Investment Securities (Tables)

9 Months Ended

Sep. 30, 2013

Investments Debt And Equity Securities [Abstract]

Investment Securities

Table 4 Investment Securities

	Available-for-Sale									Held-to-Maturity
At September 30, 2013 (Dollars in Millions)	Amortized Cost		Fair Value		Weighted- Average Maturity in Years		Weighted- Average Yield (e)			Amortized Cost		Fair Value		Weighted- Average Maturity in Years		Weighted- Average Yield (e)
U.S. Treasury and Agencies
Maturing in one year or less	$	578	$	578		.2		.95	%	$	2,112	$	2,120		.4		.98	%
Maturing after one year through five years		48		51		3.1		3.39			80		81		1.7		1.36
Maturing after five years through ten years		740		703		8.9		2.11			1,116		1,056		8.7		1.99
Maturing after ten years		201		189		12.1		1.84			60		60		11.4		1.77
Total	$	1,567	$	1,521		5.9		1.69	%	$	3,368	$	3,317		3.4		1.34	%
Mortgage-Backed Securities (a)
Maturing in one year or less	$	482	$	486		.7		1.98	%	$	23	$	23		.6		2.13	%
Maturing after one year through five years		16,679		16,697		3.8		2.17			23,127		23,060		3.6		2.17
Maturing after five years through ten years		11,086		11,126		5.9		1.90			9,496		9,331		5.6		1.75
Maturing after ten years		1,874		1,883		12.8		1.23			734		746		12.2		1.27
Total	$	30,121	$	30,192		5.1		2.01	%	$	33,380	$	33,160		4.3		2.03	%
Asset-Backed Securities (a)
Maturing in one year or less	$	–	$	–		–		7.65	%	$	–	$	–		.3		.41	%
Maturing after one year through five years		56		62		2.7		2.58			11		14		3.6		.85
Maturing after five years through ten years		562		573		6.8		2.66			5		5		6.7		.90
Maturing after ten years		–		–		17.8		5.19			2		10		21.3		.77
Total	$	618	$	635		6.4		2.66	%	$	18	$	29		6.3		.85	%
Obligations of State and Political Subdivisions (b) (c)
Maturing in one year or less	$	62	$	63		.5		6.16	%	$	–	$	–		.5		7.31	%
Maturing after one year through five years		4,810		4,930		2.9		6.73			3		3		2.2		9.29
Maturing after five years through ten years		486		477		7.0		5.81			2		2		7.4		7.74
Maturing after ten years		374		350		20.2		6.14			12		12		14.0		5.34
Total	$	5,732	$	5,820		4.3		6.61	%	$	17	$	17		11.2		6.24	%
Other Debt Securities
Maturing in one year or less	$	6	$	6		.4		1.16	%	$	4	$	4		.6		1.46	%
Maturing after one year through five years		–		–		–		–			91		91		2.3		1.15
Maturing after five years through ten years		–		–		–		–			26		14		7.1		1.01
Maturing after ten years		734		642		21.8		2.73			–		–		–		–
Total	$	740	$	648		21.6		2.71	%	$	121	$	109		3.3		1.13	%
Other Investments	$	462	$	491		14.0		2.12	%	$	–	$	–		–		–	%
Total investment securities (d)	$	39,240	$	39,307		5.5		2.70	%	$	36,904	$	36,632		4.2		1.97	%

(a) Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities anticipating future prepayments.

(b) Information related to obligations of state and political subdivisions is presented based upon yield to first optional call date if the security is purchased at a premium, yield to maturity if purchased at par or a discount.

(c) Maturity calculations for obligations of state and political subdivisions are based on the first optional call date for securities with a fair value above par and contractual maturity for securities with a fair value equal to or below par.

(d) The weighted-average maturity of the available-for-sale investment securities was 4.1 years at December 31, 2012, with a corresponding weighted-average yield of 2.93 percent. The weighted-average maturity of the held-to-maturity investment securities was 3.3 years at December 31, 2012, with a corresponding weighted-average yield of 1.94 percent. The increases in the weighted-average maturities from December 31, 2012 to September 30, 2013 related to the impact of higher interest rates on anticipated prepayments on mortgage-backed securities.

