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Fair Value (Tables)
 9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on a Recurring Basis
The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk-management activities.
 
 
Recurring fair value measurements
September 30, 2019 ($ in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Investment securities
 
 
 
 
 
 
 

Equity securities (a)
 
$
562

 
$
—

 
$
8

 
$
570

Available-for-sale securities
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies
 
2,381

 
1

 
—

 
2,382

U.S. States and political subdivisions
 
—

 
630

 
—

 
630

Foreign government
 
15

 
140

 
—

 
155

Agency mortgage-backed residential
 
—

 
20,108

 
—

 
20,108

Mortgage-backed residential
 
—

 
2,812

 
—

 
2,812

Agency mortgage-backed commercial
 
—

 
1,413

 
—

 
1,413

Mortgage-backed commercial
 
—

 
113

 
—

 
113

Asset-backed
 
—

 
417

 
—

 
417

Corporate debt
 
—

 
1,354

 
—

 
1,354

Total available-for-sale securities
 
2,396

 
26,988

 
—

 
29,384

Mortgage loans held-for-sale (b)
 
—

 
—

 
38

 
38

Interests retained in financial asset sales
 
—

 
—

 
3

 
3

Derivative contracts in a receivable position
 
 
 
 
 
 
 
 
Interest rate
 
—

 
88

 
3

 
91

Other
 
3

 
—

 
—

 
3

Total derivative contracts in a receivable position
 
3

 
88

 
3

 
94

Total assets
 
$
2,961

 
$
27,076

 
$
52

 
$
30,089

Liabilities
 
 
 
 
 
 
 
 
Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
Derivative contracts in a payable position
 
 
 
 
 
 
 
 
Interest rate
 
$
—

 
$
1

 
$
1

 
$
2

Other
 
1

 
—

 
—

 
1

Total derivative contracts in a payable position
 
1

 
1

 
1

 
3

Total liabilities
 
$
1

 
$
1

 
$
1

 
$
3


(a)
Our investment in any one industry did not exceed 14%.
(b)
Carried at fair value due to fair value option elections.
 
 
Recurring fair value measurements
December 31, 2018 ($ in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Investment securities
 
 
 
 
 
 
 
 
Equity securities (a)
 
$
766

 
$
—

 
$
7

 
$
773

Available-for-sale securities
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
U.S. Treasury and federal agencies
 
1,850

 
1

 
—

 
1,851

U.S. States and political subdivisions
 
—

 
802

 
—

 
802

Foreign government
 
7

 
138

 
—

 
145

Agency mortgage-backed residential
 
—

 
17,138

 
—

 
17,138

Mortgage-backed residential
 
—

 
2,686

 
—

 
2,686

Agency mortgage-backed commercial
 
—

 
3

 
—

 
3

Mortgage-backed commercial
 
—

 
714

 
—

 
714

Asset-backed
 
—

 
723

 
—

 
723

Corporate debt
 
—

 
1,241

 
—

 
1,241

Total available-for-sale securities
 
1,857

 
23,446

 
—

 
25,303

Mortgage loans held-for-sale (b)
 
—

 
—

 
8

 
8

Interests retained in financial asset sales
 
—

 
—

 
4

 
4

Derivative contracts in a receivable position
 
 
 
 
 
 
 

Interest rate
 
—

 
37

 
—

 
37

Foreign currency
 
—

 
4

 
—

 
4

Total derivative contracts in a receivable position
 
—

 
41

 
—

 
41

Total assets
 
$
2,623

 
$
23,487

 
$
19


$
26,129

Liabilities
 
 
 
 
 
 
 

Accrued expenses and other liabilities
 
 
 
 
 
 
 

Derivative contracts in a payable position
 
 
 
 
 
 
 

Interest rate
 
$
—

 
$
37

 
$
—

 
$
37

Total derivative contracts in a payable position
 
—

 
37

 
—

 
37

Total liabilities
 
$
—

 
$
37

 
$
—


$
37

(a)
Our investment in any one industry did not exceed 9%.
(b)
Carried at fair value due to fair value option elections.
Fair Value, Assets Measured on a Recurring Basis, Unobservable Input Reconciliation
The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. There were no transfers into or out of Level 3 in the periods presented. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk-management activities.
 
Level 3 recurring fair value measurements
 
 
Net realized/unrealized (losses) gains
 
 
 
 
Fair value at September 30, 2019
Net unrealized gains still held at September 30, 2019
($ in millions)
Fair value at July 1, 2019
included in earnings
 
included in OCI
Purchases
Sales
Issuances
Settlements
included in earnings
included in OCI
Assets
 
 
 
 
 
 
 
 
 
 
 
Equity securities
$
9

$
(1
)
(a)
$
—

$
—

$
—

$
—

$
—

$
8

$
(1
)
$
—

Mortgage loans held-for-sale (b)
22

3

(c)
—

222

(209
)
—

—

38

—

—

Other assets
 
 
 
 
 
 
 
 
 
 
 
Interests retained in financial asset sales
3

—

 
—

—

—

—

—

3

—

—

Derivative assets, net of derivative liabilities
2

—

 
—

—

—

—

—

2

—

—

Total assets
$
36

$
2

 
$
—

$
222

$
(209
)
$
—

$
—

$
51

$
(1
)
$
—

(a)
Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.
(b)
Carried at fair value due to fair value option elections.
(c)
Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.
 
