7.Offsetting Assets and Liabilities

Resale and repurchase agreements: Schwab enters into collateralized resale agreements principally with other broker-dealers, which could result in losses in the event the counterparty fails to purchase the securities held as collateral for the cash advanced and the fair value of the securities declines. To mitigate this risk, Schwab requires that the counterparty deliver securities to a custodian, to be held as collateral, with a fair value in excess of the resale price. Schwab also sets standards for the credit quality of the counterparty, monitors the fair value of the underlying securities as compared to the related receivable, including accrued interest, and requires additional collateral where deemed appropriate. The fair value of collateral received in connection with resale agreements that are available to be repledged or sold was $10.0 billion at March 31, 2015 and $10.4 billion at December 31, 2014. Schwab utilizes the collateral provided under these resale agreements to meet obligations under broker-dealer client protection rules, which place limitations on its ability to access such segregated securities. For Schwab to repledge or sell this collateral, it would be required to deposit cash and/or securities of an equal amount into its segregated reserve bank accounts in order to meet its segregated cash and investment requirement. The Company’s resale agreements are not subject to master netting arrangements.

Securities lending: The Company loans client securities temporarily to other brokers in connection with its securities lending activities and receives cash as collateral for the securities loaned. Increases in security prices may cause the fair value of the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not return the loaned securities or provide additional cash collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its client obligations. The Company mitigates this risk by requiring credit approvals for counterparties, monitoring the fair value of securities loaned, and requiring additional cash as collateral when necessary. The fair value of client securities pledged in securities lending transactions to other broker-dealers was $1.7 billion at March 31, 2015 and $1.3 billion at December 31, 2014. The Company has also pledged a portion of its securities owned in connection with securities lending transactions to other broker-dealers. Additionally, the Company borrows securities from other broker-dealers to fulfill short sales by clients and delivers cash to the lender in exchange for the securities. The fair value of these borrowed securities was $44 million at March 31, 2015 and $88 million at December 31, 2014. All of the Company’s securities lending transactions are subject to enforceable master netting arrangements with other broker-dealers. However, the Company does not net securities lending transactions and therefore, the Company’s securities loaned and securities borrowed are presented gross in the consolidated balance sheets.

The following table presents information about the Company’s resale agreements and securities lending activity to enable the users of the Company’s financial statements to evaluate the potential effect of rights of setoff between these recognized assets and recognized liabilities at March 31, 2015 and December 31, 2014.


			Gross Amounts		Net Amounts		Gross Amounts Not Offset in the
		Gross	Offset in the		Presented in the		Consolidated Balance Sheet
		Assets/	Consolidated		Consolidated		Counterparty						Net
		Liabilities	Balance Sheet		Balance Sheet		Offsetting		Collateral				Amount
March 31, 2015
Assets:
Resale agreements (1)	$	9,806	$	-	$	9,806	$	-	$	(9,806)	(2)	$	-
Securities borrowed (3)		167		-		167		(40)		(126)			1
Total	$	9,973	$	-	$	9,973	$	(40)	$	(9,932)		$	1
Liabilities:
Securities loaned (4)	$	1,956	$	-	$	1,956	$	(40)	$	(1,770)		$	146
Total	$	1,956	$	-	$	1,956	$	(40)	$	(1,770)		$	146
December 31, 2014
Assets:
Resale agreements (1)	$	10,186	$	-	$	10,186	$	-	$	(10,186)	(2)	$	-
Securities borrowed (3)		187		-		187		(69)		(117)			1
Total	$	10,373	$	-	$	10,373	$	(69)	$	(10,303)		$	1
Liabilities:
Securities loaned (4)	$	1,477	$	-	$	1,477	$	(69)	$	(1,293)		$	115
Total	$	1,477	$	-	$	1,477	$	(69)	$	(1,293)		$	115


(1)	Included in cash and investments segregated and on deposit for regulatory purposes in the Company’s consolidated balance sheets.
(2)	Actual collateral was greater than 102% of the related assets.
(3)	Included in receivables from brokers, dealers, and clearing organizations in the Company’s consolidated balance sheets.
(4)	Included in payables to brokers, dealers, and clearing organizations in the Company’s consolidated balance sheets.