Loans to Banking Clients and Related Allowance for Loan Losses (Tables)

The composition of loans to banking clients by loan segment is as follows:


	March 31, 2013			December 31, 2012
Residential real estate mortgages	$	7,102		$	6,507
Home equity lines of credit		3,193			3,287
Personal loans secured by securities		1,035			963
Other		29			25

Total loans to banking clients ⁽¹⁾		11,359			10,782
Allowance for loan losses		(59	)		(56	)

Total loans to banking clients – net	$	11,300		$	10,726

⁽¹⁾	All loans are evaluated for impairment by loan segment.

Changes in the allowance for loan losses were as follows:


Three Months Ended	March 31, 2013									March 31, 2012
	Residential real estate mortgages			Home equity lines of credit			Total			Residential real estate mortgages			Home equity lines of credit			Total
Balance at beginning of period	$	36		$	20		$	56		$	40		$	14		$	54
Charge-offs		(2	)		(2	)		(4	)		(3	)		(2	)		(5	)
Recoveries		1			—			1			1			—			1
Provision for loan losses		5			1			6			(1	)		1			—

Balance at end of period	$	40		$	19		$	59		$	37		$	13		$	50

The delinquency analysis by loan class is as follows:


March 31, 2013	Current		30-59 days past due		60-89 days past due		>90 days past due		Total past due		Total loans
Residential real estate mortgages:
First mortgages	$	6,906	$	9	$	1	$	29	$	39	$	6,945
Purchased first mortgages		151		2		—		4		6		157
Home equity lines of credit		3,175		7		2		9		18		3,193
Personal loans secured by securities		1,035		—		—		—		—		1,035
Other		29		—		—		—		—		29

Total loans to banking clients	$	11,296	$	18	$	3	$	42	$	63	$	11,359


December 31, 2012	Current		30-59 days past due		60-89 days past due		>90 days past due		Total past due		Total loans
Residential real estate mortgages:
First mortgages	$	6,291	$	22	$	2	$	33	$	57	$	6,348
Purchased first mortgages		154		1		—		4		5		159
Home equity lines of credit		3,269		5		2		11		18		3,287
Personal loans secured by securities		963		—		—		—		—		963
Other		22		3		—		—		3		25

Total loans to banking clients	$	10,699	$	31	$	4	$	48	$	83	$	10,782

In addition to monitoring delinquency, the Company monitors the credit quality of residential real estate mortgages and HELOCs by stratifying the portfolios by the year of origination, borrower FICO scores at origination (Origination FICO), updated borrower FICO scores (Updated FICO), LTV ratios at origination (Origination LTV), and estimated current LTV ratios (Estimated Current LTV), as presented in the following tables. Borrowers’ FICO scores are provided by an independent third party credit reporting service and were last updated in March 2013. The Origination LTV and Estimated Current LTV ratios for a HELOC include any first lien mortgage outstanding on the same property at the time of the HELOC’s origination. The Estimated Current LTV for each loan is estimated by reference to a home price appreciation index.


	Residential real estate mortgages
March 31, 2013	First mortgages		Purchased first mortgages		Total			Home equity lines of credit
Year of origination
Pre-2009	$	813	$	59	$	872		$	2,248
2009		269		5		274			314
2010		747		10		757			230
2011		1,065		47		1,112			187
2012		2,938		29		2,967			170
2013		1,113		7		1,120			44

Total	$	6,945	$	157	$	7,102		$	3,193

Origination FICO
<620	$	11	$	1	$	12		$	—
620 - 679		99		16		115			22
680 - 739		1,236		37		1,273			612
³740		5,599		103		5,702			2,559

Total	$	6,945	$	157	$	7,102		$	3,193

Updated FICO
<620	$	53	$	6	$	59		$	48
620 - 679		194		14		208			113
680 - 739		952		29		981			493
³740		5,746		108		5,854			2,539

Total	$	6,945	$	157	$	7,102		$	3,193

Origination LTV
£70%	$	4,626	$	101	$	4,727		$	2,154
>70% - £90%		2,302		49		2,351			1,013
>90% - £100%		17		7		24			26

Total	$	6,945	$	157	$	7,102		$	3,193


March 31, 2013	Balance		Weighted Average Updated FICO		Utilization Rate ⁽¹⁾			Percent of Loans that are 90+ Days Past Due and Less than 90 Days Past Due but on Nonaccrual Status
Residential real estate mortgages:
Estimated Current LTV
£70%	$	5,178		774		N/A			0.04	%
>70% - £90%		1,579		764		N/A			0.23	%
>90% - £100%		133		746		N/A			1.37	%
>100%		212		734		N/A			6.71	%

Total	$	7,102		770		N/A			0.30	%

Home equity lines of credit:
Estimated Current LTV
£70%	$	1,829		773		36	%		0.09	%
>70% - £90%		880		765		47	%		0.15	%
>90% - £100%		218		755		57	%		0.77	%
>100%		266		749		60	%		0.73	%

Total	$	3,193		768		41	%		0.21	%

⁽¹⁾	The Utilization Rate is calculated using the outstanding HELOC balance divided by the associated total line of credit.

N/A	Not applicable.


	Residential real estate mortgages
December 31, 2012	First mortgages		Purchased first mortgages		Total			Home equity lines of credit
Year of origination
Pre-2009	$	867	$	62	$	929		$	2,338
2009		305		6		311			338
2010		909		12		921			249
2011		1,270		53		1,323			198
2012		2,997		26		3,023			164

Total	$	6,348	$	159	$	6,507		$	3,287

Origination FICO
<620	$	10	$	1	$	11		$	—
620 - 679		98		16		114			23
680 - 739		1,141		40		1,181			633
³740		5,099		102		5,201			2,631

Total	$	6,348	$	159	$	6,507		$	3,287

Updated FICO
<620	$	54	$	6	$	60		$	49
620 - 679		191		13		204			117
680 - 739		940		34		974			510
³740		5,163		106		5,269			2,611

Total	$	6,348	$	159	$	6,507		$	3,287

Origination LTV
£70%	$	4,189	$	97	$	4,286		$	2,225
>70% - £90%		2,142		54		2,196			1,036
>90% - £100%		17		8		25			26

Total	$	6,348	$	159	$	6,507		$	3,287


December 31, 2012	Balance		Weighted Average Updated FICO		Utilization Rate ⁽¹⁾			Percent of Loans that are 90+ Days Past Due and Less than 90 Days Past Due but on Nonaccrual Status
Residential real estate mortgages:
Estimated Current LTV
£70%	$	4,162		772		N/A			0.05	%
>70% - £90%		1,841		764		N/A			0.22	%
>90% - £100%		168		750		N/A			0.51	%
>100%		336		741		N/A			5.34	%

Total	$	6,507		768		N/A			0.38	%

Home equity lines of credit:
Estimated Current LTV
£70%	$	1,559		773		36	%		0.14	%
>70% - £90%		1,020		766		46	%		0.18	%
>90% - £100%		267		759		54	%		0.44	%
>100%		441		753		59	%		1.06	%

Total	$	3,287		767		42	%		0.31	%

⁽¹⁾	The Utilization Rate is calculated using the outstanding HELOC balance divided by the associated total line of credit.

N/A	Not applicable.