Fair Value Measurements (Tables)
|
9 Months Ended |
Sep. 30, 2016 |
|---|
| Fair Value Disclosures [Abstract] |
|
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
The following tables present the financial instruments carried at fair value as of September 30, 2016 and December 31, 2015, by caption on the Consolidated Statement of Financial Condition and by level in the valuation hierarchy. | | | | | | | | | | | | | | | | | | Level 1 | | Level 2 | | Level 3 | | Total Fair Value | September 30, 2016 | (Dollars in millions) | Investment securities available-for-sale | | | | | | | | Agency - Commercial | $ | — |
| | $ | 510 |
| | $ | — |
| | $ | 510 |
| Agency - Residential | — |
| | 573 |
| | — |
| | 573 |
| Municipal obligations | — |
| | 32 |
| | — |
| | 32 |
| Loans held-for-sale | | | | | | | | Residential first mortgage loans | — |
| | 3,352 |
| | — |
| | 3,352 |
| Loans held-for-investment | | | | | | | | Residential first mortgage loans | — |
| | 8 |
| | — |
| | 8 |
| Second mortgage loans | — |
| | — |
| | 41 |
| | 41 |
| HELOC loans | — |
| | — |
| | 31 |
| | 31 |
| Mortgage servicing rights | — |
| | — |
| | 302 |
| | 302 |
| Derivative assets | | | | | | | | Rate lock commitments | — |
| | — |
| | 63 |
| | 63 |
| U.S. Treasury, swap and euro dollar futures | 1 |
| | — |
| | — |
| | 1 |
| Mortgage backed securities forwards | — |
| | 2 |
| | — |
| | 2 |
| Interest rate swaps and swaptions | — |
| | 53 |
| | — |
| | 53 |
| Total derivative assets | 1 |
| | 55 |
| | 63 |
| | 119 |
| Total assets at fair value | $ | 1 |
| | $ | 4,530 |
| | $ | 437 |
| | $ | 4,968 |
| Derivative liabilities | | | | | | | | Interest rate swap on FHLB advances | $ | — |
| | $ | (52 | ) | | $ | — |
| | $ | (52 | ) | Mortgage backed securities forwards | — |
| | (24 | ) | | — |
| | (24 | ) | Interest rate swaps and swaptions | — |
| | (17 | ) | | — |
| | (17 | ) | Total derivative liabilities | — |
| | (93 | ) | | — |
| | (93 | ) | Warrant liabilities | — |
| | (10 | ) | | — |
| | (10 | ) | DOJ litigation settlement | — |
| | — |
| | (60 | ) | | (60 | ) | Total liabilities at fair value | $ | — |
| | $ | (103 | ) | | $ | (60 | ) | | $ | (163 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | Level 1 | | Level 2 | | Level 3 | | Total Fair Value | December 31, 2015 | (Dollars in millions) | Investment securities available-for-sale | | | | | | | | Agency - Commercial | $ | — |
| | $ | 766 |
| | $ | — |
| | $ | 766 |
| Agency - Residential | — |
| | 514 |
| | — |
| | 514 |
| Municipal obligations | — |
| | 14 |
| | — |
| | 14 |
| Loans held-for-sale | | | | | | | | Residential first mortgage loans | — |
| | 2,541 |
| | — |
| | 2,541 |
| Loans held-for-investment | | | | | | | | Residential first mortgage loans | — |
| | 6 |
| | — |
| | 6 |
| Second mortgage loans | — |
| | — |
| | 42 |
| | 42 |
| HELOC loans | — |
| | — |
| | 64 |
| | 64 |
| Mortgage servicing rights | — |
| | — |
| | 296 |
| | 296 |
| Derivative assets | | | | | | | | Rate lock commitments | — |
| | — |
| | 26 |
| | 26 |
| Mortgage backed securities forwards | — |
| | 7 |
| | — |
| | 7 |
| Interest rate swaps and swaptions | — |
| | 25 |
| | — |
| | 25 |
| Total derivative assets | — |
| | 32 |
| | 26 |
| | 58 |
| Total assets at fair value | $ | — |
| | $ | 3,873 |
| | $ | 428 |
