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Share Name | Share Symbol | Market | Type |
---|---|---|---|
E TRADE Financial Corporation | NASDAQ:ETFC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 49.26 | 48.50 | 51.87 | 0 | 01:00:00 |
Delaware
|
|
94-2844166
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
x
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
|
¨
|
Emerging growth company
¨
|
|
|
|
PART I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
||
|
Condensed
Consolidated Statement of Income
|
|
|
||
|
Condensed
Consolidated Balance Sheet
|
|
|
||
|
Condensed
Consolidated Statement of Cash Flows
|
|
|
Notes to
Condensed
Consolidated Financial Statements
(Unaudited)
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 3.
|
||
|
||
Item 4.
|
||
PART II
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
•
|
Enhance overall customer experience
|
•
|
Capitalize on value of corporate services channel
|
•
|
Utilize balance sheet to enhance returns
|
•
|
Put capital to work for shareholders
|
•
|
Stock, options and exchange-traded fund (ETF) trade commissions reduced to $6.95 from $9.99
|
•
|
For active traders, commissions reduced to $4.95 from $7.99 and options charges reduced to $0.50 per contract from $0.75; trades for active tier reduced to 30 per quarter from 150
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
|
|
2017 vs. 2016
|
||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Net interest income
|
$
|
319
|
|
|
$
|
287
|
|
|
$
|
32
|
|
|
11
|
%
|
Total non-interest income
|
234
|
|
|
185
|
|
|
49
|
|
|
26
|
%
|
|||
Total net revenue
|
553
|
|
|
472
|
|
|
81
|
|
|
17
|
%
|
|||
Provision (benefit) for loan losses
|
(14
|
)
|
|
(34
|
)
|
|
20
|
|
|
(59
|
)%
|
|||
Total non-interest expense
|
342
|
|
|
312
|
|
|
30
|
|
|
10
|
%
|
|||
Income before income tax expense
|
225
|
|
|
194
|
|
|
31
|
|
|
16
|
%
|
|||
Income tax expense
|
80
|
|
|
41
|
|
|
39
|
|
|
95
|
%
|
|||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
|
$
|
(8
|
)
|
|
(5
|
)%
|
Preferred stock dividends
|
13
|
|
|
—
|
|
|
13
|
|
|
100
|
%
|
|||
Net income available to common shareholders
|
$
|
132
|
|
|
$
|
153
|
|
|
$
|
(21
|
)
|
|
(14
|
)%
|
Diluted earnings per common share
|
$
|
0.48
|
|
|
$
|
0.53
|
|
|
$
|
(0.05
|
)
|
|
(9
|
)%
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
|
|
2017 vs. 2016
|
||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Net interest income
|
$
|
319
|
|
|
$
|
287
|
|
|
$
|
32
|
|
|
11
|
%
|
Commissions
|
127
|
|
|
107
|
|
|
20
|
|
|
19
|
%
|
|||
Fees and service charges
|
86
|
|
|
58
|
|
|
28
|
|
|
48
|
%
|
|||
Gains on securities and other, net
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
%
|
|||
Other revenue
|
11
|
|
|
10
|
|
|
1
|
|
|
10
|
%
|
|||
Total non-interest income
|
234
|
|
|
185
|
|
|
49
|
|
|
26
|
%
|
|||
Total net revenue
|
$
|
553
|
|
|
$
|
472
|
|
|
$
|
81
|
|
|
17
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||
|
Average Balance
|
|
Interest Inc./Exp.
|
|
Average Yield/
Cost
|
|
Average Balance
|
|
Interest Inc./Exp.
|
|
Average Yield/
Cost
|
||||||||||
Cash and equivalents
|
$
|
1,345
|
|
|
$
|
2
|
|
|
0.64
|
%
|
|
$
|
1,611
|
|
|
$
|
2
|
|
|
0.41
|
%
|
Cash required to be segregated under federal or other regulations
|
1,684
|
|
|
3
|
|
|
0.71
|
%
|
|
1,133
|
|
|
1
|
|
|
0.32
|
%
|
||||
Available-for-sale securities
|
16,586
|
|
|
85
|
|
|
2.05
|
%
|
|
12,642
|
|
|
64
|
|
|
2.03
|
%
|
||||
Held-to-maturity securities
|
17,531
|
|
|
120
|
|
|
2.74
|
%
|
|
13,676
|
|
|
103
|
|
|
3.01
|
%
|
||||
Margin receivables
|
6,781
|
|
|
66
|
|
|
3.93
|
%
|
|
6,677
|
|
|
64
|
|
|
3.89
|
%
|
||||
Loans
(1)
|
3,608
|
|
|
43
|
|
|
4.77
|
%
|
|
4,804
|
|
|
51
|
|
|
4.23
|
%
|
||||
Broker-related receivables and other
|
1,119
|
|
|
—
|
|
|
0.12
|
%
|
|
349
|
|
|
—
|
|
|
0.29
|
%
|
||||
Subtotal interest-earning assets
|
48,654
|
|
|
319
|
|
|
2.63
|
%
|
|
40,892
|
|
|
285
|
|
|
2.79
|
%
|
||||
Other interest revenue
(2)
|
—
|
|
|
22
|
|
|
|
|
—
|
|
|
23
|
|
|
|
||||||
Total interest-earning assets
|
48,654
|
|
|
341
|
|
|
2.81
|
%
|
|
40,892
|
|
|
308
|
|
|
3.01
|
%
|
||||
Total non-interest-earning assets
(3)
|
5,252
|
|
|
|
|
|
|
4,921
|
|
|
|
|
|
||||||||
Total assets
|
$
|
53,906
|
|
|
|
|
|
|
$
|
45,813
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
34,869
|
|
|
$
|
1
|
|
|
0.01
|
%
|
|
$
|
29,567
|
|
|
$
|
1
|
|
|
0.01
|
%
|
Customer payables
|
8,686
|
|
|
1
|
|
|
0.06
|
%
|
|
6,452
|
|
|
1
|
|
|
0.07
|
%
|
||||
Broker-related payables and other
|
1,160
|
|
|
—
|
|
|
0.00
|
%
|
|
1,450
|
|
|
—
|
|
|
0.00
|
%
|
||||
Other borrowings
|
492
|
|
|
5
|
|
|
3.85
|
%
|
|
436
|
|
|
5
|
|
|
4.13
|
%
|
||||
Corporate debt
|
994
|
|
|
14
|
|
|
5.39
|
%
|
|
995
|
|
|
13
|
|
|
5.39
|
%
|
||||
Subtotal interest-bearing liabilities
|
46,201
|
|
|
21
|
|
|
0.18
|
%
|
|
38,900
|
|
|
20
|
|
|
0.21
|
%
|
||||
Other interest expense
(4)
|
—
|
|
|
1
|
|
|
|
|
—
|
|
|
1
|
|
|
|
||||||
Total interest-bearing liabilities
|
46,201
|
|
|
22
|
|
|
0.19
|
%
|
|
38,900
|
|
|
21
|
|
|
0.21
|
%
|
||||
Total non-interest-bearing liabilities
(5)
|
1,402
|
|
|
|
|
|
|
1,189
|
|
|
|
|
|
||||||||
Total liabilities
|
47,603
|
|
|
|
|
|
|
40,089
|
|
|
|
|
|
||||||||
Total shareholders' equity
|
6,303
|
|
|
|
|
|
|
5,724
|
|
|
|
|
|
||||||||
Total liabilities and shareholders' equity
|
$
|
53,906
|
|
|
|
|
|
|
$
|
45,813
|
|
|
|
|
|
||||||
Excess of interest earning assets over interest bearing liabilities/net interest income/net interest margin
|
$
|
2,453
|
|
|
$
|
319
|
|
|
2.63
|
%
|
|
$
|
1,992
|
|
|
$
|
287
|
|
|
2.81
|
%
|
(1)
|
Nonaccrual loans are included in the average loan balances. Interest payments received on nonaccrual loans are recognized on a cash basis in interest income until it is doubtful that full payment will be collected, at which point payments are applied to principal.
|
(2)
|
Represents interest income on securities loaned.
|
(3)
|
Non-interest earning assets consist of property and equipment, net, goodwill, other intangibles, net, deferred tax assets, net and other assets that do not generate interest income.
|
(4)
|
Represents interest expense on securities borrowed.
|
(5)
|
Non-interest bearing liabilities consist of other liabilities that do not generate interest expense.
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
|
|
2017 vs. 2016
|
||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Order flow revenue
|
$
|
31
|
|
|
$
|
22
|
|
|
$
|
9
|
|
|
41
|
%
|
Money market funds and sweep deposits revenue
(1)
|
22
|
|
|
8
|
|
|
14
|
|
|
175
|
%
|
|||
Mutual fund service fees
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
%
|
|||
Advisor management fees
|
8
|
|
|
7
|
|
|
1
|
|
|
14
|
%
|
|||
Foreign exchange revenue
|
8
|
|
|
4
|
|
|
4
|
|
|
100
|
%
|
|||
Reorganization fees
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
%
|
|||
Other fees and service charges
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
%
|
|||
Total fees and service charges
|
$
|
86
|
|
|
$
|
58
|
|
|
$
|
28
|
|
|
48
|
%
|
(1)
|
Includes revenue earned on average customer cash held by third parties based on the federal funds rate or LIBOR plus a negotiated spread or other contractual arrangements with the third party institutions.
