3.Securities Available for Sale and Securities Held to Maturity

The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale and securities held to maturity are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
March 31, 2014	Cost		Gains		Losses		Value
Securities available for sale:
U.S. agency mortgage-backed securities	$	18,404	$	168	$	38	$	18,534
Asset-backed securities		16,642		91		8		16,725
Corporate debt securities		9,043		53		9		9,087
U.S. agency notes		4,490		1		81		4,410
Certificates of deposit		3,424		4		2		3,426
Non-agency residential mortgage-backed securities		593		13		28		578
Non-agency commercial mortgage-backed securities		312		8		-		320
Total securities available for sale	$	52,908	$	338	$	166	$	53,080
Securities held to maturity:
U.S. agency mortgage-backed securities	$	31,066	$	219	$	627	$	30,658
Non-agency commercial mortgage-backed securities		957		1		47		911
Other securities		100		-		-		100
Total securities held to maturity	$	32,123	$	220	$	674	$	31,669


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2013	Cost		Gains		Losses		Value
Securities available for sale:
U.S. agency mortgage-backed securities	$	18,554	$	140	$	49	$	18,645
Asset-backed securities		15,201		42		37		15,206
Corporate debt securities		8,973		49		15		9,007
U.S. agency notes		4,239		1		104		4,136
Certificates of deposit		3,650		4		2		3,652
Non-agency residential mortgage-backed securities		616		11		34		593
Non-agency commercial mortgage-backed securities		271		8		-		279
Other securities		100		-		-		100
Total securities available for sale	$	51,604	$	255	$	241	$	51,618
Securities held to maturity:
U.S. agency mortgage-backed securities	$	29,260	$	161	$	921	$	28,500
Non-agency commercial mortgage-backed securities		958		-		68		890
Other securities		100		-		-		100
Total securities held to maturity	$	30,318	$	161	$	989	$	29,490

Schwab Bank pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $131 million at March 31, 2014.

A summary of securities with unrealized losses, aggregated by category and period of continuous unrealized loss, is as follows:


	Less than				12 months
	12 months				or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
March 31, 2014	Value		Losses		Value		Losses		Value		Losses
Securities available for sale:
U.S agency mortgage-backed securities	$	6,119	$	37	$	176	$	1	$	6,295	$	38
Asset-backed securities		1,887		5		769		3		2,656		8
Corporate debt securities		1,180		8		400		1		1,580		9
U.S. agency notes		3,909		81		-		-		3,909		81
Certificates of deposit		1,050		-		98		2		1,148		2
Non-agency residential mortgage-backed
securities		59		1		352		27		411		28
Total	$	14,204	$	132	$	1,795	$	34	$	15,999	$	166
Securities held to maturity:
U.S. agency mortgage-backed securities	$	15,147	$	438	$	2,591	$	189	$	17,738	$	627
Non-agency commercial mortgage-backed
securities		444		23		338		24		782		47
Total	$	15,591	$	461	$	2,929	$	213	$	18,520	$	674
Total securities with unrealized losses (1)	$	29,795	$	593	$	4,724	$	247	$	34,519	$	840

(1)	The number of investment positions with unrealized losses totaled 264 for securities available for sale and 154 for securities held to maturity.


	Less than				12 months
	12 months				or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2013	Value		Losses		Value		Losses		Value		Losses
Securities available for sale:
U.S. agency mortgage-backed securities	$	5,044	$	47	$	93	$	2	$	5,137	$	49
Asset-backed securities		6,391		33		591		4		6,982		37
Corporate debt securities		1,802		14		499		1		2,301		15
U.S. agency notes		3,636		104		-		-		3,636		104
Certificates of deposit		-		-		299		2		299		2
Non-agency residential mortgage-backed
securities		89		2		374		32		463		34
Total	$	16,962	$	200	$	1,856	$	41	$	18,818	$	241
Securities held to maturity:
U.S. agency mortgage-backed securities	$	19,175	$	698	$	2,345	$	223	$	21,520	$	921
Non-agency commercial mortgage-backed
securities		630		43		260		25		890		68
Total	$	19,805	$	741	$	2,605	$	248	$	22,410	$	989
Total securities with unrealized losses (1)	$	36,767	$	941	$	4,461	$	289	$	41,228	$	1,230

(1)	The number of investment positions with unrealized losses totaled 273 for securities available for sale and 193 for securities held to maturity.

Non-agency residential mortgage-backed securities include securities collateralized by loans that are considered to be “Prime” (defined as loans to borrowers with a Fair Isaac Corporation (FICO) credit score of 620 or higher at origination), and “Alt-A” (defined as Prime loans with reduced documentation at origination). Management determined that it does not expect to recover all of the amortized cost of certain of its Alt-A and Prime residential mortgage-backed securities and therefore determined that these securities were other-than-temporarily impaired (OTTI). The Company does not intend to sell these securities and it is not “more likely than not” that the Company will be required to sell these securities before anticipated recovery of the unrealized losses on these securities. The Company may recognize an impairment charge equal to the securities’ expected credit losses based on the Company’s cash flow projections for these securities. The expected credit losses are measured as the difference between the present value of expected cash flows and the amortized cost of the securities. There were no impairment charges recognized during the first quarter of 2014. Further deterioration in the performance of the underlying loans in the Company’s non-agency residential mortgage-backed securities portfolio could result in the recognition of impairment losses.

The following table is a rollforward of the amount of credit losses recognized in earnings for OTTI securities held by the Company during the period for which a portion of the impairment was recognized in or reclassified from other comprehensive income:


	Three Months Ended
	March 31,
	2014		2013
Balance at beginning of period	$	169	$	159
Credit losses recognized into current period earnings on debt securities for
which an other-than-temporary impairment was not previously recognized		-		-
Credit losses recognized into current period earnings on debt securities for
which an other-than-temporary impairment was previously recognized		-		4
Balance at end of period	$	169	$	163

The maturities of securities available for sale and securities held to maturity at March 31, 2014, are as follows:


			After 1 year		After 5 years
	Within		through		through		After
	1 year		5 years		10 years		10 years		Total
Securities available for sale:
U.S. agency mortgage-backed securities (1)	$	-	$	1,005	$	4,015	$	13,514	$	18,534
Asset-backed securities		-		1,513		4,109		11,103		16,725
Corporate debt securities		1,065		8,022		-		-		9,087
U.S. agency notes		-		4,410		-		-		4,410
Certificates of deposit		1,502		1,924		-		-		3,426
Non-agency residential mortgage-backed
securities (1)		-		3		-		575		578
Non-agency commercial mortgage-backed
securities (1)		-		-		-		320		320
Total fair value	$	2,567	$	16,877	$	8,124	$	25,512	$	53,080
Total amortized cost	$	2,560	$	16,907	$	8,047	$	25,394	$	52,908
Securities held to maturity:
U.S. agency mortgage-backed securities (1)	$	-	$	609	$	13,036	$	17,013	$	30,658
Non-agency commercial mortgage-backed
securities (1)		-		-		344		567		911
Other securities		100		-		-		-		100
Total fair value	$	100	$	609	$	13,380	$	17,580	$	31,669
Total amortized cost	$	100	$	601	$	13,717	$	17,705	$	32,123

(1)	Mortgage-backed securities have been allocated to maturity groupings based on final contractual maturities. Actual maturities will differ from final contractual maturities because borrowers on a certain portion of loans underlying these securities have the right to prepay their obligations.

Proceeds and gross realized gains from sales of securities available for sale are as follows:


	Three Months Ended
	March 31,
	2014		2013
Proceeds	$	1,285	$	-
Gross realized gains	$	1	$	-