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Fair Value Measurements
3 Months Ended
Mar. 31, 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 March 31, 2022 and December 31, 2021:

 

(in millions)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury bonds

 

$

88

 

 

$

 

 

$

88

 

 

$

 

Municipal bonds

 

 

1,521

 

 

 

 

 

 

1,521

 

 

 

 

Foreign government bonds

 

 

223

 

 

 

 

 

 

223

 

 

 

 

Governmental agency bonds

 

 

147

 

 

 

 

 

 

147

 

 

 

 

Governmental agency mortgage-backed securities

 

 

5,381

 

 

 

 

 

 

5,381

 

 

 

 

U.S. corporate debt securities

 

 

1,096

 

 

 

 

 

 

1,096

 

 

 

 

Foreign corporate debt securities

 

 

481

 

 

 

 

 

 

481

 

 

 

 

 

 

 

8,937

 

 

 

 

 

 

8,937

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stocks

 

 

16

 

 

 

16

 

 

 

 

 

 

 

Common stocks

 

 

557

 

 

 

557

 

 

 

 

 

 

 

 

 

 

573

 

 

 

573

 

 

 

 

 

 

 

Servicing related assets

 

 

19

 

 

 

 

 

 

2

 

 

 

17

 

Total assets

 

$

9,529

 

 

$

573

 

 

$

8,939

 

 

$

17

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing related liabilities

 

$

11

 

 

$

 

 

$

 

 

$

11

 

Total liabilities

 

$

11

 

 

$

 

 

$

 

 

$

11

 

 

 

(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

 

Total 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 March 31, 2022 and December 31, 2021:

 

 

 

Carrying

 

Estimated fair value

 

(in millions)

 

Amount

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,704

 

$

1,704

 

 

$

1,704

 

 

$

 

 

$

 

Deposits with banks

 

$

56

 

$

56

 

 

$

9

 

 

$

47

 

 

$

 

Notes receivable, net

 

$

11

 

$

11

 

 

$

 

 

$

 

 

$

11

 

Secured financings receivable

 

$

606

 

$

606

 

 

$

 

 

$

606

 

 

$

 

Loans eligible for repurchase

 

$

36

 

$

36

 

 

$

 

 

$

36

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured financings payable (1)

 

$

547

 

$

547

 

 

$

 

 

$

547

 

 

$

 

Liability for loans eligible for repurchase

 

$

36

 

$

36

 

 

$

 

 

 

$

36

 

 

$

 

Notes and contracts payable

 

$

1,647

 

$

1,595

 

 

$

 

 

$

1,591

 

 

$

4

 

 

(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.