| | $ | 4,301 |
| Derivative liabilities | | | | | | | | U.S. Treasury, swap and euro dollar futures | $ | (1 | ) | | $ | — |
| | $ | — |
| | $ | (1 | ) | Mortgage backed securities forwards | — |
| | (6 | ) | | — |
| | (6 | ) | Interest rate swap on FHLB advances | — |
| | (4 | ) | | — |
| | (4 | ) | Interest rate swaps | — |
| | (7 | ) | | — |
| | (7 | ) | Total derivative liabilities | (1 | ) | | (17 | ) | | — |
| | (18 | ) | Warrant liabilities | — |
| | (8 | ) | | — |
| | (8 | ) | DOJ litigation settlement | — |
| | — |
| | (84 | ) | | (84 | ) | Total liabilities at fair value | $ | (1 | ) | | $ | (25 | ) | | $ | (84 | ) | | $ | (110 | ) |
|
| Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
The tables below include a roll forward of the Consolidated Statement of Financial Condition amounts for the three and nine months ended September 30, 2016 and 2015 (including the change in fair value) for financial instruments classified by us within level 3 of the valuation hierarchy: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recorded in Earnings | | Recorded in OCI | | | | | | Three Months Ended September 30, 2016 | Balance at Beginning of Period | Total Unrealized Gains / (Losses) | Total Realized Gains / (Losses) | | Total Unrealized Gains / (Losses) | Purchases / Originations | Sales | Settlements | Transfers In (Out) | Balance at End of Period | Assets | (Dollars in millions) | Loans held-for-investment | | | | | | | | | | | Second mortgage loans | $ | 38 |
| $ | (2 | ) | $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | (3 | ) | $ | 8 |
| $ | 41 |
| HELOC loans | 44 |
| 6 |
| — |
| | — |
| — |
| — |
| (11 | ) | (8 | ) | 31 |
| Mortgage servicing rights | 301 |
| (33 | ) | — |
| | — |
| 51 |
| (17 | ) | — |
| — |
| 302 |
| Totals | $ | 383 |
| $ | (29 | ) | $ | — |
| | $ | — |
| $ | 51 |
| $ | (17 | ) | $ | (14 | ) | $ | — |
| $ | 374 |
| Liabilities | | | | | | | | | | | DOJ litigation settlement | $ | (84 | ) | $ | 24 |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | (60 | ) | Derivative financial instruments (net) | | | | | | | | | | | Rate lock commitments | $ | 82 |
| $ | 33 |
| $ | — |
| | $ | — |
| $ | 116 |
| $ | (150 | ) | $ | (18 | ) | $ | — |
| $ | 63 |
| | | | | | | | | | | | Three Months Ended September 30, 2015 | | | | | | | | | | | Assets | | | | | | | | | | | Other investments | $ | 100 |
| $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 100 |
| Loans held-for-investment | | | | | | | | | | | Second mortgage loans | 48 |
| — |
| — |
| | — |
| — |
| — |
| (3 | ) | — |
| 45 |
| HELOC loans | 93 |
| 2 |
| — |
| | — |
| — |
| — |
| (15 | ) | — |
| 80 |
| Mortgage servicing rights | 317 |
| (24 | ) | — |
| | — |
| 74 |
| (73 | ) | — |
| — |
| 294 |
| Totals | $ | 558 |
| $ | (22 | ) | $ | — |
| | $ | — |
| $ | 74 |
| $ | (73 | ) | $ | (18 | ) | $ | — |
| $ | 519 |
| Liabilities | | | | | | | | | | | Long-term debt | $ | (36 | ) | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | 4 |
| $ | — |
| $ | (32 | ) | DOJ litigation settlement | (84 | ) | — |
| — |
| | — |
| — |
| — |
| — |
| — |
| (84 | ) | Totals | $ | (120 | ) | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | 4 |
| $ | — |
| $ | (116 | ) | Derivative financial instruments (net) | | | | | | | | | | | Rate lock commitments | $ | 30 |
