Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of AFS and HTM securities are as follows:



June 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale securities:
U.S. agency mortgage-backed securities	$	17,604	$	56	$	27	$	17,633
Asset-backed securities	9,858		40		4		9,894
Corporate debt securities	6,603		23		1		6,625
U.S. Treasury securities	7,740		8		51		7,697
Certificates of deposit	1,620		2		—		1,622
U.S. agency notes	1,914		—		7		1,907
Commercial paper	214		—		—		214
Non-agency commercial mortgage-backed securities	42		—		—		42
Total available for sale securities	$	45,595	$	129	$	90	$	45,634
Held to maturity securities:
U.S. agency mortgage-backed securities	$	89,250	$	499	$	805	$	88,944
Non-agency commercial mortgage-backed securities	995		12		3		1,004
Asset-backed securities	12,493		70		2		12,561
Corporate debt securities	3,181		23		—		3,204
U.S. Treasury securities	223		—		1		222
Commercial paper	100		—		—		100
U.S. state and municipal securities	1,168		43		—		1,211
Certificates of deposit	200		—		—		200
Total held to maturity securities	$	107,610	$	647	$	811	$	107,446



December 31, 2016
Available for sale securities:
U.S. agency mortgage-backed securities	$	33,167	$	120	$	92	$	33,195
Asset-backed securities	20,520		29		214		20,335
Corporate debt securities	9,850		20		18		9,852
U.S. Treasury securities	8,679		3		59		8,623
Certificates of deposit	2,070		2		1		2,071
U.S. agency notes	1,915		—		8		1,907
U.S. state and municipal securities	1,167		2		46		1,123
Commercial paper	214		—		—		214
Non-agency commercial mortgage-backed securities	45		—		—		45
Total available for sale securities	$	77,627	$	176	$	438	$	77,365
Held to maturity securities:
U.S. agency mortgage-backed securities	$	72,439	$	324	$	1,086	$	71,677
Non-agency commercial mortgage-backed securities	997		11		4		1,004
Asset-backed securities	941		—		—		941
Corporate debt securities	436		—		—		436
U.S. Treasury securities	223		—		4		219
Commercial paper	99		—		—		99
U.S. state and municipal securities	68		1		1		68
Total held to maturity securities	$	75,203	$	336	$	1,095	$	74,444

The increase in the HTM portfolio at June 30, 2017 compared to December 31, 2016 was primarily attributable to the transfer of $24.7 billion of investment securities from the AFS category to the HTM category during the first quarter of 2017. These securities had a total net unrealized loss of $227 million before income tax in AOCI on the date of transfer. The transfer was made to mitigate the potential volatility in regulatory capital from changes in market values in the AFS securities portfolio and the related impact to AOCI once the Company crosses $250 billion in consolidated assets. The year after the Company surpasses $250 billion in consolidated assets, it can no longer exclude AOCI from regulatory capital. The transfer included U.S. agency mortgage-backed securities, asset-backed securities, corporate debt securities, and U.S. state and municipal securities. The unrealized holding gains and losses on the date of transfer are reported as a separate component of AOCI and as an adjustment to the purchase premium and discount on the securities transferred. The separate component of AOCI will be amortized or accreted into interest income over the remaining life of the securities transferred, offsetting the revised premium or discount amortization or accretion on the transferred assets.

Schwab Bank pledges securities issued by federal agencies to secure certain trust deposits. The fair value of these pledged securities was $967 million at June 30, 2017.

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
June 30, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale securities:
U.S. agency mortgage-backed securities	$	1,817	$	6	$	2,976	$	21	$	4,793	$	27
Asset-backed securities	866		—		550		4		1,416		4
Corporate debt securities	867		1		303		—		1,170		1
U.S. Treasury securities	6,418		51		—		—		6,418		51
U.S. agency notes	1,907		7		—		—		1,907		7
Total	$	11,875	$	65	$	3,829	$	25	$	15,704	$	90
Held to maturity securities:
U.S. agency mortgage-backed securities	$	174	$	—	$	48,699	$	805	$	48,873	$	805
Non-agency commercial mortgage-backed securities	—		—		535		3		535		3
Asset-backed securities	945		1		779		1		1,724		2
U.S. Treasury securities	—		—		222		1		222		1
Total	$	1,119	$	1	$	50,235	$	810	$	51,354	$	811
Total securities with unrealized losses ⁽¹⁾	$	12,994	$	66	$	54,064	$	835	$	67,058	$	901



