — (290 ) 50 Totals $ 312 $ (76 ) $ 448 $ (57 ) $ — $ (290 ) $ 337 Liabilities DOJ Liability $ (60 ) $ 25 $ — $ — $ — $ — $ (35 ) Contingent consideration (6 ) (5 ) — — 3 — (8 ) Totals $ (66 ) $ 20 $ — $ — $ 3 $ — $ (43 ) Nine Months Ended September 30, 2018 Assets Loans held-for-investment Home equity $ 4 $ — $ — $ — $ (1 ) $ — $ 3 Mortgage servicing rights (2) 291 12 283 (273 ) — — 313 Rate lock commitments (net) (2)(3) 24 (37 ) 191 — — (159 ) 19 Totals $ 319 $ (25 ) $ 474 $ (273 ) $ (1 ) $ (159 ) $ 335 Liabilities DOJ Liability $ (60 ) $ — $ — $ — $ — $ — $ (60 ) Contingent consideration (25 ) 8 — — 6 — (11 ) Totals $ (85 ) $ 8 $ — $ — $ 6 $ — $ (71 ) (1) There were no unrealized gains (losses) recorded in OCI during the nine months ended September 30, 2019 and 2018 . (2) We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments. (3) Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets. |
Quantitative Information about Recurring Level 3 Fair Value Instruments | The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) September 30, 2019 Assets Loans held-for-investment Home equity $ 2 Discounted cash flows Discount rate 7.2% -10.8% (9.0%) (1) Mortgage servicing rights $ 285 Discounted cash flows Option adjusted spread 2.6% - 20.6% (5.4%) (1) Rate lock commitments (net) $ 50 Consensus pricing Origination pull-through rate 80.0% - 87.2% (81.9%) (1) Liabilities DOJ Liability $ (35 ) Discounted cash flows See description below See description below Contingent consideration $ (8 ) Discounted cash flows Beta 0.6 - 1.6 (1.1) (2) Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) December 31, 2018 Assets Loans held-for-investment Home equity $ 2 Discounted cash flows Discount rate 7.2% - 10.8% (9.0%) (1) Mortgage servicing rights $ 290 Discounted cash flows Option adjusted spread 2.1% - 25.9% (5.4%) (1) Rate lock commitments (net) $ 20 Consensus pricing Origination pull-through rate 75.0% - 87.2% (76.8%) (1) Liabilities DOJ Liability $ (60 ) Discounted cash flows See description below See description below Contingent consideration $ (6 ) Discounted cash flows Beta 0.6 - 1.6 (1.1) (2) (1) Unobservable inputs were weighted by their relative fair value of the instruments. (2) Unobservable inputs were not weighted as only one instrument exists. |
Assets Measured at Fair Value on a Nonrecurring Basis | The following table presents assets measured at fair value on a nonrecurring basis: Total (1) Level 2 Level 3 Gains (Losses) (Dollars in millions) September 30, 2019 Loans held-for-sale (2) $ 6 $ 6 $ — $ (1 ) Impaired loans held-for-investment (2) Residential first mortgage loans 14 — 14 (5 ) Repossessed assets (3) 9 — 9 (3 ) Totals $ 29 $ 6 $ 23 $ (9 ) December 31, 2018 Loans held-for-sale (2) $ 5 $ 5 $ — $ (1 ) Impaired loans held-for-investment (2) Residential first mortgage loans 12 — 12 (4 ) Repossessed assets (3) 7 — 7 (3 ) Totals $ 24 $ 5 $ 19 $ (8 ) (1) The fair values are determined at various dates during the three months ended September 30, 2019 and the year ended December 31, 2018 , respectively. (2) Gains (losses) reflect fair value adjustments on assets for which we did not elect the fair value option. (3) Gains (losses) reflect write downs of repossessed assets based on the estimated fair value of the specific assets. |
Quantitative Information about Nonrecurring Level 3 Fair Value Financial Instruments | The following table presents the quantitative information about nonrecurring Level 3 fair value financial instruments and the fair value measurements: Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (Dollars in millions) September 30, 2019 Impaired loans held-for-investment Loans held-for-investment $ 14 Fair value of collateral Loss severity discount 25% - 30% (26.1%) (1) Repossessed assets $ 9 Fair value of collateral Loss severity discount 0% - 100% (21.1%) (1) December 31, 2018 Impaired loans held-for-investment Loans held-for-investment $ 12 Fair value of collateral Loss severity discount 25% - 30% (28.3%) (1) Repossessed assets $ 7 Fair value of collateral Loss severity discount 0% - 100% (25.8%) (1) (1) Unobservable inputs were weighted by their relative fair value of the instruments. |
Carrying Amount and Estimated Fair Value of Financial Instruments | The following table presents the carrying amount and estimated fair value of financial instruments that are carried either at fair value, cost, or amortized cost: September 30, 2019 Estimated Fair Value Carrying Value Total Level 1 Level 2 Level 3 (Dollars in millions) Assets Cash and cash equivalents $ 353 $ 353 $ 353 $ — $ — Investment securities available-for-sale 1,697 1,697 — 1,697 — Investment securities held-to-maturity 635 639 — 639 — Loans held-for-sale 4,196 4,196 — 4,196 — Loans held-for-investment 12,548 12,707 — 8 12,699 Loans with government guarantees 607 583 — 583 — Mortgage servicing rights 285 285 — — 285 Federal Home Loan Bank stock 303 303 — 303 — Bank owned life insurance 346 346 — 346 — Repossessed assets 9 9 — — 9 Other assets, foreclosure claims 43 43 — 43 — Derivative financial instruments, assets 96 96 — 45 51 Liabilities Retail deposits Demand deposits and savings accounts $ (6,760 ) $ (6,054 ) $ — $ (6,054 ) $ — Certificates of deposit (2,558 ) (2,577 ) — (2,577 ) — Wholesale deposits (635 ) (641 ) — (641 ) — Government deposits (1,414 ) (1,350 ) — (1,350 ) — Custodial deposits (4,378 ) (4,316 ) — (4,316 ) — Federal Home Loan Bank advances (2,979 ) (2,979 ) — (2,979 ) — Long-term debt (496 ) (458 ) — (458 ) — DOJ Liability (35 ) (35 ) — — (35 ) Contingent consideration (8 ) (8 ) — — (8 ) Derivative financial instruments, liabilities (17 ) (17 ) — (17 ) — December 31, 2018 Estimated Fair Value Carrying Value Total Level 1 Level 2 Level 3 (Dollars in millions) Assets Cash and cash equivalents $ 408 $ 408 $ 408 $ — $ — Investment securities available-for-sale 2,142 2,142 — 2,142 — Investment securities held-to-maturity 703 681 — 681 — Loans held-for-sale 3,869 3,870 — 3,870 — Loans held-for-investment 9,088 8,966 — 8 8,958 Loans with government guarantees 392 374 — 374 — Mortgage servicing rights 290 290 — — 290 Federal Home Loan Bank stock 303 303 — 303 — Bank owned life insurance 340 340 — 340 — Repossessed assets 7 7 — — 7 Other assets, foreclosure claims 50 50 — 50 — Derivative financial instruments, assets 47 47 — 27 20 Liabilities Retail deposits Demand deposits and savings accounts $ (6,467 ) $ (5,475 ) $ — $ (5,475 ) $ — Certificates of deposit (2,387 ) (2,379 ) — (2,379 ) — Wholesale deposits (583 ) (585 ) — (585 ) — Government deposits (1,202 ) (1,145 ) — (1,145 ) — Custodial deposits (1,741 ) (1,664 ) — (1,664 ) — Federal Home Loan Bank advances (3,394 ) (3,383 ) — (3,383 ) — Long-term debt (495 ) (463 ) — (463 ) — DOJ Liability (60 ) (60 ) — — (60 ) Contingent consideration (6 ) (6 ) — — (6 ) Derivative financial instruments, liabilities (39 ) (39 ) — (39 ) — |
Changes in Fair Value Included in Earnings | The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Assets Loans held-for-sale Net gain (loss) on loan sales $ 97 $ 7 $ 272 $ (61 ) Loans held-for-investment Other noninterest income $ 1 $ — $ 1 $ — Liabilities DOJ Litigation Settlement Other noninterest income $ — $ — $ 25 $ — |
Differences Between Aggregate Fair Value and Aggregate Remaining Contractual Principal Balance Outstanding | The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected: September 30, 2019 December 31, 2018 UPB Fair Value Fair Value Over / (Under) UPB UPB Fair Value Fair Value Over / (Under) UPB (Dollars in millions) Assets Nonaccrual loans Loans held-for-sale $ 11 $ 12 $ 1 $ 6 $ 6 $ — Loans held-for-investment 5 5 — 4 3 (1 ) Total nonaccrual loans $ 16 $ 17 $ 1 $ 10 $ 9 $ (1 ) Other performing loans Loans held-for-sale $ 3,976 $ 4,110 $ 134 $ 3,601 $ 3,726 $ 125 Loans held-for-investment 7 5 (2 ) 8 7 (1 ) Total other performing loans $ 3,983 $ 4,115 $ 132 $ 3,609 $ 3,733 $ 124 Total loans Loans held-for-sale $ 3,987 $ 4,122 $ 135 $ 3,607 $ 3,732 $ 125 Loans held-for-investment 12 10 (2 ) 12 10 (2 ) Total loans $ 3,999 $ 4,132 $ 133 $ 3,619 $ 3,742 $ 123 Liabilities DOJ Liability (1) $ (118 ) $ (35 ) $ 83 $ (118 ) $ (60 ) $ 58 (1) We are obligated to pay $118 million in installment payments upon meeting certain performance conditions, as described in Note 15 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Financial Information by Business Segment | The following tables present financial information by business segment for the periods indicated: Three Months Ended September 30, 2019 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 115 $ 27 $ 5 $ (1 ) $ 146 Net gain (loss) on loan sales (8 ) 118 — — 110 Other noninterest income (loss) 17 15 40 (11 ) 61 Total net interest income and noninterest income (loss) 124 160 45 (12 ) 317 (Provision) benefit for loan losses — (1 ) — — (1 ) Compensation and benefits (26 ) (30 ) (7 ) (35 ) (98 ) Other noninterest expense and directly allocated overhead (44 ) (72 ) (24 ) — (140 ) Total noninterest expense (70 ) (102 ) (31 ) (35 ) (238 ) Income (loss) before indirect overhead allocations and income taxes 54 57 14 (47 ) 78 Overhead allocations (10 ) (10 ) (4 ) 24 — Provision (benefit) for income taxes 9 10 2 (6 ) 15 Net income (loss) $ 35 $ 37 $ 8 $ (17 ) $ 63 Intersegment (expense) revenue $ (6 ) $ 8 $ 6 $ (8 ) $ — Average balances Loans held-for-sale $ 20 $ 3,766 $ — $ — $ 3,786 Loans with government guarantees — 574 — — 574 Loans held-for-investment (2) 11,710 33 — — 11,743 Total assets 12,184 5,378 38 3,597 21,197 Deposits 10,513 — 4,556 748 15,817 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Three Months Ended September 30, 2018 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 81 $ 36 $ 2 $ 5 $ 124 Net gain (loss) on loan sales (3 ) 46 — — 43 Other noninterest income 10 30 24 — 64 Total net interest income and noninterest income 88 112 26 5 231 (Provision) benefit for loan losses (1 ) — — 3 2 Compensation and benefits (17 ) (26 ) (4 ) (29 ) (76 ) Other noninterest expense and directly allocated overhead (27 ) (41 ) (18 ) (11 ) (97 ) Total noninterest expense (44 ) (67 ) (22 ) (40 ) (173 ) Income (loss) before indirect overhead allocations and income taxes 43 45 4 (32 ) 60 Overhead allocations (9 ) (16 ) (5 ) 30 — Provision (benefit) for income taxes 7 6 — (1 ) $ 12 Net income (loss) $ 27 $ 23 $ (1 ) $ (1 ) $ 48 Intersegment (expense) revenue $ 1 $ 4 $ 5 $ (10 ) $ — Average balances Loans held-for-sale $ 10 $ 4,383 $ — $ — $ 4,393 Loans with government guarantees — 292 — — 292 Loans held-for-investment (2) 8,868 11 — 29 8,908 Total assets 9,028 5,676 29 3,878 18,611 Deposits 9,170 — 2,072 94 11,336 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Nine Months Ended September 30, 2019 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 326 $ 73 $ 11 $ — $ 410 Net gain (loss) on loan sales (23 ) 257 — — 234 Other noninterest income 44 49 113 8 214 Total net interest income and noninterest income 347 379 124 8 858 (Provision) benefit for loan losses (18 ) (1 ) — 1 (18 ) Compensation and benefits (74 ) (83 ) (19 ) (99 ) (275 ) Other noninterest expense and directly allocated overhead (131 ) (161 ) (73 ) (3 ) (368 ) Total noninterest expense (205 ) (244 ) (92 ) (102 ) (643 ) Income (loss) before indirect overhead allocations and income taxes 124 134 32 (93 ) 197 Overhead allocations (30 ) (30 ) (13 ) 73 — Provision (benefit) for income taxes 20 22 4 (9 ) 37 Net income (loss) $ 74 $ 82 $ 15 $ (11 ) $ 160 Intersegment (expense) revenue $ (18 ) $ 24 $ 19 $ (25 ) $ — Average balances Loans held-for-sale $ 37 $ 3,495 $ — $ — $ 3,532 Loans with government guarantees — 511 — — 511 Loans held-for-investment (2) 10,495 21 — — 10,516 Total assets 10,950 5,018 47 3,862 19,877 Deposits 10,247 — 3,536 522 14,305 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. Nine Months Ended September 30, 2018 Community Banking Mortgage Originations Mortgage Servicing Other (1) Total (Dollars in millions) Summary of Operations Net interest income $ 231 $ 100 $ 5 $ 9 $ 345 Net gain (loss) on loan sales (10 ) 176 — — 166 Other noninterest income 27 76 65 7 175 Total net interest income and noninterest income 248 352 70 16 686 (Provision) benefit for loan losses (2 ) (1 ) — 6 3 Compensation and benefits (51 ) (83 ) (13 ) (89 ) (236 ) Other noninterest expense and directly allocated overhead (81 ) (129 ) (49 ) (28 ) (287 ) Total noninterest expense (132 ) (212 ) (62 ) (117 ) (523 ) Income (loss) before indirect overhead allocations and income taxes 114 139 8 (95 ) 166 Overhead allocations (29 ) (51 ) (15 ) 95 — Provision (benefit) for income taxes 18 18 (2 ) (1 ) 33 Net income (loss) $ 67 $ 70 $ (5 ) $ 1 $ 133 Intersegment (expense) revenue $ (1 ) $ 6 $ 14 $ (19 ) $ — Average balances Loans held-for-sale $ 11 $ 4,254 $ — $ — $ 4,265 Loans with government guarantees — 288 — — 288 Loans held-for-investment (2) 8,250 9 — 29 8,288 Total assets 8,425 5,477 30 3,902 17,834 Deposits 8,581 — 1,800 — 10,381 (1) Includes offsetting adjustments made to reclassify income and expenses relating to operating leases and custodial deposits for subservicing clients. (2) Includes adjustment made to reclassify operating lease assets to loans held-for-investment. |
Recently Issued Accounting Pr_3
Recently Issued Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Information Relating to Operating Leases | The following table reflects information relating to our operating leases: September 30, 2019 (Dollars in millions) Operating Leases (1) Weighted-average remaining lease term (years) 3.9 Weighted-average discount rate 2.86 % Right-of-use asset (2) $ 21 Lease liability (3) $ 22 (1) For the three and nine months ended September 30, 2019, the lease expense on operating leases was $3 million and $9 million , respectively, which includes a de-minimis amount of short-term lease expense and variable lease expense. (2) Recorded in premises and equipment on the Consolidated Statements of Financial Condition (3) Recorded in other liabilities on the Consolidated Statements of Financial Condition. |