| $ | 53 |
| $ | — |
| | $ | — |
| $ | 81 |
| $ | (104 | ) | $ | (16 | ) | $ | — |
| $ | 44 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Recorded in Earnings | | Recorded in OCI | | | | | | Nine Months Ended September 30, 2016 | Balance at Beginning of Period | Total Unrealized Gains / (Losses) | Total Realized Gains / (Losses) | | Total Unrealized Gains / (Losses) | Purchases / Originations | Sales | Settlements | Transfers In (Out) | Balance at End of Period | Assets | (Dollars in millions) | Loans held-for-investment | | | | | | | | | | | Second mortgage loans | $ | 42 |
| $ | (1 | ) | $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | (8 | ) | 8 |
| 41 |
| HELOC loans | 64 |
| 3 |
| — |
| | — |
| — |
| — |
| (28 | ) | (8 | ) | 31 |
| Mortgage servicing rights | 296 |
| (126 | ) | — |
| | — |
| 173 |
| (41 | ) | — |
| — |
| 302 |
| Totals | $ | 402 |
| $ | (124 | ) | $ | — |
| | $ | — |
| $ | 173 |
| $ | (41 | ) | $ | (36 | ) | $ | — |
| $ | 374 |
| Liabilities | | | | | | | | | | | DOJ litigation | $ | (84 | ) | $ | 24 |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
| — |
| $ | (60 | ) | Derivative financial instruments (net) | | | | | | | | | | | Rate lock commitments | $ | 26 |
| $ | 153 |
| $ | — |
| | $ | — |
| $ | 303 |
| $ | (371 | ) | $ | (48 | ) | $ | — |
| $ | 63 |
| | | | | | | | | | | | Nine Months Ended September 30, 2015 | | | | | | | | | | | Assets | | | | | | | | | | | Other investments | $ | 100 |
| $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 100 |
| Investment securities available-for-sale | | | | | | | | | | | Municipal obligation | 2 |
| — |
| — |
| | — |
| — |
| — |
| (2 | ) | — |
| — |
| Loans held-for-investment | | | | | | | | | | | Second mortgage loans | 53 |
| 2 |
| 1 |
| | — |
| — |
| — |
| (11 | ) | — |
| 45 |
| HELOC loans | 132 |
| (4 | ) | — |
| | — |
| — |
| — |
| (48 | ) | — |
| 80 |
| Mortgage servicing rights | 258 |
| (40 | ) | — |
| | — |
| 220 |
| (144 | ) | — |
| — |
| 294 |
| Totals | $ | 545 |
| $ | (42 | ) | $ | 1 |
| | $ | — |
| $ | 220 |
| $ | (144 | ) | $ | (61 | ) | $ | — |
| $ | 519 |
| Liabilities | | | | | | | | | | | Long-term debt | $ | (84 | ) | $ | — |
| $ | (3 | ) | | $ | — |
| $ | — |
| $ | 24 |
| $ | 31 |
| $ | — |
| $ | (32 | ) | DOJ litigation | (82 | ) | (2 | ) | — |
| | — |
| — |
| — |
| — |
| — |
| (84 | ) | Totals | $ | (166 | ) | $ | (2 | ) | $ | (3 | ) | | $ | — |
| $ | — |
| $ | 24 |
| $ | 31 |
| $ | — |
| $ | (116 | ) | Derivative financial instruments (net) | | | | | | | | | | | Rate lock commitments | $ | 31 |
| $ | 60 |
| $ | — |
| | $ | — |
| $ | 272 |
| $ | (276 | ) | $ | (43 | ) | $ | — |
| $ | 44 |
|
|
| Fair Value Inputs, Assets and Liabilities Measured on Recurring Basis, Quantitative Information |
The following tables present the quantitative information about recurring level 3 fair value financial instruments and the fair value measurements as of September 30, 2016 and December 31, 2015: | | | | | | | | | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | September 30, 2016 | (Dollars in millions) | Assets | | Second mortgage loans | $ | 41 |
| Discounted cash flows | Discount rate
Constant prepayment rate
Constant default rate | 8.0% - 12.0% (10.0%) 10.9% - 16.4% (13.6%)
2.7% - 4.1% (3.4%) | HELOC loans | $ | 31 |
