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Fair Value Disclosures (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Inputs, Assets, Quantitative Information

The following table presents additional information about significant unobservable inputs used in the valuation of assets measured at fair value on a nonrecurring basis that were categorized in Level 3 of the fair value hierarchy:



	Unobservable Inputs	Average		Range
December 31, 2018
Loans receivable:
One- to four-family	Appraised value	$	594,700	$17,000 - $2,000,000
Home equity	Appraised value	$	397,700	$73,000 - $1,060,000
Real estate owned	Appraised value	$	329,500	$57,900 - $900,000

December 31, 2017
Loans receivable:
One- to four-family	Appraised value	$	520,700	$60,000 - $1,200,000
Home equity	Appraised value	$	317,300	$38,000 - $2,066,000
Real estate owned	Appraised value	$	355,200	$4,500 - $2,000,000

Fair Value Measurements, Recurring and Nonrecurring

The following tables present the significant components of assets and liabilities measured at fair value (dollars in millions):



	Level 1		Level 2		Level 3		Total Fair Value
December 31, 2018:
Recurring fair value measurements:
Assets
Available-for-sale securities:
Agency mortgage-backed securities	$	—	$	22,162	$	—	$	22,162
Agency debentures	—		839		—		839
Agency debt securities	—		139		—		139
Municipal bonds	—		12		—		12
Other	—		1		—		1
Total available-for-sale securities	—		23,153		—		23,153
Derivative assets⁽¹⁾	—		1		—		1
Publicly traded equity securities⁽²⁾	7		—		—		7
Total assets measured at fair value on a recurring basis⁽³⁾	$	7	$	23,154	$	—	$	23,161
Nonrecurring fair value measurements:
Loans receivable, net:
One- to four-family	$	—	$	—	$	17	$	17
Home equity	—		—		6		6
Total loans receivable	—		—		23		23
Other assets:
Real estate owned	—		—		10		10
Total assets measured at fair value on a nonrecurring basis⁽⁴⁾	$	—	$	—	$	33	$	33


(1)	All derivative assets were interest rate contracts at December 31, 2018. Information related to derivative instruments is detailed in Note 8—Derivative Instruments and Hedging Activities.


(2)	Consists of investments in a mutual fund related to the CRA. At December 31, 2018, these equity securities are included in other assets on the consolidated balance sheet as a result of the adoption of amended accounting guidance. See Note 1—Organization, Basis of Presentation and Summary of Significant Accounting Policies for additional information.


(3)	Assets measured at fair value on a recurring basis represented 36% of the Company’s total assets at December 31, 2018.

(4)

Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at December 31, 2018, and for which a fair value measurement was recorded during the period.



	Level 1		Level 2		Level 3		Total Fair Value
December 31, 2017:
Recurring fair value measurements:
Assets
Available-for-sale securities:
Debt securities:
Agency mortgage-backed securities	$	—	$	19,195	$	—	$	19,195
Agency debentures	—		966		—		966
US Treasuries	—		458		—		458
Agency debt securities	—		33		—		33
Municipal bonds	—		20		—		20
Total debt securities	—		20,672		—		20,672
Publicly traded equity securities	7		—		—		7
Total available-for-sale securities	7		20,672		—		20,679
Receivables from brokers, dealers and clearing organizations:
US Treasuries	300		—		—		300
Other assets:
Derivative assets⁽¹⁾	—		131		—		131
Total assets measured at fair value on a recurring basis⁽²⁾	$	307	$	20,803	$	—	$	21,110
Liabilities
Other liabilities:
Derivative liabilities⁽¹⁾	$	—	$	14	$	—	$	14
Total liabilities measured at fair value on a recurring basis⁽²⁾	$	—	$	14	$	—	$	14
Nonrecurring fair value measurements:
Loans receivable, net:
One- to four-family	$	—	$	—	$	22	$	22
Home equity	—		—		13		13
Total loans receivable	—		—		35		35
Other assets:
Loans held-for-sale	—		17		—		17
Real estate owned	—		—		26		26
Total assets measured at fair value on a nonrecurring basis⁽³⁾	$	—	$	17	$	61	$	78


(1)	All derivative assets and liabilities were interest rate contracts at December 31, 2017. Information related to derivative instruments is detailed in Note 8—Derivative Instruments and Hedging Activities.


(2)	Assets and liabilities measured at fair value on a recurring basis represented 33% and less than 1% of the Company’s total assets and total liabilities, respectively, at December 31, 2017.

(3)

Represents the fair value of assets prior to deducting estimated selling costs that were carried on the consolidated balance sheet at December 31, 2017, and for which a fair value measurement was recorded during the period.