Undiscounted Cash Flows on Operating Leases | The following table presents our undiscounted cash flows on our operating lease liabilities as of September 30, 2019 and our minimum contractual obligations on our operating leases as of December 31, 2018 : September 30, 2019 December 31, 2018 (Dollars in millions) Within one year $ 9 $ 9 After one year and within two years 7 6 After two years and within three years 5 4 After three years and within four years 2 2 After four years and within five years 1 1 After five years 2 3 Total (1) $ 26 $ 25 (1) The difference between the total undiscounted cash payments on operating leases and the lease liability is solely the effect of discounting. |
Accounting Standards Adopted and Accounting Standards Issued and Note Expected to Have a Material Impact | The following ASUs have been issued and are not expected to have a material impact on our Consolidated Financial Statements and/or significant accounting policies outside of what has been disclosed in the prior section: Standard Description Effective Date ASU 2019-05 Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief January 1, 2020 ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments January 1, 2020 ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses January 1, 2020 ASU 2018-18 Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 January 1, 2020 ASU 2018-17 Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities January 1, 2020 ASU 2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) January 1, 2020 ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment January 1, 2020 We adopted the following accounting standard updates (ASU) during 2019 , none of which had a material impact to our financial statements: Standard Description Effective Date ASU 2019-07 SEC Final Rule Releases: Codification Updates July 26, 2019 ASU 2019-01 Leases (Topic 842): Codification Improvements January 1, 2019 ASU 2018-20 Leases (Topic 842): Narrow-Scope Improvements for Lessors January 1, 2019 ASU 2018-16 Derivatives and hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes January 1, 2019 ASU 2018-11 Leases (Topic 842): Targeted Improvements January 1, 2019 ASU 2018-10 Codification Improvements to Topic 842, Leases January 1, 2019 ASU 2018-07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting January 1, 2019 ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope. January 1, 2019 ASU 2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities January 1, 2019 ASU 2017-06 Plan Accounting - Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting January 1, 2019 |
Investment Securities - Summary
Investment Securities - Summary of Investment Securities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Available-for-sale securities | ||
Amortized Cost | $ 1,691 | $ 2,206 |
Gross Unrealized Gains | 11 | 4 |
Gross Unrealized Losses | (5) | (68) |
Fair Value | 1,697 | 2,142 |
Held-to-maturity securities | ||
Amortized Cost | 635 | 703 |
Gross Unrealized Gains | 5 | 0 |
Gross Unrealized Losses | (1) | (22) |
Fair Value | 639 | 681 |
Agency - Commercial | ||
Available-for-sale securities | ||
Amortized Cost | 964 | 1,413 |
Gross Unrealized Gains | 7 | 4 |
Gross Unrealized Losses | (2) | (43) |
Fair Value | 969 | 1,374 |
Held-to-maturity securities | ||
Amortized Cost | 325 | 349 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | (1) | (13) |
Fair Value | 325 | 336 |
Agency - Residential | ||
Available-for-sale securities | ||
Amortized Cost | 604 | 686 |
Gross Unrealized Gains | 3 | 0 |
Gross Unrealized Losses | (3) | (24) |
Fair Value | 604 | 662 |
Held-to-maturity securities | ||
Amortized Cost | 310 | 354 |
Gross Unrealized Gains | 4 | 0 |
Gross Unrealized Losses | 0 | (9) |
Fair Value | 314 | 345 |
Corporate debt obligations | ||
Available-for-sale securities | ||
Amortized Cost | 63 | 41 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 64 | 41 |
Municipal obligations | ||
Available-for-sale securities | ||
Amortized Cost | 31 | 33 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (1) |
Fair Value | 31 | 32 |
Other MBS | ||
Available-for-sale securities | ||
Amortized Cost | 28 | 32 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 28 | 32 |
Certificate of deposits | ||
Available-for-sale securities | ||
Amortized Cost | 1 | 1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 1 | $ 1 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt and Equity Securities, FV-NI [Line Items] | ||||
Other than temporary impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Agency Securities | ||||
Debt and Equity Securities, FV-NI [Line Items] | ||||
Percentage of total securities | 95.00% | 95.00% |
Investment Securities - Availab
Investment Securities - Available-for-Sale Securities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||||
Purchase of AFS securities | $ 16,000,000 | $ 43,000,000 | $ 39,000,000 | $ 48,000,000 | |
AFS securities sold | 0 | $ 0 | 432,000,000 | $ 0 | |
Gain on AFS securities | 7,000,000 | ||||
Collateral Pledged | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Investment securities pledged | $ 400,000,000 | $ 400,000,000 | $ 1,900,000,000 |
Investment Securities - Held-to
Investment Securities - Held-to-Maturity Securities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Purchase of HTM securities | $ 0 | $ 0 | $ 0 | $ 0 |
Sale of HTM securities | $ 0 | $ 0 | $ 0 | $ 0 |
Investment Securities - Summa_2
Investment Securities - Summary of Unrealized Loss Positions on Investment Securities (Details) $ in Millions | Sep. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Agency - Commercial | ||
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | $ 204 | $ 1,025 |
Unrealized Loss Position with Duration Under 12 Months | $ 21 | $ 1 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 22 | 74 |
Unrealized Loss Position with Duration Under 12 Months | security | 3 | 1 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ (2) | $ (43) |
Unrealized Loss Position with Duration Under 12 Months | 0 | 0 |
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 159 | 336 |
Unrealized Loss Position with Duration Under 12 Months | $ 0 | $ 0 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 13 | 26 |
Unrealized Loss Position with Duration Under 12 Months | security | 0 | 0 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ (1) | $ (13) |
Unrealized Loss Position with Duration Under 12 Months | 0 | 0 |
Agency - Residential | ||
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 280 | 647 |
Unrealized Loss Position with Duration Under 12 Months | $ 61 | $ 14 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 27 | 79 |
Unrealized Loss Position with Duration Under 12 Months | security | 9 | 5 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ (3) | $ (24) |
Unrealized Loss Position with Duration Under 12 Months | 0 | 0 |
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 46 | 345 |
Unrealized Loss Position with Duration Under 12 Months | $ 9 | $ 0 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 9 | 60 |
Unrealized Loss Position with Duration Under 12 Months | security | 5 | 0 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ 0 | $ (9) |
Unrealized Loss Position with Duration Under 12 Months | 0 | 0 |
Municipal obligations | ||
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 8 | 28 |
Unrealized Loss Position with Duration Under 12 Months | $ 1 | $ 1 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 3 | 16 |
Unrealized Loss Position with Duration Under 12 Months | security | 1 | 2 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ 0 | $ (1) |
Unrealized Loss Position with Duration Under 12 Months | 0 | 0 |
Corporate debt obligations | ||
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 0 | 0 |
Unrealized Loss Position with Duration Under 12 Months | $ 0 | $ 7 |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 0 | 0 |
Unrealized Loss Position with Duration Under 12 Months | security | 0 | 2 |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ 0 | $ 0 |
Unrealized Loss Position with Duration Under 12 Months | 0 | $ 0 |
Other MBS | ||
Fair Value | ||
Unrealized Loss Position with Duration 12 Months and Over | 0 | |
Unrealized Loss Position with Duration Under 12 Months | $ 13 | |
Number of Securities | ||
Unrealized Loss Position with Duration 12 Months and Over | security | 0 | |
Unrealized Loss Position with Duration Under 12 Months | security | 2 | |
Unrealized Loss | ||
Unrealized Loss Position with Duration 12 Months and Over | $ 0 | |
Unrealized Loss Position with Duration Under 12 Months | $ 0 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Estimated Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Investment Securities Available-for-Sale, Amortized Cost | ||
Due in one year or less | $ 2 | |
Due after one year through five years | 12 | |
Due after five years through 10 years | 90 | |
Due after 10 years | 1,587 | |
Amortized Cost | 1,691 | $ 2,206 |
Investment Securities Available-for-Sale, Estimated Fair Value | ||
Due in one year or less | 2 | |
Due after one year through five years | 12 | |
Due after five years through 10 years | 92 | |
Due after 10 years | 1,591 | |
Fair Value | $ 1,697 | 2,142 |
Investment Securities Available-for-Sale, Weighted-Average Yield | ||
Due in one year or less | 1.83% | |
Due after one year through five years | 2.63% | |
Due after five years through 10 years | 4.33% | |
Due after 10 years | 2.40% | |
Investment Securities Held-to-maturity, Amortized cost | ||
Due in one year or less | $ 0 | |
Due after one year through five years | 10 | |
Due after five years through 10 years | 9 | |
Due after 10 years | 616 | |
Amortized Cost | 635 | 703 |
Investment Securities Held-to-maturity, Estimated Fair Value | ||
Due in one year or less | 0 | |
Due after one year through five years | 10 | |
Due after five years through 10 years | 9 | |
Due after 10 years | 620 | |
Fair Value | $ 639 | $ 681 |
Investment Securities Held-to-maturity, Weighted-Average Yield | ||
Due in one year or less | 0.00% | |
Due after one year through five years | 2.55% | |
Due after five years through 10 years | 2.26% | |
Due after 10 years | 2.45% |
Loans Held-for-Sale (Details)
Loans Held-for-Sale (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans held-for-sale | $ 4,196 | $ 4,196 | $ 3,869 | ||
Net gain (loss) on loan sales | 110 | $ 43 | 234 | $ 166 | |
Loans Held-for-Sale | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Net gain (loss) on loan sales | 110 | $ 43 | 232 | $ 166 | |
LHFS Recorded at Lower of Cost or Fair Value | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans held-for-sale | $ 74 | $ 74 | $ 137 |
Loans Held-for-Investment - Sum
Loans Held-for-Investment - Summary of Loans Held-for-Investment (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | $ 12,548 | $ 9,088 |
Consumer loans | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 4,936 | 4,044 |
Consumer loans | Residential first mortgage loans | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 3,258 | 2,999 |
Consumer loans | Home equity | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 985 | 731 |
Consumer loans | Other | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 693 | 314 |
Commercial loans | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 7,612 | 5,044 |
Commercial loans | Commercial real estate | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 2,697 | 2,152 |
Commercial loans | Commercial and industrial | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | 1,700 | 1,433 |
Commercial loans | Warehouse lending | ||
Loans and Leases Receivable, Net Amount [Abstract] | ||
Loans held-for-investment | $ 3,215 | $ 1,459 |
Loans Held-for-Investment - S_2
Loans Held-for-Investment - Summary of the UPB of Loan Sales and Purchases in the Loans Held-for-Investment Portfolio (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans sold | $ 166 | $ 4 |
Net gain associated with loan sales | 2 | 0 |
Total loans purchased | 250 | 0 |
Premium associated with loans purchased | 9 | 0 |
Performing | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans sold | 166 | 4 |
Consumer loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans purchased | 199 | 0 |
Consumer loans | Other consumer (3) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans purchased | $ 51 | $ 0 |
Loans Held-for-Investment - Nar
Loans Held-for-Investment - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans pledged as collateral | $ 7,900,000,000 | $ 7,900,000,000 | $ 6,800,000,000 | |||||
ALLL | 110,000,000 | $ 134,000,000 | 110,000,000 | $ 134,000,000 | $ 110,000,000 | $ 128,000,000 | $ 137,000,000 | $ 140,000,000 |
Charge-off | 4,000,000 | 2,000,000 | 40,000,000 | 6,000,000 | ||||
Provision release | 1,000,000 | (2,000,000) | 18,000,000 | (3,000,000) | ||||
Accrued interest on nonaccrual loans | $ 1,000,000 | $ 1,000,000 | ||||||
Loans 90 days past due and still accruing interest | $ 0 | 0 | ||||||
Commercial Loans | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Charge-off | $ 29,000,000 |
Loans Held-for-Investment - Cha
Loans Held-for-Investment - Changes in ALLL by Class of Loan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | $ 110 | $ 137 | $ 128 | $ 140 |
Charge-offs | (4) | (2) | (40) | (6) |
Recoveries | 3 | 1 | 4 | 3 |
Provision (benefit) | 1 | (2) | 18 | (3) |
Ending balance ALLL | 110 | 134 | 110 | 134 |
Consumer loans | Residential first mortgage | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 26 | 45 | 38 | 47 |
Charge-offs | (1) | (2) | (3) | (3) |
Recoveries | 1 | 1 | 1 | 1 |
Provision (benefit) | 2 | (4) | (8) | (5) |
Ending balance ALLL | 28 | 40 | 28 | 40 |
Consumer loans | Home equity | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 16 | 19 | 15 | 22 |
Charge-offs | (1) | 0 | (1) | (2) |
Recoveries | 1 | 0 | 2 | 2 |
Provision (benefit) | 0 | 1 | 0 | (2) |
Ending balance ALLL | 16 | 20 | 16 | 20 |
Consumer loans | Other Consumer | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 5 | 1 | 3 | 1 |
Charge-offs | (2) | 0 | (5) | (1) |
Recoveries | 0 | 0 | 0 | 0 |
