US Bank 2015 Annual Report Download - page 49

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.
Home equity and second mortgages were $16.4 billion at
December 31, 2015, compared with $15.9 billion at
December 31, 2014, and included $5.0 billion of home equity
lines in a first lien position and $11.4 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,
2015, included approximately $4.5 billion of loans and lines
for which the Company also serviced the related first lien loan,
and approximately $6.9 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, 2015:
Junior Liens Behind
(Dollars in Millions)
Company Owned
or Serviced
First Lien
Third Party
First Lien Total
Total ....................... $4,480 $6,872 $11,352
Percent 30-89 days past due . . . .29% .43% .37%
Percent 90 days or more past
due ...................... .06% .08% .07%
Weighted-average CLTV ....... 74% 71% 72%
Weighted-average credit score . . 773 766 769
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.
Credit card and other retail loans principally reflect the
Company’s focus on consumers within its geographical
footprint of branches and certain niche lending activities that
are nationally focused. Approximately 71.1 percent of the
Company’s credit card balances at December 31, 2015 relate
to cards originated through the Company’s branches or co-
branded, travel and affinity programs that generally
experience better credit quality performance than portfolios
generated through other channels.
Tables 9, 10 and 11 provide a geographical summary of
the residential mortgage, credit card and other retail loan
portfolios, respectively.
Covered assets were acquired by the Company in FDIC-
assisted transactions and include loans with characteristics
indicative of a high credit risk profile, including a substantial
concentration in California and loans with negative-
amortization payment options. Because these loans are
covered under loss sharing agreements with the FDIC, the
Company’s financial exposure to losses from these assets is
substantially reduced. To the extent actual losses exceed the
Company’s estimates at acquisition, the Company’s financial
risk would only be its share of those losses under the loss
sharing agreements. As of December 31, 2015, the loss
share coverage provided by the FDIC has expired on all
previously covered assets, except for residential mortgages
and home equity and second mortgage loans that remain
covered under loss sharing agreements with remaining terms
of up to four years.
—47 —