Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 12 – Fair Value Measurements

Certain of the Company’s assets and liabilities are carried at fair value.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company categorizes its assets and liabilities carried at fair value using a three-level hierarchy for fair value measurements that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and the Company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.  The hierarchy level assigned to the assets and liabilities is based on management’s assessment of the transparency and reliability of the inputs used to estimate the fair values at the measurement date.  The three hierarchy levels are defined as follows:

Level 1—Valuations based on unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2—Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement and involve management judgment.

If the inputs used to measure fair value fall into different levels of the fair value hierarchy, the hierarchy level assigned is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present the fair values of the Company’s assets and liabilities, measured on a recurring basis, as of June 30, 2022 and December 31, 2021:

(in millions)	Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Debt securities:
U.S. Treasury bonds	$	147	$	—	$	147	$	—
Municipal bonds		1,462		—		1,462		—
Foreign government bonds		200		—		200		—
Governmental agency bonds		129		—		129		—
Governmental agency mortgage-backed securities		5,050		—		5,050		—
U.S. corporate debt securities		1,003		—		1,003		—
Foreign corporate debt securities		459		—		459		—
		8,450		—		8,450		—
Equity securities:
Preferred stocks		14		14		—		—
Common stocks		378		378		—		—
		392		392		—		—
Servicing related assets		21		—		1		20
Total assets	$	8,863	$	392	$	8,451	$	20
Liabilities:
Servicing related liabilities	$	12	$	—	$	—	$	12

(in millions)	Total		Level 1		Level 2		Level 3
December 31, 2021
Assets:
Debt securities:
U.S. Treasury bonds	$	123	$	—	$	123	$	—
Municipal bonds		1,649		—		1,649		—
Foreign government bonds		227		—		227		—
Governmental agency bonds		177		—		177		—
Governmental agency mortgage-backed securities		5,607		—		5,607		—
U.S. corporate debt securities		1,081		—		1,081		—
Foreign corporate debt securities		498		—		498		—
		9,362		—		9,362		—
Equity securities:
Preferred stocks		17		17		—		—
Common stocks		640		640		—		—
		657		657		—		—
Servicing related assets		27		—		11		16
Total assets	$	10,046	$	657	$	9,373	$	16
Liabilities:
Servicing related liabilities	$	9	$	—	$	—	$	9

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value as of June 30, 2022 and December 31, 2021:

	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Cash and cash equivalents	$	1,745	$	1,745	$	1,745	$	—	$	—
Deposits with banks	$	67	$	67	$	21	$	46	$	—
Notes receivable, net	$	11	$	10	$	—	$	—	$	10
Secured financings receivable	$	505	$	505	$	—	$	505	$	—
Loans eligible for repurchase	$	28	$	28	$	—	$	28	$	—
Liabilities:
Secured financings payable (1)	$	417	$	417	$	—	$	417	$	—
Liability for loans eligible for repurchase	$	28	$	28	$		$	28	$	—
Notes and contracts payable	$	1,646	$	1,464	$	—	$	1,461	$	3

(1) Excludes servicing related liabilities, which are measured at fair value on a recurring basis.

	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
December 31, 2021
Assets:
Cash and cash equivalents	$	1,228	$	1,228	$	1,228	$	—	$	—
Deposits with banks	$	58	$	58	$	13	$	45	$	—
Notes receivable, net	$	32	$	32	$	—	$	—	$	32
Secured financings receivable	$	565	$	565	$	—	$	565	$	—
Loans eligible for repurchase	$	47	$	47	$	—	$	47	$	—
Liabilities:
Secured financings payable (1)	$	529	$	529	$	—	$	529	$	—
Liability for loans eligible for repurchase	$	47	$	47	$		$	47	$	—
Notes and contracts payable	$	1,648	$	1,724	$	—	$	1,720	$	4

(1) Excludes servicing related liabilities, which are measured at fair value on a recurring basis.