US Bank 2014 Annual Report Download - page 46

Home equity and second mortgages
(Dollars in Millions) Lines Loans Total
Percent
of Total
Prime Borrowers
Less than or equal to 80% .... $ 9,513 $ 665 $10,178 67.1%
Over 80% through 90% ........ 2,160 211 2,371 15.6
Over 90% through 100% ....... 1,023 116 1,139 7.5
Over 100% .................... 1,140 160 1,300 8.6
No LTV/CLTV available ........ 159 23 182 1.2
Total ....................... $13,995 $ 1,175 $15,170 100.0%
Sub-Prime Borrowers
Less than or equal to 80% .... $ 37 $ 28 $ 65 27.3%
Over 80% through 90% ........ 12 19 31 13.0
Over 90% through 100% ....... 10 26 36 15.1
Over 100% .................... 25 79 104 43.7
No LTV/CLTV available ........ –22.9
Total ....................... $ 84 $ 154 $ 238 100.0%
Other Borrowers
Less than or equal to 80% .... $ 365 $ 12 $ 377 74.2%
Over 80% through 90% ........ 77 8 85 16.8
Over 90% through 100% ....... 20 3 23 4.5
Over 100% .................... 20 3 23 4.5
No LTV/CLTV available ........ ––––
Total ....................... $ 482 $ 26 $ 508 100.0%
Total
Less than or equal to 80% .... $ 9,915 $ 705 $10,620 66.7%
Over 80% through 90% ........ 2,249 238 2,487 15.6
Over 90% through 100% ....... 1,053 145 1,198 7.5
Over 100% .................... 1,185 242 1,427 9.0
No LTV/CLTV available ........ 159 25 184 1.2
Total ....................... $14,561 $ 1,355 $15,916 100.0%
At December 31, 2014, approximately $1.2 billion of
residential mortgages were to customers that may be
defined as sub-prime borrowers based on credit scores from
independent agencies at loan origination, compared with
$1.4 billion at December 31, 2013. In addition to residential
mortgages, at December 31, 2014, $.2 billion of home equity
and second mortgage loans were to customers that may be
defined as sub-prime borrowers, compared with $.3 billion at
December 31, 2013. The total amount of consumer lending
segment residential mortgage, home equity and second
mortgage loans to customers that may be defined as sub-
prime borrowers represented only .4 percent of total assets
at December 31, 2014, compared with .5 percent at
December 31, 2013. The Company considers sub-prime
loans to be those made to borrowers with a risk of default
significantly higher than those approved for prime lending
programs, as reflected in credit scores obtained from
independent agencies at loan origination, in addition to other
credit underwriting criteria. Sub-prime portfolios include
only loans originated according to the Company’s
underwriting programs specifically designed to serve
customers with weakened credit histories. The sub-prime
designation indicators have been and will continue to be
subject to re-evaluation over time as borrower
characteristics, payment performance and economic
conditions change. The sub-prime loans originated during
periods from June 2009 and after are with borrowers who
met the Company’s program guidelines and have a credit
score that generally is at or below a threshold of 620 to 650
depending on the program. Sub-prime loans originated
during periods prior to June 2009 were based upon program
level guidelines without regard to credit score.
Covered loans included $850 million in loans with
negative-amortization payment options at December 31,
2014, compared with $986 million at December 31, 2013.
Other than covered loans, the Company does not have any
residential mortgages with payment schedules that would
cause balances to increase over time.
Home equity and second mortgages were $15.9 billion at
December 31, 2014, compared with $15.4 billion at
December 31, 2013, and included $5.0 billion of home equity
lines in a first lien position and $10.9 billion of home equity and
second mortgage loans and lines in a junior lien position.
Loans and lines in a junior lien position at December 31, 2014,
included approximately $4.2 billion of loans and lines for which
the Company also serviced the related first lien loan, and
approximately $6.7 billion where the Company did not service
the related first lien loan. The Company was able to determine
the status of the related first liens using information the
Company has as the servicer of the first lien or information
reported on customer credit bureau files. The Company also
evaluates other indicators of credit risk for these junior lien
loans and lines including delinquency, estimated average CLTV
ratios and updated weighted-average credit scores in making
its assessment of credit risk, related loss estimates and
determining the allowance for credit losses.
The following table provides a summary of delinquency
statistics and other credit quality indicators for the
Company’s junior lien positions at December 31, 2014:
Junior Liens Behind
(Dollars in Millions)
Company
Owned or
Serviced
First Lien
Third Party
First Lien Total
Total ................................... $4,159 $6,754 $10,913
Percent 30-89 days past due ........... .42% .66% .57%
Percent 90 days or more past due ..... .06% .14% .11%
Weighted-average CLTV ............... 76% 73% 74%
Weighted-average credit score ........ 749 744 746
See the Analysis and Determination of the Allowance for
Credit Losses section for additional information on how the
Company determines the allowance for credit losses for
loans in a junior lien position.
44