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
|
|
2017 vs. 2016
|
||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Gains on available-for-sale securities
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
(7
|
)
|
|
(47
|
)%
|
Hedge ineffectiveness
|
(1
|
)
|
|
(2
|
)
|
|
1
|
|
|
(50
|
)%
|
|||
Equity method investment income (loss) and other
|
3
|
|
|
(3
|
)
|
|
6
|
|
|
(200
|
)%
|
|||
Gains on securities and other, net
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
|
|
2017 vs. 2016
|
||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Compensation and benefits
|
$
|
136
|
|
|
$
|
126
|
|
|
$
|
10
|
|
|
8
|
%
|
Advertising and market development
|
43
|
|
|
43
|
|
|
—
|
|
|
—
|
%
|
|||
Clearing and servicing
|
32
|
|
|
24
|
|
|
8
|
|
|
33
|
%
|
|||
Professional services
|
22
|
|
|
22
|
|
|
—
|
|
|
—
|
%
|
|||
Occupancy and equipment
|
27
|
|
|
23
|
|
|
4
|
|
|
17
|
%
|
|||
Communications
|
25
|
|
|
23
|
|
|
2
|
|
|
9
|
%
|
|||
Depreciation and amortization
|
20
|
|
|
20
|
|
|
—
|
|
|
—
|
%
|
|||
FDIC insurance premiums
|
8
|
|
|
6
|
|
|
2
|
|
|
33
|
%
|
|||
Amortization of other intangibles
|
9
|
|
|
5
|
|
|
4
|
|
|
80
|
%
|
|||
Restructuring and acquisition-related activities
|
4
|
|
|
2
|
|
|
2
|
|
|
100
|
%
|
|||
Other non-interest expenses
|
16
|
|
|
18
|
|
|
(2
|
)
|
|
(11
|
)%
|
|||
Total non-interest expense
|
$
|
342
|
|
|
$
|
312
|
|
|
$
|
30
|
|
|
10
|
%
|
|
Three Months Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
||||||||
|
Amount
|
|
Operating Margin %
|
|
Amount
|
|
Operating Margin %
|
||||
Income before income tax expense / operating margin
|
$
|
225
|
|
|
41%
|
|
$
|
194
|
|
|
41%
|
Provision (benefit) for loan losses
|
(14
|
)
|
|
|
|
(34
|
)
|
|
|
||
Adjusted income before income tax expense / adjusted operating margin
|
$
|
211
|
|
|
38%
|
|
$
|
160
|
|
|
34%
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|||||||
Cash and equivalents
|
$
|
998
|
|
|
$
|
1,950
|
|
|
$
|
(952
|
)
|
|
(49
|
)%
|
Segregated cash
|
1,876
|
|
|
1,460
|
|
|
416
|
|
|
28
|
%
|
|||
Securities
(1)
|
36,960
|
|
|
29,643
|
|
|
7,317
|
|
|
25
|
%
|
|||
Margin receivables
|
6,906
|
|
|
6,731
|
|
|
175
|
|
|
3
|
%
|
|||
Loans receivable, net
|
3,288
|
|
|
3,551
|
|
|
(263
|
)
|
|
(7
|
)%
|
|||
Receivables from brokers, dealers and clearing organizations
(2)
|
1,410
|
|
|
1,056
|
|
|
354
|
|
|
34
|
%
|
|||
Goodwill and other intangibles, net
|
2,682
|
|
|
2,690
|
|
|
(8
|
)
|
|
—
|
%
|
|||
Deferred tax assets, net
|
653
|
|
|
756
|
|
|
(103
|
)
|
|
(14
|
)%
|
|||
Other
(3)
|
1,106
|
|
|
1,162
|
|
|
(56
|
)
|
|
(5
|
)%
|
|||
Total assets
|
$
|
55,879
|
|
|
$
|
48,999
|
|
|
$
|
6,880
|
|
|
14
|
%
|
Liabilities and shareholders’ equity:
|
|
|
|
|
|
|
|
|||||||
Deposits
|
$
|
37,384
|
|
|
$
|
31,682
|
|
|
$
|
5,702
|
|
|
18
|
%
|
Customer payables
|
8,926
|
|
|
8,159
|
|
|
767
|
|
|
9
|
%
|
|||
Payables to brokers, dealers and clearing organizations
(4)
|
1,288
|
|
|
983
|
|
|
305
|
|
|
31
|
%
|
|||
Other borrowings
|
409
|
|
|
409
|
|
|
—
|
|
|
—
|
%
|
|||
Corporate debt
|
991
|
|
|
994
|
|
|
(3
|
)
|
|
—
|
%
|
|||
Other liabilities
|
437
|
|
|
500
|
|
|
(63
|
)
|
|
(13
|
)%
|
|||
Total liabilities
|
49,435
|
|
|
42,727
|
|
|
6,708
|
|
|
16
|
%
|
|||
Shareholders’ equity
|
6,444
|
|
|
6,272
|
|
|
172
|
|
|
3
|
%
|
|||
Total liabilities and shareholders’ equity
|
$
|
55,879
|
|
|
$
|
48,999
|
|
|
$
|
6,880
|
|
|
14
|
%
|
(1)
|
Includes balance sheet line items available-for-sale and held-to-maturity securities.
|
(2)
|
Includes deposits paid for securities borrowed of
$995 million
and
$774 million
as of March 31, 2017 and December 31, 2016, respectively.
|
(3)
|
Includes balance sheet line items property and equipment, net and other assets.
|
(4)
|
Includes deposits received for securities loaned of
$1.2 billion
and
$926 million
as of March 31, 2017 and December 31, 2016, respectively.
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|||||||
Debt securities:
|
|
|
|
|
|
|
|
|||||||
Agency mortgage-backed securities
|
$
|
16,496
|
|
|
$
|
12,634
|
|
|
$
|
3,862
|
|
|
31
|
%
|
Other debt securities
|
1,266
|
|
|
1,251
|
|
|
15
|
|
|
1
|
%
|
|||
Total debt securities
|
17,762
|
|
|
13,885
|
|
|
3,877
|
|
|
28
|
%
|
|||
Publicly traded equity securities
(1)
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
%
|
|||
Total available-for-sale securities
|
$
|
17,769
|
|
|
$
|
13,892
|
|
|
$
|
3,877
|
|
|
28
|
%
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|||||||
Agency mortgage-backed securities
|
$
|
16,218
|
|
|
$
|
12,868
|
|
|
$
|
3,350
|
|
|
26
|
%
|
Other debt securities
|
2,973
|
|
|
2,883
|
|
|
90
|
|
|
3
|
%
|
|||
Total held-to-maturity securities
|
$
|
19,191
|
|
|
$
|
15,751
|
|
|
$
|
3,440
|
|
|
22
|
%
|
Total investments in securities
|
$
|
36,960
|
|
|
$
|
29,643
|
|
|
$
|
7,317
|
|
|
25
|
%
|
(1)
|
Consists of Community Reinvestment Act investments in a mutual fund.
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
One- to four-family
|
$
|
1,819
|
|
|
$
|
1,950
|
|
|
$
|
(131
|
)
|
|
(7
|
)%
|
Home equity
|
1,437
|
|
|
1,556
|
|
|
(119
|
)
|
|
(8
|
)%
|
|||
Consumer
|
230
|
|
|
250
|
|
|
(20
|
)
|
|
(8
|
)%
|
|||
Total loans receivable
|
3,486
|
|
|
3,756
|
|
|
(270
|
)
|
|
(7
|
)%
|
|||
Unamortized premiums, net
|
15
|
|
|
16
|
|
|
(1
|
)
|
|
(6
|
)%
|
|||
Allowance for loan losses
|
(213
|
)
|
|
(221
|
)
|
|
8
|
|
|
(4
|
)%
|
|||
Total loans receivable, net
|
$
|
3,288
|
|
|
$
|
3,551
|
|
|
$
|
(263
|
)
|
|
(7
|
)%
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Sweep deposits
|
$
|
31,955
|
|
|
$
|
26,362
|
|
|
$
|
5,593
|
|
|
21
|
%
|
Savings deposits
|
3,238
|
|
|
3,185
|
|
|
53
|
|
|
2
|
%
|
|||
Other deposits
|
2,191
|
|
|
2,135
|
|
|
56
|
|
|
3
|
%
|
|||
Total deposits
|
$
|
37,384
|
|
|
$
|
31,682
|
|
|
$
|
5,702
|
|
|
18
|
%
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Sweep deposits
(1)
|
$
|
31,955
|
|
|
$
|
26,362
|
|
|
$
|
5,593
|
|
|
21
|
%
|
Customer payables
|
8,926
|
|
|
8,159
|
|
|
767
|
|
|
9
|
%
|
|||
Subtotal
|
40,881
|
|
|
34,521
|
|
|
6,360
|
|
|
18
|
%
|
|||
Customer cash held by third parties
(2)
|
12,572
|
|
|
16,848
|
|
|
(4,276
|
)
|
|
(25
|
)%
|
|||
Total brokerage related cash
|
$
|
53,453
|
|
|
$
|
51,369
|
|
|
$
|
2,084
|
|
|
4
|
%
|
(1)
|
Sweep deposits are held at bank subsidiaries and are included in the deposits line item on our consolidated balance sheet.
|
(2)
|
Customer cash held by third parties is not reflected on our consolidated balance sheet and is not immediately available for liquidity purposes.
|
|
|
|
Variance
|
|||||||||||
|
March 31,
|
|
December 31,
|
|
2017 vs. 2016
|
|||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Sweep deposits held by unaffiliated financial institutions
|
$
|
10,550
|
|
|
$
|
14,943
|
|
|
$
|
(4,393
|
)
|
|
(29
|
)%
|
Customer cash held by third party clearing firm
(1)
|
1,712
|
|
|
1,634
|
|
|
78
|
|
|
5
|
%
|
|||
Municipal funds and other
|
310
|
|
|
271
|
|
|
39
|
|
|
14
|
%
|
|||
Customer cash held by third parties
|
$
|
12,572
|
|
|
$
|
16,848
|
|
|
$
|
(4,276
|
)
|
|
(25
|
)%
|
(1)
|
Represents OptionsHouse customer cash held by third party.
|
•
|
Dividends from subsidiaries
|
•
|
Non-cumulative preferred stock dividends
|
•
|
Acquisitions and investments
|
•
|
Share repurchases
|
•
|
Debt service costs
|
•
|
Tax payments and the reimbursement from the parent company's subsidiaries for the use of its deferred tax assets
|
•
|
Other overhead and expense reimbursements through cost sharing arrangements
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
|
2016
|
||||||
Consolidated cash and equivalents
|
$
|
998
|
|
|
$
|
1,950
|
|
|
$
|
1,627
|
|
Less: Bank cash
|
(115
|
)
|
|
(840
|
)
|
|
(680
|
)
|
|||
Less: U.S. broker-dealers' cash
|
(433
|
)
|
|
(614
|
)
|
|
(440
|
)
|
|||
Less: Other cash
|
(33
|
)
|
|
(35
|
)
|
|
(25
|
)
|
|||
Corporate cash
|
$
|
417
|
|
|
$
|
461
|
|
|
$
|
482
|
|
•
|
A 364-day,
$400 million
senior unsecured committed revolving credit facility with a syndicate of banks that matures in June 2017
|
•
|
Secured committed lines of credit with
two
unaffiliated banks, aggregating to
$175 million
with a maturity date of June 2017
|
•
|
Unsecured uncommitted lines of credit with two unaffiliated banks, aggregating to
$100 million
, of which
$75 million
is scheduled to mature in June 2017 and the remaining line has no maturity date
|
•
|
Secured uncommitted lines of credit with several unaffiliated banks, aggregating to
$375 million
with no maturity date
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
|
2016
|
||||||
E*TRADE Financial shareholders’ equity
|
$
|
6,444
|
|
|
$
|
6,272
|
|
|
$
|
5,737
|
|
Deduct:
|
|
|
|
|
|
||||||
Preferred stock
|
(394
|
)
|
|
(394
|
)
|
|
—
|
|
|||
E*TRADE Financial Common Equity Tier 1 capital before regulatory adjustments
|
$
|
6,050
|
|
|
$
|
5,878
|
|
|
$
|
5,737
|
|
Add:
|
|
|
|
|
|
||||||
(Gains) losses in other comprehensive income on available-for-sale debt securities, net of tax
|
98
|
|
|
139
|
|
|
17
|
|
|||
Deduct:
|
|
|
|
|
|
||||||
Goodwill and other intangible assets, net of deferred tax liabilities
|
(2,058
|
)
|
|
(2,029
|
)
|
|
(1,435
|
)
|
|||
Disallowed deferred tax assets
|
(638
|
)
|
|
(505
|
)
|
|
(909
|
)
|
|||
E*TRADE Financial Common Equity Tier 1 capital
|
3,452
|
|
|
3,483
|
|
|
3,410
|
|
|||
Add:
|
|
|
|
|
|
||||||
Preferred stock
|
394
|
|
|
394
|
|
|
—
|
|
|||
Deduct:
|
|
|
|
|
|
||||||
Disallowed deferred tax assets
|
(136
|
)
|
|
(267
|
)
|
|
—
|
|
|||
E*TRADE Financial Tier 1 capital
|
$
|
3,710
|
|
|
$
|
3,610
|
|
|
$
|
3,410
|
|
Add:
|
|
|
|
|
|
||||||
Allowable allowance for loan losses
|
135
|
|
|
124
|
|
|
131
|
|
|||
Non-qualifying capital instruments subject to phase-out (trust preferred securities)
|
414
|
|
|
414
|
|
|
414
|
|
|||
E*TRADE Financial total capital
|
$
|
4,259
|
|
|
$
|
4,148
|
|
|
$
|
3,955
|
|
|
|
|
|
|
|
||||||
E*TRADE Financial average assets for leverage capital purposes
|
$
|
54,032
|
|
|
$
|
49,113
|
|
|
$
|
45,886
|
|
Deduct:
|
|
|
|
|
|
||||||
Goodwill and other intangible assets, net of deferred tax liabilities
|
(2,058
|
)
|
|
(2,029
|
)
|
|
(1,435
|
)
|
|||
Disallowed deferred tax assets
|
(774
|
)
|
|
(772
|
)
|
|
(909
|
)
|
|||
E*TRADE Financial adjusted average assets for leverage capital purposes
|
$
|
51,200
|
|
|
$
|
46,312
|
|
|
$
|
43,542
|
|
|
|
|
|
|
|
||||||
E*TRADE Financial total risk-weighted assets
(1)
|
$
|
10,466
|
|
|
$
|
9,422
|
|
|
$
|
9,882
|
|
|
|
|
|
|
|
||||||
E*TRADE Financial Tier 1 leverage ratio (Tier 1 capital / Adjusted average assets for leverage capital purposes)
|
7.2
|
%
|
|
7.8
|
%
|
|
7.8
|
%
|
|||
E*TRADE Financial Common Equity Tier 1 capital / Total risk-weighted assets
|
33.0
|
%
|
|
37.0
|
%
|
|
34.5
|
%
|
|||
E*TRADE Financial Tier 1 capital / Total risk-weighted assets
|
35.4
|
%
|
|
38.3
|
%
|
|
34.5
|
%
|
|||
E*TRADE Financial total capital / Total risk-weighted assets
|
40.7
|
%
|
|
44.0
|
%
|
|
40.0
|
%
|
(1)
|
Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets.