| Discounted cash flows | Discount rate | 6.6% - 9.9% (8.2%) | Mortgage servicing rights | $ | 302 |
| Discounted cash flows | Option adjusted spread
Constant prepayment rate
Weighted average cost to service per loan | 7.4% - 11.0% (9.2%)
12.8% - 18.5% (15.7%)
$57 - $85 ($71) | Liabilities | | | | | DOJ litigation settlement | $ | (60 | ) | Discounted cash flows | Discount rate | 5.7% - 8.5% (7.1%) | Derivative financial instruments | | | | | Rate lock commitments | $ | 63 |
| Consensus pricing | Origination pull-through rate | 66.6% - 99.9% (83.3%) |
| | | | | | | | | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | December 31, 2015 | (Dollars in millions) | Assets | | Second mortgage loans | $ | 42 |
| Discounted cash flows | Discount rate
Constant prepayment rate
Constant default rate | 7.2% - 10.8% (9.0%)13.5% - 20.2% (16.9%)
2.6% - 4.0% (3.3%) | HELOC loans | $ | 64 |
| Discounted cash flows | Discount rate | 6.8% - 10.1% (8.4%) | Mortgage servicing rights | $ | 296 |
| Discounted cash flows | Option adjusted spread
Constant prepayment rate
Weighted average cost to service per loan | 6.6% - 9.9% (8.2%)
10.3% - 14.8% (12.6%)
$57 - $86 ($72) | Liabilities | | | | | DOJ litigation settlement | $ | (84 | ) | Discounted cash flows | Discount rate | 4.9% - 9.5% (7.2%) | Derivative financial instruments | | | | | Rate lock commitments | $ | 26 |
| Consensus pricing | Origination pull-through rate | 67.6% - 101.5% (84.6%) |
|
| Fair Value Inputs, Assets, Quantitative Information |
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 would result in a significantly lower (higher) fair value measurement. Additionally, the key economic assumptions used in determining the fair value of MSRs capitalized during the three and nine months ended September 30, 2016 and 2015 periods were as follows: | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2016 | | 2015 | | 2016 | | 2015 | Weighted average life (in years) | 6.7 |
| | 7.9 |
| | 6.9 |
| | 7.9 |
| Weighted average constant prepayment rate | 13.4 | % | | 11.0 | % | | 13.5 | % | | 11.2 | % | Weighted average option adjusted spread | 11.8 | % | | 8.9 | % | | 9.5 | % | | 8.7 | % |
The key economic assumptions reflected in the overall fair value of the entire portfolio of MSRs were as follows: | | | | | | | | September 30,
2016 | | December 31,
2015 | Weighted average life (in years) | 6.0 |
| | 7.3 |
| Weighted average constant prepayment rate | 15.7 | % | | 12.6 | % | Weighted average option adjusted spread | 9.2 | % | | 8.2 | % |
|
| Fair Value Measurements, Nonrecurring |
These assets are measured at the lower of cost or market and had a fair value below cost at the end of the period as summarized below: | | | | | | | | | | | | | | Total (1) | | Level 2 | | Level 3 | | (Dollars in millions) | September 30, 2016 | | Loans held-for-sale (2) | $ | 10 |
| | $ | 10 |
| | $ | — |
| Impaired loans held-for-investment (3) | | | | | | Residential first mortgage loans | 22 |
| | — |
| | 22 |
| Commercial and industrial loans | 1 |
| | — |
| | 1 |
| Repossessed assets (4) | 15 |
| | — |
| | 15 |
| Totals | $ | 48 |
| | $ | 10 |
| | $ | 38 |
| December 31, 2015 | | | | | | Loans held-for-sale (2) | $ | 8 |
| | $ | 8 |
| | $ | — |
| Impaired loans held-for-investment (3) | | | | | | Residential first mortgage loans | 40 |