Provision (benefit) | 3 | 1 | 8 | 2 |
Ending balance ALLL | 6 | 2 | 6 | 2 |
Commercial loans | Commercial real estate | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 35 | 45 | 48 | 45 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision (benefit) | (2) | 1 | (15) | 1 |
Ending balance ALLL | 33 | 46 | 33 | 46 |
Commercial loans | Commercial and industrial | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 23 | 21 | 18 | 19 |
Charge-offs | 0 | 0 | (31) | 0 |
Recoveries | 1 | 0 | 1 | 0 |
Provision (benefit) | (2) | (1) | 34 | 1 |
Ending balance ALLL | 22 | 20 | 22 | 20 |
Commercial loans | Warehouse lending | ||||
Allowance for Loan Losses [Roll Forward] | ||||
Beginning balance ALLL | 5 | 6 | 6 | 6 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision (benefit) | 0 | 0 | (1) | 0 |
Ending balance ALLL | $ 5 | $ 6 | $ 5 | $ 6 |
Loans Held-for-Investment - Met
Loans Held-for-Investment - Method of Evaluation by Class of Loan (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Loans held-for-investment | ||||||
Individually evaluated | $ 55 | $ 55 | ||||
Collectively evaluated | 12,483 | 9,023 | ||||
Total loans | 12,538 | 9,078 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 14 | 11 | ||||
Collectively evaluated | 96 | 117 | ||||
Total allowance for loan losses | 110 | $ 110 | 128 | $ 134 | $ 137 | $ 140 |
Consumer loans | Residential first mortgage | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 33 | 32 | ||||
Collectively evaluated | 3,217 | 2,959 | ||||
Total loans | 3,250 | 2,991 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 5 | 4 | ||||
Collectively evaluated | 23 | 34 | ||||
Total allowance for loan losses | 28 | 26 | 38 | 40 | 45 | 47 |
Consumer loans | Home equity | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 21 | 23 | ||||
Collectively evaluated | 961 | 706 | ||||
Total loans | 982 | 729 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 8 | 7 | ||||
Collectively evaluated | 8 | 8 | ||||
Total allowance for loan losses | 16 | 16 | 15 | 20 | 19 | 22 |
Consumer loans | Other Consumer | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 1 | 0 | ||||
Collectively evaluated | 692 | 314 | ||||
Total loans | 693 | 314 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 1 | 0 | ||||
Collectively evaluated | 5 | 3 | ||||
Total allowance for loan losses | 6 | 5 | 3 | 2 | 1 | 1 |
Commercial loans | Commercial real estate | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 2,697 | 2,152 | ||||
Total loans | 2,697 | 2,152 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 33 | 48 | ||||
Total allowance for loan losses | 33 | 35 | 48 | 46 | 45 | 45 |
Commercial loans | Commercial and industrial | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 1,701 | 1,433 | ||||
Total loans | 1,701 | 1,433 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 22 | 18 | ||||
Total allowance for loan losses | 22 | 23 | 18 | 20 | 21 | 19 |
Commercial loans | Warehouse lending | ||||||
Loans held-for-investment | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 3,215 | 1,459 | ||||
Total loans | 3,215 | 1,459 | ||||
Allowance for loan losses | ||||||
Individually evaluated | 0 | 0 | ||||
Collectively evaluated | 5 | 6 | ||||
Total allowance for loan losses | $ 5 | $ 5 | $ 6 | $ 6 | $ 6 | $ 6 |
Loans Held-for-Investment - Agi
Loans Held-for-Investment - Aging Analysis of Past Due and Current Loans (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Loans, Aging [Abstract] | ||
Total Past Due | $ 38 | $ 29 |
Current | 12,510 | 9,059 |
Total LHFI | 12,548 | 9,088 |
Loans greater than 90 days past due accounted for under the fair value option | 4 | 3 |
30-59 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 9 | 5 |
60-89 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 3 | 2 |
90 Days or Greater Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 26 | 22 |
Consumer loans | ||
Loans, Aging [Abstract] | ||
Total Past Due | 38 | 29 |
Current | 4,898 | 4,015 |
Total LHFI | 4,936 | 4,044 |
Consumer loans | Residential first mortgage | ||
Loans, Aging [Abstract] | ||
Total Past Due | 29 | 25 |
Current | 3,229 | 2,974 |
Total LHFI | 3,258 | 2,999 |
Consumer loans | Home equity | ||
Loans, Aging [Abstract] | ||
Total Past Due | 5 | 4 |
Current | 980 | 727 |
Total LHFI | 985 | 731 |
Consumer loans | Other | ||
Loans, Aging [Abstract] | ||
Total Past Due | 4 | 0 |
Current | 689 | 314 |
Total LHFI | 693 | 314 |
Consumer loans | 30-59 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 9 | 5 |
Consumer loans | 30-59 Days Past Due | Residential first mortgage | ||
Loans, Aging [Abstract] | ||
Total Past Due | 6 | 4 |
Consumer loans | 30-59 Days Past Due | Home equity | ||
Loans, Aging [Abstract] | ||
Total Past Due | 1 | 1 |
Consumer loans | 30-59 Days Past Due | Other | ||
Loans, Aging [Abstract] | ||
Total Past Due | 2 | 0 |
Consumer loans | 60-89 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 3 | 2 |
Consumer loans | 60-89 Days Past Due | Residential first mortgage | ||
Loans, Aging [Abstract] | ||
Total Past Due | 1 | 2 |
Consumer loans | 60-89 Days Past Due | Home equity | ||
Loans, Aging [Abstract] | ||
Total Past Due | 1 | 0 |
Consumer loans | 60-89 Days Past Due | Other | ||
Loans, Aging [Abstract] | ||
Total Past Due | 1 | 0 |
Consumer loans | 90 Days or Greater Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 26 | 22 |
Consumer loans | 90 Days or Greater Past Due | Residential first mortgage | ||
Loans, Aging [Abstract] | ||
Total Past Due | 22 | 19 |
Consumer loans | 90 Days or Greater Past Due | Home equity | ||
Loans, Aging [Abstract] | ||
Total Past Due | 3 | 3 |
Consumer loans | 90 Days or Greater Past Due | Other | ||
Loans, Aging [Abstract] | ||
Total Past Due | 1 | 0 |
Commercial loans | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Current | 7,612 | 5,044 |
Total LHFI | 7,612 | 5,044 |
Commercial loans | Commercial real estate | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Current | 2,697 | 2,152 |
Total LHFI | 2,697 | 2,152 |
Commercial loans | Commercial and industrial | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Current | 1,700 | 1,433 |
Total LHFI | 1,700 | 1,433 |
Commercial loans | Warehouse lending | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Current | 3,215 | 1,459 |
Total LHFI | 3,215 | 1,459 |
Commercial loans | 30-59 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 30-59 Days Past Due | Commercial real estate | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 30-59 Days Past Due | Commercial and industrial | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 30-59 Days Past Due | Warehouse lending | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 60-89 Days Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 60-89 Days Past Due | Commercial real estate | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 60-89 Days Past Due | Commercial and industrial | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 60-89 Days Past Due | Warehouse lending | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 90 Days or Greater Past Due | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 90 Days or Greater Past Due | Commercial real estate | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 90 Days or Greater Past Due | Commercial and industrial | ||
Loans, Aging [Abstract] | ||
Total Past Due | 0 | 0 |
Commercial loans | 90 Days or Greater Past Due | Warehouse lending | ||
Loans, Aging [Abstract] | ||
Total Past Due | $ 0 | $ 0 |
Loans Held-for-Investment - S_3
Loans Held-for-Investment - Summary of TDRs by Type and Performing Status (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Troubled Debt Restructurings | ||
TDRs | $ 49 | $ 54 |
Allowance for loan losses on TDR loans | 8 | 10 |
TDR loans under fair value option | 3 | 3 |
Consumer loans | Residential first mortgage | ||
Troubled Debt Restructurings | ||
TDRs | 28 | 30 |
Consumer loans | Home equity | ||
Troubled Debt Restructurings | ||
TDRs | 21 | 24 |
Performing | ||
Troubled Debt Restructurings | ||
TDRs | 39 | 44 |
Performing | Consumer loans | Residential first mortgage | ||
Troubled Debt Restructurings | ||
TDRs | 20 | 22 |
Performing | Consumer loans | Home equity | ||
Troubled Debt Restructurings | ||
TDRs | 19 | 22 |
Nonperforming | ||
Troubled Debt Restructurings | ||
TDRs | 10 | 10 |
Nonperforming | Consumer loans | Residential first mortgage | ||
Troubled Debt Restructurings | ||
TDRs | 8 | 8 |
Nonperforming | Consumer loans | Home equity | ||
Troubled Debt Restructurings | ||
TDRs | $ 2 | $ 2 |
Loans Held-for-Investment - S_4
Loans Held-for-Investment - Summary of Newly Modified TDR's (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)loan | Sep. 30, 2018USD ($)loan | Sep. 30, 2019USD ($)loan | Sep. 30, 2018USD ($)loan | |
Troubled Debt Restructurings | ||||
Number of Accounts | loan | 4 | 8 | 10 | 27 |
Pre-Modification Unpaid Principal Balance | $ 1 | $ 1 | $ 2 | $ 3 |
Post-Modification Unpaid Principal Balance | 1 | 1 | 2 | 3 |
Increase in Allowance at Modification | $ 0 | $ 0 | $ 0 | $ 0 |
Residential first mortgage | ||||
Troubled Debt Restructurings | ||||
Number of loans modified in previous 12 months that have defaulted | loan | 0 | 0 | 0 | 0 |
Consumer loans | Residential first mortgage | ||||
Troubled Debt Restructurings | ||||
Number of Accounts | loan | 4 | 2 | 6 | 13 |
Pre-Modification Unpaid Principal Balance | $ 1 | $ 0 | $ 1 | $ 2 |
Post-Modification Unpaid Principal Balance | 1 | 0 | 1 | 2 |
Increase in Allowance at Modification | $ 0 | $ 0 | $ 0 | $ 0 |
Consumer loans | Home equity | ||||
Troubled Debt Restructurings | ||||
Number of Accounts | loan | 0 | 6 | 4 | 14 |
Pre-Modification Unpaid Principal Balance | $ 0 | $ 1 | $ 1 | $ 1 |
Post-Modification Unpaid Principal Balance | 0 | 1 | 1 | 1 |
Increase in Allowance at Modification | $ 0 | $ 0 | $ 0 | $ 0 |
Loans Held-for-Investment - Imp
Loans Held-for-Investment - Impaired Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Impaired Loans | |||||
With no related allowance recorded, recorded investment | $ 18 | $ 18 | $ 14 | ||
With no related allowance recorded, unpaid principal balance | 27 | 27 | 20 | ||
With an allowance recorded, recorded investment | 36 | 36 | 41 | ||
With an allowance recorded, unpaid principal balance | 36 | 36 | 43 | ||
With an allowance recorded, related allowance | 10 | 10 | 11 | ||
Total recorded investment | 54 | 54 | 55 | ||
Total unpaid principal balance | 63 | 63 | 63 | ||
Average Recorded Investment | 79 | $ 58 | 76 | $ 61 | |
Interest Income Recognized | 0 | 1 | 0 | 2 | |
Consumer loans | |||||
Impaired Loans | |||||
Average Recorded Investment | 54 | 58 | 56 | 59 | |
Interest Income Recognized | 0 | 1 | 0 | 2 | |
Consumer loans | Residential first mortgage | |||||
Impaired Loans | |||||
With no related allowance recorded, recorded investment | 17 | 17 | 13 | ||
With no related allowance recorded, unpaid principal balance | 21 | 21 | 16 | ||
With an allowance recorded, recorded investment | 16 | 16 | 19 | ||
With an allowance recorded, unpaid principal balance | 16 | 16 | 20 | ||
With an allowance recorded, related allowance | 3 | 3 | 4 | ||
Total recorded investment | 33 | 33 | 32 | ||
Total unpaid principal balance | 37 | 37 | 36 | ||
Average Recorded Investment | 46 | 34 | 38 | 34 | |
Interest Income Recognized | 0 | 1 | 0 | 1 | |
Consumer loans | Home equity | |||||
Impaired Loans | |||||
With no related allowance recorded, recorded investment | 1 | 1 | 1 | ||
With no related allowance recorded, unpaid principal balance | 5 | 5 | 4 | ||
With an allowance recorded, recorded investment | 19 | 19 | 22 | ||
With an allowance recorded, unpaid principal balance | 19 | 19 | 23 | ||
With an allowance recorded, related allowance | 6 | 6 | 7 | ||
Total recorded investment | 20 | 20 | 23 | ||
Total unpaid principal balance | 24 | 24 | 27 | ||
Average Recorded Investment | 7 | 24 | 17 | 25 | |
Interest Income Recognized | 0 | 0 | 0 | 1 | |
Consumer loans | Other consumer | |||||
Impaired Loans | |||||
With no related allowance recorded, recorded investment | 0 | 0 | 0 | ||
With no related allowance recorded, unpaid principal balance | 1 | 1 | 0 | ||
With an allowance recorded, recorded investment | 1 | 1 | 0 | ||
With an allowance recorded, unpaid principal balance | 1 | 1 | 0 | ||
With an allowance recorded, related allowance | 1 | 1 | 0 | ||
Total recorded investment | 1 | 1 | 0 | ||
Total unpaid principal balance | 2 | 2 | 0 | ||
Average Recorded Investment | 1 | 0 | 1 | 0 | |
Interest Income Recognized | 0 | 0 | 0 | 0 | |
Commercial loans | |||||
Impaired Loans | |||||
Average Recorded Investment | 25 | 0 | 20 | 2 | |
Interest Income Recognized | 0 | 0 | 0 | 0 | |
Commercial loans | Commercial real estate | |||||
Impaired Loans | |||||
Average Recorded Investment | 0 | 0 | 0 | 0 | |
Interest Income Recognized | 0 | 0 | 0 | 0 | |
Commercial loans | Commercial and industrial | |||||
Impaired Loans | |||||
With an allowance recorded, related allowance | 0 | 0 | 0 | ||
Total recorded investment | 0 | 0 | 0 | ||
Total unpaid principal balance | 0 | 0 | $ 0 | ||
Average Recorded Investment | 25 | 0 | 20 | 2 | |
Interest Income Recognized | 0 | 0 | 0 | 0 | |
Commercial loans | Warehouse lending | |||||
Impaired Loans | |||||
Average Recorded Investment | 0 | 0 | 0 | 0 | |
Interest Income Recognized | $ 0 | $ 0 | $ 0 | $ 0 |
Loans Held-for-Investment - Loa
Loans Held-for-Investment - Loan Credit Quality Indicators (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Loans held-for-investment | ||
Loans held-for-investment | $ 12,538 | $ 9,078 |
Loans held-for-investment, net | 12,548 | 9,088 |
Consumer loans | ||
Loans held-for-investment | ||
Loans held-for-investment, net | 4,936 | 4,044 |
Consumer loans | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 4,863 | 3,971 |
Consumer loans | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 46 | 51 |
Consumer loans | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 0 | 0 |
Consumer loans | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 27 | 22 |
Consumer loans | Residential first mortgage | ||
