Investment Securities (Tables)

6 Months Ended

Jun. 30, 2014

Investments Debt And Equity Securities [Abstract]

Investment Securities

Table 4  Investment Securities

	Available-for-Sale									Held-to-Maturity
At June 30, 2014 (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	$	32	$	32		.2		4.36	%	$	180	$	181		.5		1.15	%
Maturing after one year through five years		724		728		3.6		1.30			404		406		4.0		1.41
Maturing after five years through ten years		1,034		1,009		8.1		2.80			1,340		1,305		7.8		2.09
Maturing after ten years		101		101		18.8		1.38			58		58		10.9		1.73
Total	$	1,891	$	1,870		6.8		2.17	%	$	1,982	$	1,950		6.5		1.86	%
Mortgage-Backed Securities(a)
Maturing in one year or less	$	699	$	705		.7		1.84	%	$	134	$	133		.8		1.16	%
Maturing after one year through five years		24,383		24,569		3.8		2.04			28,844		28,853		3.6		2.15
Maturing after five years through ten years		12,680		12,656		5.8		1.63			10,518		10,496		5.5		1.58
Maturing after ten years		1,236		1,228		12.5		1.21			385		390		12.3		1.19
Total	$	38,998	$	39,158		4.7		1.88	%	$	39,881	$	39,872		4.2		1.99	%
Asset-Backed Securities(a)
Maturing in one year or less	$	–	$	–		–		–	%	$	2	$	2		.9		.87	%
Maturing after one year through five years		273		283		3.7		1.78			7		10		3.7		.83
Maturing after five years through ten years		357		365		7.4		1.64			5		6		7.0		.84
Maturing after ten years		–		–		–		–			—		7		15.8		.48
Total	$	630	$	648		5.8		1.70	%	$	14	$	25		4.8		.83	%
Obligations of State and Political Subdivisions(b)(c)
Maturing in one year or less	$	379	$	389		.7		6.57	%	$	1	$	1		.5		10.51	%
Maturing after one year through five years		4,379		4,598		2.3		6.80			2		2		2.5		8.24
Maturing after five years through ten years		540		549		6.7		5.07			1		1		7.7		8.08
Maturing after ten years		64		62		22.2		5.52			6		7		11.7		2.49
Total	$	5,362	$	5,598		2.9		6.59	%	$	10	$	11		9.0		4.57	%
Other Debt Securities
Maturing in one year or less	$	6	$	6		.7		1.01	%	$	2	$	2		.3		1.78	%
Maturing after one year through five years		–		–		–		–			82		82		2.3		1.13
Maturing after five years through ten years		–		–		–		–			24		22		6.3		.96
Maturing after ten years		690		629		19.0		2.46			–		–		–		–
Total	$	696	$	635		18.8		2.45	%	$	108	$	106		3.1		1.10	%
Other Investments	$	434	$	480		14.6		2.25	%	$	–	$	–		–		–	%
Total investment securities (d)	$	48,011	$	48,389		4.9		2.43	%	$	41,995	$	41,964		4.3		1.98	%

(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 6.0 years at December 31, 2013, with a corresponding weighted-average yield of 2.64 percent. The weighted-average maturity of the held-to-maturity investment securities was 4.5 years at December 31, 2013, with a corresponding weighted-average yield of 2.00 percent.

(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.

	June 30, 2014					December 31, 2013
(Dollars in Millions)	Amortized Cost		Percent of Total			Amortized Cost		Percent of Total
U.S. Treasury and agencies	$	3,873		4.3	%	$	4,222		5.3	%
Mortgage-backed securities		78,879		87.6			68,236		85.3
Asset-backed securities		644		.7			652		.8
Obligations of state and political subdivisions		5,372		6.0			5,685		7.1
Other debt securities and investments		1,238		1.4			1,184		1.5
Total investment securities	$	90,006		100.0	%	$	79,979		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:

	June 30, 2014												December 31, 2013
					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	$	1,982	$	8	$	–		$	(40	)	$	1,950	$	3,114	$	5	$	–		$	(79	)	$	3,040
Mortgage-backed securities
Residential
Agency		39,880		302		–			(311	)		39,871		35,671		187		–			(665	)		35,193
Non-agency non-prime (d)		1		–		–			–			1		1		–		–			–			1
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations		–		8		–			–			8		–		9		–			–			9
Other		14		4		(1	)		–			17		16		4		(1	)		(1	)		18
Obligations of state and political subdivisions		10		1		–			–			11		12		–		–			–			12
Obligations of foreign governments		9		–		–			–			9		7		–		–			–			7
Other debt securities		99		–		–			(2	)		97		99		–		–			(11	)		88
Total held-to-maturity	$	41,995	$	323	$	(1	)	$	(353	)	$	41,964	$	38,920	$	205	$	(1	)	$	(756	)	$	38,368
Available-for-sale (b)
U.S. Treasury and agencies	$	1,891	$	8	$	–		$	(29	)	$	1,870	$	1,108	$	4	$	–		$	(67	)	$	1,045
Mortgage-backed securities
Residential
Agency		38,147		547		–			(402	)		38,292		31,633		449		–			(529	)		31,553
Non-agency
Prime (c)		443		9		(4	)		(1	)		447		486		4		(8	)		(4	)		478
Non-prime (d)		278		10		(2	)		–			286		297		5		(5	)		–			297
Commercial agency		130		3		–			–			133		148		4		–			–			152
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations		19		4		–			–			23		20		4		–			–			24
Other		611		14		–			–			625		616		13		–			–			629
Obligations of state and political subdivisions		5,362		245		–			(9	)		5,598		5,673		116		–			(51	)		5,738
Obligations of foreign governments		6		–		–			–			6		6		–		–			–			6
Corporate debt securities		690		3		–			(64	)		629		734		–		–			(94	)		640
Perpetual preferred securities		205		30		–			(11	)		224		205		24		–			(17	)		212
Other investments		229		27		–			–			256		133		28		–			–			161
Total available-for-sale	$	48,011	$	900	$	(6	)	$	(516	)	$	48,389	$	41,059	$	651	$	(13	)	$	(762	)	$	40,935