(e) Average yields are presented on a fully-taxable equivalent basis under a tax rate of 35 percent. Yields on available-for-sale and held-to-maturity investment securities are computed based on amortized cost balances, excluding any premiums or discounts recorded related to the transfer of investment securities at fair value from available-for-sale to held-to-maturity. Average yield and maturity calculations exclude equity securities that have no stated yield or maturity.

	September 30, 2013					December 31, 2012
(Dollars in Millions)	Amortized Cost		Percent of Total			Amortized Cost		Percent of Total
U.S. Treasury and agencies	$	4,935		6.5	%	$	4,365		5.9	%
Mortgage-backed securities		63,501		83.4			61,019		83.1
Asset-backed securities		636		.8			637		.9
Obligations of state and political subdivisions		5,749		7.6			6,079		8.3
Other debt securities and investments		1,323		1.7			1,329		1.8
Total investment securities	$	76,144		100.0	%	$	73,429		100.0	%

Investment Securities Held to Maturity and Available for Sale

The amortized cost, other-than-temporary impairment recorded in other comprehensive income (loss), gross unrealized holding gains and losses, and fair value of held-to-maturity and available-for-sale investment securities were as follows:

	September 30, 2013												December 31, 2012
					Unrealized Losses												Unrealized Losses
(Dollars in Millions)	Amortized Cost		Unrealized Gains		Other-than- Temporary (e)			Other (f)			Fair Value		Amortized Cost		Unrealized Gains		Other-than- Temporary (e)			Other (f)			Fair Value
Held-to-maturity (a)
U.S. Treasury and agencies	$	3,368	$	9	$	–		$	(60	)	$	3,317	$	3,154	$	27	$	–		$	–		$	3,181
Mortgage-backed securities
Residential
Agency		33,378		234		–			(454	)		33,158		31,064		545		–			(6	)		31,603
Non-agency non-prime (d)		1		–		–			–			1		1		–		–			–			1
Commercial non-agency		1		–		–			–			1		2		–		–			–			2
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations		2		9		–			–			11		7		15		–			–			22
Other		16		4		(1	)		(1	)		18		19		2		(3	)		(1	)		17
Obligations of state and political subdivisions		17		–		–			–			17		20		1		–			–			21
Obligations of foreign governments		7		–		–			–			7		7		–		–			–			7
Other debt securities		114		–		–			(12	)		102		115		–		–			(17	)		98
Total held-to-maturity	$	36,904	$	256	$	(1	)	$	(527	)	$	36,632	$	34,389	$	590	$	(3	)	$	(24	)	$	34,952
Available-for-sale (b)
U.S. Treasury and agencies	$	1,567	$	5	$	–		$	(51	)	$	1,521	$	1,211	$	16	$	–		$	(1	)	$	1,226
Mortgage-backed securities
Residential
Agency		29,136		476		–			(392	)		29,220		28,754		746		–			(5	)		29,495
Non-agency
Prime (c)		513		2		(10	)		(5	)		500		641		3		(16	)		(4	)		624
Non-prime (d)		307		3		(6	)		(1	)		303		372		4		(20	)		(1	)		355
Commercial agency		165		4		–			–			169		185		8		–			–			193
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations		20		5		–			–			25		32		10		–			–			42
Other		598		13		–			(1	)		610		579		14		–			(1	)		592
Obligations of state and political subdivisions		5,732		134		–			(46	)		5,820		6,059		396		–			–			6,455
Obligations of foreign governments		6		–		–			–			6		6		–		–			–			6
Corporate debt securities		734		–		–			(92	)		642		814		2		–			(85	)		731
Perpetual preferred securities		205		24		–			(20	)		209		205		27		–			(14	)		218
Other investments		257		25		–			–			282		182		20		–			–			202
Total available-for-sale	$	39,240	$	691	$	(16	)	$	(608	)	$	39,307	$	39,040	$	1,246	$	(36	)	$	(111	)	$	40,139

(a) Held-to-maturity investment securities are carried at historical cost or at fair value at the time of transfer from the available-for-sale to held-to-maturity category, adjusted for amortization of premiums and accretion of discounts and credit-related other-than-temporary impairment.