Loans held-for-investment | ||
Loans held-for-investment | 3,250 | 2,991 |
Loans held-for-investment, net | 3,258 | 2,999 |
Consumer loans | Residential first mortgage | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 3,210 | 2,952 |
Consumer loans | Residential first mortgage | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 25 | 28 |
Consumer loans | Residential first mortgage | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 0 | 0 |
Consumer loans | Residential first mortgage | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 23 | 19 |
Consumer loans | Home equity | ||
Loans held-for-investment | ||
Loans held-for-investment | 982 | 729 |
Loans held-for-investment, net | 985 | 731 |
Consumer loans | Home equity | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 962 | 705 |
Consumer loans | Home equity | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 20 | 23 |
Consumer loans | Home equity | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 0 | 0 |
Consumer loans | Home equity | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 3 | 3 |
Consumer loans | Other Consumer | ||
Loans held-for-investment | ||
Loans held-for-investment | 693 | 314 |
Loans held-for-investment, net | 693 | 314 |
Consumer loans | Other Consumer | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 691 | 314 |
Consumer loans | Other Consumer | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 1 | 0 |
Consumer loans | Other Consumer | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 0 | 0 |
Consumer loans | Other Consumer | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 1 | 0 |
Commercial loans | ||
Loans held-for-investment | ||
Loans held-for-investment, net | 7,612 | 5,044 |
Commercial loans | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 7,312 | 4,807 |
Commercial loans | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 242 | 187 |
Commercial loans | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 48 | 49 |
Commercial loans | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 10 | 1 |
Commercial loans | Commercial real estate | ||
Loans held-for-investment | ||
Loans held-for-investment | 2,697 | 2,152 |
Loans held-for-investment, net | 2,697 | 2,152 |
Commercial loans | Commercial real estate | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 2,655 | 2,132 |
Commercial loans | Commercial real estate | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 33 | 14 |
Commercial loans | Commercial real estate | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 4 | 5 |
Commercial loans | Commercial real estate | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 5 | 1 |
Commercial loans | Commercial and industrial | ||
Loans held-for-investment | ||
Loans held-for-investment | 1,701 | 1,433 |
Loans held-for-investment, net | 1,700 | 1,433 |
Commercial loans | Commercial and industrial | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 1,624 | 1,351 |
Commercial loans | Commercial and industrial | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 44 | 53 |
Commercial loans | Commercial and industrial | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 27 | 29 |
Commercial loans | Commercial and industrial | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | 5 | 0 |
Commercial loans | Warehouse lending | ||
Loans held-for-investment | ||
Loans held-for-investment | 3,215 | 1,459 |
Loans held-for-investment, net | 3,215 | 1,459 |
Commercial loans | Warehouse lending | Pass | ||
Loans held-for-investment | ||
Loans held-for-investment | 3,033 | 1,324 |
Commercial loans | Warehouse lending | Watch | ||
Loans held-for-investment | ||
Loans held-for-investment | 165 | 120 |
Commercial loans | Warehouse lending | Special Mention | ||
Loans held-for-investment | ||
Loans held-for-investment | 17 | 15 |
Commercial loans | Warehouse lending | Substandard | ||
Loans held-for-investment | ||
Loans held-for-investment | $ 0 | $ 0 |
Loans with Government Guarant_2
Loans with Government Guarantees (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Debt instrument, term | 10 years | |
Repossessed assets and associated claims | $ 43 | $ 50 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - entity | Sep. 30, 2019 | Dec. 31, 2018 |
Disclosure of Transfer of Securitizations or Asset-backed Financing Financial Assets Accounted for as Sale [Abstract] | ||
Number of VIEs | 0 | 0 |
Agency - Commercial | ||
Private-label Securitizations | ||
Ownership interest investment | 5.00% |
Mortgage Servicing Rights - Cha
Mortgage Servicing Rights - Changes in the Fair Value of Residential First Mortgage MSRs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Asset at Fair Value [Roll Forward] | ||||
Balance at beginning of period | $ 290 | |||
Changes in fair value due to | ||||
Fair value of MSRs at end of period | $ 285 | 285 | ||
Residential First Mortgage MSRs | ||||
Servicing Asset at Fair Value [Roll Forward] | ||||
Balance at beginning of period | 316 | $ 257 | 290 | $ 291 |
Additions from loans sold with servicing retained | 39 | 100 | 203 | 283 |
Reductions from sales | (12) | (51) | (57) | (273) |
Changes in fair value due to | ||||
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other | (30) | (3) | (60) | (12) |
Changes in estimates of fair value due to interest rate risk | (28) | 10 | (91) | 24 |
Fair value of MSRs at end of period | $ 285 | $ 313 | $ 285 | $ 313 |
Mortgage Servicing Rights - Sum
Mortgage Servicing Rights - Summary of Adverse Changes to Weighted-Average Assumptions on the Fair Value of Servicing Rights (Details) - Mortgage Servicing Rights - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Actual | ||
Option adjusted spread | 5.41% | 5.42% |
Constant prepayment rate | 11.24% | 9.57% |
Weighted average cost to service per loan (in dollars per share) | $ 84.62 | $ 85.57 |
Fair value impact due to 10% adverse change | ||
Option adjusted spread | $ 280 | $ 284 |
Constant prepayment rate | 265 | 278 |
Weighted average cost to service per loan (in dollars per share) | 282 | 286 |
Fair value impact due to 20% adverse change | ||
Option adjusted spread | 276 | 280 |
Constant prepayment rate | 248 | 268 |
Weighted average cost to service per loan (in dollars per share) | $ 279 | $ 283 |
Mortgage Servicing Rights - S_2
Mortgage Servicing Rights - Summary of Income and Fees (Details) - Residential first mortgage loans - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Assets at Fair Value [Line Items] | ||||
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other | $ (30) | $ (3) | $ (60) | $ (12) |
Changes in estimates of fair value due to interest rate risk | (28) | 10 | (91) | 24 |
Net return on mortgage servicing rights | ||||
Servicing Assets at Fair Value [Line Items] | ||||
Servicing fees, ancillary income and late fees | 25 | 17 | 70 | 46 |
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other | (30) | (3) | (60) | (12) |
Changes in estimates of fair value due to interest rate risk | (28) | 10 | (91) | 24 |
Gain (loss) on MSR derivatives | 31 | (11) | 92 | (27) |
Net transaction costs on sale of MSR assets | 0 | 0 | (2) | (5) |
Total return included in net return on mortgage servicing rights | (2) | 13 | 9 | 26 |
Loan administration income on mortgage loans subserviced | ||||
Servicing Assets at Fair Value [Line Items] | ||||
Servicing fees, ancillary income and late fees | 27 | 14 | 77 | 36 |
Charges on subserviced custodial balances (2) | (20) | (9) | (50) | (20) |
Other servicing charges | (2) | 0 | (5) | (1) |
Total income on mortgage loans subserviced, included in loan administration | $ 5 | $ 5 | $ 22 | $ 15 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Notional Amount, Estimated Fair Value and Maturity of Derivative Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Derivatives in fair value hedge relationships: | Interest rate swap on AFS Securities | Other assets | ||
Assets | ||
Notional amount | $ 100 | |
Fair value | 0 | |
Derivatives in fair value hedge relationships: | Interest rate swap on AFS Securities | Other liabilities | ||
Liabilities | ||
Notional amount | 200 | |
Fair value | 0 | |
Derivatives in fair value hedge relationships: | Interest rate swaps on CDs | Other assets | ||
Assets | ||
Notional amount | $ 20 | |
Fair value | 0 | |
Derivatives in fair value hedge relationships: | Interest rate swaps on CDs | Other liabilities | ||
Liabilities | ||
Notional amount | 10 | |
Fair value | 0 | |
Derivatives not designated as hedging instruments: | ||
Assets | ||
Fair value | 45 | 27 |
Liabilities | ||
Fair value | 16 | 39 |
Derivatives not designated as hedging instruments: | Other assets | ||
Assets | ||
Notional amount | 9,655 | 4,493 |
Fair value | 96 | 47 |
Derivatives not designated as hedging instruments: | Other liabilities | ||
Liabilities | ||
Notional amount | 6,844 | 6,938 |
Fair value | 17 | 39 |
Derivatives not designated as hedging instruments: | Futures | ||
Liabilities | ||
Fair value | 0 | 1 |
Derivatives not designated as hedging instruments: | Futures | Other assets | ||
Assets | ||
Notional amount | 224 | 248 |
Fair value | 0 | 0 |
Derivatives not designated as hedging instruments: | Futures | Other liabilities | ||
Liabilities | ||
Notional amount | 242 | 1,513 |
Fair value | 0 | 1 |
Derivatives not designated as hedging instruments: | Mortgage-backed securities forwards | ||
Assets | ||
Fair value | 11 | 4 |
Liabilities | ||
Fair value | 11 | 31 |
Derivatives not designated as hedging instruments: | Mortgage-backed securities forwards | Other assets | ||
Assets | ||
Notional amount | 3,658 | 362 |
Fair value | 11 | 4 |
Derivatives not designated as hedging instruments: | Mortgage-backed securities forwards | Other liabilities | ||
Liabilities | ||
Notional amount | 4,699 | 4,625 |
Fair value | 11 | 31 |
Derivatives not designated as hedging instruments: | Rate lock commitments | Other assets | ||
Assets | ||
Notional amount | 5,036 | 2,221 |
Fair value | 51 | 20 |
Derivatives not designated as hedging instruments: | Rate lock commitments | Other liabilities | ||
Liabilities | ||
Notional amount | 275 | 45 |
Fair value | 1 | 0 |
Derivatives not designated as hedging instruments: | Interest rate swaps and swaptions | ||
Assets | ||
Fair value | 34 | 23 |
Derivatives not designated as hedging instruments: | Interest rate swaps and swaptions | Other assets | ||
Assets | ||
Notional amount | 737 | 1,662 |
Fair value | 34 | 23 |
Derivatives not designated as hedging instruments: | Interest rate swaps | ||
Liabilities | ||
Fair value | 5 | 7 |
Derivatives not designated as hedging instruments: | Interest rate swaps | Other liabilities | ||
Liabilities | ||
Notional amount | 1,628 | 755 |
Fair value | $ 5 | $ 7 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Derivatives Subject to a Master Netting Arrangement (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | $ 3 | $ 14 |
Liabilities | ||
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 57 | 53 |
Derivatives not designated as hedging instruments: | ||
Assets | ||
Gross Amount | 45 | 27 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 45 | 27 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 3 | 14 |
Liabilities | ||
Gross Amount | 16 | 39 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 16 | 39 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 57 | 53 |
Derivatives not designated as hedging instruments: | Mortgage-backed securities forwards | ||
Assets | ||
Gross Amount | 11 | 4 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 11 | 4 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 3 | 0 |
Liabilities | ||
Gross Amount | 11 | 31 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 11 | 31 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 16 | 29 |
Derivatives not designated as hedging instruments: | Interest rate swaps and swaptions | ||
Assets | ||
Gross Amount | 34 | 23 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 34 | 23 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 0 | 14 |
Derivatives not designated as hedging instruments: | Futures | ||
Liabilities | ||
Gross Amount | 0 | 1 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 0 | 1 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | 0 | 1 |
Derivatives not designated as hedging instruments: | Interest rate swaps | ||
Liabilities | ||
Gross Amount | 5 | 7 |
Gross Amounts Netted in the Statements of Financial Condition | 0 | 0 |
Net Amount Presented in the Statements of Financial Condition | 5 | 7 |
Gross Amounts Not Offset in the Statement of Financial Condition, Financial Instruments | 0 | 0 |
Gross Amounts Not Offset in the Statement of Financial Condition, Cash Collateral | $ 41 | $ 23 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Narrative (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative [Line Items] | ||
Right to reclaim cash | $ 57,000,000 | $ 53,000,000 |
Right to reclaim cash, cash collateral | 23,000,000 | 30,000,000 |
Right to reclaim cash, maintenance margin | 34,000,000 | 23,000,000 |
Obligation to return cash | 3,000,000 | 14,000,000 |
Interest rate swap on AFS Securities | ||
Derivative [Line Items] | ||
Amount representing designated last of layer | 295,000,000 | |
Amortized cost basis of hedge designated last of layer | 292,000,000 | |
Derivatives in fair value hedge relationships: | Interest rate swap on AFS Securities | ||
Derivative [Line Items] | ||
Cumulative amount of fair value hedging adjustment included in the carrying amount | 2,000,000 | |
Amount representing designated last of layer | 100,000,000 | |
Amortized cost basis of hedge designated last of layer | 0 | |
Carrying Value | Derivatives in fair value hedge relationships: | Interest rate swap on AFS Securities | ||
Derivative [Line Items] | ||
Carrying amount of hedged securities | 293,000,000 | |
Carrying Value | Derivatives in fair value hedge relationships: | FLHB Advances | ||
Derivative [Line Items] | ||
Carrying amount of hedged securities | 200,000,000 | 0 |
Estimated Fair Value | Derivatives in fair value hedge relationships: | FLHB Advances | ||
