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Investment Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]


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:


	June 30, 2023										December 31, 2022
(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	$	1,345		$	—	$	(58	)	$	1,287	$	1,344	$	—	$	(51	)	$	1,293
Mortgage-backed securities
Residential agency		83,898			—		(10,578	)		73,320		85,693		2		(10,810	)		74,885
Commercial agency		1,695			—		(17	)		1,678		1,703		1		(8	)		1,696
Total held-to-maturity	$	86,938		$	—	$	(10,653	)	$	76,285	$	88,740	$	3	$	(10,869	)	$	77,874
Available-for-sale
U.S. Treasury and agencies	$	21,328		$	1	$	(2,361	)	$	18,968	$	24,801	$	1	$	(2,769	)	$	22,033
Mortgage-backed securities
Residential agency		28,253			3		(2,595	)		25,661		32,060		8		(2,797	)		29,271
Commercial
Agency		8,719			—		(1,532	)		7,187		8,736		—		(1,591	)		7,145
Non-agency		7			—		(1	)		6		7		—		—			7
Asset-backed securities		7,487			5		(41	)		7,451		4,356		5		(38	)		4,323
Obligations of state and political subdivisions		11,091			6		(1,153	)		9,944		11,484		12		(1,371	)		10,125
Other		4			—		—			4		6		—		—			6
Total available-for-sale, excluding portfolio level basis adjustments		76,889			15		(7,683	)		69,221		81,450		26		(8,566	)		72,910
Portfolio level basis adjustments (a)		(1	)		—		1			—		—		—		—			—
Total available-for-sale	$	76,888		$	15	$	(7,682	)	$	69,221	$	81,450	$	26	$	(8,566	)	$	72,910

(a)	Represents fair value hedge basis adjustments related to active portfolio layer method hedges of available-for-sale investment securities, which are not allocated to individual securities in the portfolio. For additional information, refer to Note 13.

Investment securities with a fair value of $21.3 billion at June 30, 2023, and $15.3 billion at December 31, 2022, 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 $327 million at June 30, 2023, and $858 million at December 31, 2022.

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)	2023		2022		2023		2022
Taxable	$	999	$	732	$	1,993	$	1,378
Non-taxable		78		74		158		145
Total interest income from investment securities	$	1,077	$	806	$	2,151	$	1,523

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)	2023			2022			2023			2022
Realized gains	$	5		$	144		$	65		$	386
Realized losses		(2	)		(125	)		(94	)		(349	)
Net realized gains (losses)	$	3		$	19		$	(29	)	$	37
Income tax on net realized gains (losses)	$	1		$	5		$	(7	)	$	9

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 June 30, 2023 and December 31, 2022.

At June 30, 2023, 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 June 30, 2023:


	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	$	419	$	(8	)	$	17,061	$	(2,353	)	$	17,480	$	(2,361	)
Mortgage-backed securities
Residential agency		2,932		(83	)		22,463		(2,512	)		25,395		(2,595	)
Commercial
Agency		—		—			7,186		(1,532	)		7,186		(1,532	)
Non-agency		6		(1	)		—		—			6		(1	)
Asset-backed securities		2,839		(41	)		—		—			2,839		(41	)
Obligations of state and political subdivisions		2,391		(34	)		6,924		(1,119	)		9,315		(1,153	)
Other		—		—			4		—			4		—
Total investment securities	$	8,587	$	(167	)	$	53,638	$	(7,516	)	$	62,225	$	(7,683	)

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 June 30, 2023, 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 six months ended June 30, 2023 and 2022, 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 June 30, 2023:


(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	$	50	$	49		.8		2.67	%
Maturing after one year through five years		1,295		1,238		2.9		2.85
Maturing after five years through ten years		—		—		—		—
Maturing after ten years		—		—		—		—
Total	$	1,345	$	1,287		2.8		2.85	%
Mortgage-Backed Securities (a)
Maturing in one year or less	$	22	$	22		.8		4.95	%
Maturing after one year through five years		1,436		1,419		2.6		4.60
Maturing after five years through ten years		70,260		61,972		9.2		2.18
Maturing after ten years		13,875		11,585		10.2		2.05
Total	$	85,593	$	74,998		9.2		2.20	%
Total held-to-maturity (b)	$	86,938	$	76,285		9.1		2.21	%
Available-for-sale
U.S. Treasury and Agencies
Maturing in one year or less	$	13	$	13		.2		4.72	%
Maturing after one year through five years		6,140		5,809		3.7		2.79
Maturing after five years through ten years		12,981		11,462		6.8		2.20
Maturing after ten years		2,194		1,684		11.1		2.00
Total	$	21,328	$	18,968		6.4		2.35	%
Mortgage-Backed Securities (a)
Maturing in one year or less	$	134	$	130		.9		2.45	%
Maturing after one year through five years		8,980		8,325		3.1		2.42
Maturing after five years through ten years		26,491		23,211		7.6		3.02
Maturing after ten years		1,374		1,188		11.1		3.65
Total	$	36,979	$	32,854		6.6		2.90	%
Asset-Backed Securities (a)
Maturing in one year or less	$	1	$	1		.3		7.57	%
Maturing after one year through five years		7,104		7,068		1.6		5.02
Maturing after five years through ten years		382		382		5.6		6.96
Maturing after ten years		—		—		—		—
Total	$	7,487	$	7,451		1.8		5.12	%
Obligations of State and Political
Subdivisions (c) (d)
Maturing in one year or less	$	149	$	149		.3		5.76	%
Maturing after one year through five years		2,539		2,510		3.5		4.68
Maturing after five years through ten years		1,542		1,470		7.8		3.99
Maturing after ten years		6,861		5,815		16.2		3.37
Total	$	11,091	$	9,944		11.9		3.79	%
Other
Maturing in one year or less	$	—	$	—		—		—	%
Maturing after one year through five years		4		4		1.9		1.89
Maturing after five years through ten years		—		—		—		—
Maturing after ten years		—		—		—		—
Total	$	4	$	4		1.9		1.89	%
Total available-for-sale (b) (f)	$	76,889	$	69,221		6.8		3.09	%

(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 9.2 years at December 31, 2022, with a corresponding weighted-average yield of 2.18 percent. The weighted-average maturity of total

available-for-sale

investment securities was 7.4 years at December 31, 2022, with a corresponding weighted-average yield of 2.94 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

held-to-maturity.

(f)	Amortized cost excludes portfolio level basis adjustments of $(1) million.