Investment Securities (Tables)

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Table 4

Investment Securities


	Available-for-Sale									Held-to-Maturity
At March 31, 2015 (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	$	421	$	421		.7		2.39	%	$	80	$	80		.2		1.36	%
Maturing after one year through five years		1,384		1,403		3.2		1.39			1,097		1,112		3.4		1.42
Maturing after five years through ten years		654		667		7.2		2.51			1,510		1,525		7.5		2.20
Maturing after ten years		101		101		18.1		1.41			57		57		10.4		1.76
Total	$	2,560	$	2,592		4.4		1.84	%	$	2,744	$	2,774		5.7		1.86	%
Mortgage-Backed Securities (a)
Maturing in one year or less	$	1,373	$	1,378		.7		1.43	%	$	757	$	758		.7		1.35	%
Maturing after one year through five years		38,616		39,090		3.7		1.84			38,155		38,508		3.6		1.97
Maturing after five years through ten years		5,737		5,807		5.9		1.78			3,777		3,810		5.7		1.33
Maturing after ten years		515		516		11.5		1.24			112		111		11.6		1.20
Total	$	46,241	$	46,791		4.0		1.81	%	$	42,801	$	43,187		3.7		1.90	%
Asset-Backed Securities (a)
Maturing in one year or less	$	–	$	–		–		–	%	$	1	$	1		.3		.79	%
Maturing after one year through five years		266		276		3.2		1.52			7		10		3.1		.86
Maturing after five years through ten years		355		362		6.5		2.10			5		6		6.4		.87
Maturing after ten years		–		–		–		–			–		6		19.1		.79
Total	$	621	$	638		5.1		1.86	%	$	13	$	23		4.3		.86	%
Obligations of State and Political Subdivisions (b) (c)
Maturing in one year or less	$	1,160	$	1,181		.5		6.69	%	$	–	$	–		.5		9.64	%
Maturing after one year through five years		3,737		3,956		2.0		6.70			1		1		2.9		8.49
Maturing after five years through ten years		480		489		6.9		4.50			1		1		7.3		7.92
Maturing after ten years		100		109		14.5		7.07			7		7		10.9		2.52
Total	$	5,477	$	5,735		2.3		6.51	%	$	9	$	9		9.2		4.08	%
Other Debt Securities
Maturing in one year or less	$	–	$	–		–		–	%	$	–	$	–		–		–	%
Maturing after one year through five years		–		–		–		–			9		9		2.0		1.44
Maturing after five years through ten years		–		–		–		–			21		20		5.6		1.00
Maturing after ten years		690		628		18.2		2.48			–		–		–		–
Total	$	690	$	628		18.2		2.48	%	$	30	$	29		4.5		1.13	%
Other Investments	$	392	$	442		11.5		2.36	%	$	–	$	–		–		–	%
Total investment securities (d)	$	55,981	$	56,826		4.1		2.29	%	$	45,597	$	46,022		3.8		1.90	%

(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 4.3 years at December 31, 2014, with a corresponding weighted-average yield of 2.32 percent. The weighted-average maturity of the held-to-maturity investment securities was 4.0 years at December 31, 2014, with a corresponding weighted-average yield of 1.92 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.


	March 31, 2015					December 31, 2014
(Dollars in Millions)	Amortized Cost		Percent of Total			Amortized Cost		Percent of Total
U.S. Treasury and agencies	$	5,304		5.2	%	$	5,339		5.3	%
Mortgage-backed securities		89,042		87.7			87,645		87.3
Asset-backed securities		634		.6			638		.6
Obligations of state and political subdivisions		5,486		5.4			5,613		5.6
Other debt securities and investments		1,112		1.1			1,171		1.2
Total investment securities	$	101,578		100.0	%	$	100,406		100.0	%

Investment Securities Held to Maturity

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 investment securities were as follows:


	March 31, 2015												December 31, 2014
					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	$	2,744	$	34	$	–		$	(4	)	$	2,774	$	2,717	$	15	$	–	$	(18	)	$	2,714
Mortgage-backed securities
Residential
Agency		42,800		471		–			(85	)		43,186		42,204		335		–		(176	)		42,363
Non-agency non-prime (d)		1		–		–			–			1		1		–		–		–			1
Asset-backed securities
Collateralized debt obligations/ Collateralized loan obligations		–		7		–			–			7		–		7		–		–			7
Other		13		4		(1	)		–			16		13		4		–		–			17
Obligations of state and political subdivisions		9		1		–			(1	)		9		9		1		–		(1	)		9
Obligations of foreign governments		9		–		–			–			9		9		–		–		–			9
Other debt securities		21		–		–			(1	)		20		21		–		–		(1	)		20
Total held-to-maturity	$	45,597	$	517	$	(1	)	$	(91	)	$	46,022	$	44,974	$	362	$	–	$	(196	)	$	45,140

(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.