Derivative [Line Items] | ||
Cumulative amount of fair value hedging adjustment included in the carrying amount | $ 0 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Net Gain (Loss) Recognized on Designated Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest Rate Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Amount of loss reclassified from AOCI into income | $ 0 | $ 1 | $ 0 | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Net Gain (Loss) Recognized in Income on Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative [Line Items] | ||||
Derivative gain (loss) | $ 60 | $ 11 | $ 154 | $ (12) |
Futures | Net return on mortgage servicing rights | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | 0 | (1) | (2) | (4) |
Interest rate swaps and swaptions | Net return on mortgage servicing rights | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | 28 | (8) | 71 | (16) |
Mortgage-backed securities forwards | Net return on mortgage servicing rights | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | 3 | (2) | 23 | (6) |
Rate lock commitments and forward agency and loan sales | Net gain on loan sales | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | 27 | 21 | 57 | 12 |
Forward commitments | Other noninterest income | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | 0 | 0 | 2 | 0 |
Interest rate swaps | Other noninterest income | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | $ 2 | $ 1 | $ 3 | $ 2 |
Borrowings - Breakdown of FHLB
Borrowings - Breakdown of FHLB Advances Outstanding (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Short-term amount | $ 2,329 | $ 3,244 |
Long-term Federal Home Loan Bank fixed rate advances | 650 | 150 |
Total | $ 2,979 | $ 3,394 |
Rate | 1.45% | 1.53% |
Current portion of fixed rate advances | $ 0 | $ 50 |
Short-term fixed rate term advances | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Short-term amount | $ 2,325 | $ 2,993 |
Rate | 1.89% | 2.52% |
Other short-term borrowings | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Short-term amount | $ 4 | $ 251 |
Rate | 2.32% | 2.87% |
Borrowings - Detailed Informati
Borrowings - Detailed Information on FHLB Advances and Other Borrowings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Disclosure [Abstract] | ||||
Maximum outstanding at any month end | $ 2,979 | $ 5,085 | $ 3,391 | $ 5,740 |
Average outstanding balance | 2,446 | 4,745 | 2,769 | 4,996 |
Average remaining borrowing capacity | $ 4,957 | $ 2,165 | $ 3,932 | $ 1,830 |
Weighted average interest rate | 2.10% | 2.08% | 2.33% | 1.88% |
Borrowings - Maturity Dates of
Borrowings - Maturity Dates of FHLB Advances and Other Borrowings (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 | $ 2,329 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
Thereafter | 650 | |
Total | $ 2,979 | $ 3,394 |
Borrowings - Summary of Long-Te
Borrowings - Summary of Long-Term Debt, Net of Debt Issuance Costs (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||
Senior notes | $ 249 | $ 248 |
Trust preferred securities | 247 | 247 |
Long-term debt | $ 496 | $ 495 |
Interest rate | 6.125% | 6.125% |
3.25%, matures 2032 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 26 | $ 26 |
Interest rate | 5.36% | 6.07% |
3.25%, matures 2033 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 26 | $ 26 |
Interest rate | 5.55% | 5.69% |
3.25%, matures 2033 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 26 | $ 26 |
Interest rate | 5.57% | 6.05% |
2.00%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 26 | $ 26 |
Interest rate | 4.30% | 4.44% |
2.00%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 26 | $ 26 |
Interest rate | 4.30% | 4.44% |
1.75%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 51 | $ 51 |
Interest rate | 3.87% | 4.54% |
1.50%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 25 | $ 25 |
Interest rate | 3.80% | 3.94% |
1.45%, matures 2037 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 25 | $ 25 |
Interest rate | 3.57% | 4.24% |
2.50%, matures 2037 | ||
Debt Instrument [Line Items] | ||
Trust preferred securities | $ 16 | $ 16 |
Interest rate | 4.62% | 5.29% |
Floating Three Month LIBOR | 3.25%, matures 2032 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 3.25% | |
Floating Three Month LIBOR | 3.25%, matures 2033 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 3.25% | |
Floating Three Month LIBOR | 3.25%, matures 2033 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 3.25% | |
Floating Three Month LIBOR | 2.00%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 2.00% | |
Floating Three Month LIBOR | 2.00%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 2.00% | |
Floating Three Month LIBOR | 1.75%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 1.75% | |
Floating Three Month LIBOR | 1.50%, matures 2035 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 1.50% | |
Floating Three Month LIBOR | 1.45%, matures 2037 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 1.45% | |
Floating Three Month LIBOR | 2.50%, matures 2037 | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 2.50% |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) | Jul. 11, 2016USD ($) | Sep. 30, 2019USD ($)trust_subsidiary |
Debt Instrument [Line Items] | ||
Number of trust subsidiaries | trust_subsidiary | 9 | |
Payment of interest on trust preferred securities | $ 0 | |
Senior Notes | Senior Notes Maturing July 2021 | ||
Debt Instrument [Line Items] | ||
Debt instrument face amount | $ 250,000,000 | |
Debt instrument redemption rate | 100.00% | |
Senior Notes | Senior Notes Maturing July 2021 | Treasury Rate | ||
Debt Instrument [Line Items] | ||
Variable rate on interest rate | 0.50% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accumulated other comprehensive income (loss) | ||||
Beginning balance | $ 1,570 | $ 1,399 | ||
Other comprehensive income (loss), net of tax | $ 13 | $ (10) | 52 | (26) |
Ending balance | 1,734 | 1,518 | 1,734 | 1,518 |
Investment securities | ||||
Accumulated other comprehensive income (loss) | ||||
Beginning balance | (8) | (56) | (47) | (18) |
Unrealized gain (loss) | 18 | (11) | 61 | (55) |
Less: Tax provision (benefit) | 5 | (2) | 15 | (13) |
Net unrealized loss, net of tax | 13 | (9) | 46 | (42) |
Reclassification out of AOCI | 0 | 0 | 7 | 0 |
Less: Tax provision | 0 | 0 | 1 | 0 |
Net unrealized gain reclassified out of AOCI | 0 | 0 | 6 | 0 |
Reclassification of certain income tax effects | 0 | 0 | 0 | (5) |
Other comprehensive income (loss), net of tax | 13 | (9) | 52 | (47) |
Ending balance | 5 | (65) | 5 | (65) |
Cash Flow Hedges | ||||
Accumulated other comprehensive income (loss) | ||||
Beginning balance | 0 | 24 | 0 | 2 |
Unrealized gain (loss) | 0 | 0 | 0 | 28 |
Less: Tax provision (benefit) | 0 | 0 | 0 | 7 |
Net unrealized loss, net of tax | 0 | 0 | 0 | 21 |
Reclassification out of AOCI | 0 | (1) | 0 | 0 |
Net unrealized gain reclassified out of AOCI | 0 | (1) | 0 | 0 |
Other comprehensive income (loss), net of tax | 0 | (1) | 0 | 21 |
Ending balance | $ 0 | $ 23 | $ 0 | $ 23 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 63 | $ 48 | $ 160 | $ 133 |
Weighted Average Shares | ||||
Weighted average common shares outstanding (in shares) | 56,484,499 | 57,600,360 | 56,607,944 | 57,483,802 |
Effect of dilutive securities | ||||
Stock-based awards (in shares) | 626,297 | 732,238 | 644,596 | 818,118 |
Weighted average diluted common shares (in shares) | 57,110,796 | 58,332,598 | 57,252,540 | 58,301,920 |
Earnings per common share | ||||
Basic earnings per common share (in dollars per share) | $ 1.12 | $ 0.84 | $ 2.83 | $ 2.32 |
Effect of dilutive securities | ||||
Stock-based awards (in dollars per share) | (0.01) | (0.01) | (0.03) | (0.04) |
Diluted earnings per common share (in dollars per share) | $ 1.11 | $ 0.83 | $ 2.80 | $ 2.28 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation expense | $ 4 | $ 4 | $ 9 | $ 8 |
Employee Stock Purchase Plan | 2017 ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation shares authorized (in shares) | 800,000 | 800,000 | ||
Shares available for issuance (in shares) | 553,547 | 553,547 | ||
Shares issued during period (in shares) | 24,373 | 84,036 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock and Restricted Stock Units - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Shares | ||
Non-vested balance at beginning of period (in shares) | 1,612,174 | 1,620,568 |
Granted (in shares) | 0 | 325,209 |
Vested (in shares) | (2,719) | (227,818) |
Canceled and forfeited (in shares) | (18,140) | (126,644) |
Non-vested balance at end of period (in shares) | 1,591,315 | 1,591,315 |
Weighted — Average Grant-Date Fair Value per Share | ||
Non-vested balance at beginning of period (in dollars per share) | $ 29.11 | $ 27.27 |
Granted (in dollars per share) | 0 | 31.88 |
Vested (in dollars per share) | 33.64 | 23.91 |
Canceled and forfeited (in dollars per share) | 32.48 | 22.58 |
Non-vested balance at end of period (in dollars per share) | $ 29.06 | $ 29.06 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 15 | $ 12 | $ 37 | $ 33 |
Effective tax provision rate | 18.40% | 20.00% | 18.60% | 20.10% |
Unrecognized tax benefits, recognition period | 12 months |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Tier One Leverage Capital | ||
Tier 1 capital actual amount | $ 1,668 | $ 1,505 |
Tier 1 capital (to adjusted tangible assets), actual ratio | 7.98% | 8.29% |
Tier 1 capital, for capital adequacy purposes amount | $ 836 | $ 726 |
Tier 1 capital (to adjusted tangible assets), for capital adequacy purposes ratio | 4.00% | 4.00% |
Tier 1 capital capitalized under prompt corrective action provision amount | $ 1,045 | $ 908 |
Tier 1 capital (to adjusted tangible assets), capitalized under prompt corrective action provision ratio | 5.00% | 5.00% |
Common Equity Tier 1 Capital | ||
Common equity Tier 1 capital (to RWA), actual amount | $ 1,428 | $ 1,265 |
Common equity Tier 1 capital (to RWA), actual ratio | 9.25% | 10.54% |
Common equity Tier 1 capital (to RWA), for capital adequacy purposes, amount | $ 694 | $ 540 |
Common equity Tier 1 capital (to RWA), for capital adequacy purposes, ratio | 4.50% | 4.50% |
Common equity Tier 1 capital (to RWA), well capitalized under prompt corrective action provisions, amount | $ 1,003 | $ 780 |
Common equity Tier 1 capital (to RWA), well capitalized under prompt corrective action provisions, ratio | 6.50% | 6.50% |
Tier One Risk Based Capital [Abstract] | ||
Tier 1 capital, actual amount | $ 1,668 | $ 1,505 |
Tier 1 capital (to risk-weighted assets), actual ratio | 10.81% | 12.54% |
Tier 1 capital, for capital adequacy purposes amount | $ 926 | $ 720 |
Tier 1 capital (to risk-weighted assets), for capital adequacy purposes ratio | 6.00% | 6.00% |
Tier 1 capital, capitalized under prompt corrective action provision amount | $ 1,235 | $ 960 |
Tier 1 capital (to risk-weighted assets), capitalized under prompt corrective action provision ratio | 8.00% | 8.00% |
Capital [Abstract] | ||
Total capital, actual amount | $ 1,781 | $ 1,637 |
Total capital (to risk-weighted assets), actual ratio | 11.54% | 13.63% |
Total capital, for capital adequacy purposes amount | $ 1,235 | $ 960 |
Total capital (to risk-weighted assets), for capital adequacy purposes ratio | 8.00% | 8.00% |
Total capital, capitalized under prompt corrective action provisions amount | $ 1,543 | $ 1,201 |
Total capital (to risk-weighted assets), capitalized under prompt corrective action provisions ratio | 10.00% | 10.00% |
Bank | ||
Tier One Leverage Capital | ||
Tier 1 capital actual amount | $ 1,747 | $ 1,574 |
Tier 1 capital (to adjusted tangible assets), actual ratio | 8.35% | 8.67% |
Tier 1 capital, for capital adequacy purposes amount | $ 837 | $ 726 |
Tier 1 capital (to adjusted tangible assets), for capital adequacy purposes ratio | 4.00% | 4.00% |
Tier 1 capital capitalized under prompt corrective action provision amount | $ 1,046 | $ 908 |
Tier 1 capital (to adjusted tangible assets), capitalized under prompt corrective action provision ratio | 5.00% | 5.00% |
Common Equity Tier 1 Capital | ||
Common equity Tier 1 capital (to RWA), actual amount | $ 1,747 | $ 1,574 |
Common equity Tier 1 capital (to RWA), actual ratio | 11.33% | 13.12% |
Common equity Tier 1 capital (to RWA), for capital adequacy purposes, amount | $ 694 | $ 540 |
Common equity Tier 1 capital (to RWA), for capital adequacy purposes, ratio | 4.50% | 4.50% |
Common equity Tier 1 capital (to RWA), well capitalized under prompt corrective action provisions, amount | $ 1,002 | $ 780 |
Common equity Tier 1 capital (to RWA), well capitalized under prompt corrective action provisions, ratio | 6.50% | 6.50% |
Tier One Risk Based Capital [Abstract] | ||
Tier 1 capital, actual amount | $ 1,747 | $ 1,574 |
Tier 1 capital (to risk-weighted assets), actual ratio | 11.33% | 13.12% |
Tier 1 capital, for capital adequacy purposes amount | $ 925 | $ 720 |
Tier 1 capital (to risk-weighted assets), for capital adequacy purposes ratio | 6.00% | 6.00% |
Tier 1 capital, capitalized under prompt corrective action provision amount | $ 1,233 | $ 960 |
Tier 1 capital (to risk-weighted assets), capitalized under prompt corrective action provision ratio | 8.00% | 8.00% |
Capital [Abstract] | ||
Total capital, actual amount | $ 1,860 | $ 1,705 |
Total capital (to risk-weighted assets), actual ratio | 12.06% | 14.21% |
Total capital, for capital adequacy purposes amount | $ 1,233 | $ 960 |
Total capital (to risk-weighted assets), for capital adequacy purposes ratio | 8.00% | 8.00% |
Total capital, capitalized under prompt corrective action provisions amount | $ 1,542 | $ 1,200 |
Total capital (to risk-weighted assets), capitalized under prompt corrective action provisions ratio | 10.00% | 10.00% |
Legal Proceedings, Contingenc_3
Legal Proceedings, Contingencies and Commitments - Narrative (Details) - USD ($) | Feb. 24, 2012 | Dec. 31, 2012 | Sep. 30, 2019 | Dec. 31, 2018 | Aug. 30, 2018 | Dec. 31, 2013 |
Loss Contingencies | ||||||