December 31, 2016
Available for sale securities:
U.S. agency mortgage-backed securities	$	14,816	$	69	$	2,931	$	23	$	17,747	$	92
Asset-backed securities	1,670		13		9,237		201		10,907		214
Corporate debt securities	2,407		17		653		1		3,060		18
U.S. Treasury securities	6,926		59		—		—		6,926		59
Certificates of deposit	474		—		100		1		574		1
U.S. agency notes	1,907		8		—		—		1,907		8
U.S. state and municipal securities	956		46		—		—		956		46
Total	$	29,156	$	212	$	12,921	$	226	$	42,077	$	438
Held to maturity securities:
U.S. agency mortgage-backed securities	$	51,361	$	1,086	$	—	$	—	$	51,361	$	1,086
Non-agency commercial mortgage-backed securities	591		4		—		—		591		4
U.S. Treasury securities	219		4		—		—		219		4
U.S. state and municipal securities	14		1		—		—		14		1
Total	$	52,185	$	1,095	$	—	$	—	$	52,185	$	1,095
Total securities with unrealized losses ⁽²⁾	$	81,341	$	1,307	$	12,921	$	226	$	94,262	$	1,533


⁽¹⁾	The number of investment positions with unrealized losses totaled 205 for AFS securities and 625 for HTM securities.


⁽²⁾	The number of investment positions with unrealized losses totaled 627 for AFS securities and 612 for HTM securities.

At June 30, 2017, substantially all securities in the investment portfolios were rated investment grade. U.S. agency mortgage-backed securities do not have explicit credit ratings; however, management considers these to be of the highest credit quality and rating given the guarantee of principal and interest by the U.S. government-sponsored enterprises.

Management evaluates whether investment securities are OTTI on a quarterly basis as described in Note 2 in the 2016

Form 10-K.

The maturities of AFS and HTM securities are as follows:



June 30, 2017	Within 1 year		After 1 year through 5 years		After 5 years through 10 years		After 10 years		Total
Available for sale securities:
U.S. agency mortgage-backed securities ⁽¹⁾	$	108	$	1,884	$	6,306	$	9,335	$	17,633
Asset-backed securities	23		8,019		1,126		726		9,894
Corporate debt securities	2,851		3,774		—		—		6,625
U.S. Treasury securities	1,619		6,078		—		—		7,697
Certificates of deposit	951		671		—		—		1,622
U.S. agency notes	847		1,060		—		—		1,907
Commercial paper	214		—		—		—		214
Non-agency commercial mortgage-backed securities ⁽¹⁾	—		—		—		42		42
Total fair value	$	6,613	$	21,486	$	7,432	$	10,103	$	45,634
Total amortized cost	$	6,612	$	21,476	$	7,427	$	10,080	$	45,595
Held to maturity securities:
U.S. agency mortgage-backed securities ⁽¹⁾	$	—	$	9,695	$	30,224	$	49,025	$	88,944
Non-agency commercial mortgage-backed securities ⁽¹⁾	—		—		363		641		1,004
Asset-backed securities	—		1,019		5,395		6,147		12,561
Corporate debt securities	—		3,204		—		—		3,204
U.S. Treasury securities	—		—		222		—		222
Commercial paper	100		—		—		—		100
U.S. state and municipal securities	—		—		88		1,123		1,211
Certificates of deposit	—		200		—		—		200
Total fair value	$	100	$	14,118	$	36,292	$	56,936	$	107,446
Total amortized cost	$	100	$	13,939	$	36,222	$	57,349	$	107,610


⁽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 and losses from sales of AFS securities are as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Proceeds	$	4,421	$	3,774	$	5,485	$	4,074
Gross realized gains	6		3		7		3