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
|
2016
|
||||||
E*TRADE Bank shareholder's equity
|
$
|
3,291
|
|
|
$
|
3,153
|
|
|
$
|
3,126
|
|
Add:
|
|
|
|
|
|
||||||
(Gains) losses in other comprehensive income on available-for-sale debt securities, net of tax
|
98
|
|
|
139
|
|
|
17
|
|
|||
Deduct:
|
|
|
|
|
|
||||||
Goodwill and other intangible assets, net of deferred tax liabilities
|
(38
|
)
|
|
(38
|
)
|
|
(38
|
)
|
|||
Disallowed deferred tax assets
|
(100
|
)
|
|
(122
|
)
|
|
(209
|
)
|
|||
E*TRADE Bank Common Equity Tier 1 capital / Tier 1 capital
|
3,251
|
|
|
3,132
|
|
|
2,896
|
|
|||
Add:
|
|
|
|
|
|
||||||
Allowable allowance for loan losses
|
118
|
|
|
105
|
|
|
113
|
|
|||
E*TRADE Bank total capital
|
$
|
3,369
|
|
|
$
|
3,237
|
|
|
$
|
3,009
|
|
|
|
|
|
|
|
||||||
E*TRADE Bank average assets for leverage capital purposes
|
$
|
40,501
|
|
|
$
|
35,885
|
|
|
$
|
34,073
|
|
Deduct:
|
|
|
|
|
|
||||||
Goodwill and other intangible assets, net of deferred tax liabilities
|
(38
|
)
|
|
(38
|
)
|
|
(38
|
)
|
|||
Disallowed deferred tax assets
|
(100
|
)
|
|
(122
|
)
|
|
(209
|
)
|
|||
E*TRADE Bank adjusted average assets for leverage capital purposes
|
$
|
40,363
|
|
|
$
|
35,725
|
|
|
$
|
33,826
|
|
|
|
|
|
|
|
||||||
E*TRADE Bank total risk-weighted assets
(1)
|
$
|
9,280
|
|
|
$
|
8,187
|
|
|
$
|
8,695
|
|
|
|
|
|
|
|
||||||
E*TRADE Bank Tier 1 leverage ratio (Tier 1 capital / Adjusted average assets for leverage capital purposes)
|
8.1
|
%
|
|
8.8
|
%
|
|
8.6
|
%
|
|||
E*TRADE Bank Common Equity Tier 1 capital / Total risk-weighted assets
|
35.0
|
%
|
|
38.3
|
%
|
|
33.3
|
%
|
|||
E*TRADE Bank Tier 1 capital / Total risk-weighted assets
|
35.0
|
%
|
|
38.3
|
%
|
|
33.3
|
%
|
|||
E*TRADE Bank total capital / Total risk-weighted assets
|
36.3
|
%
|
|
39.5
|
%
|
|
34.6
|
%
|
(1)
|
Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
One- to four-family
|
$
|
212
|
|
|
$
|
215
|
|
Home equity
|
130
|
|
|
136
|
|
||
Consumer
|
1
|
|
|
1
|
|
||
Total nonperforming loans receivable
|
343
|
|
|
352
|
|
||
Real estate owned and other repossessed assets, net
|
30
|
|
|
36
|
|
||
Total nonperforming assets, net
|
$
|
373
|
|
|
$
|
388
|
|
|
One- to Four-Family
|
|
Home Equity
|
|
Consumer
|
|
Total
|
||||||||||||||||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||
General reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Quantitative component
|
$
|
40
|
|
|
$
|
34
|
|
|
$
|
116
|
|
|
$
|
118
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
161
|
|
|
$
|
157
|
|
Qualitative component
|
1
|
|
|
4
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
6
|
|
||||||||
Specific valuation allowance
|
5
|
|
|
7
|
|
|
45
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
58
|
|
||||||||
Total allowance for loan losses
|
$
|
46
|
|
|
$
|
45
|
|
|
$
|
162
|
|
|
$
|
171
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
213
|
|
|
$
|
221
|
|
Allowance as a % of loans
receivable (1) |
2.5
|
%
|
|
2.3
|
%
|
|
11.2
|
%
|
|
11.0
|
%
|
|
2.1
|
%
|
|
1.9
|
%
|
|
6.1
|
%
|
|
5.8
|
%
|
(1)
|
Allowance as a percentage of loans receivable is calculated based on the gross loans receivable including net unamortized premiums for each respective category.
|
•
|
Interest-earning assets and interest-bearing liabilities may re-price at different times or by different amounts, creating a mismatch.
|
•
|
The yield curve may steepen, flatten or otherwise change shape, which could affect the spread between short- and long-term rates. Widening or narrowing spreads could impact net interest income.
|
•
|
Market interest rates may influence prepayments, resulting in maturity mismatches. In addition, prepayments could impact yields as premiums and discounts amortize.
|
(1)
|
These scenario analyses assume a balance sheet size as of the dates indicated. Any changes in size would cause the amounts to vary.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Interest income
|
$
|
341
|
|
|
$
|
308
|
|
Interest expense
|
(22
|
)
|
|
(21
|
)
|
||
Net interest income
|
319
|
|
|
287
|
|
||
Commissions
|
127
|
|
|
107
|
|
||
Fees and service charges
|
86
|
|
|
58
|
|
||
Gains on securities and other, net
|
10
|
|
|
10
|
|
||
Other revenue
|
11
|
|
|
10
|
|
||
Total non-interest income
|
234
|
|
|
185
|
|
||
Total net revenue
|
553
|
|
|
472
|
|
||
Provision (benefit) for loan losses
|
(14
|
)
|
|
(34
|
)
|
||
Non-interest expense:
|
|
|
|
||||
Compensation and benefits
|
136
|
|
|
126
|
|
||
Advertising and market development
|
43
|
|
|
43
|
|
||
Clearing and servicing
|
32
|
|
|
24
|
|
||
Professional services
|
22
|
|
|
22
|
|
||
Occupancy and equipment
|
27
|
|
|
23
|
|
||
Communications
|
25
|
|
|
23
|
|
||
Depreciation and amortization
|
20
|
|
|
20
|
|
||
FDIC insurance premiums
|
8
|
|
|
6
|
|
||
Amortization of other intangibles
|
9
|
|
|
5
|
|
||
Restructuring and acquisition-related activities
|
4
|
|
|
2
|
|
||
Other non-interest expenses
|
16
|
|
|
18
|
|
||
Total non-interest expense
|
342
|
|
|
312
|
|
||
Income before income tax expense
|
225
|
|
|
194
|
|
||
Income tax expense
|
80
|
|
|
41
|
|
||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
Preferred stock dividends
|
13
|
|
|
—
|
|
||
Net income available to common shareholders
|
$
|
132
|
|
|
$
|
153
|
|
Basic earnings per common share
|
$
|
0.48
|
|
|
$
|
0.54
|
|
Diluted earnings per common share
|
$
|
0.48
|
|
|
$
|
0.53
|
|
Shares used in computation of per common share data:
|
|
|
|
||||
Basic (in thousands)
|
274,876
|
|
|
285,274
|
|
||
Diluted (in thousands)
|
276,277
|
|
|
286,680
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
Other comprehensive income, net of tax
|
|
|
|
||||
Available-for-sale securities:
|
|
|
|
||||
Unrealized gains, net
|
46
|
|
|
94
|
|
||
Reclassification into earnings, net
|
(5
|
)
|
|
(9
|
)
|
||
Net change from available-for-sale securities
|
41
|
|
|
85
|
|
||
Reclassification of foreign currency translation gains
|
(2
|
)
|
|
—
|
|
||
Other comprehensive income
|
39
|
|
|
85
|
|
||
Comprehensive income
|
$
|
184
|
|
|
$
|
238
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Cash and equivalents
|
$
|
998
|
|
|
$
|
1,950
|
|
Cash required to be segregated under federal or other regulations
|
1,876
|
|
|
1,460
|
|
||
Available-for-sale securities
|
17,769
|
|
|
13,892
|
|
||
Held-to-maturity securities (fair value of $19,180 and $15,716 at March 31, 2017 and December 31, 2016, respectively)
|
19,191
|
|
|
15,751
|
|
||
Margin receivables
|
6,906
|
|
|
6,731
|
|
||
Loans receivable, net (net of allowance for loan losses of $213 million and $221 million at March 31, 2017 and December 31, 2016, respectively)
|
3,288
|
|
|
3,551
|
|
||
Receivables from brokers, dealers and clearing organizations
|
1,410
|
|
|
1,056
|
|
||
Property and equipment, net
|
239
|
|
|
239
|
|
||
Goodwill
|
2,370
|
|
|
2,370
|
|
||
Other intangibles, net
|
312
|
|
|
320
|
|
||
Deferred tax assets, net
|
653
|
|
|
756
|
|
||
Other assets
|
867
|
|
|
923
|
|
||
Total assets
|
$
|
55,879
|
|
|
$
|
48,999
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Deposits
|
$
|
37,384
|
|
|
$
|
31,682
|
|
Customer payables
|
8,926
|
|
|
8,159
|
|
||
Payables to brokers, dealers and clearing organizations
|
1,288
|
|
|
983
|
|
||
Other borrowings
|
409
|
|
|
409
|
|
||
Corporate debt
|
991
|
|
|
994
|
|
||
Other liabilities
|
437
|
|
|
500
|
|
||
Total liabilities
|
49,435
|
|
|
42,727
|
|
||
Commitments and contingencies (see Note 14)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, $1,000 liquidation preference, shares authorized: 1,000,000 at March 31, 2017 and December 31, 2016; shares issued and outstanding: 400,000 at both March 31, 2017 and December 31, 2016
|
394
|
|
|
394
|
|
||
Common stock, $0.01 par value, shares authorized: 400,000,000 at March 31, 2017 and December 31, 2016; shares issued and outstanding: 275,006,536 and 273,963,415 at March 31, 2017 and December 31, 2016, respectively
|
3
|
|
|
3
|
|
||
Additional paid-in-capital
|
6,919
|
|
|
6,921
|
|
||
Accumulated deficit
|
(774
|
)
|
|
(909
|
)
|
||
Accumulated other comprehensive loss
|
(98
|
)
|
|
(137
|
)
|
||
Total shareholders’ equity
|
6,444
|
|
|
6,272
|
|
||
Total liabilities and shareholders’ equity
|
$
|
55,879
|
|
|
$
|
48,999
|
|
|
|
|
|
|
Additional
Paid-in Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Shareholders’ Equity |
|||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|||||||||||||||||||
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2016
|
$
|
394
|
|
|
274
|
|
|
$
|
3
|
|
|
$
|
6,921
|
|
|
$
|
(909
|
)
|
|
$
|
(137
|
)
|
|
$
|
6,272
|
|
Cumulative effect of accounting change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|
—
|
|
|
145
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
39
|
|
||||||
Conversion of convertible debentures
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||||
Issuance of common stock for share-based compensation, net of shares withheld to pay taxes
|
—
|
|
|
1
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Balance at March 31, 2017
|
$
|
394
|
|
|
275
|
|
|
$
|
3
|
|
|
$
|
6,919
|
|
|
$
|
(774
|
)
|
|
$
|
(98
|
)
|
|
$
|
6,444
|
|
|
|
|
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Shareholders’
Equity
|
|||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|||||||||||||||||||
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2015
|
$
|
—
|
|
|
291
|
|
|
$
|
3
|
|
|
$
|
7,356
|
|
|
$
|
(1,461
|
)
|
|
$
|
(99
|
)
|
|
$
|
5,799
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
153
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
85
|
|
||||||
Conversion of convertible debentures
|
—
|
|
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Exercise of stock options and related tax effects
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Repurchases of common stock