Tier 1 capital (to adjusted tangible assets), capitalized under prompt corrective action provision ratio | 5.00% | 5.00% | ||||
Tier 1 capital (to adjusted tangible assets), actual ratio | 7.98% | 8.29% | ||||
Business acquisition threshold | 33.30% | |||||
Accrued reserve for contingent liabilities | $ 2,000,000 | $ 2,000,000 | ||||
Letter of credit, reserve amount | $ 3,000,000 | $ 3,000,000 | ||||
Bank | ||||||
Loss Contingencies | ||||||
Tier 1 capital (to adjusted tangible assets), capitalized under prompt corrective action provision ratio | 5.00% | 5.00% | ||||
Tier 1 capital (to adjusted tangible assets), actual ratio | 8.35% | 8.67% | ||||
DOJ Agreement | Bank | ||||||
Loss Contingencies | ||||||
Tier 1 capital (to adjusted tangible assets), capitalized under prompt corrective action provision ratio | 11.00% | |||||
DOJ Agreement | ||||||
Loss Contingencies | ||||||
Litigation settlement payment amount | $ 118,000,000 | $ 118,000,000 | ||||
Accrued reserve for contingent liabilities | $ 35,000,000 | |||||
DOJ Agreement | Subsequent Payments | ||||||
Loss Contingencies | ||||||
Litigation expense (up to) | $ 25,000,000 | |||||
CEO | SERP | ||||||
Loss Contingencies | ||||||
SERP Liability | $ 16,000,000 | $ 16,000,000 |
Legal Proceedings, Contingenc_4
Legal Proceedings, Contingencies and Commitments - Summary of the Contractual Amount of Significant Commitments (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Mortgage loans interest-rate lock commitments | ||
Loss Contingencies | ||
Commitments to extend credit | $ 5,325 | $ 2,293 |
Warehouse loan commitments | ||
Loss Contingencies | ||
Commitments to extend credit | 1,579 | 2,334 |
Commercial and industrial commitments | ||
Loss Contingencies | ||
Commitments to extend credit | 1,034 | 918 |
Other commercial commitments | ||
Loss Contingencies | ||
Commitments to extend credit | 1,907 | 1,260 |
HELOC commitments | ||
Loss Contingencies | ||
Commitments to extend credit | 526 | 429 |
Other consumer commitments | ||
Loss Contingencies | ||
Commitments to extend credit | 227 | 108 |
Standby and commercial letters of credit | ||
Loss Contingencies | ||
Commitments to extend credit | $ 81 | $ 63 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Carried at Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative assets | ||
Investment securities available-for-sale | $ 1,697 | $ 2,142 |
Loans held-for-sale, fair value | 4,122 | 3,732 |
Loans held-for-investment | 10 | 10 |
Mortgage servicing rights | 285 | 290 |
Total assets at fair value | 4,132 | 3,742 |
Agency - Commercial | ||
Derivative assets | ||
Investment securities available-for-sale | 969 | 1,374 |
Agency - Residential | ||
Derivative assets | ||
Investment securities available-for-sale | 604 | 662 |
Municipal obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 31 | 32 |
Corporate debt obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 64 | 41 |
Certificates of deposit | ||
Derivative assets | ||
Investment securities available-for-sale | 1 | 1 |
Total Fair Value | ||
Derivative assets | ||
Investment securities available-for-sale | 1,697 | 2,142 |
Loans held-for-sale, fair value | 4,196 | 3,870 |
Loans held-for-investment | 12,707 | 8,966 |
Mortgage servicing rights | 285 | 290 |
Derivative liabilities | ||
Contingent consideration | (8) | (6) |
Level 1 | Total Fair Value | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Loans held-for-sale, fair value | 0 | 0 |
Loans held-for-investment | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Derivative liabilities | ||
Contingent consideration | 0 | 0 |
Level 2 | Total Fair Value | ||
Derivative assets | ||
Investment securities available-for-sale | 1,697 | 2,142 |
Loans held-for-sale, fair value | 4,196 | 3,870 |
Loans held-for-investment | 8 | 8 |
Mortgage servicing rights | 0 | 0 |
Derivative liabilities | ||
Contingent consideration | 0 | 0 |
Level 3 | Total Fair Value | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Loans held-for-sale, fair value | 0 | 0 |
Loans held-for-investment | 12,699 | 8,958 |
Mortgage servicing rights | 285 | 290 |
Derivative liabilities | ||
Contingent consideration | (8) | (6) |
Recurring | Total Fair Value | ||
Derivative assets | ||
Mortgage servicing rights | 285 | 290 |
Total assets at fair value | 6,210 | 6,221 |
Derivative liabilities | ||
DOJ Liability | (35) | (60) |
Total liabilities at fair value | (60) | (105) |
Recurring | Total Fair Value | Rate lock commitments | ||
Derivative assets | ||
Derivative assets | 51 | 20 |
Derivative liabilities | ||
Derivative liabilities | (1) | |
Recurring | Total Fair Value | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Total Fair Value | Mortgage-backed securities forwards | ||
Derivative assets | ||
Derivative assets | 11 | 4 |
Derivative liabilities | ||
Derivative liabilities | (11) | (31) |
Recurring | Total Fair Value | Interest rate swaps and swaptions | ||
Derivative assets | ||
Derivative assets | 34 | 23 |
Recurring | Total Fair Value | Futures | ||
Derivative liabilities | ||
Derivative liabilities | (1) | |
Recurring | Total Fair Value | Interest rate swaps and swaptions | ||
Derivative liabilities | ||
Derivative liabilities | (5) | (7) |
Recurring | Total Fair Value | Contingent consideration | ||
Derivative liabilities | ||
Contingent consideration | (8) | (6) |
Recurring | Total Fair Value | Residential first mortgage loans | ||
Derivative assets | ||
Loans held-for-sale, fair value | 4,122 | 3,732 |
Loans held-for-investment | 8 | 8 |
Recurring | Total Fair Value | Commercial Loan | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | |
Recurring | Total Fair Value | Home equity | ||
Derivative assets | ||
Loans held-for-investment | 2 | 2 |
Recurring | Total Fair Value | Agency - Commercial | ||
Derivative assets | ||
Investment securities available-for-sale | 969 | 1,374 |
Recurring | Total Fair Value | Agency - Residential | ||
Derivative assets | ||
Investment securities available-for-sale | 604 | 662 |
Recurring | Total Fair Value | Municipal obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 31 | 32 |
Recurring | Total Fair Value | Corporate debt obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 64 | 42 |
Recurring | Total Fair Value | Other MBS | ||
Derivative assets | ||
Investment securities available-for-sale | 28 | 32 |
Recurring | Total Fair Value | Certificates of deposit | ||
Derivative assets | ||
Investment securities available-for-sale | 1 | |
Recurring | Level 1 | ||
Derivative assets | ||
Mortgage servicing rights | 0 | 0 |
Total assets at fair value | 0 | 0 |
Derivative liabilities | ||
DOJ Liability | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Recurring | Level 1 | Rate lock commitments | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 1 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 1 | Mortgage-backed securities forwards | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Derivative liabilities | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 1 | Interest rate swaps and swaptions | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Recurring | Level 1 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 1 | Interest rate swaps and swaptions | ||
Derivative liabilities | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 1 | Contingent consideration | ||
Derivative liabilities | ||
Contingent consideration | 0 | 0 |
Recurring | Level 1 | Residential first mortgage loans | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | 0 |
Loans held-for-investment | 0 | 0 |
Recurring | Level 1 | Commercial Loan | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | |
Recurring | Level 1 | Home equity | ||
Derivative assets | ||
Loans held-for-investment | 0 | 0 |
Recurring | Level 1 | Agency - Commercial | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 1 | Agency - Residential | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 1 | Municipal obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 1 | Corporate debt obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 1 | Other MBS | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 1 | Certificates of deposit | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | |
Recurring | Level 2 | ||
Derivative assets | ||
Mortgage servicing rights | 0 | 0 |
Total assets at fair value | 5,872 | 5,909 |
Derivative liabilities | ||
DOJ Liability | 0 | 0 |
Total liabilities at fair value | (16) | (39) |
Recurring | Level 2 | Rate lock commitments | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 2 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 2 | Mortgage-backed securities forwards | ||
Derivative assets | ||
Derivative assets | 11 | 4 |
Derivative liabilities | ||
Derivative liabilities | (11) | (31) |
Recurring | Level 2 | Interest rate swaps and swaptions | ||
Derivative assets | ||
Derivative assets | 34 | 23 |
Recurring | Level 2 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | (1) | |
Recurring | Level 2 | Interest rate swaps and swaptions | ||
Derivative liabilities | ||
Derivative liabilities | (5) | (7) |
Recurring | Level 2 | Contingent consideration | ||
Derivative liabilities | ||
Contingent consideration | 0 | 0 |
Recurring | Level 2 | Residential first mortgage loans | ||
Derivative assets | ||
Loans held-for-sale, fair value | 4,122 | 3,732 |
Loans held-for-investment | 8 | 8 |
Recurring | Level 2 | Commercial Loan | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | |
Recurring | Level 2 | Home equity | ||
Derivative assets | ||
Loans held-for-investment | 0 | 0 |
Recurring | Level 2 | Agency - Commercial | ||
Derivative assets | ||
Investment securities available-for-sale | 969 | 1,374 |
Recurring | Level 2 | Agency - Residential | ||
Derivative assets | ||
Investment securities available-for-sale | 604 | 662 |
Recurring | Level 2 | Municipal obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 31 | 32 |
Recurring | Level 2 | Corporate debt obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 64 | 42 |
Recurring | Level 2 | Other MBS | ||
Derivative assets | ||
Investment securities available-for-sale | 28 | 32 |
Recurring | Level 2 | Certificates of deposit | ||
Derivative assets | ||
Investment securities available-for-sale | 1 | |
Recurring | Level 3 | ||
Derivative assets | ||
Mortgage servicing rights | 285 | 290 |
Total assets at fair value | 338 | 312 |
Derivative liabilities | ||
DOJ Liability | (35) | (60) |
Total liabilities at fair value | (44) | (66) |
Recurring | Level 3 | Rate lock commitments | ||
Derivative assets | ||
Derivative assets | 51 | 20 |
Derivative liabilities | ||
Derivative liabilities | (1) | |
Recurring | Level 3 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 3 | Mortgage-backed securities forwards | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Derivative liabilities | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 3 | Interest rate swaps and swaptions | ||
Derivative assets | ||
Derivative assets | 0 | 0 |
Recurring | Level 3 | Futures | ||
Derivative liabilities | ||
Derivative liabilities | 0 | |
Recurring | Level 3 | Interest rate swaps and swaptions | ||
Derivative liabilities | ||
Derivative liabilities | 0 | 0 |
Recurring | Level 3 | Contingent consideration | ||
Derivative liabilities | ||
Contingent consideration | (8) | (6) |
Recurring | Level 3 | Residential first mortgage loans | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | 0 |
Loans held-for-investment | 0 | 0 |
Recurring | Level 3 | Commercial Loan | ||
Derivative assets | ||
Loans held-for-sale, fair value | 0 | |
Recurring | Level 3 | Home equity | ||
Derivative assets | ||
Loans held-for-investment | 2 | 2 |
Recurring | Level 3 | Agency - Commercial | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 3 | Agency - Residential | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 3 | Municipal obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 3 | Corporate debt obligations | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | 0 |
Recurring | Level 3 | Other MBS | ||
Derivative assets | ||
Investment securities available-for-sale | 0 | $ 0 |
Recurring | Level 3 | Certificates of deposit | ||
Derivative assets | ||
Investment securities available-for-sale | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Settlement liability | $ 2 | $ 2 | $ 2 |
DOJ Agreement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value adjustment on settlement liability | 0 | 25 | |
Settlement liability | $ 35 | $ 35 | |
Measurement Input, Expected Term | Level 3 | Residential Mortgage Servicing Rights Capitalized | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Weighted average life | 3 years 8 months 12 days | 5 years 2 months 12 days |
Fair Value Measurements - Roll
Fair Value Measurements - Roll Forward of Financial Instruments Classified as Level 3 (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Liabilities, Unobservable Input Reconciliation | ||||
Unrealized gains (losses) recorded in OCI | $ 0 | $ 0 | $ 0 | $ 0 |
Recurring | Level 3 | ||||
Assets, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | 368,000,000 | 292,000,000 | 312,000,000 | 319,000,000 |
Total Gains (Losses) Recorded in Earnings | (38,000,000) | 2,000,000 | (76,000,000) | (25,000,000) |
Purchases / Originations | 152,000,000 | 160,000,000 | 448,000,000 | 474,000,000 |
Sales | (12,000,000) | (51,000,000) | (57,000,000) | (273,000,000) |
Settlement | 0 | 0 | 0 | (1,000,000) |
Transfers In (Out) | (133,000,000) | (68,000,000) | (290,000,000) | (159,000,000) |
Balance at End of Period | 337,000,000 | 335,000,000 | 337,000,000 | 335,000,000 |
Liabilities, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | (42,000,000) | (78,000,000) | (66,000,000) | (85,000,000) |
Total unrealized gains/(losses) recorded in earnings | (4,000,000) | 3,000,000 | 20,000,000 | 8,000,000 |
Purchases / Originations | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlement | 3,000,000 | 4,000,000 | 3,000,000 | 6,000,000 |
Transfers In (Out) | 0 | 0 | 0 | 0 |
Balance at End of Period | (43,000,000) | (71,000,000) | (43,000,000) | (71,000,000) |