Level 3 recurring fair value measurements
 
Fair value at July 1, 2018
Net realized/unrealized gains
Purchases
Sales
Issuances
Settlements
Fair value at September 30, 2018
Net unrealized losses included in earnings still held at September 30, 2018
($ in millions)
included in earnings
 
included in OCI
Assets
 
 
 
 
 
 
 
 
 
 
Equity securities
$
12

$
—

 
$
—

$
—

$
—

$
—

$
(1
)
$
11

$
(1
)
Mortgage loans held-for-sale (a)
13

2

(b)
—

86

(88
)
—

—

13

—

Other assets
 
 
 
 
 
 
 
 
 
 
Interests retained in financial asset sales
4

—

 
—

—

—

—

—

4

—

Derivative assets
1

—

 
—

—

—

—

—

1

—

Total assets
$
30

$
2

 
$
—

$
86

$
(88
)
$
—

$
(1
)
$
29

$
(1
)
(a)
Carried at fair value due to fair value option elections.
(b)
Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.
 
Level 3 recurring fair value measurements
 
 
Net realized/unrealized gains
 
 
 
 
Fair value at September 30, 2019
Net unrealized gains still held at September 30, 2019
($ in millions)
Fair value at Jan. 1, 2019
included in earnings
 
included in OCI
Purchases
Sales
Issuances
Settlements
included in earnings
included in OCI
Assets
 
 
 
 
 
 
 
 
 
 
 
Equity securities
$
7

$
5

(a)
$
—

$
—

$
—

$
—

$
(4
)
$
8

$
5

$
—

Mortgage loans held-for-sale (b)
8

7

(c)
—

468

(445
)
—

—

38

—

—

Other assets
 
 
 
 
 
 
 
 
 
 
 
Interests retained in financial asset sales
4

—

 
—

—

—

—

(1
)
3

—

—

Derivative assets, net of derivative liabilities
—

2

(c)
—

—

—

—

—

2

2

—

Total assets
$
19

$
14

 
$
—

$
468

$
(445
)
$
—

$
(5
)
$
51

$
7

$
—

(a)
Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.
(b)
Carried at fair value due to fair value option elections.
(c)
Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.
 
Level 3 recurring fair value measurements
 
Fair value at Jan. 1, 2018
Net realized/unrealized (losses) gains
Purchases
Sales
Issuances
Settlements
Fair value at September 30, 2018
Net unrealized losses included in earnings still held at September 30, 2018
($ in millions)
included in earnings
 
included in OCI
Assets
 
 
 
 
 
 
 
 
 
 
Equity securities
$
19

$
(4
)
(a)
$
—

$
—

$
—

$
—

$
(4
)
$
11

$
(6
)
Mortgage loans held-for-sale (b)
13

4

(c)
—

218

(222
)
—

—

13

—

Other assets
 
 
 
 
 
 
 
 
 
 
Interests retained in financial asset sales
5

—

 
—

—

—

—

(1
)
4

—

Derivative assets
1

—

 
—

—

—

—

—

1

—

Total assets
$
38

$
—

 
$
—

$
218

$
(222
)
$
—

$
(5
)
$
29

$
(6
)
(a)
Reported as other loss on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.
(b)
Carried at fair value due to fair value option elections.
(c)
Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.
Fair Value Measurements - Nonrecurring Basis
The following tables display assets and liabilities measured at fair value on a nonrecurring basis and still held at September 30, 2019, and December 31, 2018, respectively. The amounts are as of the end of each period presented, which approximate the fair value measurements that occurred during each period.
 
 
Nonrecurring fair value measurements
 
Lower-of-cost or fair value reserve, valuation reserve, or cumulative adjustments
 
Total gain (loss) included in earnings
 
September 30, 2019 ($ in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held-for-sale, net
 
$
—

 
$
—

 
$
307

 
$
307

 
$
—

 
n/m
(a)
Commercial finance receivables and loans, net (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
—

 
—

 
48

 
48

 
(18
)
 
n/m
(a)
Other
 
—

 
—

 
17

 
17

 
(14
)
 
n/m
(a)
Total commercial finance receivables and loans, net
 
—

 
—

 
65

 
65

 
(32
)
 
n/m
(a)
Other assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonmarketable equity investments
 
—

 
4

 
10

 
14

 
2

 
n/m
(a)
Equity-method investments
 
—

 
—

 
2

 
2

 
(6
)
 
n/m
(a)
Repossessed and foreclosed assets (c)
 
—

 
—

 
14

 
14

 
(1
)
 
n/m
(a)
Total assets
 
$
—

 
$
4

 
$
398

 
$
402

 
$
(37
)
 
n/m
 
n/m = not meaningful
(a)
We consider the applicable valuation allowance, loan loss allowance, or cumulative impairment to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation allowance, loan loss allowance, or cumulative impairment.
(b)
Represents the portion of the portfolio specifically impaired during 2019. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables.
(c)
The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.
 
