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Investment Securities
9 Months Ended
Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
  Note  4
 
   Investment Securities
The Company’s
held-to-maturity
investment securities are carried at historical cost, adjusted for amortization of premiums and accretion of discounts. 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, gross unrealized holding gains and losses, and fair value of
held-to-maturity
and
available-for-sale
investment securities were as follows:
 
 
 
September 30, 2022
 
  
December 31, 2021
 
(Dollars in Millions)
 
Amortized
Cost
 
  
Unrealized
Gains
 
  
Unrealized
Losses
 
 
Fair
Value
 
  
Amortized
Cost
 
  
Unrealized
Gains
 
  
Unrealized
Losses
 
 
Fair
Value
 
Held-to-maturity
 
     
  
     
  
     
 
   
 
  
     
  
     
  
     
 
     
U.S. Treasury and agencies
  $ 1,344      $      $ (56   $ 1,288      $      $      $     $  
Residential agency mortgage-backed securities
    84,230               (11,390     72,840        41,858        2        (48     41,812  
Total
held-to-maturity
  $ 85,574      $      $ (11,446   $ 74,128      $ 41,858      $ 2      $ (48   $ 41,812  
Available-for-sale
                               
 
                                  
U.S. Treasury and agencies
  $ 24,470      $      $ (2,884   $ 21,586      $ 36,648      $ 205      $ (244   $ 36,609  
Mortgage-backed securities
                               
 
                                  
Residential agency
    33,398        12        (2,753     30,657        76,761        665        (347     77,079  
Commercial agency
    8,746               (1,655     7,091        8,633        53        (201     8,485  
Asset-backed securities
    25                     25        62        4              66  
Obligations of state and political subdivisions
    11,105        2        (1,949     9,158        10,130        607        (20     10,717  
Other
    6                     6        7                     7  
Total
available-for-sale
  $ 77,750      $ 14      $ (9,241   $ 68,523      $ 132,241      $ 1,534      $ (812   $ 132,963  
During the first nine months of 2022, the Company transferred $45.1 billion amortized cost ($40.7 billion fair value) of
available-for-sale
investment securities to the
held-to-maturity
category to reflect its new intent for these securities.
Investment securities with a fair value of $14.3 billion at September 30, 2022, and $30.7 billion at December 31, 2021, 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 $858 million at September 30, 2022, and $557 million at December 31, 2021.
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)
 
        2022
 
  
        2021
 
 
        2022
 
  
        2021
 
Taxable
  $ 793      $ 539     $ 2,171      $ 1,548  
Non-taxable
    74        67       219        193  
Total interest income from investment securities
  $ 867      $ 606     $ 2,390      $ 1,741  
 
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)
 
        2022
 
  
        2021
 
 
        2022
 
 
        2021
 
Realized gains
  $ 1     $ 39     $ 78     $ 107  
Realized losses
          (19     (40 )     (19
Net realized gains
  $ 1     $ 20     $
38     $ 88  
Income tax on net realized gains
  $     $ 5     $ 9     $ 22  
The Company conducts a regular assessment of its
available-for-sale
investment securities with unrealized losses to determine whether all or some portion of a security’s unrealized loss is related to credit and an allowance for credit losses is necessary. If the Company intends to sell or it is more likely than not the Company will be required to sell an investment security, the amortized cost of the security is written down to fair value. When evaluating credit losses, the Company considers various factors such as the nature of the investment security, the credit ratings or financial condition of the issuer, the extent of the unrealized loss, expected cash flows of underlying collateral, the existence of any government or agency guarantees, and market conditions. The Company measures the allowance for credit losses using market information where available and discounting the cash flows at the original effective rate of the investment security. The allowance for credit losses is adjusted each period through earnings and can be subsequently recovered. The allowance for credit losses on the Company’s
available-for-sale
investment securities was immaterial at September 30, 2022 and December 31, 2021.
At September 30, 2022, 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
available-for-sale
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, 2022:
 
 
 
Less Than 12 Months
 
  
12 Months or Greater
 
  
Total
 
(Dollars in Millions)
 