| | — |
| | 40 |
| Commercial real estate loans | 2 |
| | — |
| | 2 |
| Repossessed assets (4) | 17 |
| | — |
| | 17 |
| Totals | $ | 67 |
| | $ | 8 |
| | $ | 59 |
|
| | (1) | The fair values are obtained at various dates during the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively. |
| | (2) | We recorded less than $1 million in fair value losses on loans held-for-sale for which we did not elect the fair value option (included in interest income on the Consolidated Statements of Operations) during both the three and nine months ended September 30, 2016, respectively, compared to less than $1 million in fair value losses on loans held-for-sale during both the three and nine months ended September 30, 2015, respectively. |
| | (3) | We recorded $11 million and $31 million in fair value losses on impaired loans (included in provision (benefit) for loan losses on Consolidated Statements of Operations) during the three and nine months ended September 30, 2016, respectively, compared to $20 million and $76 million in fair value losses on impaired loans during the three and nine months ended September 30, 2015, respectively. |
| | (4) | We recorded zero and $2 million in losses related to write downs of repossessed assets based on the estimated fair value of the specific assets during the three and nine months ended September 30, 2016, respectively, and recognized net gain of $1 million and $2 million on sales of repossessed assets (both write downs and net gains/losses are included in assets resolution expense on the Consolidated Statements of Operations) during the three and nine months ended September 30, 2016. We recorded $1 million and $2 million in losses related to write downs of repossessed assets based on the estimated fair value of the specific assets during the three and nine months ended September 30, 2015, respectively, and recognized a net gain of $1 million and $2 million on sales of repossessed assets during the three and nine months ended September 30, 2015, respectively. |
|
| Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques |
The following tables present the quantitative information about nonrecurring level 3 fair value financial instruments and the fair value measurements as of September 30, 2016 and December 31, 2015: | | | | | | | | | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | September 30, 2016 | (Dollars in millions) | Impaired loans held-for-investment | | | | | Residential first mortgage loans | $ | 22 |
| Fair value of collateral | Loss severity discount | 23% - 28% (25.6%) | Commercial and industrial loans | $ | 1 |
| Fair value of collateral | Loss severity discount | 50% - 55% (53.4%) | Repossessed assets | $ | 15 |
| Fair value of collateral | Loss severity discount | 35% - 98% (61.7%) |
| | | | | | | | | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | December 31, 2015 | (Dollars in millions) | Impaired loans held-for-investment | | | | | Residential first mortgage loans | $ | 40 |
| Fair value of collateral | Loss severity discount | 35% - 45% (35.2%) | Commercial real estate loans | $ | 2 |
| Fair value of collateral | Loss severity discount | 45% - 55% (50.1%) | Repossessed assets | $ | 17 |
| Fair value of collateral | Loss severity discount | 16% - 100% (48.7%) |
