Fair Values

9 Months Ended

Sep. 30, 2016

10. Fair Values

Financial Assets and Financial Liabilities Carried at Fair Value

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s valuation hierarchy, as of September 30, 2016 and December 31, 2015:

		2016								2015
(Millions)		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Investment securities:^(a)
	Equity securities and other	$	49	$	1	$	48	$	―	$	50	$	1	$	49	$	―
	Debt securities		3,679		541		3,138		―		3,709		409		3,300		―
Derivatives^(a)			720		―		720		―		544		―		544		―
Total assets			4,448		542		3,906		―		4,303		410		3,893		―
Liabilities:
Derivatives^(a)			241		―		241		―		201		―		201		―
Total liabilities		$	241	$	―	$	241	$	―	$	201	$	―	$	201	$	―

Refer to Note 5 for the fair values of investment securities and to Note 9 for the fair values of derivative assets and liabilities, on a further disaggregated basis.

The following table summarizes the estimated fair values of the Company’s financial assets and financial liabilities that are not required to be carried at fair value on a recurring basis, as of September 30, 2016 and December 31, 2015. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of September 30, 2016 and December 31, 2015, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of the Company be estimated by aggregating the amounts presented.

				Carrying		Corresponding Fair Value Amount
2016 (Billions)				Value		Total		Level 1		Level 2		Level 3
Financial Assets:
	Financial assets for which carrying values equal or approximate fair value
		Cash and cash equivalents^(a)	$	27	$	27	$	25	$	2	$	―
		Other financial assets^(b)		48		48		―		48		―
	Financial assets carried at other than fair value
		Loans, net^(c)		61		61		―		―		61

Financial Liabilities:
	Financial liabilities for which carrying values equal or approximate fair value			63		63		―		63		―
	Financial liabilities carried at other than fair value
		Certificates of deposit^(d)		13		13		―		13		―
		Long-term debt^(c)	$	45	$	46	$	―	$	46	$	―

				Carrying		Corresponding Fair Value Amount
2015 (Billions)				Value		Total		Level 1		Level 2		Level 3
Financial Assets:
	Financial assets for which carrying values equal or approximate fair value
		Cash and cash equivalents^(a)	$	23	$	23	$	22	$	1	$	―
		Other financial assets^(b)		47		47		―		47		―
	Financial assets carried at other than fair value
		Card Member loans and receivables HFS^(e)		15		15		―		―		15
		Loans, net^(c)		59		60		―		―		60

Financial Liabilities:
	Financial liabilities for which carrying values equal or approximate fair value			67		67		―		67		―
	Financial liabilities carried at other than fair value
		Certificates of deposit^(d)		14		14		―		14		―
		Long-term debt^(c)	$	48	$	49	$	―	$	49	$	―

Level 2 amounts reflect time deposits and short-term investments.
Includes Card Member receivables (including fair values of Card Member receivables of $5.5 billion and $6.7 billion held by a consolidated VIE as of September 30, 2016 and December 31, 2015, respectively), Other receivables, restricted cash and other miscellaneous assets.
Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $24.7 billion and $23.5 billion as of September 30, 2016 and December 31, 2015, respectively, and the fair values of long-term debt were $14.8 billion and $13.6 billion as of September 30, 2016 and December 31, 2015, respectively.
Presented as a component of customer deposits on the Consolidated Balance Sheets.
Does not include any fair value associated with the Card Member account relationships. Refer to Note 2 for additional information.

Nonrecurring Fair Value Measurements

The Company has certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if determined to be impaired. During the nine months ended September 30, 2016, the Company did not have any material assets that were measured at fair value due to impairment. During the year ended December 31, 2015, the Company recorded a $384 million impairment charge, consisting of a $219 million write-down of the entire balance of goodwill in the Prepaid Services business and a $165 million write-down of technology and other assets, to fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details