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
September 30, 2014
U.S. Treasury and other U.S. government agency securities	$	45	$	—	$	—	$	45
Residential mortgage-backed securities (a)	9,131		106		128		9,109
State and municipal securities	24		—		1		23
Corporate debt securities	53		—		—		53
Equity and other non-debt securities	238		1		1		238
Total investment securities available-for-sale (b)	$	9,491	$	107	$	130	$	9,468

December 31, 2013
U.S. Treasury and other U.S. government agency securities	$	45	$	—	$	—	$	45
Residential mortgage-backed securities (a)	9,023		91		188		8,926
State and municipal securities	24		—		2		22
Corporate debt securities	56		—		—		56
Equity and other non-debt securities	266		1		9		258
Total investment securities available-for-sale (b)	$	9,414	$	92	$	199	$	9,307


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


(b)	Included auction-rate securities at amortized cost and fair value of $138 million and $137 million, respectively, as of September 30, 2014 and $169 million and $159 million, respectively, as of December 31, 2013.

A summary of the Corporation’s investment securities available-for-sale in an unrealized loss position as of September 30, 2014 and December 31, 2013 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
September 30, 2014
Residential mortgage-backed securities (a)	$	1,434	$	11	$	3,519	$	117		$	4,953	$	128
State and municipal securities (b)	—		—		23		1			23		1
Corporate debt securities (b)	—		—		1		—		(c)	1		—		(c)
Equity and other non-debt securities (b)	—		—		113		1			113		1
Total impaired securities	$	1,434	$	11	$	3,656	$	119		$	5,090	$	130
December 31, 2013
Residential mortgage-backed securities (a)	$	5,825	$	187	$	11	$	1		$	5,836	$	188
State and municipal securities (b)	—		—		22		2			22		2
Corporate debt securities (b)	—		—		1		—		(c)	1		—		(c)
Equity and other non-debt securities (b)	—		—		148		9			148		9
Total impaired securities	$	5,825	$	187	$	182	$	12		$	6,007	$	199


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


(b)	Auction-rate securities.


(c)	Unrealized losses less than $0.5 million.

At September 30, 2014, the Corporation had 162 securities in an unrealized loss position with no credit impairment, including 101 residential mortgage-backed securities, 43 equity and other non-debt auction-rate preferred securities, 17 state and municipal auction-rate securities, and one corporate auction-rate debt security. As of September 30, 2014, approximately 89 percent of the aggregate par value of auction-rate securities have been redeemed or sold since acquisition, of which approximately 95 percent were redeemed at or above cost. 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 September 30, 2014.

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



	Nine Months Ended September 30,
(in millions)	2014			2013
Securities gains	$	1		$	1
Securities losses (a)	(1		)	(2		)
Net securities (losses) gains	$	—		$	(1	)

(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.



(in millions)
September 30, 2014	Amortized Cost		Fair Value
Contractual maturity
Within one year	$	131	$	132
After one year through five years	443		442
After five years through ten years	571		600
After ten years	8,108		8,056
Subtotal	9,253		9,230
Equity and other non-debt securities	238		238
Total investment securities available-for-sale	$	9,491	$	9,468

Included in the contractual maturity distribution in the table above were auction-rate securities with a total amortized cost and fair value of $24 million and $23 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 total amortized cost and fair value of $9.1 billion. 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 September 30, 2014, investment securities with a carrying value of $3.1 billion were pledged where permitted or required by law to secure $2.1 billion of liabilities, primarily public and other deposits of state and local government agencies and derivative instruments.