|
| Fair Value, by Balance Sheet Grouping |
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, 2016 | | | | Estimated Fair Value | | Carrying Value | | Total | | Level 1 | | Level 2 | | Level 3 | | (Dollars in millions) | Assets | | | | | | | | | | Cash and cash equivalents | $ | 174 |
| | $ | 174 |
| | $ | 174 |
| | $ | — |
| | $ | — |
| Investment securities available-for-sale | 1,115 |
| | 1,115 |
| | — |
| | 1,115 |
| | — |
| Investment securities held-to-maturity | 1,156 |
| | 1,177 |
| | — |
| | 1,177 |
| | — |
| Loans held-for-sale | 3,393 |
| | 3,394 |
| | — |
| | 3,394 |
| | — |
| Loans with government guarantees | 404 |
| | 391 |
| | — |
| | 391 |
| | — |
| Loans held-for-investment, net | 6,147 |
| | 6,134 |
| | — |
| | 8 |
| | 6,126 |
| Repossessed assets | 15 |
| | 15 |
| | — |
| | — |
| | 15 |
| Federal Home Loan Bank stock | 172 |
| | 172 |
| | — |
| | 172 |
| | — |
| Mortgage servicing rights | 302 |
| | 302 |
| | — |
| | — |
| | 302 |
| Bank owned life insurance | 269 |
| | 269 |
| | — |
| | 269 |
| | — |
| Other assets, foreclosure claims | 152 |
| | 152 |
| | — |
| | 152 |
| | — |
| Derivative financial instruments, assets | 119 |
| | 119 |
| | 1 |
| | 55 |
| | 63 |
| Liabilities | | | | | | | | | | Retail deposits | | | | | | | | | | Demand deposits and savings accounts | $ | (5,204 | ) | | $ | (4,961 | ) | | $ | — |
| | $ | (4,961 | ) | | $ | — |
| Certificates of deposit | (1,083 | ) | | (1,095 | ) | | — |
| | (1,095 | ) | | — |
| Government deposits | (1,176 | ) | | (1,158 | ) | | — |
| | (1,158 | ) | | — |
| Company controlled deposits | (1,908 | ) | | (1,839 | ) | | — |
| | (1,839 | ) | | — |
| Federal Home Loan Bank advances | (2,482 | ) | | (2,450 | ) | | — |
| | (2,450 | ) | | — |
| Other long-term debt | (493 | ) | | (257 | ) | | — |
| | (257 | ) | | — |
| Warrant liabilities | (10 | ) | | (10 | ) | | — |
| | (10 | ) | | — |
| DOJ litigation settlement | (60 | ) | | (60 | ) | | — |
| | — |
| | (60 | ) | Derivative financial instruments, liabilities | (93 | ) | | (93 | ) | | — |
| | (93 | ) | | — |
|
| | | | | | | | | | | | | | | | | | | | | | December 31, 2015 | | | | Estimated Fair Value | | Carrying Value | | Total | | Level 1 | | Level 2 | | Level 3 | | (Dollars in millions) | Assets | | | | | | | | | | Cash and cash equivalents | $ | 208 |
| | $ | 208 |
| | $ | 208 |
| | $ | — |
| | $ | — |
| Investment securities available-for-sale | 1,294 |
| | 1,294 |
| | — |
| | 1,294 |
| | — |
| Investment securities held-to-maturity | 1,268 |
| | 1,262 |
| | — |
| | 1,262 |
| | — |
| Loans held-for-sale | 2,576 |
| | 2,578 |
| | — |
| | 2,578 |
| | — |
| Loans with government guarantees | 485 |
| | 469 |
| | — |
| | 469 |
| | — |
| Loans held-for-investment, net | 6,165 |
| | 6,121 |
| | — |
| | 6 |
| | 6,115 |
| Repossessed assets | 17 |
| | 17 |
| | — |
| | — |
| | 17 |
| Federal Home Loan Bank stock | 170 |
| | 170 |
| | — |
| | 170 |
| | — |
| Mortgage servicing rights | 296 |
| | 296 |
| | — |
| | — |
| | 296 |
| Bank owned life insurance | 178 |
| | 178 |
| | — |
| | 178 |
| | — |
| Other assets, foreclosure claims | 210 |
| | 210 |
| | — |
| | 210 |
| | — |
| Derivative financial instruments, assets | 58 |
| | 58 |
| | 7 |
| | 25 |
| | 26 |