Fair
Value
 
  
Unrealized
Losses
 
  
Fair
Value
 
  
Unrealized
Losses
 
  
Fair
Value
 
  
Unrealized
Losses
 
U.S. Treasury and agencies
  $ 16,648      $ (1,870    $ 4,831              $ (1,014    $ 21,479      $ (2,884
Residential agency mortgage-backed securities
    24,355        (1,787      5,377        (966      29,732        (2,753
Commercial agency mortgage-backed securities
    2,992        (559      4,100        (1,096      7,092        (1,655
Obligations of state and political subdivisions
    8,006        (1,481      960        (468      8,966        (1,949
Other
    2               4               6         
Total
investment securities
  $ 52,003      $ (5,697    $ 15,272              $ (3,544    $ 67,275      $ (9,241
These unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase of these
available-for-sale
investment securities. U.S. Treasury and agencies securities and agency mortgage-backed securities are issued, guaranteed or otherwise supported by the United States government. The Company’s obligations of state and political subdivisions are generally high grade. Accordingly, the Company does not consider these unrealized losses to be credit-related and an allowance for credit losses is not necessary. 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 September 30, 2022, 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.
During the nine months ended September 30, 2022 and 2021, the Company did not purchase any investment securities that had more-than-insignificant credit deterioration.
All of the Company’s
held-to-maturity
investment securities are
 U.S. Treasury and agencies securities and
highly rated agency mortgage-backed securities that are guaranteed or otherwise supported by the United States government and have no history of credit losses. Accordingly the Company does not expect to incur any credit losses on
held-to-maturity
investment securities and has no allowance for credit losses recorded for these securities.
The following table provides information about the amortized cost, fair value and yield by maturity date of the investment securities outstanding at September 30, 2022:
 
(Dollars in Millions)
 
Amortized
Cost
 
  
Fair
Value
 
  
Weighted-
Average
Maturity in
Years
 
  
Weighted-
Average
Yield (e)
 
Held-to-maturity
 
     
  
     
  
     
  
     
U.S. Treasury and Agencies
 
     
  
     
  
     
  
     
Maturing in one year or less
  $      $              
Maturing after one year through five years
    1,344        1,288        3.5        2.85  
Maturing after five years through ten years
                          
Maturing after ten years
                          
Total
  $ 1,344      $ 1,288        3.5        2.85
Mortgage-Backed Securities (a)
                                  
Maturing in one year or less
  $      $              
Maturing after one year through five years
                          
Maturing after five years through ten years
    50,750        44,735        9.3        2.06  
Maturing after ten years
    33,480        28,105        10.3        1.92  
Total
  $ 84,230      $ 72,840        9.7        2.01
Total
held-to-maturity
(
b
)
  $ 85,574      $ 74,128        9.6        2.02
Available-for-sale
                                  
U.S. Treasury and Agencies
                                  
Maturing in one year or less
  $ 1,172      $ 1,170        .2        2.05
Maturing after one year through five years
    3,697        3,382        4.1        1.95  
Maturing after five years through ten years
    16,944        15,024        7.1        2.27  
Maturing after ten years
    2,657        2,010        11.6        1.99  
Total
  $ 24,470      $ 21,586        6.8        2.18
Mortgage-Backed Securities (a)
                                  
Maturing in one year or less
  $ 34      $ 33        .8        2.84
Maturing after one year through five years
    11,601        10,724        3.2        2.19  
Maturing after five years through ten years
    28,896        25,569        7.8        2.52  
Maturing after ten years
    1,613        1,422        11.3        2.77  
Total
  $ 42,144      $ 37,748        6.7        2.44
Asset-Backed Securities
                                  
Maturing in one year or less
  $      $              
Maturing after one year through five years
                          
Maturing after five years through ten years
    25        25        6.1        5.52  
Maturing after ten years
                          
Total
  $ 25      $ 25        6.1        5.52
Obligations of State and Political
                                  
Subdivisions (c)
 
(d) 
                                  
Maturing in one year or less
  $ 102      $ 102        .3        4.73
Maturing after one year through five years
    402        398        3.5        4.54  
Maturing after five years through ten years
    442        411        8.4        4.01  
Maturing after ten years
    10,159        8,247        16.7        3.60  
Total
  $ 11,105      $ 9,158        15.8        3.66
Other
                                  
Maturing in one year or less
  $      $              
Maturing after one year through five years
    6        6        2.7        1.99  
Maturing after five years through ten years
                          
Maturing after ten years
                          
Total
  $ 6      $ 6        2.7        1.99
Total
available-for-sale
(
b
)
  $ 77,750      $ 68,523        8.0        2.53
 
(a)
Information related to asset and mortgage-backed securities included above is presented based upon weighted-average maturities that take into account anticipated future prepayments.
(b)
The weighted-average maturity of total
held-to-maturity
investment securities was 7.4 years at December 31, 2021, with a corresponding weighted-average yield of 1.45 percent. The weighted-average maturity of total
available-for-sale
investment securities was 5.5 years at December 31, 2021, with a corresponding weighted-average yield of 1.73 percent.
(c)
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, and yield to maturity if the security is purchased at par or a discount.
(d)
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 the contractual maturity date for securities with a fair value equal to or below par.
(e)
Weighted-average yields for obligations of state and political subdivisions are presented on a fully-taxable equivalent basis based on a federal income tax rate of 21 percent. Yields on 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.