(b) Available-for-sale investment securities are carried at fair value with unrealized net gains or losses reported within accumulated other comprehensive income (loss) in shareholders’ equity.

(c) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads). When the Company determines the designation, prime securities typically have a weighted average credit score of 725 or higher and a loan-to-value of 80 percent or lower; however, other pool characteristics may result in designations that deviate from these credit score and loan-to-value thresholds.

(d) Includes all securities not meeting the conditions to be designated as prime.

(e) Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.

(f) Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired.

Amount of Interest Income from Taxable and Non-Taxable Investment Securities

The following table provides information about the amount of interest income from taxable and non-taxable investment securities:

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in Millions)	2013		2012		2013		2012
Taxable	$	357	$	369	$	1,029	$	1,166
Non-taxable		63		69		193		210
Total interest income from investment securities	$	420	$	438	$	1,222	$	1,376

Amount of Gross Gains and Losses Realized through Sales of Available for Sale Investment Securities

The following table provides information about the amount of gross gains and losses realized through the sales of available-for-sale investment securities:

	Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in Millions)	2013		2012			2013		2012
Realized gains	$	–	$	115		$	21	$	145
Realized losses		–		(99	)		–		(99	)
Net realized gains (losses)	$	–	$	16		$	21	$	46
Income tax (benefit) on net realized gains (losses)	$	–	$	7		$	8	$	18

Summary of Other than Temporary Impairment by Investment Category

The following tables summarize other-than-temporary impairment by investment category:

	2013									2012
Three Months Ended September 30 (Dollars in Millions)		Losses Recorded in Earnings			Other Gains (Losses) (c)		Total			Losses Recorded in Earnings			Other Gains (Losses) (c)			Total
Available-for-sale
Mortgage-backed securities
Non-agency residential
Prime (a)		$	(1	)	$	–	$	(1	)	$	(5	)	$	(3	)	$	(8	)
Non-prime (b)			(2	)		1		(1	)		(10	)		5			(5	)
Total available-for-sale		$	(3	)	$	1	$	(2	)	$	(15	)	$	2		$	(13	)

(a) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads).

(b) Includes all securities not meeting the conditions to be designated as prime.

(c) Losses represent the non-credit portion of other-than-temporary impairment recorded in other comprehensive income (loss) for investment securities determined to be other-than-temporarily impaired during the period. Gains represent recoveries in the fair value of securities that had non-credit other-than-temporary impairment during the period.

	2013									2012
Nine Months Ended September 30 (Dollars in Millions)		Losses Recorded in Earnings			Other Gains (Losses) (c)		Total			Losses Recorded in Earnings			Other Gains (Losses) (c)			Total
Available-for-sale
Mortgage-backed securities
Non-agency residential
Prime (a)		$	(5	)	$	2	$	(3	)	$	(8	)	$	(12	)	$	(20	)
Non-prime (b)			(8	)		6		(2	)		(27	)		15			(12	)
Commercial non-agency			–			–		–			(1	)		(1	)		(2	)
Other asset-backed securities			–			–		–			(1	)		1			–
Perpetual preferred securities			–			–		–			(27	)		–			(27	)
Total available-for-sale		$	(13	)	$	8	$	(5	)	$	(64	)	$	3		$	(61	)

(a) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads).

(b) Includes all securities not meeting the conditions to be designated as prime.

(c) Losses represent the non-credit portion of other-than-temporary impairment recorded in other comprehensive income (loss) for investment securities determined to be other-than-temporarily impaired during the period. Gains represent recoveries in the fair value of securities that had non-credit other-than-temporary impairment during the period.

