Fair Values of Assets and Liabilities

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Values of Assets and Liabilities

Fair Values of Assets and Liabilities

Assets and liabilities measured at fair value on a recurring basis

Schwab’s assets and liabilities measured at fair value on a recurring basis include: certain cash equivalents, certain investments segregated and on deposit for regulatory purposes, AFS securities, and certain other assets. The Company uses the market approach to determine the fair value of assets and liabilities. When available, the Company uses quoted prices in active markets to measure the fair value of assets and liabilities. Quoted prices for investments in exchange-traded securities represent end-of-day close prices published by exchanges. Quoted prices for money market funds and other mutual funds represent reported net asset values. When utilizing market data and bid-ask spread, the Company uses the price within the bid-ask spread that best represents fair value. When quoted prices in active markets do not exist, the Company uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. We generally obtain prices from three independent third-party pricing sources for assets recorded at fair value.

Our primary independent pricing service provides prices for our fixed income investments such as commercial paper; certificates of deposit; U.S. government and agency securities; state and municipal securities; corporate debt securities; asset-backed securities; foreign government agency securities; and non-agency commercial mortgage-backed securities. Such prices are based on observable trades, broker/dealer quotes, and discounted cash flows that incorporate observable information such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar “to-be-issued” securities. We compare the prices obtained from the primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Schwab does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in material differences in the amounts recorded.

For a description of the fair value hierarchy and Schwab’s fair value methodologies, see Note 2 in the 2019 Form 10-K. The Company did not adjust prices received from the primary independent third-party pricing service at March 31, 2020 or December 31, 2019.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the fair value hierarchy for assets measured at fair value on a recurring basis. Liabilities recorded at fair value were not material, and therefore are not included in the following tables:

March 31, 2020	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	5,152	$	—	$	—	$	5,152
Commercial paper	—		4,057		—		4,057
Total cash equivalents	5,152		4,057		—		9,209
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		1,949		—		1,949
U.S. Government securities	—		12,649		—		12,649
Total investments segregated and on deposit for regulatory purposes	—		14,598		—		14,598
Available for sale securities:
U.S. agency mortgage-backed securities	—		179,595		—		179,595
Asset-backed securities	—		22,481		—		22,481
Corporate debt securities	—		11,222		—		11,222
U.S. Treasury securities	—		3,664		—		3,664
U.S. state and municipal securities	—		1,578		—		1,578
Non-agency commercial mortgage-backed securities	—		1,226		—		1,226
Certificates of deposit	—		998		—		998
Commercial paper	—		396		—		396
Foreign government agency securities	—		51		—		51
Other	—		21		—		21
Total available for sale securities	—		221,232		—		221,232
Other assets:
Equity and bond mutual funds	379		—		—		379
U.S. Government securities	—		251		—		251
State and municipal debt obligations	—		41		—		41
Equity, corporate debt, and other securities	3		21		—		24
Total other assets	382		313		—		695
Total	$	5,534	$	240,200	$	—	$	245,734

December 31, 2019	Level 1		Level 2		Level 3		Balance at Fair Value
Cash equivalents:
Money market funds	$	5,179	$	—	$	—	$	5,179
Commercial paper	—		2,498		—		2,498
Total cash equivalents	5,179		2,498		—		7,677
Investments segregated and on deposit for regulatory purposes:
Certificates of deposit	—		1,351		—		1,351
U.S. Government securities	—		7,276		—		7,276
Total investments segregated and on deposit for regulatory purposes	—		8,627		—		8,627
Available for sale securities:
U.S. agency mortgage-backed securities	—		46,155		—		46,155
Corporate debt securities	—		5,484		—		5,484
Asset-backed securities	—		4,987		—		4,987
U.S. Treasury securities	—		3,384		—		3,384
Certificates of deposit	—		1,004		—		1,004
Commercial paper	—		395		—		395
Non-agency commercial mortgage-backed securities	—		13		—		13
Total available for sale securities	—		61,422		—		61,422
Other assets:
Equity and bond mutual funds	442		—		—		442
U.S. Government securities	—		202		—		202
State and municipal debt obligations	—		47		—		47
Equity, corporate debt, and other securities	5		22		—		27
Total other assets	447		271		—		718
Total	$	5,626	$	72,818	$	—	$	78,444

 

Fair Value of Other Financial Instruments

The following tables present the fair value hierarchy for other financial instruments:

March 31, 2020	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	59,249	$	59,249	$	—	$	—	$	59,249
Cash and investments segregated and on deposit for regulatory purposes	19,668		2,637		17,031		—		19,668
Receivables from brokerage clients — net	18,998		—		18,998		—		18,998
Bank loans — net:
First Mortgages	12,777		—		12,969		—		12,969
HELOCs	1,063		—		1,054		—		1,054
Pledged asset lines	5,467		—		5,467		—		5,467
Other	214		—		214		—		214
Total bank loans — net	19,521		—		19,704		—		19,704
Other assets	812		—		812		—		812
Liabilities
Bank deposits	$	277,477	$	—	$	277,477	$	—	$	277,477
Payables to brokerage clients	49,251		—		49,251		—		49,251
Accrued expenses and other liabilities	4,648		—		4,648		—		4,648
Long-term debt	8,522		—		8,736		—		8,736

December 31, 2019	Carrying Amount		Level 1		Level 2		Level 3		Balance at Fair Value
Assets
Cash and cash equivalents	$	21,668	$	21,668	$	—	$	—	$	21,668
Cash and investments segregated and on deposit for regulatory purposes	11,807		2,792		9,015		—		11,807
Receivables from brokerage clients — net	21,763		—		21,763		—		21,763
Held to maturity securities:
U.S. agency mortgage-backed securities	109,325		—		110,566		—		110,566
Asset-backed securities	17,806		—		17,771		—		17,771
Corporate debt securities	4,661		—		4,718		—		4,718
U.S. state and municipal securities	1,301		—		1,404		—		1,404
Non-agency commercial mortgage-backed securities	1,119		—		1,141		—		1,141
U.S. Treasury securities	223		—		228		—		228
Certificates of deposit	200		—		200		—		200
Foreign government agency securities	50		—		50		—		50
Other	21		—		21		—		21
Total held to maturity securities	134,706		—		136,099		—		136,099
Bank loans — net:
First Mortgages	11,693		—		11,639		—		11,639
HELOCs	1,113		—		1,153		—		1,153
Pledged asset lines	5,206		—		5,206		—		5,206
Other	200		—		200		—		200
Total bank loans — net	18,212		—		18,198		—		18,198
Other assets	1,014		—		1,014		—		1,014
Liabilities
Bank deposits	$	220,094	$	—	$	220,094	$	—	$	220,094
Payables to brokerage clients	39,220		—		39,220		—		39,220
Accrued expenses and other liabilities	1,882		—		1,882		—		1,882
Long-term debt	7,430		—		7,775		—		7,775