Investment Securities (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

 Table 4  Investment Securities

	Available-for-Sale									Held-to-Maturity
At September 30, 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	$	374	$	375		.4		2.52	%	$	—	$	—		—		—	%
Maturing after one year through five years		1,488		1,509		2.8		1.42			1,098		1,114		2.9		1.42
Maturing after five years through ten years		972		989		6.9		2.28			1,783		1,805		7.0		2.15
Maturing after ten years		1		1		11.9		4.15			56		56		10.1		1.78
Total	$	2,835	$	2,874		3.9		1.86	%	$	2,937	$	2,975		5.5		1.87	%
Mortgage-Backed Securities (a)
Maturing in one year or less	$	836	$	840		.7		1.68	%	$	349	$	350		.7		1.69	%
Maturing after one year through five years		38,148		38,531		4.0		1.83			36,027		36,296		3.7		1.96
Maturing after five years through ten years		10,540		10,625		5.7		1.43			5,161		5,206		5.6		1.21
Maturing after ten years		558		560		12.8		1.25			168		168		11.3		1.22
Total	$	50,082	$	50,556		4.4		1.73	%	$	41,705	$	42,020		3.9		1.86	%
Asset-Backed Securities (a)
Maturing in one year or less	$	52	$	53		.5		.18	%	$	—	$	1		.2		.82	%
Maturing after one year through five years		199		205		3.5		3.00			5		8		2.4		.86
Maturing after five years through ten years		354		361		6.2		2.16			4		4		5.8		.92
Maturing after ten years		—		—		—		—			1		7		11.9		.95
Total	$	605	$	619		4.8		2.26	%	$	10	$	20		4.7		.89	%
Obligations of State and Political Subdivisions (b) (c)
Maturing in one year or less	$	1,581	$	1,614		.6		7.01	%	$	—	$	—		.2		9.50	%
Maturing after one year through five years		2,753		2,891		1.8		6.91			1		1		2.7		7.93
Maturing after five years through ten years		635		639		7.2		5.40			1		2		8.0		7.78
Maturing after ten years		152		158		16.6		6.81			6		5		10.6		1.73
Total	$	5,121	$	5,302		2.5		6.75	%	$	8	$	8		9.0		3.72	%
Other Debt Securities
Maturing in one year or less	$	—	$	—		—		—	%	$	1	$	1		.8		1.39	%
Maturing after one year through five years		—		—		—		—			8		8		1.6		1.50
Maturing after five years through ten years		—		—		—		—			21		19		5.1		1.05
Maturing after ten years		677		616		17.8		2.55			—		—		—		—
Total	$	677	$	616		17.8		2.55	%	$	30	$	28		4.0		1.18	%
Other Investments	$	384	$	429		11.6		2.41	%	$	—	$	—		—		—	%
Total investment securities (d)	$	59,704	$	60,396		4.4		2.19	%	$	44,690	$	45,051		4.0		1.86	%

(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.

	September 30, 2015					December 31, 2014
(Dollars in Millions)	Amortized Cost		Percent of Total			Amortized Cost		Percent of Total
U.S. Treasury and agencies	$	5,772		5.5	%	$	5,339		5.3	%
Mortgage-backed securities		91,787		87.9			87,645		87.3
Asset-backed securities		615		.6			638		.6
Obligations of state and political subdivisions		5,129		4.9			5,613		5.6
Other debt securities and investments		1,091		1.1			1,171		1.2
Total investment securities	$	104,394		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 and available-for-sale investment securities were as follows:

	September 30, 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	$	2,937	$	40	$	–		$	(2	)	$	2,975	$	2,717	$	15	$	–	$	(18	)	$	2,714
Mortgage-backed securities
Residential
Agency		41,704		403		–			(88	)		42,019		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		10		4		(1	)		–			13		13		4		–		–			17
Obligations of state and political subdivisions		8		1		–			(1	)		8		9		1		–		(1	)		9
Obligations of foreign governments		9		–		–			–			9		9		–		–		–			9
Other debt securities		21		–		–			(2	)		19		21		–		–		(1	)		20
Total held-to-maturity	$	44,690	$	455	$	(1	)	$	(93	)	$	45,051	$	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 held-to-maturity and available-for-sale investment securities were as follows:

	September 30, 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	$	2,835	$	40	$	–		$	(1	)	$	2,874	$	2,622	$	14	$	–		$	(4	)	$	2,632
Mortgage-backed securities
Residential
Agency		49,446		582		–			(133	)		49,895		44,668		593		–			(244	)		45,017
Non-agency
Prime (c)		334		7		(2	)		(1	)		338		399		9		(2	)		(1	)		405
Non-prime (d)		231		21		(1	)		–			251		261		20		(1	)		–			280
Commercial agency		71		1		–			–			72		112		3		–			–			115
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations		17		3		–			–			20		18		4		–			–			22
Other		588		12		–			(1	)		599		607		13		–			(1	)		619
Obligations of state and political subdivisions		5,121		187		–			(6	)		5,302		5,604		265		–			(1	)		5,868
Obligations of foreign governments		–		–		–			–			–		6		–		–			–			6
Corporate debt securities		677		1		–			(62	)		616		690		3		–			(79	)		614
Perpetual preferred securities		156		26		–			(11	)		171		200		27		–			(10	)		217
Other investments		228		30		–			–			258		245		29		–			–			274
Total available-for-sale	$	59,704	$	910	$	(3	)	$	(215	)	$	60,396	$	55,432	$	980	$	(3	)	$	(340	)	$	56,069

(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)	2015		2014		2015		2014
Taxable	$	448	$	419	$	1,333	$	1,203
Non-taxable		54		57		169		175
Total interest income from investment securities	$	502	$	476	$	1,502	$	1,378

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)	2015		2014		2015			2014
Realized gains	$	–	$	–	$	1		$	8
Realized losses		–		–		(1	)		–
Net realized gains (losses)	$	–	$	–	$	–		$	8
Income tax (benefit) on net realized gains (losses)	$	–	$	–	$	–		$	3

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 September 30,						Nine Months Ended September 30,
(Dollars in Millions)	2015			2014			2015			2014
Balance at beginning of period	$	91		$	111		$	101		$	116
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
Total other-than-temporary impairment on debt securities		–			–			–			3
Other Changes in Credit Losses
Increases in expected cash flows		–			(2	)		(2	)		(4	)
Realized losses (a)		(3	)		(4	)		(11	)		(10	)
Balance at end of period	$	88		$	105		$	88		$	105

(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 September 30, 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	$	339	$	(1	)	$	64	$	(1	)	$	403	$	(2	)
Residential agency mortgage-backed securities		4,715		(22	)		4,449		(66	)		9,164		(88	)
Other asset-backed securities		–		–			6		(1	)		6		(1	)
Obligations of state and political subdivisions		2		(1	)		–		–			2		(1	)
Other debt securities		–		–			20		(2	)		20		(2	)
Total held-to-maturity	$	5,056	$	(24	)	$	4,539	$	(70	)	$	9,595	$	(94	)
Available-for-sale
U.S. Treasury and agencies	$	202	$	(1	)	$	8	$	–		$	210	$	(1	)
Residential mortgage-backed securities
Agency		6,276		(27	)		6,589		(106	)		12,865		(133	)
Non-agency (a)
Prime (b)		64		–			75		(3	)		139		(3	)
Non-prime (c)		10		–			18		(1	)		28		(1	)
Other asset-backed securities		24		(1	)		2		–			26		(1	)
Obligations of state and political subdivisions		285		(6	)		–		–			285		(6	)
Corporate debt securities		–		–			432		(62	)		432		(62	)
Perpetual preferred securities		–		–			73		(11	)		73		(11	)
Other investments		1		–			–		–			1		–
Total available-for-sale	$	6,862	$	(35	)	$	7,197	$	(183	)	$	14,059	$	(218	)

(a) The Company had $4 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.