Recurring | Level 3 | Home equity | ||||
Assets, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | 2,000,000 | 3,000,000 | 2,000,000 | 4,000,000 |
Total Gains (Losses) Recorded in Earnings | 0 | 0 | 0 | 0 |
Purchases / Originations | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlement | 0 | 0 | 0 | (1,000,000) |
Transfers In (Out) | 0 | 0 | 0 | 0 |
Balance at End of Period | 2,000,000 | 3,000,000 | 2,000,000 | 3,000,000 |
Recurring | Level 3 | Mortgage servicing rights | ||||
Assets, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | 316,000,000 | 257,000,000 | 290,000,000 | 291,000,000 |
Total Gains (Losses) Recorded in Earnings | (58,000,000) | 7,000,000 | (151,000,000) | 12,000,000 |
Purchases / Originations | 39,000,000 | 100,000,000 | 203,000,000 | 283,000,000 |
Sales | (12,000,000) | (51,000,000) | (57,000,000) | (273,000,000) |
Settlement | 0 | 0 | 0 | 0 |
Transfers In (Out) | 0 | 0 | 0 | 0 |
Balance at End of Period | 285,000,000 | 313,000,000 | 285,000,000 | 313,000,000 |
Recurring | Level 3 | Rate lock commitments | ||||
Assets, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | 50,000,000 | 32,000,000 | 20,000,000 | 24,000,000 |
Total Gains (Losses) Recorded in Earnings | 20,000,000 | (5,000,000) | 75,000,000 | (37,000,000) |
Purchases / Originations | 113,000,000 | 60,000,000 | 245,000,000 | 191,000,000 |
Sales | 0 | 0 | 0 | 0 |
Settlement | 0 | 0 | 0 | 0 |
Transfers In (Out) | (133,000,000) | (68,000,000) | (290,000,000) | (159,000,000) |
Balance at End of Period | 50,000,000 | 19,000,000 | 50,000,000 | 19,000,000 |
Recurring | Level 3 | DOJ Liability | ||||
Liabilities, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | (35,000,000) | (60,000,000) | (60,000,000) | (60,000,000) |
Total unrealized gains/(losses) recorded in earnings | 0 | 0 | 25,000,000 | 0 |
Purchases / Originations | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlement | 0 | 0 | 0 | 0 |
Transfers In (Out) | 0 | 0 | 0 | 0 |
Balance at End of Period | (35,000,000) | (60,000,000) | (35,000,000) | (60,000,000) |
Recurring | Level 3 | Contingent consideration | ||||
Liabilities, Unobservable Input Reconciliation | ||||
Balance at Beginning of Period | (7,000,000) | (18,000,000) | (6,000,000) | (25,000,000) |
Total unrealized gains/(losses) recorded in earnings | (4,000,000) | 3,000,000 | (5,000,000) | 8,000,000 |
Purchases / Originations | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlement | 3,000,000 | 4,000,000 | 3,000,000 | 6,000,000 |
Transfers In (Out) | 0 | 0 | 0 | 0 |
Balance at End of Period | $ (8,000,000) | $ (11,000,000) | $ (8,000,000) | $ (11,000,000) |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Recurring Level 3 Fair Value Instruments (Details) - Recurring - Level 3 $ in Millions | Sep. 30, 2019USD ($)$ / loan | Dec. 31, 2018USD ($)$ / loan |
Home equity | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held-for-investment | $ 2 | $ 2 |
Home equity | Discount rate | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.072 | 0.072 |
Home equity | Discount rate | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.108 | 0.108 |
Home equity | Discount rate | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.090 | 0.090 |
Home equity | Constant prepayment rate | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.193 | 0.136 |
Home equity | Constant prepayment rate | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.290 | 0.203 |
Home equity | Constant prepayment rate | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.2415 | 0.169 |
Home equity | Constant default rate | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.030 | 0.030 |
Home equity | Constant default rate | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.044 | 0.046 |
Home equity | Constant default rate | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Loans held for investment, fair value input (in percentage) | 0.037 | 0.038 |
Mortgage servicing rights | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Mortgage servicing rights | $ 285 | $ 290 |
Mortgage servicing rights | Constant prepayment rate | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0 | 0 |
Mortgage servicing rights | Constant prepayment rate | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0.135 | 0.107 |
Mortgage servicing rights | Constant prepayment rate | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0.112 | 0.096 |
Mortgage servicing rights | Weighted average cost to service per loan | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | $ / loan | 67 | 67 |
Mortgage servicing rights | Weighted average cost to service per loan | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | $ / loan | 95 | 95 |
Mortgage servicing rights | Weighted average cost to service per loan | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | $ / loan | 85 | 86 |
Mortgage servicing rights | Option adjusted spread | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0.026 | 0.021 |
Mortgage servicing rights | Option adjusted spread | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0.206 | 0.259 |
Mortgage servicing rights | Option adjusted spread | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Weighted average cost to service per loan (in usd per loan) | 0.054 | 0.054 |
Rate lock commitments | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Derivative assets | $ 50 | $ 20 |
Rate lock commitments | Origination pull-through rate | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Rate lock commitment, fair value input | 0.800 | 0.750 |
Rate lock commitments | Origination pull-through rate | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Rate lock commitment, fair value input | 0.872 | 0.872 |
Rate lock commitments | Origination pull-through rate | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Rate lock commitment, fair value input | 0.819 | 0.768 |
DOJ Liability | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
DOJ Liability | $ (35) | $ (60) |
Contingent consideration | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Contingent consideration | $ (8) | $ (6) |
Contingent consideration | Beta | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 0.6 | 0.6 |
Contingent consideration | Beta | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 1.6 | 1.6 |
Contingent consideration | Beta | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 1.1 | 1.1 |
Contingent consideration | Equity volatility | Lower range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 0.266 | 0.266 |
Contingent consideration | Equity volatility | Upper range | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 0.589 | 0.589 |
Contingent consideration | Equity volatility | Weighted Average | ||
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items] | ||
Fair value inputs, equity volatility | 0.400 | 0.400 |
Fair Value Measurements - Qua_2
Fair Value Measurements - Quantitative Information about Nonrecurring Level 3 Fair Value Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held-for-sale | $ 4,122 | $ 4,122 | $ 3,732 | ||
Total assets at fair value | 4,132 | 4,132 | 3,742 | ||
Net gain (loss) on loan sales | 110 | $ 43 | 234 | $ 166 | |
Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held-for-sale | 6 | 6 | 5 | ||
Repossessed assets | 9 | 9 | 7 | ||
Total assets at fair value | 29 | 29 | 24 | ||
Fair value gains (losses) on loans | (1) | (1) | |||
Fair value gains (losses) on repossessed assets | (3) | (3) | |||
Net gain (loss) on loan sales | (9) | (8) | |||
Nonrecurring | Residential first mortgage loans | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Impaired loans held-for-investment | 14 | 14 | 12 | ||
Fair value gains (losses) on loans | (5) | (4) | |||
Nonrecurring | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held-for-sale | 6 | 6 | 5 | ||
Repossessed assets | 0 | 0 | 0 | ||
Total assets at fair value | 6 | 6 | 5 | ||
Nonrecurring | Level 2 | Residential first mortgage loans | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Impaired loans held-for-investment | 0 | 0 | 0 | ||
Nonrecurring | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held-for-sale | 0 | 0 | 0 | ||
Repossessed assets | 9 | 9 | 7 | ||
Total assets at fair value | 23 | 23 | 19 | ||
Nonrecurring | Level 3 | Residential first mortgage loans | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Impaired loans held-for-investment | $ 14 | $ 14 | $ 12 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - Nonrecurring - Level 3 $ in Millions | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Residential first mortgage loans | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Loans held-for-investment | $ 14 | $ 12 |
Residential first mortgage loans | Loss severity discount | Lower range | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Loans held for investment, fair value input (in percentage) | 0.25 | 0.25 |
Residential first mortgage loans | Loss severity discount | Upper range | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Loans held for investment, fair value input (in percentage) | 0.30 | 0.30 |
Residential first mortgage loans | Loss severity discount | Weighted Average | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Loans held for investment, fair value input (in percentage) | 0.261 | 0.283 |
Repossessed assets | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Loans held-for-investment | $ 9 | $ 7 |
Repossessed assets | Loss severity discount | Lower range | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Repossessed asset, fair value input | 0 | 0 |
Repossessed assets | Loss severity discount | Upper range | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Repossessed asset, fair value input | 1 | 1 |
Repossessed assets | Loss severity discount | Weighted Average | ||
Fair Value Inputs, Assets, Quantitative Information | ||
Repossessed asset, fair value input | 0.211 | 0.258 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value Included in Earnings (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Investment securities available-for-sale | $ 1,697 | $ 2,142 |
Investment securities held-to-maturity | 639 | 681 |
Loans held-for-sale | 4,122 | 3,732 |
Loans held-for-investment | 10 | 10 |
Mortgage servicing rights | 285 | 290 |
Carrying Value | ||
Assets | ||
Cash and cash equivalents | 353 | 408 |
Investment securities available-for-sale | 1,697 | 2,142 |
Investment securities held-to-maturity | 635 | 703 |
Loans held-for-sale | 4,196 | 3,869 |
Loans held-for-investment | 12,548 | 9,088 |
Loans with government guarantees | 607 | 392 |
Mortgage servicing rights | 285 | 290 |
Federal Home Loan Bank stock | 303 | 303 |
Bank owned life insurance | 346 | 340 |
Repossessed assets | 9 | 7 |
Other assets, foreclosure claims | 43 | 50 |
Derivative financial instruments, assets | 96 | 47 |
Liabilities | ||
Federal Home Loan Bank advances | (2,979) | (3,394) |
Long-term debt | (496) | (495) |
DOJ Liability | (35) | (60) |
Contingent consideration | (8) | (6) |
Derivative financial instruments, liabilities | (17) | (39) |
Carrying Value | Demand deposits and savings accounts | ||
Liabilities | ||
Deposits | (6,760) | (6,467) |
Carrying Value | Certificates of deposit | ||
Liabilities | ||
Deposits | (2,558) | (2,387) |
Carrying Value | Wholesale deposits | ||
Liabilities | ||
Deposits | (635) | (583) |
Carrying Value | Government deposits | ||
Liabilities | ||
Deposits | (1,414) | (1,202) |
Carrying Value | Custodial deposits | ||
Liabilities | ||
Deposits | (4,378) | (1,741) |
Estimated Fair Value | ||
Assets | ||
Cash and cash equivalents | 353 | 408 |
Investment securities available-for-sale | 1,697 | 2,142 |
Investment securities held-to-maturity | 639 | 681 |
Loans held-for-sale | 4,196 | 3,870 |
Loans held-for-investment | 12,707 | 8,966 |
Loans with government guarantees | 583 | 374 |
Mortgage servicing rights | 285 | 290 |
Federal Home Loan Bank stock | 303 | 303 |
Bank owned life insurance | 346 | 340 |
Repossessed assets | 9 | 7 |
Other assets, foreclosure claims | 43 | 50 |
Derivative financial instruments, assets | 96 | 47 |
Liabilities | ||
Federal Home Loan Bank advances | (2,979) | (3,383) |
Long-term debt | (458) | (463) |
DOJ Liability | (35) | (60) |
Contingent consideration | (8) | (6) |
Derivative financial instruments, liabilities | (17) | (39) |
Estimated Fair Value | Demand deposits and savings accounts | ||
Liabilities | ||
Deposits | (6,054) | (5,475) |
Estimated Fair Value | Certificates of deposit | ||
Liabilities | ||
Deposits | (2,577) | (2,379) |
Estimated Fair Value | Wholesale deposits | ||
Liabilities | ||
Deposits | (641) | (585) |
Estimated Fair Value | Government deposits | ||
Liabilities | ||
Deposits | (1,350) | (1,145) |
Estimated Fair Value | Custodial deposits | ||
Liabilities | ||
Deposits | (4,316) | (1,664) |
Estimated Fair Value | Level 1 | ||
Assets | ||
Cash and cash equivalents | 353 | 408 |
Investment securities available-for-sale | 0 | 0 |
Investment securities held-to-maturity | 0 | 0 |
Loans held-for-sale | 0 | 0 |
Loans held-for-investment | 0 | 0 |
Loans with government guarantees | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Federal Home Loan Bank stock | 0 | 0 |
Bank owned life insurance | 0 | 0 |
Repossessed assets | 0 | 0 |
Other assets, foreclosure claims | 0 | 0 |
Derivative financial instruments, assets | 0 | 0 |
Liabilities | ||
Federal Home Loan Bank advances | 0 | 0 |
Long-term debt | 0 | 0 |
DOJ Liability | 0 | 0 |
Contingent consideration | 0 | 0 |
Derivative financial instruments, liabilities | 0 | 0 |
Estimated Fair Value | Level 1 | Demand deposits and savings accounts | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 1 | Certificates of deposit | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 1 | Wholesale deposits | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 1 | Government deposits | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 1 | Custodial deposits | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 2 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available-for-sale | 1,697 | 2,142 |