 
Nonrecurring fair value measurements
 
Lower-of-cost or fair value reserve, valuation reserve, or cumulative adjustments
 
Total gain (loss) included in earnings
 
December 31, 2018 ($ in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held-for-sale, net
 
 
 
 
 
 
 
 
 
 
 
 
 
Automotive (a)
 
$
—

 
$
—

 
$
210

 
$
210

 
$
(2
)
 
n/m
(b)
Other
 
—

 
—

 
96

 
96

 
—

 
n/m
(b)
Total loans held-for-sale, net
 
—

 
—

 
306

 
306

 
(2
)
 
n/m
(b)
Commercial finance receivables and loans, net (c)
 
 
 
 
 
 
 

 
 
 
 
 
Automotive
 
—

 
—

 
84

 
84

 
(10
)
 
n/m
(b)
Other
 
—

 
—

 
55

 
55

 
(46
)
 
n/m
(b)
Total commercial finance receivables and loans, net
 
—

 
—

 
139

 
139

 
(56
)
 
n/m
(b)
Other assets
 
 
 
 
 
 
 

 
 
 
 
 
Nonmarketable equity investments
 
—

 
—

 
1

 
1

 
(1
)
 
n/m
(b)
Equity-method investments
 
—

 
—

 
3

 
3

 
—

 
n/m
(b)
Repossessed and foreclosed assets (d)
 
—

 
—

 
13

 
13

 
(1
)
 
n/m
(b)
Total assets
 
$
—

 
$
—

 
$
462

 
$
462

 
$
(60
)
 
n/m
 
n/m = not meaningful
(a)
Represents loans within our commercial automotive portfolio. Of this amount, $104 million was valued based upon a sales price for a transaction that closed in January 2019, and $106 million was valued using a discounted cash flow analysis, with a spread over forward interest rates as a significant unobservable input utilizing a range of 0.08–1.09% and weighted average of 0.72%.
(b)
We consider the applicable valuation allowance, loan loss allowance, or cumulative impairment to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation allowance, loan loss allowance, or cumulative impairment.
(c)
Represents the portion of the portfolio specifically impaired during 2018. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables.
(d)
The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.
Financial Instruments Disclosure
The following table presents the carrying and estimated fair value of financial instruments, except for those recorded at fair value on a recurring basis presented in the previous section of this note titled Recurring Fair Value. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting current market data to develop the market assumptions and inputs necessary to estimate fair value. As such, the actual amount received to sell an asset or the amount paid to settle a liability could differ from our estimates. Fair value information presented herein was based on information available at September 30, 2019, and December 31, 2018.
 
 
 
Estimated fair value
($ in millions)
Carrying value
 
Level 1
 
Level 2
 
Level 3
 
Total
September 30, 2019
 
 
 
 
 
 
 
 
 
Financial assets
 
 
 
 
 
 
 
 
 
Held-to-maturity securities
$
2,618

 
$
—

 
$
2,687

 
$
—

 
$
2,687

Loans held-for-sale, net
962

 
—

 
—

 
963

 
963

Finance receivables and loans, net
127,332

 
—

 
—

 
131,154

 
131,154

FHLB/FRB stock (a)
1,160

 
—

 
1,160

 
—

 
1,160

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities
$
59,788

 
$
—

 
$
—

 
$
60,364

 
$
60,364

Short-term borrowings
5,335

 
—

 
—

 
5,336

 
5,336

Long-term debt
35,730

 
—

 
23,336

 
15,221

 
38,557

December 31, 2018
 
 
 
 
 
 
 
 
 
Financial assets
 
 
 
 
 
 
 
 
 
Held-to-maturity securities
$
2,362

 
$
—

 
$
2,307

 
$
—

 
$
2,307

Loans held-for-sale, net
306

 
—

 
—

 
306

 
306

Finance receivables and loans, net
128,684

 
—

 
—

 
130,878

 
130,878

FHLB/FRB stock (a)
1,351

 
—

 
1,351

 
—

 
1,351

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities
$
51,985

 
$
—

 
$
—

 
$
51,997

 
$
51,997

Short-term borrowings
9,987

 
—

 
—

 
9,992

 
9,992

Long-term debt
44,193

 
—

 
23,846

 
21,800

 
45,646


(a)
Included in other assets on our Condensed Consolidated Balance Sheet.