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(301
|
)
|
|
—
|
|
|
—
|
|
|
(301
|
)
|
||||||
Issuance of common stock for share-based compensation, net of shares withheld to pay taxes
|
—
|
|
|
1
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Balance at March 31, 2016
|
$
|
—
|
|
|
280
|
|
|
$
|
3
|
|
|
$
|
7,056
|
|
|
$
|
(1,308
|
)
|
|
$
|
(14
|
)
|
|
$
|
5,737
|
|
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Provision (benefit) for loan losses
|
(14
|
)
|
|
(34
|
)
|
||
Depreciation and amortization (including discount amortization and accretion)
|
61
|
|
|
53
|
|
||
Gains on securities and other, net
|
(10
|
)
|
|
(10
|
)
|
||
Share-based compensation
|
10
|
|
|
8
|
|
||
Deferred tax expense
|
81
|
|
|
42
|
|
||
Other
|
(4
|
)
|
|
4
|
|
||
Net effect of changes in assets and liabilities:
|
|
|
|
||||
Increase in cash required to be segregated under federal or other regulations
|
(416
|
)
|
|
(1,101
|
)
|
||
Increase in receivables from brokers, dealers and clearing organizations
|
(354
|
)
|
|
(91
|
)
|
||
(Increase) decrease in margin receivables
|
(175
|
)
|
|
1,062
|
|
||
Decrease (increase) in other assets
|
13
|
|
|
(5
|
)
|
||
Increase (decrease) in payables to brokers, dealers and clearing organizations
|
305
|
|
|
(139
|
)
|
||
Increase in customer payables
|
767
|
|
|
249
|
|
||
Decrease in other liabilities
|
(44
|
)
|
|
(83
|
)
|
||
Net cash provided by operating activities
|
365
|
|
|
108
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale securities
|
(4,426
|
)
|
|
(1,993
|
)
|
||
Proceeds from sales of available-for-sale securities
|
248
|
|
|
703
|
|
||
Proceeds from maturities of and principal payments on available-for-sale securities
|
336
|
|
|
285
|
|
||
Purchases of held-to-maturity securities
|
(3,963
|
)
|
|
(2,378
|
)
|
||
Proceeds from maturities of and principal payments on held-to-maturity securities
|
513
|
|
|
430
|
|
||
Decrease in loans receivable
|
273
|
|
|
282
|
|
||
Capital expenditures for property and equipment
|
(23
|
)
|
|
(20
|
)
|
||
Proceeds from sale of real estate owned and repossessed assets
|
8
|
|
|
5
|
|
||
Net cash flow from derivative contracts
|
42
|
|
|
(38
|
)
|
||
Other
|
2
|
|
|
20
|
|
||
Net cash used in investing activities
|
(6,990
|
)
|
|
(2,704
|
)
|
E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
—
(Continued)
(In millions)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Increase in deposits
|
$
|
5,702
|
|
|
$
|
2,384
|
|
Preferred stock dividends
|
(13
|
)
|
|
—
|
|
||
Net decrease in securities sold under agreements to repurchase
|
—
|
|
|
(82
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(301
|
)
|
||
Other
|
(16
|
)
|
|
(11
|
)
|
||
Net cash provided by financing activities
|
5,673
|
|
|
1,990
|
|
||
Decrease in cash and equivalents
|
(952
|
)
|
|
(606
|
)
|
||
Cash and equivalents, beginning of period
|
1,950
|
|
|
2,233
|
|
||
Cash and equivalents, end of period
|
$
|
998
|
|
|
$
|
1,627
|
|
Supplemental disclosures:
|
|
|
|
||||
Cash paid for interest
|
$
|
20
|
|
|
$
|
17
|
|
Cash paid for income taxes, net of refunds
|
$
|
1
|
|
|
$
|
2
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Transfers from loans to other real estate owned and repossessed assets
|
$
|
6
|
|
|
$
|
5
|
|
Conversion of convertible debentures to common stock
|
$
|
3
|
|
|
$
|
4
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Interest income:
|
|
|
|
||||
Cash and equivalents
|
$
|
2
|
|
|
$
|
2
|
|
Cash required to be segregated under federal or other regulation
|
3
|
|
|
1
|
|
||
Available-for-sale securities
|
85
|
|
|
64
|
|
||
Held-to-maturity securities
|
120
|
|
|
103
|
|
||
Margin receivables
|
66
|
|
|
64
|
|
||
Loans
|
43
|
|
|
51
|
|
||
Subtotal interest income
|
319
|
|
|
285
|
|
||
Other interest revenue
(1)
|
22
|
|
|
23
|
|
||
Total interest income
|
341
|
|
|
308
|
|
||
Interest expense:
|
|
|
|
||||
Deposits
|
(1
|
)
|
|
(1
|
)
|
||
Customer payables
|
(1
|
)
|
|
(1
|
)
|
||
Other borrowings
|
(5
|
)
|
|
(5
|
)
|
||
Corporate debt
|
(14
|
)
|
|
(13
|
)
|
||
Subtotal interest expense
|
(21
|
)
|
|
(20
|
)
|
||
Other interest expense
(2)
|
(1
|
)
|
|
(1
|
)
|
||
Total interest expense
|
(22
|
)
|
|
(21
|
)
|
||
Net interest income
|
$
|
319
|
|
|
$
|
287
|
|
(1)
|
Represents interest income on securities loaned.
|
(2)
|
Represents interest expense on securities borrowed.
|
•
|
Level 1—unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company
|
•
|
Level 2—quoted prices for similar assets and liabilities in an active market, quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly
|
•
|
Level 3—unobservable inputs that are significant to the fair value of the assets or liabilities
|
|
Unobservable Inputs
|
|
Average
|
|
Range
|
||
March 31, 2017
|
|
|
|
|
|
||
Loans receivable:
|
|
|
|
|
|
||
One- to four-family
|
Appraised value
|
|
$
|
397,700
|
|
|
$50,000-$1,100,000
|
Home equity
|
Appraised value
|
|
$
|
312,300
|
|
|
$15,000-$2,400,000
|
Real estate owned
|
Appraised value
|
|
$
|
290,600
|
|
|
$29,000-$1,450,000
|
|
|
|
|
|
|
||
December 31, 2016
|
|
|
|
|
|
||
Loans receivable:
|
|
|
|
|
|
||
One- to four-family
|
Appraised value
|
|
$
|
408,100
|
|
|
$50,000-$1,490,000
|
Home equity
|
Appraised value
|
|
$
|
312,000
|
|
|
$6,000-$2,500,000
|
Real estate owned
|
Appraised value
|
|
$
|
342,300
|
|
|
$21,500-$1,800,000
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||
March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
—
|
|
|
$
|
16,496
|
|
|
$
|
—
|
|
|
$
|
16,496
|
|
Agency debentures
|
—
|
|
|
929
|
|
|
—
|
|
|
929
|
|
||||
U.S. Treasuries
|
—
|
|
|
281
|
|
|
—
|
|
|
281
|
|
||||
Agency debt securities
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||
Municipal bonds
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Total debt securities
|
—
|
|
|
17,762
|
|
|
—
|
|
|
17,762
|
|
||||
Publicly traded equity securities
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total available-for-sale securities
|
7
|
|
|
17,762
|
|
|
—
|
|
|
17,769
|
|
||||
Receivables from brokers, dealers and clearing organizations:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries
|
122
|
|
|
—
|
|
|
—
|
|
|
122
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Derivative assets
(1)
|
—
|
|
|
128
|
|
|
—
|
|
|
128
|
|
||||
Total assets measured at fair value on a recurring basis
(2)
|
$
|
129
|
|
|
$
|
17,890
|
|
|
$
|
—
|
|
|
$
|
18,019
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
(1)
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Total liabilities measured at fair value on a recurring basis
(2)
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Nonrecurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Loans receivable, net:
|
|
|
|
|
|
|
|
||||||||
One- to four-family
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Home equity
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
||||
Total loans receivable
|
—
|
|
|
—
|
|
|
31
|
|
|
31
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Real estate owned
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
||||
Total assets measured at fair value on a nonrecurring basis
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
48
|
|
(1)
|
All derivative assets and liabilities were interest rate contracts at
March 31, 2017
. Information related to derivative instruments is detailed in
Note 7—Derivative Instruments and Hedging Activities
.
|
(2)
|
Assets and liabilities measured at fair value on a recurring basis represented
32%
and less than
1%
of the Company’s total assets and total liabilities, respectively, at
March 31, 2017
.
|
(3)
|
Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at
March 31, 2017
, and for which a fair value measurement was recorded during the period.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||
December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
—
|
|
|
$
|
12,634
|
|
|
$
|
—
|
|
|
$
|
12,634
|
|
Agency debentures
|
—
|
|
|
788
|
|
|
—
|
|
|
788
|
|
||||
U.S. Treasuries
|
—
|
|
|
407
|
|
|
—
|
|
|
407
|
|
||||
Agency debt securities
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||
Municipal bonds
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Total debt securities
|
—
|
|
|
13,885
|
|
|
—
|
|
|
13,885
|
|
||||
Publicly traded equity securities
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total available-for-sale securities
|
7
|
|
|
13,885
|
|
|
—
|
|
|
13,892
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Derivative assets
(1)
|
—
|
|
|
165
|
|
|
—
|
|
|
165
|
|
||||
Total assets measured at fair value on a recurring basis
(2)
|
$
|
7
|
|
|
$
|
14,050
|
|
|
$
|
—
|
|
|
$
|
14,057
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
(1)
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
31
|
|
Total liabilities measured at fair value on a recurring basis
(2)
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
31
|
|
Nonrecurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Loans receivable, net:
|
|
|
|
|
|
|
|
||||||||
One- to four-family
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
25
|
|
Home equity
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
||||
Total loans receivable
|
—
|
|
|
—
|
|
|
46
|
|
|
46
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Real estate owned
|
—
|
|
|
—
|
|
|
35
|
|
|
35
|
|
||||
Total assets measured at fair value on a nonrecurring basis
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
81
|
|
(1)
|
All derivative assets and liabilities were interest rate contracts at
December 31, 2016
. Information related to derivative instruments is detailed in
Note 7—Derivative Instruments and Hedging Activities
.
|
(2)
|
Assets and liabilities measured at fair value on a recurring basis represented
29%
and less than
1%
of the Company’s total assets and total liabilities, respectively, at
December 31, 2016
.