Investment securities held-to-maturity | 639 | 681 |
Loans held-for-sale | 4,196 | 3,870 |
Loans held-for-investment | 8 | 8 |
Loans with government guarantees | 583 | 374 |
Mortgage servicing rights | 0 | 0 |
Federal Home Loan Bank stock | 303 | 303 |
Bank owned life insurance | 346 | 340 |
Repossessed assets | 0 | 0 |
Other assets, foreclosure claims | 43 | 50 |
Derivative financial instruments, assets | 45 | 27 |
Liabilities | ||
Federal Home Loan Bank advances | (2,979) | (3,383) |
Long-term debt | (458) | (463) |
DOJ Liability | 0 | 0 |
Contingent consideration | 0 | 0 |
Derivative financial instruments, liabilities | (17) | (39) |
Estimated Fair Value | Level 2 | Demand deposits and savings accounts | ||
Liabilities | ||
Deposits | (6,054) | (5,475) |
Estimated Fair Value | Level 2 | Certificates of deposit | ||
Liabilities | ||
Deposits | (2,577) | (2,379) |
Estimated Fair Value | Level 2 | Wholesale deposits | ||
Liabilities | ||
Deposits | (641) | (585) |
Estimated Fair Value | Level 2 | Government deposits | ||
Liabilities | ||
Deposits | (1,350) | (1,145) |
Estimated Fair Value | Level 2 | Custodial deposits | ||
Liabilities | ||
Deposits | (4,316) | (1,664) |
Estimated Fair Value | Level 3 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available-for-sale | 0 | 0 |
Investment securities held-to-maturity | 0 | 0 |
Loans held-for-sale | 0 | 0 |
Loans held-for-investment | 12,699 | 8,958 |
Loans with government guarantees | 0 | 0 |
Mortgage servicing rights | 285 | 290 |
Federal Home Loan Bank stock | 0 | 0 |
Bank owned life insurance | 0 | 0 |
Repossessed assets | 9 | 7 |
Other assets, foreclosure claims | 0 | 0 |
Derivative financial instruments, assets | 51 | 20 |
Liabilities | ||
Federal Home Loan Bank advances | 0 | 0 |
Long-term debt | 0 | 0 |
DOJ Liability | (35) | (60) |
Contingent consideration | (8) | (6) |
Derivative financial instruments, liabilities | 0 | 0 |
Estimated Fair Value | Level 3 | Demand deposits and savings accounts | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 3 | Certificates of deposit | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 3 | Wholesale deposits | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 3 | Government deposits | ||
Liabilities | ||
Deposits | 0 | 0 |
Estimated Fair Value | Level 3 | Custodial deposits | ||
Liabilities | ||
Deposits | $ 0 | $ 0 |
Fair Value Measurements - Diffe
Fair Value Measurements - Differences Between Aggregate Fair Value and Aggregate Remaining Contractual Principal Balance Outstanding (Details) - USD ($) $ in Millions | Feb. 24, 2012 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2012 | Dec. 31, 2018 |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | $ 3,999 | $ 3,999 | $ 3,619 | ||||
Total assets at fair value | 4,132 | 4,132 | 3,742 | ||||
Assets, fair value over/(under) UPB | 133 | 133 | 123 | ||||
Litigation settlement | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Litigation settlement payment amount | $ 118 | $ 118 | |||||
Nonperforming | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 16 | 16 | 10 | ||||
Total assets at fair value | 17 | 17 | 9 | ||||
Assets, fair value over/(under) UPB | 1 | 1 | (1) | ||||
Performing | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 3,983 | 3,983 | 3,609 | ||||
Total assets at fair value | 4,115 | 4,115 | 3,733 | ||||
Assets, fair value over/(under) UPB | 132 | 132 | 124 | ||||
Loans held-for-sale | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 3,987 | 3,987 | 3,607 | ||||
Total assets at fair value | 4,122 | 4,122 | 3,732 | ||||
Assets, fair value over/(under) UPB | 135 | 135 | 125 | ||||
Loans held-for-sale | Nonperforming | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 11 | 11 | 6 | ||||
Total assets at fair value | 12 | 12 | 6 | ||||
Assets, fair value over/(under) UPB | 1 | 1 | 0 | ||||
Loans held-for-sale | Performing | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 3,976 | 3,976 | 3,601 | ||||
Total assets at fair value | 4,110 | 4,110 | 3,726 | ||||
Assets, fair value over/(under) UPB | 134 | 134 | 125 | ||||
Loans held-for-investment | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 12 | 12 | 12 | ||||
Total assets at fair value | 10 | 10 | 10 | ||||
Assets, fair value over/(under) UPB | (2) | (2) | (2) | ||||
Loans held-for-investment | Nonperforming | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 5 | 5 | 4 | ||||
Total assets at fair value | 5 | 5 | 3 | ||||
Assets, fair value over/(under) UPB | 0 | 0 | (1) | ||||
Loans held-for-investment | Performing | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Assets, unpaid principal balance (UPB) | 7 | 7 | 8 | ||||
Total assets at fair value | 5 | 5 | 7 | ||||
Assets, fair value over/(under) UPB | (2) | (2) | (1) | ||||
Litigation settlement | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Liabilities, unpaid principal balance (UPB) | (118) | (118) | (118) | ||||
Long-term debt, fair value | (35) | (35) | (60) | ||||
Liabilities, fair value over/(under) UPB | 83 | 83 | $ 58 | ||||
Net gain (loss) on loan sales | Loans held-for-sale | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Changes in fair value, gain (loss) | 97 | $ 7 | 272 | $ (61) | |||
Other noninterest income | Loans held-for-investment | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Changes in fair value, gain (loss) | 1 | 0 | 1 | 0 | |||
Other noninterest income | Litigation settlement | |||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||||||
Changes in fair value, gain (loss) | $ 0 | $ 0 | $ 25 | $ 0 |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)segment | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 3 | |
Outgoing Wires, Overdrafts Stop Payments and ATM Fees | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 7 | |
Interchange Fees | ||
Segment Reporting Information [Line Items] | ||
Revenues | 3 | |
Investment and Insurance Income | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 1 | |
Community Banking Segment | Deposit Fees and Charges | Deposit Account and Other Banking Income | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 20 | |
Community Banking Segment | Deposit Fees and Charges | Interchange Fees | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | |
Community Banking Segment | Other Non-Interest Income | Wealth Management | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 4 |
Segment Information - Financial
Segment Information - Financial Information by Business Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Summary of Operations | ||||
Net interest income | $ 146 | $ 124 | $ 410 | $ 345 |
Net gain (loss) on loan sales | 110 | 43 | 234 | 166 |
Other noninterest income (loss) | 61 | 64 | 214 | 175 |
Total net interest income and noninterest income (loss) | 317 | 231 | 858 | 686 |
(Provision) benefit for loan losses | (1) | 2 | (18) | 3 |
Compensation and benefits | (98) | (76) | (275) | (236) |
Other noninterest expense and directly allocated overhead | (140) | (97) | (368) | (287) |
Total noninterest expense | (238) | (173) | (643) | (523) |
Income (loss) before indirect overhead allocations and income taxes | 78 | 60 | 197 | 166 |
Overhead allocations | 0 | 0 | 0 | 0 |
Provision (benefit) for income taxes | 15 | 12 | 37 | 33 |
Net income | 63 | 48 | 160 | 133 |
Average balances | ||||
Loans held-for-sale | 3,786 | 4,393 | 3,532 | 4,265 |
Loans with government guarantees | 574 | 292 | 511 | 288 |
Loans held-for-investment | 11,743 | 8,908 | 10,516 | 8,288 |
Total assets | 21,197 | 18,611 | 19,877 | 17,834 |
Deposits | 15,817 | 11,336 | 14,305 | 10,381 |
Intersegment Eliminations | ||||
Summary of Operations | ||||
Total net interest income and noninterest income (loss) | 0 | 0 | 0 | 0 |
Community Banking | ||||
Summary of Operations | ||||
Net interest income | 115 | 81 | 326 | 231 |
Net gain (loss) on loan sales | (8) | (3) | (23) | (10) |
Other noninterest income (loss) | 17 | 10 | 44 | 27 |
Total net interest income and noninterest income (loss) | 124 | 88 | 347 | 248 |
(Provision) benefit for loan losses | 0 | (1) | (18) | (2) |
Compensation and benefits | (26) | (17) | (74) | (51) |
Other noninterest expense and directly allocated overhead | (44) | (27) | (131) | (81) |
Total noninterest expense | (70) | (44) | (205) | (132) |
Income (loss) before indirect overhead allocations and income taxes | 54 | 43 | 124 | 114 |
Overhead allocations | (10) | (9) | (30) | (29) |
Provision (benefit) for income taxes | 9 | 7 | 20 | 18 |
Net income | 35 | 27 | 74 | 67 |
Average balances | ||||
Loans held-for-sale | 20 | 10 | 37 | 11 |
Loans with government guarantees | 0 | 0 | 0 | 0 |
Loans held-for-investment | 11,710 | 8,868 | 10,495 | 8,250 |
Total assets | 12,184 | 9,028 | 10,950 | 8,425 |
Deposits | 10,513 | 9,170 | 10,247 | 8,581 |
Community Banking | Intersegment Eliminations | ||||
Summary of Operations | ||||
Total net interest income and noninterest income (loss) | (6) | 1 | (18) | (1) |
Mortgage Originations | ||||
Summary of Operations | ||||
Net interest income | 27 | 36 | 73 | 100 |
Net gain (loss) on loan sales | 118 | 46 | 257 | 176 |
Other noninterest income (loss) | 15 | 30 | 49 | 76 |
Total net interest income and noninterest income (loss) | 160 | 112 | 379 | 352 |
(Provision) benefit for loan losses | (1) | 0 | (1) | (1) |
Compensation and benefits | (30) | (26) | (83) | (83) |
Other noninterest expense and directly allocated overhead | (72) | (41) | (161) | (129) |
Total noninterest expense | (102) | (67) | (244) | (212) |
Income (loss) before indirect overhead allocations and income taxes | 57 | 45 | 134 | 139 |
Overhead allocations | (10) | (16) | (30) | (51) |
Provision (benefit) for income taxes | 10 | 6 | 22 | 18 |
Net income | 37 | 23 | 82 | 70 |
Average balances | ||||
Loans held-for-sale | 3,766 | 4,383 | 3,495 | 4,254 |
Loans with government guarantees | 574 | 292 | 511 | 288 |
Loans held-for-investment | 33 | 11 | 21 | 9 |
Total assets | 5,378 | 5,676 | 5,018 | 5,477 |
Deposits | 0 | 0 | 0 | 0 |
Mortgage Originations | Intersegment Eliminations | ||||
Summary of Operations | ||||
Total net interest income and noninterest income (loss) | 8 | 4 | 24 | 6 |
Mortgage Servicing | ||||
Summary of Operations | ||||
Net interest income | 5 | 2 | 11 | 5 |
Net gain (loss) on loan sales | 0 | 0 | 0 | 0 |
Other noninterest income (loss) | 40 | 24 | 113 | 65 |
Total net interest income and noninterest income (loss) | 45 | 26 | 124 | 70 |
(Provision) benefit for loan losses | 0 | 0 | 0 | 0 |
Compensation and benefits | (7) | (4) | (19) | (13) |
Other noninterest expense and directly allocated overhead | (24) | (18) | (73) | (49) |
Total noninterest expense | (31) | (22) | (92) | (62) |
Income (loss) before indirect overhead allocations and income taxes | 14 | 4 | 32 | 8 |
Overhead allocations | (4) | (5) | (13) | (15) |
Provision (benefit) for income taxes | 2 | 0 | 4 | (2) |
Net income | 8 | (1) | 15 | (5) |
Average balances | ||||
Loans held-for-sale | 0 | 0 | 0 | 0 |
Loans with government guarantees | 0 | 0 | 0 | 0 |
Loans held-for-investment | 0 | 0 | 0 | 0 |
Total assets | 38 | 29 | 47 | 30 |
Deposits | 4,556 | 2,072 | 3,536 | 1,800 |
Mortgage Servicing | Intersegment Eliminations | ||||
Summary of Operations | ||||
Total net interest income and noninterest income (loss) | 6 | 5 | 19 | 14 |
Other | ||||
Summary of Operations | ||||
Net interest income | (1) | 5 | 0 | 9 |
Net gain (loss) on loan sales | 0 | 0 | 0 | 0 |
Other noninterest income (loss) | (11) | 0 | 8 | 7 |
Total net interest income and noninterest income (loss) | (12) | 5 | 8 | 16 |
(Provision) benefit for loan losses | 0 | 3 | 1 | 6 |
Compensation and benefits | (35) | (29) | (99) | (89) |
Other noninterest expense and directly allocated overhead | 0 | (11) | (3) | (28) |
Total noninterest expense | (35) | (40) | (102) | (117) |
Income (loss) before indirect overhead allocations and income taxes | (47) | (32) | (93) | (95) |
Overhead allocations | 24 | 30 | 73 | 95 |
Provision (benefit) for income taxes | (6) | (1) | (9) | (1) |
Net income | (17) | (1) | (11) | 1 |
Average balances | ||||
Loans held-for-sale | 0 | 0 | 0 | 0 |
Loans with government guarantees | 0 | 0 | 0 | 0 |
Loans held-for-investment | 0 | 29 | 0 | 29 |
Total assets | 3,597 | 3,878 | 3,862 | 3,902 |
Deposits | 748 | 94 | 522 | 0 |
Other | Intersegment Eliminations | ||||
Summary of Operations | ||||
Total net interest income and noninterest income (loss) | $ (8) | $ (10) | $ (25) | $ (19) |
Recently Issued Accounting Pr_4
Recently Issued Accounting Pronouncements - Information Relating to Operating Leases (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Operating Leases | ||
Weighted-average remaining lease term | 3 years 10 months 24 days | 3 years 10 months 24 days |
Weighted-average discount rate | 2.86% | 2.86% |
Right-of-use asset | $ 21 | $ 21 |
Lease liability | 22 | 22 |
Lease expense | $ 3 | $ 9 |
Recently Issued Accounting Pr_5
Recently Issued Accounting Pronouncements - Undiscounted Cash Flows on Operating Leases (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
September 30, 2019 | ||
Within one year | $ 9 | |
After one year and within two years | 7 | |
After two years and within three years | 5 | |
After three years and within four years | 2 | |
After four years and within five years | 1 | |
After five years | 2 | |
Total | $ 26 | |
December 31, 2018 | ||
Within one year | $ 9 | |
After one year and within two years | 6 | |
After two years and within three years | 4 | |
After three years and within four years | 2 | |
After four years and within five years | 1 | |
After five years | 3 | |
Total | $ 25 |
Recently Issued Accounting Pr_6
Recently Issued Accounting Pronouncements - Credit Losses (Details) - Pro Forma - Accounting Standards Update 2016-13 | Sep. 30, 2019 |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Estimated increase in allowance for credit losses and reserve (in percentage) | 30.00% |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Estimated increase in allowance for credit losses and reserve (in percentage) | 40.00% |