Charles Schwab 2015 Annual Report Download - page 97

THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
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9. Other Assets
The components of other assets are as follows:
December 31,   2015 2014
Accounts receivable (1)
  $ 388 $ 359
Interest and dividends receivable   241 180
Other investments (2)
 180 72
Deferred tax asset – net   145 -
Other
 119 59
Prepaid expenses   101 110
Total other assets  $ 1,174 $ 780
(1) Accounts receivable includes accrued service fee income and a receivable from the Company’s loan servicer.
(2) Other investments include LIHTC investments.
10. Variable Interest Entities
A VIE requires consolidation by the entity’s primary beneficiary. The Company evaluates all of the entities in which it is
involved to determine if an entity is a VIE and if so, whether the Company is the primary beneficiary. See the “Principles of
Consolidation” section of “Notes – 1. Introduction and Basis of Presentation” for discussion of the Company’s evaluations of
VIEs and whether it is deemed to be the primary beneficiary of any VIEs in which it holds an interest. The Company was not
the primary beneficiary of, and therefore, not required to consolidate any VIEs during 2015, 2014, or 2013.
Community Reinvestment Act investments
Schwab Bank is subject to the CRA. The CRA is intended to encourage banks to help meet the credit needs of the
communities in which they operate, including low and moderate income neighborhoods, consistent with safe and sound
banking operations. As part of Schwab Bank’s community reinvestment initiatives, Schwab Bank invests with other
institutional investors in funds that make equity investments in multifamily affordable housing properties.
In 2014, Schwab Bank’s management approved a program to invest in LIHTC funds. Schwab Bank receives tax credits and
other tax benefits for these investments. Schwab Bank’s LIHTC investments are accounted for using the proportional
amortization method if certain criteria are met. See “Notes – 2. Summary of Significant Accounting Policies” for discussion
of the application of the proportional amortization method. As of December 31, 2015, the majority of the Company’s VIEs
are related to Schwab Bank’s LIHTC investments made in 2014 and 2015. Schwab Bank did not have any LIHTC
investments prior to 2014. Schwab Bank also has investments in other CRA-related funds, which were invested prior to 2014.
During 2015 and 2014, Schwab Bank recorded amortization of $3.3 million and $0.3 million, respectively, and recognized
tax credits and other tax benefits of $4.5 million and $0.5 million, respectively, associated with these investments, both of
which are included in taxes on income. The carrying value of the LIHTC investments was $104 million and $45 million as of
December 31, 2015 and 2014, respectively, which is included in other assets on the consolidated balance sheets. Schwab
Bank recorded liabilities of $84 million and $40 million for unfunded commitments related to LIHTC investments at
December 31, 2015 and 2014, respectively, which are included in accrued expenses and other liabilities on the consolidated
balance sheets. Schwab Bank’s funding of these remaining commitments is dependent upon the occurrence of certain
conditions and Schwab Bank expects to pay substantially all of these commitments between 2016 and 2020.