|
(3)
|
Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at
December 31, 2016
, and for which a fair value measurement was recorded during the period.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
One- to four-family
|
$
|
1
|
|
|
$
|
1
|
|
Home equity
|
1
|
|
|
3
|
|
||
Total losses on loans receivable measured at fair value
|
$
|
2
|
|
|
$
|
4
|
|
|
|
|
|
||||
Losses (gains) on real estate owned measured at fair value
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
March 31, 2017
|
||||||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
998
|
|
|
$
|
998
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
998
|
|
Cash required to be segregated under federal or other regulations
|
$1,876
|
|
$1,876
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,876
|
|
||||
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Agency mortgage-backed securities
|
$
|
16,218
|
|
|
$
|
—
|
|
|
$
|
16,209
|
|
|
$
|
—
|
|
|
$
|
16,209
|
|
Agency debentures
|
203
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
203
|
|
|||||
Agency debt securities
|
2,766
|
|
|
—
|
|
|
2,764
|
|
|
—
|
|
|
2,764
|
|
|||||
Other non-agency debt securities
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|||||
Total held-to-maturity securities
|
$
|
19,191
|
|
|
$
|
—
|
|
|
$
|
19,176
|
|
|
$
|
4
|
|
|
$
|
19,180
|
|
Margin receivables
(1)
|
$
|
6,906
|
|
|
$
|
—
|
|
|
$6,906
|
|
$
|
—
|
|
|
$
|
6,906
|
|
||
Loans receivable, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
One- to four-family
|
$
|
1,784
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,819
|
|
|
$
|
1,819
|
|
Home equity
|
1,276
|
|
|
—
|
|
|
—
|
|
|
1,225
|
|
|
1,225
|
|
|||||
Consumer
|
228
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
227
|
|
|||||
Total loans receivable, net
(2)
|
$
|
3,288
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,271
|
|
|
$
|
3,271
|
|
Receivables from brokers, dealers and clearing organizations
(1)
|
$
|
1,288
|
|
|
$
|
—
|
|
|
$1,288
|
|
$
|
—
|
|
|
$
|
1,288
|
|
||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
37,384
|
|
|
$
|
—
|
|
|
$
|
37,384
|
|
|
$
|
—
|
|
|
$
|
37,384
|
|
Customer payables
|
$
|
8,926
|
|
|
$
|
—
|
|
|
$8,926
|
|
$
|
—
|
|
|
$
|
8,926
|
|
||
Payables to brokers, dealers and clearing organizations
|
$
|
1,288
|
|
|
$
|
—
|
|
|
$1,288
|
|
$
|
—
|
|
|
$
|
1,288
|
|
||
Trust preferred securities
|
$
|
409
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
305
|
|
|
$
|
305
|
|
Corporate debt
|
$
|
991
|
|
|
$
|
—
|
|
|
$
|
1,042
|
|
|
$
|
—
|
|
|
$
|
1,042
|
|
(1)
|
The fair value of securities that the Company received as collateral in connection with margin receivables and securities borrowing activities, where the Company is permitted to sell or re-pledge the securities, was approximately
$10.3 billion
and
$9.8 billion
at
March 31, 2017 and December 31, 2016
, respectively. Of this amount,
$2.5 billion
and
$2.0 billion
had been pledged or sold in connection with securities loans and deposits with clearing organizations at
March 31, 2017 and December 31, 2016
, respectively.
|
(2)
|
The carrying value of loans receivable, net includes the allowance for loan losses of
$213 million
and loans that are recorded at fair value on a nonrecurring basis at
March 31, 2017
.
|
|
December 31, 2016
|
||||||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
1,950
|
|
|
$
|
1,950
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,950
|
|
Cash required to be segregated under federal or other regulations
|
$
|
1,460
|
|
|
$
|
1,460
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,460
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Agency mortgage-backed securities
|
$
|
12,868
|
|
|
$
|
—
|
|
|
$
|
12,839
|
|
|
$
|
—
|
|
|
$
|
12,839
|
|
Agency debentures
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|||||
Agency debt securities
|
2,854
|
|
|
—
|
|
|
2,848
|
|
|
—
|
|
|
2,848
|
|
|||||
Total held-to-maturity securities
|
$
|
15,751
|
|
|
$
|
—
|
|
|
$
|
15,716
|
|
|
$
|
—
|
|
|
$
|
15,716
|
|
Margin receivables
|
$
|
6,731
|
|
|
$
|
—
|
|
|
$
|
6,731
|
|
|
$
|
—
|
|
|
$
|
6,731
|
|
Loans receivable, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
One- to four-family
|
$
|
1,918
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,942
|
|
|
$
|
1,942
|
|
Home equity
|
1,385
|
|
|
—
|
|
|
—
|
|
|
1,311
|
|
|
1,311
|
|
|||||
Consumer
|
248
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|
249
|
|
|||||
Total loans receivable, net
(1)
|
$
|
3,551
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,502
|
|
|
$
|
3,502
|
|
Receivables from brokers, dealers and clearing organizations
|
$
|
1,056
|
|
|
$
|
—
|
|
|
$
|
1,056
|
|
|
$
|
—
|
|
|
$
|
1,056
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
31,682
|
|
|
$
|
—
|
|
|
$
|
31,681
|
|
|
$
|
—
|
|
|
$
|
31,681
|
|
Customer Payables
|
$
|
8,159
|
|
|
$
|
—
|
|
|
$
|
8,159
|
|
|
$
|
—
|
|
|
$
|
8,159
|
|
Payables to brokers, dealers and clearing organizations
|
$
|
983
|
|
|
$
|
—
|
|
|
$
|
983
|
|
|
$
|
—
|
|
|
$
|
983
|
|
Trust preferred securities
|
$
|
409
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
288
|
|
|
$
|
288
|
|
Corporate debt
|
$
|
994
|
|
|
$
|
—
|
|
|
$
|
1,050
|
|
|
$
|
—
|
|
|
$
|
1,050
|
|
(1)
|
The carrying value of loans receivable, net includes the allowance for loan losses of
$221 million
and loans that are recorded at fair value on a nonrecurring basis at
December 31, 2016
.
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet
|
|
|
||||||||||||||
|
|
|
|
Gross Amounts of Recognized Assets and Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
|
Net Amounts Presented in the Consolidated Balance Sheet
(1)
|
|
Financial Instruments
|
|
Collateral Received or Pledged (Including Cash)
|
|
Net Amount
|
||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Deposits paid for securities borrowed
(2)
|
$
|
995
|
|
|
$
|
—
|
|
|
$
|
995
|
|
|
$
|
(273
|
)
|
|
$
|
(700
|
)
|
|
$
|
22
|
|
|
|
|
|
Total
|
$
|
995
|
|
|
$
|
—
|
|
|
$
|
995
|
|
|
$
|
(273
|
)
|
|
$
|
(700
|
)
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Deposits received for securities loaned
(3)
|
$
|
1,246
|
|
|
$
|
—
|
|
|
$
|
1,246
|
|
|
$
|
(273
|
)
|
|
$
|
(886
|
)
|
|
$
|
87
|
|
|
|
|
Derivative liabilities
(4)(5)
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||||
|
|
|
Total
|
$
|
1,250
|
|
|
$
|
—
|
|
|
$
|
1,250
|
|
|
$
|
(273
|
)
|
|
$
|
(890
|
)
|
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Deposits paid for securities borrowed
(2)
|
$
|
774
|
|
|
$
|
—
|
|
|
$
|
774
|
|
|
$
|
(192
|
)
|
|
$
|
(560
|
)
|
|
$
|
22
|
|
|
|
|
|
Total
|
$
|
774
|
|
|
$
|
—
|
|
|
$
|
774
|
|
|
$
|
(192
|
)
|
|
$
|
(560
|
)
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Deposits received for securities loaned
(3)
|
$
|
926
|
|
|
$
|
—
|
|
|
$
|
926
|
|
|
$
|
(192
|
)
|
|
$
|
(661
|
)
|
|
$
|
73
|
|
|
|
|
Derivative liabilities
(4)(5)
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||||||
|
|
|
Total
|
$
|
932
|
|
|
$
|
—
|
|
|
$
|
932
|
|
|
$
|
(192
|
)
|
|
$
|
(667
|
)
|
|
$
|
73
|
|
(1)
|
Net amount of deposits paid for securities borrowed are reflected in the receivables from brokers, dealers and clearing organizations line item in the consolidated balance sheet. Net amount of deposits received for securities loaned and derivative liabilities are reflected in the payables to brokers, dealers and clearing organizations and other liabilities line items in the consolidated balance sheet, respectively.
|
(2)
|
Included in the gross amounts of deposits paid for securities borrowed was
$701 million
and
$307 million
at
March 31, 2017 and December 31, 2016
, respectively, transacted through a program with a clearing organization, which guarantees the return of cash to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements.
|
(3)
|
Included in the gross amounts of deposits received for securities loaned was
$745 million
and
$546 million
at
March 31, 2017 and December 31, 2016
, respectively, transacted through a program with a clearing organization, which guarantees the return of securities to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements.
|
(4)
|
Excludes net accrued interest payable of
$1 million
and
$2 million
at
March 31, 2017 and December 31, 2016
, respectively.
|
(5)
|
The collateral pledged included held-to-maturity securities at amortized cost for
March 31, 2017
and available-for-sale securities at fair value for
December 31, 2016
.
|
|
Amortized
Cost
|
|
Gross
Unrealized /
Unrecognized
Gains
|
|
Gross
Unrealized /
Unrecognized
Losses
|
|
Fair Value
|
||||||||
March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
16,754
|
|
|
$
|
36
|
|
|
$
|
(294
|
)
|
|
$
|
16,496
|
|
Agency debentures
|
927
|
|
|
21
|
|
|
(19
|
)
|
|
929
|
|
||||
U.S. Treasuries
|
298
|
|
|
—
|
|
|
(17
|
)
|
|
281
|
|
||||
Agency debt securities
|
25
|
|
|
—
|
|
|
(1
|
)
|
|
24
|
|
||||
Municipal bonds
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
||||
Total debt securities
|
18,036
|
|
|
57
|
|
|
(331
|
)
|
|
17,762
|
|
||||
Publicly traded equity securities
(1)
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total available-for-sale securities
|
$
|
18,043
|
|
|
$
|
57
|
|
|
$
|
(331
|
)
|
|
$
|
17,769
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
16,218
|
|
|
$
|
132
|
|
|
$
|
(141
|
)
|
|
$
|
16,209
|
|
Agency debentures
|
203
|
|
|
—
|
|
|
—
|
|
|
203
|
|
||||
Agency debt securities
|
2,766
|
|
|
26
|
|
|
(28
|
)
|
|
2,764
|
|
||||
Other non-agency debt securities
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Total held-to-maturity securities
|
$
|
19,191
|
|
|
$
|
158
|
|
|
$
|
(169
|
)
|
|
$
|
19,180
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
12,946
|
|
|
$
|
24
|
|
|
$
|
(336
|
)
|
|
$
|
12,634
|
|
Agency debentures
|
791
|
|
|
18
|
|
|
(21
|
)
|
|
788
|
|
||||
U.S. Treasuries
|
452
|
|
|
—
|
|
|
(45
|
)
|
|
407
|
|
||||
Agency debt securities
|
25
|
|
|
—
|
|
|
(1
|
)
|
|
24
|
|
||||
Municipal bonds
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
||||
Total debt securities
|
14,246
|
|
|
42
|
|
|
(403
|
)
|
|
13,885
|
|
||||
Publicly traded equity securities
(1)
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Total available-for-sale securities
|
$
|
14,253
|
|
|
$
|
42
|
|
|
$
|
(403
|
)
|
|
$
|
13,892
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
||||||||
Agency mortgage-backed securities
|
$
|
12,868
|
|
|
$
|
123
|
|
|
$
|
(152
|
)
|
|
$
|
12,839
|
|
Agency debentures
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||
Agency debt securities
|
2,854
|
|
|
26
|
|
|
(32
|
)
|
|
2,848
|
|
||||
Total held-to-maturity securities
|
$
|
15,751
|
|
|
$
|
149
|
|
|
$
|
(184
|
)
|
|
$
|
15,716
|
|
(1)
|
Consists of investments in a mutual fund related to the Community Reinvestment Act.