Gains and Losses, Fair Value Measurements, Nonrecurring

The following table presents (gains) and losses recognized on assets measured at fair value on a nonrecurring basis (dollars in millions):



	Year Ended December 31,
	2018			2017		2016
One- to four-family	$	3		$	4	$	4
Home equity	(1		)	5		12
Total losses on loans receivable measured at fair value	$	2		$	9	$	16

Fair Value, by Balance Sheet Grouping

The following tables present the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not carried at fair value on the consolidated balance sheet (dollars in millions):



	December 31, 2018
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Assets
Cash and equivalents	$	2,333	$	2,333	$	—	$	—	$	2,333
Cash segregated under federal or other regulations	$	1,011	$	1,011	$	—	$	—	$	1,011
Held-to-maturity securities:
Agency mortgage-backed securities	$	18,085	$	—	$	17,748	$	—	$	17,748
Agency debentures	1,824		—		1,808		—		1,808
Agency debt securities	1,975		—		1,935		—		1,935
Total held-to-maturity securities	$	21,884	$	—	$	21,491	$	—	$	21,491
Margin receivables⁽¹⁾	$	9,560			$	9,560			$	9,560
Loans receivable, net:
One- to four-family	$	1,069	$	—	$	—	$	1,099	$	1,099
Home equity	810		—		—		825		825
Consumer	117		—		—		115		115
Securities-based lending	107		—		107		—		107
Total loans receivable, net⁽²⁾	$	2,103	$	—	$	107	$	2,039	$	2,146
Receivables from brokers, dealers and clearing organizations⁽¹⁾	$	760	$	—	$	760	$	—	$	760
Other assets⁽¹⁾⁽³⁾	$	36	$	—	$	36	$	—	$	36
Liabilities
Deposits	$	45,313	$	—	$	45,313	$	—	$	45,313
Customer payables	$	10,117	$	—	$	10,117	$	—	$	10,117
Payables to brokers, dealers and clearing organizations	$	948	$	—	$	948	$	—	$	948
Corporate debt	$	1,409	$	—	$	1,372	$	—	$	1,372

(1)

The fair value of securities that the Company received as collateral in connection with margin receivables and securities borrowing activities, including the fully paid lending program, where the Company is permitted to sell or re-pledge the securities, was $12.9 billion at December 31, 2018. Of this amount, $2.3 billion had been pledged or sold in connection with securities loaned and deposits with clearing organizations at December 31, 2018.


(2)	The carrying value of loans receivable, net includes the allowance for loan losses of $37 million and loans that are recorded at fair value on a nonrecurring basis at December 31, 2018.

(3)

The $36 million in other assets at December 31, 2018 represents securities borrowing from customers under the fully paid lending program.



	December 31, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Assets
Cash and equivalents	$	931	$	931	$	—	$	—	$	931
Cash segregated under federal or other regulations	$	872	$	872	$	—	$	—	$	872
Held-to-maturity securities:
Agency mortgage-backed securities	$	20,502	$	—	$	20,404	$	—	$	20,404
Agency debentures	710		—		708		—		708
Agency debt securities	2,615		—		2,595		—		2,595
Other	12		—		—		12		12
Total held-to-maturity securities	$	23,839	$	—	$	23,707	$	12	$	23,719
Margin receivables⁽¹⁾	$	9,071	$	—	$	9,071	$	—	$	9,071
Loans receivable, net:
One- to four-family	$	1,417	$	—	$	—	$	1,463	$	1,463
Home equity	1,051		—		—		1,055		1,055
Consumer	186		—		—		187		187
Total loans receivable, net⁽²⁾	$	2,654	$	—	$	—	$	2,705	$	2,705
Receivables from brokers, dealers and clearing organizations⁽¹⁾	$	878	$	—	$	878	$	—	$	878
Other assets⁽¹⁾⁽³⁾	$	18	$	—	$	18	$	—	$	18
Liabilities
Deposits	$	42,742	$	—	$	42,741	$	—	$	42,741
Customer Payables	$	9,449	$	—	$	9,449	$	—	$	9,449
Payables to brokers, dealers and clearing organizations	$	1,542	$	—	$	1,542	$	—	$	1,542
Other borrowings:
FHLB advances	$	500	$	—	$	500	$	—	$	500
Trust preferred securities	$	410	$	—	$	—	$	379	$	379
Total other borrowings	$	910	$	—	$	500	$	379	$	879
Corporate debt	$	991	$	—	$	992	$	—	$	992

(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 $12.8 billion at December 31, 2017. Of this amount, $3.2 billion had been pledged or sold in connection with securities loaned and deposits with clearing organizations at December 31, 2017.


(2)	The carrying value of loans receivable, net includes the allowance for loan losses of $74 million and loans that are recorded at fair value on a nonrecurring basis at December 31, 2017.

(3)

The $18 million in other assets at December 31, 2017 represents securities borrowing from customers under the fully paid lending program.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details