Fair Value Measurements |
| | | 14. Fair Value Measurements |
The accounting policies of our fair value measurements are the same as those disclosed in Note 3 and Note 19 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report.
The following table presents the carrying amounts and estimated fair values of our financial instruments and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements Using | | Total Fair Value | | Total Carrying Value | (dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | | | | | | | | | | | | | March 31, 2021 | | | | | | | | | | | Assets | | | | | | | | | | | Cash and cash equivalents | | $ | 1,298 | | | $ | 3 | | | $ | — | | | $ | 1,301 | | | $ | 1,301 | | Investment securities | | 52 | | | 1,891 | | | 8 | | | 1,951 | | | 1,951 | | Net finance receivables, less allowance for finance receivable losses | | — | | | — | | | 18,447 | | | 18,447 | | | 15,502 | | Restricted cash and restricted cash equivalents | | 571 | | | — | | | — | | | 571 | | | 571 | | Other assets * | | — | | | 3 | | | 57 | | | 60 | | | 60 | | | | | | | | | | | | | Liabilities | | | | | | | | | | | Long-term debt | | $ | — | | | $ | 18,082 | | | $ | — | | | $ | 18,082 | | | $ | 16,789 | | | | | | | | | | | | | December 31, 2020 | | | | | | | | | | | Assets | | | | | | | | | | | Cash and cash equivalents | | $ | 2,255 | | | $ | 17 | | | $ | — | | | $ | 2,272 | | | $ | 2,272 | | Investment securities | | 44 | | | 1,870 | | | 8 | | | 1,922 | | | 1,922 | | Net finance receivables, less allowance for finance receivable losses | | — | | | — | | | 18,629 | | | 18,629 | | | 15,815 | | Restricted cash and restricted cash equivalents | | 451 | | | — | | | — | | | 451 | | | 451 | | Other assets * | | — | | | 2 | | | 60 | | | 62 | | | 62 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | Long-term debt | | $ | — | | | $ | 19,426 | | | $ | — | | | $ | 19,426 | | | $ | 17,800 | |
*Other assets at March 31, 2021 and December 31, 2020 primarily consists of finance receivables held for sale. FAIR VALUE MEASUREMENTS — RECURRING BASIS
The following tables present information about our assets measured at fair value on a recurring basis and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements Using | | Total Carried At Fair Value | (dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | | | | | | | | | | March 31, 2021 | | | | | | | | | Assets | | | | | | | | | Cash equivalents in mutual funds | | $ | 881 | | | $ | — | | | $ | — | | | $ | 881 | | Cash equivalents in securities | | — | | | 3 | | | — | | | 3 | | Investment securities: | | | | | | | | | Available-for-sale securities | | | | | | | | | | | | | | | | | | U.S. government and government sponsored entities | | — | | | 11 | | | — | | | 11 | | Obligations of states, municipalities, and political subdivisions | | — | | | 88 | | | — | | | 88 | | Commercial paper | | — | | | 49 | | | — | | | 49 | | Non-U.S. government and government sponsored entities | | — | | | 147 | | | — | | | 147 | | Corporate debt | | 5 | | | 1,223 | | | 6 | | | 1,234 | | RMBS | | — | | | 195 | | | — | | | 195 | | CMBS | | — | | | 56 | | | — | | | 56 | | CDO/ABS | | — | | | 87 | | | — | | | 87 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total available-for-sale securities | | 5 | | | 1,856 | | | 6 | | | 1,867 | | Other securities | | | | | | | | | | | | | | | | | | Bonds: | | | | | | | | | | | | | | | | | | Non-U.S. government and government sponsored entities | | — | | | 1 | | | — | | | 1 | | Corporate debt | | — | | | 12 | | | 1 | | | 13 | | RMBS | | — | | | 1 | | | — | | | 1 | | | | | | | | | | | CDO/ABS | | — | | | 21 | | | 1 | | | 22 | | Total bonds | | — | | | 35 | | | 2 | | | 37 | | Preferred stock | | 18 | | | — | | | — | | | 18 | | Common stock | | 29 | | | — | | | — | | | 29 | | | | | | | | | | | Total other securities | | 47 | | | 35 | | | 2 | | | 84 | | Total investment securities | | 52 | | | 1,891 | | | 8 | | | 1,951 | | | | | | | | | | | Restricted cash equivalents in mutual funds | | 560 | | | — | | | — | | | 560 | | Total | | $ | 1,493 | | | $ | 1,894 | | | $ | 8 | | | $ | 3,395 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements Using | | Total Carried At Fair Value | (dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | | | | | | | | | | December 31, 2020 | | | | | | | | | Assets | | | | | | | | | Cash equivalents in mutual funds | | $ | 2,018 | | | $ | — | | | $ | — | | | $ | 2,018 | | Cash equivalents in securities | | — | | | 17 | | | — | | | 17 | | Investment securities: | | | | | | | | | Available-for-sale securities | | | | | | | | | | | | | | | | | | U.S. government and government sponsored entities | | — | | | 12 | | | — | | | 12 | | Obligations of states, municipalities, and political subdivisions | | — | | | 92 | | | — | | | 92 | | Certificates of deposit and commercial paper | | — | | | 28 | | | — | | | 28 | | Non-U.S. government and government sponsored entities | | — | | | 146 | | | — | | | 146 | | Corporate debt | | 5 | | | 1,207 | | | 6 | | | 1,218 | | RMBS | | — | | | 215 | | | — | | | 215 | | CMBS | | — | | | 58 | | | — | | | 58 | | CDO/ABS | | — | | | 78 | | | — | | | 78 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total available-for-sale securities | | 5 | | | 1,836 | | | 6 | | | 1,847 | | Other securities | | | | | | | | | | | | | | | | | | Bonds: | | | | | | | | | Non-U.S. government and government sponsored entities | | — | | | 1 | | | — | | | 1 | | Corporate debt | | — | | | 16 | | | 1 | | | 17 | | | | | | | | | | | | | | | | | | | | CDO/ABS | | — | | | 17 | | | — | | | 17 | | Total bonds | | — | | | 34 | | | 1 | | | 35 | | Preferred stock | | 13 | | | — | | | — | | | 13 | | Common stock | | 26 | | | — | | | 1 | | | 27 | | | | | | | | | | | Total other securities | | 39 | | | 34 | | | 2 | | | 75 | | Total investment securities | | 44 | | | 1,870 | | | 8 | | | 1,922 | | Restricted cash equivalents in mutual funds | | 441 | | | — | | | — | | | 441 | | Total | | $ | 2,503 | | | $ | 1,887 | | | $ | 8 | | | $ | 4,398 | |
Due to the insignificant activity within the Level 3 assets during the three months ended March 31, 2021 and 2020, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.
FAIR VALUE MEASUREMENTS — NON-RECURRING BASIS
We measure the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Net impairment charges recorded on assets measured at fair value on a non-recurring basis were immaterial during the three months ended March 31, 2021 and 2020.
FAIR VALUE MEASUREMENTS — VALUATION METHODOLOGIES AND ASSUMPTIONS
See Note 19 of the Notes to the Consolidated Financial Statements in Part II - Item 8 included in our Annual Report for information regarding our methods and assumptions used to estimate fair value.
|