|
|
Amortized Cost
|
|
Fair Value
|
||||
Available-for-sale debt securities:
|
|
|
|
||||
Due within one year
|
$
|
—
|
|
|
$
|
—
|
|
Due within one to five years
|
6
|
|
|
6
|
|
||
Due within five to ten years
|
6,452
|
|
|
6,324
|
|
||
Due after ten years
|
11,578
|
|
|
11,432
|
|
||
Total available-for-sale debt securities
|
$
|
18,036
|
|
|
$
|
17,762
|
|
Held-to-maturity debt securities:
|
|
|
|
||||
Due within one year
|
$
|
152
|
|
|
$
|
153
|
|
Due within one to five years
|
1,575
|
|
|
1,614
|
|
||
Due within five to ten years
|
5,177
|
|
|
5,178
|
|
||
Due after ten years
|
12,287
|
|
|
12,235
|
|
||
Total held-to-maturity debt securities
|
$
|
19,191
|
|
|
$
|
19,180
|
|
|
Less than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized /
Unrecognized
Losses
|
|
Fair Value
|
|
Unrealized /
Unrecognized
Losses
|
|
Fair Value
|
|
Unrealized /
Unrecognized
Losses
|
||||||||||||
March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Agency mortgage-backed securities
|
$
|
10,264
|
|
|
$
|
(243
|
)
|
|
$
|
1,666
|
|
|
$
|
(51
|
)
|
|
$
|
11,930
|
|
|
$
|
(294
|
)
|
Agency debentures
|
370
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
370
|
|
|
(19
|
)
|
||||||
U.S. Treasuries
|
281
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
281
|
|
|
(17
|
)
|
||||||
Agency debt securities
|
24
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(1
|
)
|
||||||
Municipal bonds
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
||||||
Publicly traded equity securities
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||||
Total temporarily impaired available-for-sale securities
|
$
|
10,968
|
|
|
$
|
(280
|
)
|
|
$
|
1,666
|
|
|
$
|
(51
|
)
|
|
$
|
12,634
|
|
|
$
|
(331
|
)
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Agency mortgage-backed securities
|
$
|
6,464
|
|
|
$
|
(113
|
)
|
|
$
|
1,189
|
|
|
$
|
(28
|
)
|
|
$
|
7,653
|
|
|
$
|
(141
|
)
|
Agency debentures
|
123
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
—
|
|
||||||
Agency debt securities
|
1,707
|
|
|
(28
|
)
|
|
18
|
|
|
—
|
|
|
1,725
|
|
|
(28
|
)
|
||||||
Total temporarily impaired held-to-maturity securities
|
$
|
8,294
|
|
|
$
|
(141
|
)
|
|
$
|
1,207
|
|
|
$
|
(28
|
)
|
|
$
|
9,501
|
|
|
$
|
(169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Agency mortgage-backed securities
|
$
|
9,281
|
|
|
$
|
(279
|
)
|
|
$
|
1,620
|
|
|
$
|
(57
|
)
|
|
$
|
10,901
|
|
|
$
|
(336
|
)
|
Agency debentures
|
454
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
454
|
|
|
(21
|
)
|
||||||
U.S. Treasuries
|
407
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
407
|
|
|
(45
|
)
|
||||||
Agency debt securities
|
24
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(1
|
)
|
||||||
Municipal bonds
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||||
Publicly traded equity securities
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||||
Total temporarily impaired available-for-sale securities
|
$
|
10,186
|
|
|
$
|
(346
|
)
|
|
$
|
1,620
|
|
|
$
|
(57
|
)
|
|
$
|
11,806
|
|
|
$
|
(403
|
)
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Agency mortgage-backed securities
|
$
|
5,929
|
|
|
$
|
(123
|
)
|
|
$
|
1,272
|
|
|
$
|
(29
|
)
|
|
$
|
7,201
|
|
|
$
|
(152
|
)
|
Agency debentures
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
||||||
Agency debt securities
|
1,739
|
|
|
(32
|
)
|
|
18
|
|
|
—
|
|
|
1,757
|
|
|
(32
|
)
|
||||||
Total temporarily impaired held-to-maturity securities
|
$
|
7,686
|
|
|
$
|
(155
|
)
|
|
$
|
1,290
|
|
|
$
|
(29
|
)
|
|
$
|
8,976
|
|
|
$
|
(184
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Gains on available-for-sale securities
|
$
|
8
|
|
|
$
|
15
|
|
Hedge ineffectiveness
|
(1
|
)
|
|
(2
|
)
|
||
Equity method investment income (loss) and other
|
3
|
|
|
(3
|
)
|
||
Gains on securities and other, net
|
$
|
10
|
|
|
$
|
10
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
One- to four-family
|
$
|
1,819
|
|
|
$
|
1,950
|
|
Home equity
|
1,437
|
|
|
1,556
|
|
||
Consumer
|
230
|
|
|
250
|
|
||
Total loans receivable
|
3,486
|
|
|
3,756
|
|
||
Unamortized premiums, net
|
15
|
|
|
16
|
|
||
Allowance for loan losses
|
(213
|
)
|
|
(221
|
)
|
||
Total loans receivable, net
|
$
|
3,288
|
|
|
$
|
3,551
|
|
|
Recorded Investment
|
|
Allowance for Loan Losses
|
||||||||||||
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
||||||||
One- to four-family
|
$
|
1,595
|
|
|
$
|
1,717
|
|
|
$
|
41
|
|
|
$
|
38
|
|
Home equity
|
1,249
|
|
|
1,361
|
|
|
117
|
|
|
120
|
|
||||
Consumer
|
233
|
|
|
253
|
|
|
5
|
|
|
5
|
|
||||
Total collectively evaluated for impairment
|
3,077
|
|
|
3,331
|
|
|
163
|
|
|
163
|
|
||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
||||||||
One- to four-family
|
236
|
|
|
246
|
|
|
5
|
|
|
7
|
|
||||
Home equity
|
188
|
|
|
195
|
|
|
45
|
|
|
51
|
|
||||
Total individually evaluated for impairment
|
424
|
|
|
441
|
|
|
50
|
|
|
58
|
|
||||
Total
|
$
|
3,501
|
|
|
$
|
3,772
|
|
|
$
|
213
|
|
|
$
|
221
|
|
|
One- to Four-Family
|
|
Home Equity
|
||||||||||||
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
||||||||
Current LTV/CLTV
(1)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
<=80%
|
$
|
1,208
|
|
|
$
|
1,308
|
|
|
$
|
650
|
|
|
$
|
686
|
|
80%-100%
|
392
|
|
|
413
|
|
|
379
|
|
|
414
|
|
||||
100%-120%
|
130
|
|
|
143
|
|
|
249
|
|
|
274
|
|
||||
>120%
|
89
|
|
|
86
|
|
|
159
|
|
|
182
|
|
||||
Total mortgage loans receivable
|
$
|
1,819
|
|
|
$
|
1,950
|
|
|
$
|
1,437
|
|
|
$
|
1,556
|
|
Average estimated current LTV/CLTV
(2)
|
73
|
%
|
|
73
|
%
|
|
86
|
%
|
|
87
|
%
|
||||
Average LTV/CLTV at loan origination
(3)
|
71
|
%
|
|
71
|
%
|
|
81
|
%
|
|
81
|
%
|
(1)
|
Current CLTV calculations for home equity loans are based on the maximum available line for HELOCs and outstanding principal balance for home equity installment loans. For home equity loans in the second lien position, the original balance of the first lien loan at origination date and updated valuations on the property underlying the loan are used to calculate CLTV. Current property value estimates are updated on a quarterly basis.
|
(2)
|
The average estimated current LTV/CLTV ratio reflects the outstanding balance at the balance sheet date and the maximum available line for HELOCs, divided by the estimated current value of the underlying property.
|
(3)
|
Average LTV/CLTV at loan origination calculations are based on LTV/CLTV at time of purchase for one- to four-family purchased loans and home equity installment loans and maximum available line for HELOCs
|
|
One- to Four-Family
|
|
Home Equity
|
||||||||||||
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
||||||||
Current FICO
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
>=720
|
$
|
1,041
|
|
|
$
|
1,121
|
|
|
$
|
705
|
|
|
$
|
778
|
|
719 - 700
|
166
|
|
|
179
|
|
|
152
|
|
|
156
|
|
||||
699 - 680
|
140
|
|
|
153
|
|
|
128
|
|
|
141
|
|
||||
679 - 660
|
106
|
|
|
121
|
|
|
99
|
|
|
117
|
|
||||
659 - 620
|
140
|
|
|
154
|
|
|
143
|
|
|
149
|
|
||||
<620
|
226
|
|
|
222
|
|
|
210
|
|
|
215
|
|
||||
Total mortgage loans receivable
|
$
|
1,819
|
|
|
$
|
1,950
|
|
|
$
|
1,437
|
|
|
$
|
1,556
|
|
Period of Conversion to Amortizing Loan
|
% of One- to Four-Family
Portfolio
|
|
% of Home Equity Line of
Credit Portfolio
|
Already amortizing
|
84%
|
|
96%
|
Q2 2017
|
11%
|
|
3%
|
Q3 2017 or later
|
5%
|
|
1%
|
|
Current
|
|
30-89 Days
Delinquent
|
|
90-179 Days
Delinquent
|
|
180+ Days
Delinquent
|
|
Total
|
||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
One- to four-family
|
$
|
1,623
|
|
|
$
|
84
|
|
|
$
|
25
|
|
|
$
|
87
|
|
|
$
|
1,819
|
|
Home equity
|
1,327
|
|
|
43
|
|
|
20
|
|
|
47
|
|
|
1,437
|
|
|||||
Consumer
|
225
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
230
|
|
|||||
Total loans receivable
|
$
|
3,175
|
|
|
$
|
131
|
|
|
$
|
46
|
|
|
$
|
134
|
|
|
$
|
3,486
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
One- to four-family
|
$
|
1,774
|
|
|
$
|
67
|
|
|
$
|
23
|
|
|
$
|
86
|
|
|
$
|
1,950
|
|
Home equity
|
1,442
|
|
|
43
|
|
|
18
|
|
|
53
|
|
|
1,556
|
|
|||||
Consumer
|
245
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
250
|
|
|||||
Total loans receivable
|
$
|
3,461
|
|
|
$
|
114
|
|
|
$
|
42
|
|
|
$
|
139
|
|
|
$
|
3,756
|
|
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
One- to four-family
|
$
|
212
|
|
|
$
|
215
|
|
Home equity
|
130
|
|
|
136
|
|
||
Consumer
|
1
|
|
|
1
|
|
||
Total nonperforming loans receivable
|
$
|
343
|
|
|
$
|
352
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||
|
One- to
Four-Family
|
|
Home
Equity
|
|
Consumer
|
|
Total
|
||||||||
Allowance for loan losses, beginning of period
|
$
|
45
|
|
|
$
|
171
|
|
|
$
|
5
|
|
|
$
|
221
|
|
Provision (benefit) for loan losses
|
—
|
|
|
(15
|
)
|
|
1
|
|
|
(14
|
)
|
||||
Charge-offs
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Recoveries
|
1
|
|
|
6
|
|
|
1
|
|
|
8
|
|
||||
Net (charge-offs) recoveries
|
1
|
|
|
6
|
|
|
(1
|
)
|
|
6
|
|
||||
Allowance for loan losses, end of period
|
$
|
46
|
|
|
$
|
162
|
|
|
$
|
5
|
|
|
$
|
213
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||
|
One- to
Four-Family
|
|
Home
Equity
|
|
Consumer
|
|
Total
|
||||||||
Allowance for loan losses, beginning of period
|
$
|
40
|
|
|
$
|
307
|
|
|
$
|
6
|
|
|
$
|
353
|
|
Provision (benefit) for loan losses
|
8
|
|
|
(42
|
)
|
|
—
|
|
|
(34
|
)
|
||||
Charge-offs
|
(1
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(8
|
)
|
||||
Recoveries
|
2
|
|
|
7
|
|
|
2
|
|
|
11
|
|
||||
Net (charge-offs) recoveries
|
1
|
|
|
2
|
|
|
—
|
|
|
3
|
|
||||
Allowance for loan losses, end of period
|
$
|
49
|
|
|
$
|
267
|
|
|
$
|
6
|
|
|
$
|
322
|
|
|
|
|
Nonaccrual TDRs
|
|
|
||||||||||||||||||
|
Accrual
TDRs
(1)
|
|
Current
(2)
|
|
30-89 Days
Delinquent
|
|
90-179 Days
Delinquent
|
|
180+ Days
Delinquent
|
|
Total Recorded
Investment in
TDRs
(3)(4)
|
||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One- to four-family
|
$
|
96
|
|
|
$
|
80
|
|
|
$
|
19
|
|
|
$
|
6
|
|
|
$
|
35
|
|
|
$
|
236
|
|
Home equity
|
112
|
|
|
41
|
|
|
11
|
|
|
4
|
|
|
20
|
|
|
188
|
|
||||||
Total
|
$
|
208
|
|
|
$
|
121
|
|
|
$
|
30
|
|
|
$
|
10
|
|
|
$
|
55
|
|
|
$
|
424
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One- to four-family
|
$
|
97
|
|
|
$
|
90
|
|
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
35
|
|
|
$
|
246
|
|
Home equity
|
119
|
|
|
41
|
|
|
10
|
|
|
4
|
|
|
21
|
|
|
195
|
|
||||||
Total
|
$
|
216
|
|
|
$
|
131
|
|
|
$
|
26
|
|
|
$
|
12
|
|
|
$
|
56
|
|
|
$
|
441
|
|
(1)
|
Represents loans modified as TDRs that are current and have made six or more consecutive payments.