(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 June 30,				Six Months Ended June 30,
(Dollars in Millions)	2014		2013		2014		2013
Taxable	$	403	$	328	$	784	$	672
Non-taxable		58		64		118		130
Total interest income from investment securities	$	461	$	392	$	902	$	802

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 June 30,				Six Months Ended June 30,
(Dollars in Millions)	2014		2013		2014		2013
Realized gains	$	3	$	9	$	8	$	21
Realized losses		–		–		–		–
Net realized gains (losses)	$	3	$	9	$	8	$	21
Income tax (benefit) on net realized gains (losses)	$	1	$	3	$	3	$	8

Summary of Other-than-Temporary Impairment by Investment Category

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

	2014								2013
Three Months Ended June 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	$	–		$	(3	)	$	1	$	(2	)
Non-prime (b)		(2	)		–		(2	)		–			–		–
Total available-for-sale	$	(3	)	$	1	$	(2	)	$	(3	)	$	1	$	(2	)

(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.

	2014								2013
Six Months Ended June 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	$	–		$	(4	)	$	2	$	(2	)
Non-prime (b)		(2	)		–		(2	)		(6	)		5		(1	)
Total available-for-sale	$	(3	)	$	1	$	(2	)	$	(10	)	$	7	$	(3	)

(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 significant assumptions used for those available-for-sale non-agency mortgage-backed securities determined to be other-than-temporarily impaired during the three months ended June 30, 2014:

	Prime (a)									Non-Prime (b)
	Minimum			Maximum			Average			Minimum			Maximum			Average
Estimated lifetime prepayment rates		15	%		20	%		16	%		1	%		8	%		3	%
Lifetime probability of default rates		4			7			6			8			10			9
Lifetime loss severity rates		15			55			40			40			75			63

(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 are summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in Millions)	2014			2013			2014			2013
Balance at beginning of period	$	111		$	133		$	116		$	134
Additions to Credit Losses Due to Other-than-temporary Impairments
Decreases in expected cash flows on securities for which other-than-temporary impairment was previously recognized		3			3			3			10
Total other-than-temporary impairment on debt securities		3			3			3			10
Other Changes in Credit Losses
Increases in expected cash flows		–			(1	)		(2	)		(1	)
Realized losses (a)		(3	)		(6	)		(6	)		(14	)
Credit losses on security sales and securities expected to be sold		–			(5	)		–			(5	)
Balance at end of period	$	111		$	124		$	111		$	124

(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.

Schedule of Gross Unrealized Losses and Fair Value of Company's Investment Securities with Unrealized Losses

At June 30, 2014, 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 June 30, 2014:

	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	$	–	$	–		$	968	$	(40	)	$	968	$	(40	)
Residential agency mortgage-backed securities		8,419		(38	)		9,556		(273	)		17,975		(311	)
Other asset-backed securities		–		–			10		(1	)		10		(1	)
Other debt securities		–		–			22		(2	)		22		(2	)
Total held-to-maturity	$	8,419	$	(38	)	$	10,556	$	(316	)	$	18,975	$	(354	)
Available-for-sale
U.S. Treasury and agencies	$	109	$	–		$	817	$	(29	)	$	926	$	(29	)
Mortgage-backed securities
Residential
Agency		9,318		(73	)		8,213		(329	)		17,531		(402	)
Non-agency (a)
Prime (b)		16		–			159		(5	)		175		(5	)
Non-prime (c)		59		(1	)		42		(1	)		101		(2	)
Other asset-backed securities		24		–			3		–			27		–
Obligations of state and political subdivisions		7		–			355		(9	)		362		(9	)
Obligations of foreign governments		6		–			–		–			6		–
Corporate debt securities		–		–			443		(64	)		443		(64	)
Perpetual preferred securities		–		–			123		(11	)		123		(11	)
Total available-for-sale	$	9,539	$	(74	)	$	10,155	$	(448	)	$	19,694	$	(522	)

(a) The Company has $7 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.