Charles Schwab 2015 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2015 Charles Schwab annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
- 68 -
January 1, 2016, and is applicable to all entities but provides an exception for reporting entities with interests in legal entities
that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the
Investment Company Act of 1940 for registered money market funds. The adoption of ASU 2015-02 will not have an impact
on the Company’s consolidated financial statements or EPS as of December 31, 2015.
In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30).” The new guidance will
require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction
from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are presented as
a separate asset. The new guidance, which became effective January 1, 2016, will not impact the Company’s financial results
or EPS as the change only affects the balance sheet presentation of debt issuance costs; recognition and measurement of debt
issuance costs will not be affected.
In April 2015, the FASB issued ASU 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-
40),” which provides new guidance that clarifies customer’s accounting for fees paid in a cloud computing arrangement.
Under the new guidance, if a cloud computing arrangement includes a software license, the customer shall account for the
software license element of the arrangement consistent with the acquisition of other software licenses. If the cloud computing
arrangement does not include a software license, the customer shall account for the arrangement as a service contract. The
guidance became effective January 1, 2016, and applies to any new arrangements entered into after that date. The Company
does not expect the new guidance will have a significant impact on its financial statements or EPS.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10),” which will become
effective January 1, 2018. This new guidance addresses certain aspects of recognition, measurement, presentation, and
disclosure of financial instruments. The Company is currently evaluating the impact of this new guidance on its financial
statements and EPS.
3. Receivables from Brokerage Clients
Receivables from brokerage clients consist primarily of margin loans to brokerage clients of $15.8 billion and $14.3 billion at
December 31, 2015 and 2014, respectively. Securities owned by brokerage clients are held as collateral for margin loans.
Such collateral is not reflected in the consolidated financial statements. The average yield earned on margin loans was 3.30%
and 3.50% in 2015 and 2014, respectively.
4. Other Securities Owned
A summary of other securities owned is as follows:
December 31,   2015
2014
Schwab Funds® money market funds  $ 261 $ 224
Equity and bond mutual funds  205 215
State and municipal debt obligations  50 51
Equity, U.S. Government and corporate debt, and other securities  17 26
Total other securities owned  $ 533 $ 516
The Company’s positions in Schwab Funds® money market funds arise from certain overnight funding of clients’
redemption, check-writing, and debit card activities. Equity and bond mutual funds include inventory maintained to facilitate
certain Schwab Funds and third-party mutual fund clients’ transactions, and investments made by the Company relating to its
deferred compensation plan. State and municipal debt obligations, equity, U.S. Government and corporate debt, and other
securities include securities held to meet clients’ trading activities.