Investment Securities 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 available-for-sale investment securities were as follows:


	March 31, 2015												December 31, 2014
					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
Available-for-sale (b)
U.S. Treasury and agencies	$	2,560	$	32	$	–		$	–		$	2,592	$	2,622	$	14	$	–		$	(4	)	$	2,632
Mortgage-backed securities
Residential
Agency		45,506		658		–			(134	)		46,030		44,668		593		–			(244	)		45,017
Non-agency
Prime (c)		380		9		(2	)		(2	)		385		399		9		(2	)		(1	)		405
Non-prime (d)		254		20		(1	)		–			273		261		20		(1	)		–			280
Commercial agency		101		2		–			–			103		112		3		–			–			115
Asset-backed securities
Collateralized debt obligations/ Collateralized loan obligations		18		4		–			–			22		18		4		–			–			22
Other		603		13		–			–			616		607		13		–			(1	)		619
Obligations of state and political subdivisions		5,477		260		–			(2	)		5,735		5,604		265		–			(1	)		5,868
Obligations of foreign governments		–		–		–			–			–		6		–		–			–			6
Corporate debt securities		690		6		–			(68	)		628		690		3		–			(79	)		614
Perpetual preferred securities		156		29		–			(9	)		176		200		27		–			(10	)		217
Other investments		236		30		–			–			266		245		29		–			–			274
Total available-for-sale	$	55,981	$	1,063	$	(3	)	$	(215	)	$	56,826	$	55,432	$	980	$	(3	)	$	(340	)	$	56,069

(a)

(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)

(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 March 31, (Dollars in Millions)	2015		2014
Taxable	$	436	$	381
Non-taxable		59		60
Total interest income from investment securities	$	495	$	441

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 March 31 (Dollars in Millions)	2015			2014
Realized gains	$	1		$	5
Realized losses		(1	)		–
Net realized gains (losses)	$	–		$	5
Income tax (benefit) on net realized gains (losses)	$	–		$	2

Changes in Credit Losses on Debt Securities Excluding Perpetual Preferred Securities

Changes in the credit losses on debt securities are summarized as follows:


Three Months Ended March 31 (Dollars in Millions)	2015			2014
Balance at beginning of period	$	101		$	116
Increases in expected cash flows		(2	)		(2	)
Realized losses (a)		(3	)		(3	)
Balance at end of period	$	96		$	111

(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 Investment Securities

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 March 31, 2015:


	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	$	439	$	(2	)	$	114	$	(2	)	$	553	$	(4	)
Residential agency mortgage-backed securities		2,907		(9	)		5,171		(76	)		8,078		(85	)
Other asset-backed securities		–		–			6		(1	)		6		(1	)
Obligations of state and political subdivisions		2		(1	)		–		–			2		(1	)
Other debt securities		–		–			20		(1	)		20		(1	)
Total held-to-maturity	$	3,348	$	(12	)	$	5,311	$	(80	)	$	8,659	$	(92	)
Available-for-sale
U.S. Treasury and agencies	$	215	$	–		$	108	$	–		$	323	$	–
Residential mortgage-backed securities
Agency		4,282		(16	)		7,253		(118	)		11,535		(134	)
Non-agency (a)
Prime (b)		82		(1	)		66		(3	)		148		(4	)
Non-prime (c)		17		–			20		(1	)		37		(1	)
Other asset-backed securities		–		–			3		–			3		–
Obligations of state and political subdivisions		92		(2	)		–		–			92		(2	)
Corporate debt securities		–		–			440		(68	)		440		(68	)
Perpetual preferred securities		–		–			76		(9	)		76		(9	)
Total available-for-sale	$	4,688	$	(19	)	$	7,966	$	(199	)	$	12,654	$	(218	)

(a)

The Company has $5 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)

(c)

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

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of all investments in certain debt and equity securities for which the entity has the positive intent and ability to hold until maturity.

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- Definition

Tabular disclosure of investment income, including, but not limited to, interest and dividend income and amortization of discount (premium) derived from debt and equity securities. Excludes realized and unrealized gain (loss) on investments.

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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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