|
(2)
|
Represents loans modified as TDRs that are current but have not yet made six consecutive payments, bankruptcy loans and certain junior lien TDRs that have a delinquent senior lien.
|
(3)
|
The unpaid principal balance in one- to four-family TDRs was
$234 million
and
$243 million
at
March 31, 2017 and December 31, 2016
, respectively. For home equity loans, the recorded investment in TDRs represents the unpaid principal balance.
|
(4)
|
Total recorded investment in TDRs at
March 31, 2017
consisted of
$307 million
of loans modified as TDRs and
$117 million
of loans that have been charged off due to bankruptcy notification. Total recorded investment in TDRs at
December 31, 2016
consisted of
$316 million
of loans modified as TDRs and
$125 million
of loans that have been charged off due to bankruptcy notification.
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
One- to four-family
|
$
|
241
|
|
|
$
|
282
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Home equity
|
192
|
|
|
205
|
|
|
4
|
|
|
4
|
|
||||
Total
|
$
|
433
|
|
|
$
|
487
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Recorded
Investment
in TDRs
|
|
Specific
Valuation
Allowance
|
|
Net
Investment
in TDRs
|
|
Recorded
Investment
in TDRs
|
|
Specific
Valuation
Allowance
|
|
Net
Investment
in TDRs
|
||||||||||||
With a recorded allowance:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One- to four-family
|
$
|
55
|
|
|
$
|
5
|
|
|
$
|
50
|
|
|
$
|
61
|
|
|
$
|
7
|
|
|
$
|
54
|
|
Home equity
|
$
|
101
|
|
|
$
|
45
|
|
|
$
|
56
|
|
|
$
|
111
|
|
|
$
|
51
|
|
|
$
|
60
|
|
Without a recorded allowance:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One- to four-family
|
$
|
181
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
$
|
185
|
|
|
$
|
—
|
|
|
$
|
185
|
|
Home equity
|
$
|
87
|
|
|
$
|
—
|
|
|
$
|
87
|
|
|
$
|
84
|
|
|
$
|
—
|
|
|
$
|
84
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One- to four-family
|
$
|
236
|
|
|
$
|
5
|
|
|
$
|
231
|
|
|
$
|
246
|
|
|
$
|
7
|
|
|
$
|
239
|
|
Home equity
|
$
|
188
|
|
|
$
|
45
|
|
|
$
|
143
|
|
|
$
|
195
|
|
|
$
|
51
|
|
|
$
|
144
|
|
(1)
|
Represents loans where the discounted cash flow analysis or collateral value is equal to or exceeds the recorded investment in the loan.
|
|
Three Months Ended March 31, 2017
|
|||||||||||||||||
|
|
|
Interest Rate Reduction
|
|
|
|
|
|||||||||||
|
Number of
Loans
|
|
Re-age/
Extension/
Interest
Capitalization
|
|
Other with
Interest Rate Reduction |
|
Other
(1)
|
|
Total
|
|||||||||
One- to four-family
|
8
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Home equity
|
161
|
|
|
3
|
|
|
—
|
|
|
8
|
|
|
11
|
|
||||
Total
|
169
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
13
|
|
|
Three Months Ended March 31, 2016
|
|||||||||||||||||
|
|
|
Interest Rate Reduction
|
|
|
|
|
|||||||||||
|
Number of
Loans |
|
Re-age/
Extension/ Interest Capitalization |
|
Other with
Interest Rate Reduction |
|
Other
(1)
|
|
Total
|
|||||||||
One- to four-family
|
14
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
5
|
|
Home equity
|
193
|
|
|
2
|
|
|
1
|
|
|
12
|
|
|
15
|
|
||||
Total
|
207
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
20
|
|
(1)
|
Amounts represent loans whose terms were modified in a manner that did not result in an interest rate reduction, including re-aged loans, extensions, and loans with capitalized interest.
|
|
|
|
Fair Value
(1)
|
||||||||||||
|
Notional
|
|
Asset
(2)
|
|
Liability
(3)
|
|
Net
(4)
|
||||||||
March 31, 2017
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||||
Fair value hedges
|
$
|
5,569
|
|
|
$
|
128
|
|
|
$
|
(12
|
)
|
|
$
|
116
|
|
Total derivatives designated as hedging instruments
(4)
|
$
|
5,569
|
|
|
$
|
128
|
|
|
$
|
(12
|
)
|
|
$
|
116
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||||
Fair value hedges
|
$
|
3,862
|
|
|
$
|
165
|
|
|
$
|
(31
|
)
|
|
$
|
134
|
|
Total derivatives designated as hedging instruments
(4)
|
$
|
3,862
|
|
|
$
|
165
|
|
|
$
|
(31
|
)
|
|
$
|
134
|
|
(1)
|
At March 31, 2017, excludes derivative assets and liabilities of
$16 million
and
$17 million
, respectively, that were executed through a central clearing organization and were settled by variation margin payments. See
Note 4—Offsetting Assets and Liabilities
for additional information.
|
(2)
|
Reflected in the other assets line item on the consolidated balance sheet.
|
(3)
|
Reflected in the other liabilities line item on the consolidated balance sheet.
|
(4)
|
Represents net fair value of derivative instruments for disclosure purposes only.
|
(5)
|
All derivatives were designated as hedging instruments at
March 31, 2017 and December 31, 2016
.
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Hedging
Instrument
|
|
Hedged
Item
|
|
Hedge
Ineffectiveness
(1)
|
|
Hedging
Instrument
|
|
Hedged
Item
|
|
Hedge
Ineffectiveness
(1)
|
||||||||||||
Agency debentures
|
$
|
11
|
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
(47
|
)
|
|
$
|
46
|
|
|
$
|
(1
|
)
|
Agency mortgage-backed securities
|
13
|
|
|
(14
|
)
|
|
(1
|
)
|
|
(69
|
)
|
|
68
|
|
|
(1
|
)
|
||||||
Total gains (losses) included in earnings
|
$
|
24
|
|
|
$
|
(25
|
)
|
|
$
|
(1
|
)
|
|
$
|
(116
|
)
|
|
$
|
114
|
|
|
$
|
(2
|
)
|
(1)
|
Reflected in the
gains on securities and other, net
line item on the
consolidated statement of income
.
|
|
Amount
|
|
Weighted-Average Rate
|
||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||
Sweep deposits
|
$
|
31,955
|
|
|
$
|
26,362
|
|
|
0.01
|
%
|
|
0.01
|
%
|
Savings deposits
|
3,238
|
|
|
3,185
|
|
|
0.01
|
%
|
|
0.01
|
%
|
||
Other deposits
(1)(2)
|
2,191
|
|
|
2,135
|
|
|
0.03
|
%
|
|
0.03
|
%
|
||
Total deposits
|
$
|
37,384
|
|
|
$
|
31,682
|
|
|
0.01
|
%
|
|
0.01
|
%
|
(1)
|
Includes checking deposits, money market and time deposits.
|
(2)
|
As of
March 31, 2017 and December 31, 2016
, the Company had
$195 million
and
$177 million
in non-interest bearing deposits, respectively.