| Liabilities | | | | | | | | | | Retail deposits | | | | | | | | | | Demand deposits and savings accounts | $ | (5,008 | ) | | $ | (4,744 | ) | | $ | — |
| | $ | (4,744 | ) | | $ | — |
| Certificates of deposit | (826 | ) | | (833 | ) | | — |
| | (833 | ) | | — |
| Government deposits | (1,062 | ) | | (1,045 | ) | | — |
| | (1,045 | ) | | — |
| Company controlled deposits | (1,039 | ) | | (947 | ) | | — |
| | (947 | ) | | — |
| Federal Home Loan Bank advances | (3,541 | ) | | (3,543 | ) | | — |
| | (3,543 | ) | | — |
| Long-term debt | (247 | ) | | (89 | ) | | — |
| | (89 | ) | | — |
| Warrant liabilities | (8 | ) | | (8 | ) | | — |
| | (8 | ) | | — |
| DOJ litigation settlement | (84 | ) | | (84 | ) | | — |
| | — |
| | (84 | ) | Derivative financial instruments, liabilities | (18 | ) | | (18 | ) | | (1 | ) | | (17 | ) | | — |
|
|
| Schedule of 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, | | | 2016 | | 2015 | | 2016 | | 2015 | Assets | (Dollars in millions) | Loans held-for-sale | | | | | | | | | Net gain on loan sales | $ | 151 |
| | $ | 134 |
| | $ | 440 |
| | $ | 276 |
| Loans held-for-investment | | | | | | | | | Interest income on loans | $ | — |
| | $ | 1 |
| | $ | (2 | ) | | $ | 4 |
| | Other noninterest income | — |
| | (1 | ) | | — |
| | (35 | ) | Liabilities | | | | | | | | Long-term debt | | | | | | | | | Other noninterest income | $ | — |
| | $ | 3 |
| | $ | — |
| | $ | 28 |
| Litigation settlement | | | | | | | | | Other noninterest income | $ | 24 |
| | $ | — |
| | $ | 24 |
| | $ | 2 |
| | Other noninterest (expense) | $ | — |
| | $ | — |
| | $ | — |
| | $ | (2 | ) |
|
| Fair Value, Option, Quantitative Disclosures |
The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding as of September 30, 2016 and December 31, 2015 for assets and liabilities for which the fair value option has been elected: | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2016 | | December 31, 2015 | | | (Dollars in millions) | |
| Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) Unpaid Principal Balance | Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) Unpaid Principal Balance | Assets | | | | | | | | Nonaccrual loans | | | | | | | | Loans held-for-sale | $ | 2 |
| $ | 2 |
| $ | — |
| | $ | 1 |
| $ | — |
| $ | (1 | ) | Loans held-for-investment | 18 |
| 12 |
| (6 | ) | | 21 |
| 10 |
| (11 | ) | Total nonaccrual loans | $ | 20 |
| $ | 14 |
| $ | (6 | ) | | $ | 22 |
| $ | 10 |
| $ | (12 | ) | Other performing loans | | | | | | | | Loans held-for-sale | $ | 3,217 |
| $ | 3,350 |
| $ | 133 |
| | $ | 2,451 |
| $ | 2,541 |
| $ | 90 |
| Loans held-for-investment | 81 |
| 68 |
| (13 | ) | | 112 |
| 101 |
| (11 | ) | Total other performing loans | $ | 3,298 |
| $ | 3,418 |
| $ | 120 |
| | $ | 2,563 |
| $ | 2,642 |
| $ | 79 |
| Total loans | | | | | | | | Loans held-for-sale | $ | 3,219 |
| $ | 3,352 |
| $ | 133 |
| | $ | 2,452 |
| $ | 2,541 |
| $ | 89 |
| Loans held-for-investment | 99 |
| 80 |
| (19 | ) | | 133 |
| 111 |
| (22 | ) | Total loans | $ | 3,318 |
| $ | 3,432 |
| $ | 114 |
| | $ | 2,585 |
| $ | 2,652 |
| $ | 67 |
| Liabilities | | | | | | | | Litigation settlement (1) | $ | (118 | ) | $ | (60 | ) | $ | 58 |
| | $ | (118 | ) | $ | (84 | ) | $ | 34 |
|
| | (1) | We are obligated to pay $118 million in installment payments upon meeting certain performance conditions. |
|