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Investment Securities
6 Months Ended
Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
 Note 3      Investment Securities

The Company’s held-to-maturity investment securities are carried at historical cost, adjusted for amortization of premiums and accretion of discounts and credit-related other-than-temporary impairment. The Company’s 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.

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, 2018            December 31, 2017  
                Unrealized Losses                             Unrealized Losses        
(Dollars in Millions)   Amortized
Cost
    Unrealized
Gains
    Other-than-
Temporary (a)
    Other (b)    

Fair

Value

           Amortized
Cost
    Unrealized
Gains
    Other-than-
Temporary (a)
    Other (b)    

Fair

Value

 

Held-to-maturity

                       

U.S. Treasury and agencies

  $ 5,143     $ 1     $     $ (203   $ 4,941         $ 5,181     $ 5     $     $ (120   $ 5,066  

Residential agency mortgage-backed securities

    40,880       34             (1,277     39,637           39,150       48             (579     38,619  

Asset-backed securities

                       

Collateralized debt obligations/Collateralized loan obligations

          4                   4                 4                   4  

Other

    5       2                   7           6       2                   8  

Obligations of state and political subdivisions

    6       1                   7           6       1                   7  

Obligations of foreign governments

    9                         9           7                         7  

Other

    12                         12               12                         12  

Total held-to-maturity

  $ 46,055     $ 42     $     $ (1,480   $ 44,617             $ 44,362     $ 60     $     $ (699   $ 43,723  

Available-for-sale

                       

U.S. Treasury and agencies

  $ 21,244     $ 2     $     $ (515   $ 20,731         $ 23,586     $ 3     $     $ (288   $ 23,301  

Mortgage-backed securities

                       

Residential agency

    39,409       124             (1,113     38,420           38,450       152             (571     38,031  

Commercial agency

    6                         6           6                         6  

Other asset-backed securities

    405       6                   411           413       6                   419  

Obligations of state and political subdivisions

    6,866       49             (136     6,779           6,240       147             (29     6,358  

Other

                                          22                         22  

Total available-for-sale

  $ 67,930     $ 181     $     $ (1,764   $ 66,347             $ 68,717     $ 308     $     $ (888   $ 68,137  

 

(a) Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.
(b) Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired.

The weighted-average maturity of the available-for-sale investment securities was 5.5 years at June 30, 2018, compared with 5.1 years at December 31, 2017. The corresponding weighted-average yields were 2.38 percent and 2.25 percent, respectively. The weighted-average maturity of the held-to-maturity investment securities was 5.3 years at June 30, 2018 and 4.7 years at December 31, 2017. The corresponding weighted-average yields were 2.32 percent and 2.14 percent, respectively.

For amortized cost, fair value and yield by maturity date of held-to-maturity and available-for-sale investment securities outstanding at June 30, 2018, refer to Table 4 included in Management’s Discussion and Analysis, which is incorporated by reference into these Notes to Consolidated Financial Statements.

Investment securities with a fair value of $10.4 billion at June 30, 2018, and $12.8 billion at December 31, 2017, were pledged to secure public, private and trust deposits, repurchase agreements and for other purposes required by contractual obligation or law. Included in these amounts were securities where the Company and certain counterparties have agreements granting the counterparties the right to sell or pledge the securities. Investment securities securing these types of arrangements had a fair value of $2.2 billion at June 30, 2018, and $689 million at December 31, 2017.

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)   2018      2017             2018      2017  

Taxable

  $       597      $     507          $     1,158      $     990  

Non-taxable

    56        48                108        95  

Total interest income from investment securities

  $ 653      $ 555              $ 1,266      $ 1,085  

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)   2018      2017             2018      2017  

Realized gains

  $         10      $         9          $         15      $         56  

Realized losses

                                 (18

Net realized gains (losses)

  $ 10      $ 9              $ 15      $ 38  

Income tax (benefit) on net realized gains (losses)

  $ 3      $ 4              $ 4      $ 15  

The Company conducts a regular assessment of its investment securities with unrealized losses to determine whether investment securities are other-than-temporarily impaired considering, among other factors, the nature of the investment securities, the credit ratings or financial condition of the issuer, the extent and duration of the unrealized loss, expected cash flows of underlying collateral, the existence of any government or agency guarantees, market conditions and whether the Company intends to sell or it is more likely than not the Company will be required to sell the investment securities. The Company determines other-than-temporary impairment recorded in earnings for investment securities not intended to be sold by estimating the future cash flows of each individual investment security, using market information where available, and discounting the cash flows at the original effective rate of the investment security. Other-than-temporary impairment recorded in other comprehensive income (loss) is measured as the difference between that discounted amount and the fair value of each investment security. The total amount of other-than-temporary impairment recorded was immaterial for the three and six months ended June 30, 2018 and 2017.

At June 30, 2018, 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, 2018:

 

    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

  $ 2,250      $ (52        $ 2,541      $ (151        $ 4,791      $ (203

Residential agency mortgage-backed securities

    21,722        (585          13,791        (692          35,513        (1,277

Other asset-backed securities

                      2                   2         

Other

                          11                       11         

Total held-to-maturity

  $ 23,972      $ (637            $ 16,345      $ (843            $ 40,317      $ (1,480

Available-for-sale

                        

U.S. Treasury and agencies

  $ 12,332      $ (294        $ 8,199      $ (221        $ 20,531      $ (515

Residential agency mortgage-backed securities

    13,044        (305          17,989        (808          31,033        (1,113

Commercial agency mortgage-backed securities

    6                                     6         

Obligations of state and political subdivisions

    2,827        (48              1,245        (88              4,072        (136

Total available-for-sale

  $ 28,209      $ (647            $ 27,433      $ (1,117            $ 55,642      $ (1,764

The Company does not consider these unrealized losses to be credit-related. These unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase. A substantial portion of investment securities that have unrealized losses are either U.S. Treasury and agencies, agency mortgage-backed or state and political securities. In general, the issuers of the investment securities are contractually prohibited from prepayment at less than par, and the Company did not pay significant purchase premiums for these investment securities. At June 30, 2018, the Company had no plans to sell investment securities with unrealized losses, and believes it is more likely than not it would not be required to sell such investment securities before recovery of their amortized cost.