|
•
|
A 364-day,
$400 million
senior unsecured committed revolving credit facility with a syndicate of banks that matures in June 2017
|
•
|
Secured committed lines of credit with
two
unaffiliated banks, aggregating to
$175 million
with a maturity date of June 2017
|
•
|
Unsecured uncommitted lines of credit with
two
unaffiliated banks aggregating to
$100 million
, of which
$75 million
is scheduled to mature in June 2017 and the remaining line has no maturity date
|
•
|
Secured uncommitted lines of credit with several unaffiliated banks aggregating to
$375 million
with no maturity date
|
|
Face Value
|
|
Discount
|
|
Net
|
||||||
March 31, 2017
|
|
|
|
|
|
||||||
Interest-bearing notes:
|
|
|
|
|
|
||||||
5
3
/
8
% Notes, due 2022
|
$
|
540
|
|
|
$
|
(5
|
)
|
|
$
|
535
|
|
4
5
/
8
% Notes, due 2023
|
460
|
|
|
(4
|
)
|
|
456
|
|
|||
Total corporate debt
|
$
|
1,000
|
|
|
$
|
(9
|
)
|
|
$
|
991
|
|
December 31, 2016
|
|
|
|
|
|
||||||
Interest-bearing notes:
|
|
|
|
|
|
||||||
5
3
/
8
% Notes, due 2022
|
$
|
540
|
|
|
$
|
(5
|
)
|
|
$
|
535
|
|
4
5
/
8
% Notes, due 2023
|
460
|
|
|
(4
|
)
|
|
456
|
|
|||
Total interest-bearing notes
|
1,000
|
|
|
(9
|
)
|
|
991
|
|
|||
Non-interest-bearing debt:
|
|
|
|
|
|
||||||
0% Convertible debentures, due 2019
|
3
|
|
|
—
|
|
|
3
|
|
|||
Total corporate debt
|
$
|
1,003
|
|
|
$
|
(9
|
)
|
|
$
|
994
|
|
|
Available-for-Sale
Securities
|
|
Foreign
Currency
Translation
|
|
Total
|
||||||
Balance, December 31, 2016
|
$
|
(139
|
)
|
|
$
|
2
|
|
|
$
|
(137
|
)
|
Other comprehensive income before reclassifications
|
46
|
|
|
—
|
|
|
46
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
(5
|
)
|
|
(2
|
)
|
|
(7
|
)
|
|||
Net change
|
41
|
|
|
(2
|
)
|
|
39
|
|
|||
Balance, March 31, 2017
|
$
|
(98
|
)
|
|
$
|
—
|
|
|
$
|
(98
|
)
|
|
Available-for-Sale
Securities
|
|
Foreign
Currency
Translation
|
|
Total
|
||||||
Balance, December 31, 2015
|
$
|
(101
|
)
|
|
$
|
2
|
|
|
$
|
(99
|
)
|
Other comprehensive income before reclassifications
|
94
|
|
|
—
|
|
|
94
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||
Net change
|
85
|
|
|
—
|
|
|
85
|
|
|||
Balance, March 31, 2016
|
$
|
(16
|
)
|
|
$
|
2
|
|
|
$
|
(14
|
)
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Before Tax
|
|
Tax Effect
|
|
After Tax
|
|
Before Tax
|
|
Tax Effect
|
|
After Tax
|
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gains, net
|
$
|
76
|
|
|
$
|
(30
|
)
|
|
$
|
46
|
|
|
$
|
152
|
|
|
$
|
(58
|
)
|
|
$
|
94
|
|
Reclassification into earnings, net
|
(8
|
)
|
|
3
|
|
|
(5
|
)
|
|
(15
|
)
|
|
6
|
|
|
(9
|
)
|
||||||
Net change from available-for-sale securities
|
68
|
|
|
(27
|
)
|
|
41
|
|
|
137
|
|
|
(52
|
)
|
|
85
|
|
||||||
Reclassification of foreign currency translation gains
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive income
|
$
|
66
|
|
|
$
|
(27
|
)
|
|
$
|
39
|
|
|
$
|
137
|
|
|
$
|
(52
|
)
|
|
$
|
85
|
|
Accumulated Other Comprehensive Loss Components
|
|
Amounts Reclassified from Accumulated Other Comprehensive Loss
|
|
Affected Line Items in the Consolidated Statement of Income
|
||||||
|
|
Three Months Ended March 31,
|
|
|
||||||
|
|
2017
|
|
2016
|
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
||||
|
|
$
|
8
|
|
|
$
|
15
|
|
|
Gains on securities and other, net
|
|
|
(3
|
)
|
|
(6
|
)
|
|
Income tax expense
|
||
|
|
$
|
5
|
|
|
$
|
9
|
|
|
Reclassification into earnings, net
|
Foreign currency translation:
|
|
|
|
|
|
|
||||
|
|
$
|
2
|
|
|
$
|
—
|
|
|
Other non-interest expenses
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
Reclassification into earnings, net
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Basic:
|
|
|
|
||||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
Preferred stock dividends
|
13
|
|
|
—
|
|
||
Net income available to common shareholders
|
$
|
132
|
|
|
$
|
153
|
|
Basic weighted-average shares outstanding (in thousands)
|
274,876
|
|
|
285,274
|
|
||
Basic earnings per common share
|
$
|
0.48
|
|
|
$
|
0.54
|
|
Diluted:
|
|
|
|
||||
Net income
|
$
|
145
|
|
|
$
|
153
|
|
Preferred stock dividends
|
13
|
|
|
—
|
|
||
Net income available to common shareholders
|
$
|
132
|
|
|
$
|
153
|
|
Basic weighted-average shares outstanding (in thousands)
|
274,876
|
|
|
285,274
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Weighted-average restricted stock and options issued to employees (in thousands)
|
1,109
|
|
|
809
|
|
||
Weighted-average convertible debentures (in thousands)
|
292
|
|
|
597
|
|
||
Diluted weighted-average shares outstanding (in thousands)
|
276,277
|
|
|
286,680
|
|
||
Diluted earnings per common share
|
$
|
0.48
|
|
|
$
|
0.53
|
|
|
Required Net
Capital
|
|
Net Capital
|
|
Excess Net
Capital
|
||||||
March 31, 2017:
|
|
|
|
|
|
||||||
E*TRADE Securities
(1)(2)
|
$
|
167
|
|
|
$
|
1,006
|
|
|
$
|
839
|
|
OptionsHouse
(3)
|
1
|
|
|
28
|
|
|
27
|
|
|||
Other broker-dealer
|
1
|
|
|
20
|
|
|
19
|
|
|||
Total
|
$
|
169
|
|
|
$
|
1,054
|
|
|
$
|
885
|
|
December 31, 2016:
|
|
|
|
|
|
||||||
E*TRADE Securities
(1)
|
$
|
158
|
|
|
$
|
969
|
|
|
$
|
811
|
|
OptionsHouse
(3)
|
1
|
|
|
22
|
|
|
21
|
|
|||
Other broker-dealer
|
—
|
|
|
21
|
|
|
21
|
|
|||
Total
|
$
|
159
|
|
|
$
|
1,012
|
|
|
$
|
853
|
|
(1)
|
Elected to use the Alternative method to compute required net capital.
|
(2)
|
E*TRADE Securities paid a dividend of
$70 million
to the parent company during the
three months ended March 31, 2017
and
$50 million
in April 2017.
|
(3)
|
Elected to use the Aggregate Indebtedness method to compute net capital; however, as OptionsHouse is an FCM, the prescribed fixed-dollar minimum capital requirement is
$1 million
.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||||||
|
Actual
|
|
Well Capitalized Minimum Capital
|
|
Excess Capital
|
|
Actual
|
|
Well Capitalized Minimum Capital
|
|
Excess Capital
|
||||||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
||||||||||||||||
E*TRADE Financial
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tier 1 leverage
|
$
|
3,710
|
|
|
7.2
|
%
|
|
$
|
2,560
|
|
|
5.0
|
%
|
|
$
|
1,150
|
|
|
$
|
3,610
|
|
|
7.8
|
%
|
|
$
|
2,316
|
|
|
5.0
|
%
|
|
$
|
1,294
|
|
Common equity Tier 1 capital
|
$
|
3,452
|
|
|
33.0
|
%
|
|
$
|
680
|
|
|
6.5
|
%
|
|
$
|
2,772
|
|
|
$
|
3,483
|
|
|
37.0
|
%
|
|
$
|
612
|
|
|
6.5
|
%
|
|
$
|
2,871
|
|
Tier 1 risk-based capital
|
$
|
3,710
|
|
|
35.4
|
%
|
|
$
|
837
|
|
|
8.0
|
%
|
|
$
|
2,873
|
|
|
$
|
3,610
|
|
|
38.3
|
%
|
|
$
|
754
|
|
|
8.0
|
%
|
|
$
|
2,856
|
|
Total risk-based capital
|
$
|
4,259
|
|
|
40.7
|
%
|
|
$
|
1,047
|
|
|
10.0
|
%
|
|
$
|
3,212
|
|
|
$
|
4,148
|
|
|
44.0
|
%
|
|
$
|
942
|
|
|
10.0
|
%
|
|
$
|
3,206
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||||||
|
Actual
|
|
Well Capitalized Minimum Capital
|
|
Excess Capital
|
|
Actual
|
|
Well Capitalized Minimum Capital
|
|
Excess Capital
|
||||||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
||||||||||||||||
E*TRADE Bank
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Tier 1 leverage
|
$
|
3,251
|
|
|
8.1
|
%
|
|
$
|
2,018
|
|
|
5.0
|
%
|
|
$
|
1,233
|
|
|
$
|
3,132
|
|
|
8.8
|
%
|
|
$
|
1,786
|
|
|
5.0
|
%
|
|
$
|
1,346
|
|
Common equity Tier 1 capital
|
$
|
3,251
|
|
|
35.0
|
%
|
|
$
|
603
|
|
|
6.5
|
%
|
|
$
|
2,648
|
|
|
$
|
3,132
|
|
|
38.3
|
%
|
|
$
|
532
|
|
|
6.5
|
%
|
|
$
|
2,600
|
|
Tier 1 risk-based capital
|
$
|
3,251
|
|
|
35.0
|
%
|
|
$
|
742
|
|
|
8.0
|
%
|
|
$
|
2,509
|
|
|
$
|
3,132
|
|
|
38.3
|
%
|
|
$
|
655
|
|
|
8.0
|
%
|
|
$
|
2,477
|
|
Total risk-based capital
|
$
|
3,369
|
|
|
36.3
|
%
|
|
$
|
928
|
|
|
10.0
|
%
|
|
$
|
2,441
|
|
|
$
|
3,237
|
|
|
39.5
|
%
|
|
$
|
819
|
|
|
10.0
|
%
|
|
$
|
2,418
|
|
(1)
|
The Basel III final rule introduces a capital conservation buffer that limits a banking organization’s ability to make capital distributions and discretionary bonus payments to executive officers if a banking organization fails to maintain a Common Equity Tier 1 capital conservation buffer of more than
2.5%
, on a fully phased-in basis, of total risk-weighted assets above each of the following minimum risk-based capital ratio requirements: Common Equity Tier 1 capital (
4.5%
), Tier 1 (
6.0%
), and total risk-based capital (
8.0%
). This requirement was effective beginning on January 1, 2016, and will be fully phased-in by 2019. Certain new regulatory deductions and adjustments are subject to a phase-in period over a
four
year period, beginning at
40%
in 2015 and fully implemented at
100%
in 2018.
|
(a)
|
Based on an evaluation under the supervision and with the participation of our management, our Chief Executive Officer and our Chief Financial Officer have concluded that the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
|
(b)
|
There were no changes in the Company’s internal control over financial reporting during the quarter ended
March 31, 2017
, identified in connection with management's evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
(2)
|
|
Total Number of Shares Purchased as Part of the Publicly Announced Plan
(3)
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
(3)
|
||||||
January 1, 2017 - January 31, 2017
|
|
8,186
|
|
|
$
|
35.23
|
|
|
—
|
|
|
$
|
297.9
|
|
February 1, 2017 - February 28, 2017
|
|
418,045
|
|
|
35.08
|
|
|
—
|
|
|
$
|
297.9
|
|
|
March 1, 2017 - March 31, 2017
|
|
16,154
|
|
|
35.27
|
|
|
—
|
|
|
$
|
297.9
|
|
|
Total
|
|
442,385
|
|
|
35.09
|
|
|
—
|
|
|
|
(1)
|
The 442,385 shares purchased during the three months ended March 31, 2017 were withheld from employees to satisfy tax withholding obligations associated with restricted shares.
|
(2)
|
Excludes commission paid, if any.
|
(3)
|
On November 19, 2015, the Company publicly announced that its Board of Directors authorized the repurchase of up to $800 million of shares of the Company's common stock through March 31, 2017.
|
Exhibit
Number
|
|
Description
|
|
|
|
*31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
.
|
|
|
|
*31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
.
|
|
|
|
*32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*101.INS
|
|
XBRL Instance Document
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
*
|
Filed herewith.
|
|
|
|
E*TRADE Financial Corporation
(Registrant)
|
||
|
|
|
By
|
|
/S/ KARL A. ROESSNER
|
|
|
Karl A. Roessner
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
By
|
|
/S/ MICHAEL A. PIZZI
|
|
|
Michael A. Pizzi
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|
By
|
|
/S/ BRENT B. SIMONICH
|
|
|
Brent B. Simonich
|
|
|
Corporate Controller
|
|
|
(Principal Accounting Officer)
|
1 Year E TRADE Financial Chart |
1 Month E TRADE Financial Chart |
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