Summary of Ranges used in Valuation of Non-Agency Mortgage-Backed Securities Other than Temporarily Impaired

The following table includes the ranges for principal assumptions used for those available-for-sale non-agency mortgage-backed securities determined to be other-than-temporarily impaired:

	Prime (a)									Non-Prime (b)
	Minimum			Maximum			Average			Minimum			Maximum			Average
September 30, 2013
Estimated lifetime prepayment rates		12	%		18	%		13	%		4	%		10	%		6	%
Lifetime probability of default rates		3			5			4			5			10			7
Lifetime loss severity rates		25			50			48			15			60			51
December 31, 2012
Estimated lifetime prepayment rates		6	%		22	%		14	%		3	%		10	%		6	%
Lifetime probability of default rates		3			6			4			3			10			7
Lifetime loss severity rates		40			50			47			45			65			56

(a) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads).

(b) Includes all securities not meeting the conditions to be designated as prime.

Changes in Credit Losses on Debt Securities

Changes in the credit losses on debt securities (excluding perpetual preferred securities) are summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in Millions)	2013			2012			2013			2012
Balance at beginning of period	$	124		$	277		$	134		$	298
Additions to Credit Losses Due to Other-than-temporary Impairments
Credit losses on securities not previously considered other-than-temporarily impaired		–			2			–			5
Decreases in expected cash flows on securities for which other-than-temporary impairment was previously recognized		3			13			13			32
Total other-than-temporary impairment on debt securities		3			15			13			37
Other Changes in Credit Losses
Increases in expected cash flows		(1	)		–			(2	)		(14	)
Realized losses (a)		(4	)		(4	)		(18	)		(33	)
Credit losses on security sales and securities expected to be sold		–			(142	)		(5	)		(142	)
Balance at end of period	$	122		$	146		$	122		$	146

(a) Primarily represents principal losses allocated to mortgage and asset-backed securities in the Company’s portfolio under the terms of the securitization transaction documents.

Gross Unrealized Losses and Fair Value of Company's Investments with Unrealized Losses

At September 30, 2013, certain investment securities had a fair value below amortized cost. The following table shows the gross unrealized losses and fair value of the Company’s investment securities with unrealized losses, aggregated by investment category and length of time the individual investment securities have been in continuous unrealized loss positions, at September 30, 2013:

	Less Than 12 Months					12 Months or Greater					Total
(Dollars in Millions)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Held-to-maturity
U.S. Treasury and agencies	$	1,056	$	(60	)	$	–	$	–		$	1,056	$	(60	)
Mortgage-backed securities
Residential agency		20,034		(452	)		85		(2	)		20,119		(454	)
Commercial non-agency		1		–			–		–			1		–
Other asset-backed securities		–		–			10		(2	)		10		(2	)
Obligations of state and political subdivisions		8		–			–		–			8		–
Other debt securities		–		–			13		(12	)		13		(12	)
Total held-to-maturity	$	21,099	$	(512	)	$	108	$	(16	)	$	21,207	$	(528	)
Available-for-sale
U.S. Treasury and agencies	$	853	$	(51	)	$	–	$	–		$	853	$	(51	)
Mortgage-backed securities
Residential
Agency		13,540		(389	)		343		(3	)		13,883		(392	)
Non-agency (a)
Prime (b)		137		(2	)		206		(13	)		343		(15	)
Non-prime (c)		128		(2	)		81		(5	)		209		(7	)
Commercial agency		61		–			–		–			61		–
Other asset-backed securities		25		(1	)		3		–			28		(1	)
Obligations of state and political subdivisions		1,382		(46	)		10		–			1,392		(46	)
Corporate debt securities		214		(5	)		420		(87	)		634		(92	)
Perpetual preferred securities		–		–			112		(20	)		112		(20	)
Total available-for-sale	$	16,340	$	(496	)	$	1,175	$	(128	)	$	17,515	$	(624	)

(a) The Company has $22 million of unrealized losses on residential non-agency mortgage-backed securities. Credit-related other-than-temporary impairment on these securities may occur if there is further deterioration in the underlying collateral pool performance. Borrower defaults may increase if economic conditions worsen. Additionally, deterioration in home prices may increase the severity of projected losses.

(b) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool delinquencies and security market spreads).

(c) Includes all securities not meeting the conditions to be designated as prime.