Investment Securities

6 Months Ended

Jun. 30, 2012

Investment Securities Disclosure [Abstract]

Investment Securities

INVESTMENT SECURITIES

A summary of the Corporation’s investment securities available-for-sale follows:

(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2012
U.S. Treasury and other U.S. government agency securities	$	20	$	—	$	—	$	20
Residential mortgage-backed securities (a)	9,301		263		—		9,564
State and municipal securities (b)	28		—		4		24
Corporate debt securities:
Auction-rate debt securities	1		—		—		1
Other corporate debt securities	46		—		—		46
Equity and other non-debt securities:
Auction-rate preferred securities	219		—		4		215
Money market and other mutual funds	70		—		—		70
Total investment securities available-for-sale	$	9,685	$	263	$	8	$	9,940
December 31, 2011
U.S. Treasury and other U.S. government agency securities	$	20	$	—	$	—	$	20
Residential mortgage-backed securities (a)	9,289		224		1		9,512
State and municipal securities (b)	29		—		5		24
Corporate debt securities:
Auction-rate debt securities	1		—		—		1
Other corporate debt securities	46		—		—		46
Equity and other non-debt securities:
Auction-rate preferred securities	423		—		15		408
Money market and other mutual funds	93		—		—		93
Total investment securities available-for-sale	$	9,901	$	224	$	21	$	10,104

(a) Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

(b) Primarily auction-rate securities.

A summary of the Corporation’s investment securities available-for-sale in an unrealized loss position as of June 30, 2012 and December 31, 2011 follows:

	Temporarily Impaired
	Less than 12 months				12 months or more					Total
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2012
State and municipal securities (b)	$	—	$	—	$	23	$	4		$	23	$	4
Corporate debt securities:
Auction-rate debt securities	—		—		1		—		(c)	1		—		(c)
Equity and other non-debt securities:
Auction-rate preferred securities	—		—		215		4			215		4
Total impaired securities	$	—	$	—	$	239	$	8		$	239	$	8
December 31, 2011
Residential mortgage-backed securities (a)	$	249	$	1	$	—	$	—		$	249	$	1
State and municipal securities (b)	—		—		24		5			24		5
Corporate debt securities:
Auction-rate debt securities	—		—		1		—		(c)	1		—		(c)
Equity and other non-debt securities:
Auction-rate preferred securities	88		1		320		14			408		15
Total impaired securities	$	337	$	2	$	345	$	19		$	682	$	21

(a) Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

(b) Primarily auction-rate securities.

(c) Unrealized losses less than $0.5 million.

As of June 30, 2012, 89 percent of the Corporation’s auction-rate portfolio was rated Aaa/AAA by the credit rating agencies.

At June 30, 2012, the Corporation had 89 securities in an unrealized loss position with no credit impairment, including 66 auction-rate preferred securities, 22 state and municipal auction-rate securities and one auction-rate debt security. The unrealized losses for these securities resulted from changes in market interest rates and liquidity. The Corporation ultimately expects full collection of the carrying amount of these securities, does not intend to sell the securities in an unrealized loss position, and it is not more-likely-than-not that the Corporation will be required to sell the securities in an unrealized loss position prior to recovery of amortized cost. The Corporation does not consider these securities to be other-than-temporarily impaired at June 30, 2012.

Sales, calls and write-downs of investment securities available-for-sale resulted in the following gains and losses, recorded in “net securities gains” on the consolidated statements of comprehensive income, computed based on the adjusted cost of the specific security.

	Six Months Ended June 30,
(in millions)	2012		2011
Securities gains	$	11	$	7
Securities losses (a)	—		(1		)
Total net securities gains	$	11	$	6

(a)    Primarily charges related to a derivative contract tied to the conversion rate of Visa Class B shares.

The following table summarizes the amortized cost and fair values of debt securities by contractual maturity. Securities with multiple maturity dates are classified in the period of final maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2012
(in millions)	Amortized Cost		Fair Value
Contractual maturity
Within one year	$	66	$	66
After one year through five years	451		459
After five years through ten years	129		131
After ten years	8,750		8,999
Subtotal	9,396		9,655
Equity and other nondebt securities:
Auction-rate preferred securities	219		215
Money market and other mutual funds	70		70
Total investment securities available-for-sale	$	9,685	$	9,940

Included in the contractual maturity distribution in the table above were auction-rate securities with a total amortized cost and fair value of $28 million and $24 million, respectively. Auction-rate securities are long-term, floating rate instruments for which interest rates are reset at periodic auctions. At each successful auction, the Corporation has the option to sell the security at par value. Additionally, the issuers of auction-rate securities generally have the right to redeem or refinance the debt. As a result, the expected life of auction-rate securities may differ significantly from the contractual life. Also included in the table above were residential mortgage-backed securities with a total amortized cost and fair value of $9.3 billion and $9.6 billion, respectively. The actual cash flows of mortgage-backed securities may differ from contractual maturity as the borrowers of the underlying loans may exercise prepayment options.

At June 30, 2012, investment securities with a carrying value of $2.9 billion were pledged where permitted or required by law to secure $2.2 billion of liabilities, primarily public and other deposits of state and local government agencies and derivative instruments.