| SECURITIES |
SECURITIES The amortized cost and fair value of debt securities are as follows: TABLE 3.1 | | | | | | | | | | | | | | | | | (in millions) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Debt Securities Available for Sale: | | | | | | | | September 30, 2019 | | | | | | | | U.S. government agencies | $ | 159 |
| | $ | 1 |
| | $ | (1 | ) | | $ | 159 |
| U.S. government-sponsored entities | 245 |
| | 1 |
| | (1 | ) | | 245 |
| Residential mortgage-backed securities: | | | | | | | | Agency mortgage-backed securities | 1,337 |
| | 5 |
| | (4 | ) | | 1,338 |
| Agency collateralized mortgage obligations | 1,178 |
| | 13 |
| | (3 | ) | | 1,188 |
| Commercial mortgage-backed securities | 309 |
| | 8 |
| | (1 | ) | | 316 |
| States of the U.S. and political subdivisions | 14 |
| | — |
| | — |
| | 14 |
| Other debt securities | 2 |
| | — |
| | — |
| | 2 |
| Total debt securities available for sale | $ | 3,244 |
| | $ | 28 |
| | $ | (10 | ) | | $ | 3,262 |
| December 31, 2018 | | | | | | | | U.S. government agencies | $ | 188 |
| | $ | — |
| | $ | (1 | ) | | $ | 187 |
| U.S. government-sponsored entities | 317 |
| | — |
| | (4 | ) | | 313 |
| Residential mortgage-backed securities: | | | | | | | | Agency mortgage-backed securities | 1,465 |
| | — |
| | (36 | ) | | 1,429 |
| Agency collateralized mortgage obligations | 1,179 |
| | 5 |
| | (23 | ) | | 1,161 |
| Commercial mortgage-backed securities | 229 |
| | — |
| | (1 | ) | | 228 |
| States of the U.S. and political subdivisions | 21 |
| | — |
| | — |
| | 21 |
| Other debt securities | 2 |
| | — |
| | — |
| | 2 |
| Total debt securities available for sale | $ | 3,401 |
| | $ | 5 |
| | $ | (65 | ) | | $ | 3,341 |
|
| | | | | | | | | | | | | | | | | (in millions) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Debt Securities Held to Maturity: | | | | | | | | September 30, 2019 | | | | | | | | U.S. Treasury | $ | 1 |
| | $ | — |
| | $ | — |
| | $ | 1 |
| U.S. government agencies | 2 |
| | — |
| | — |
| | 2 |
| U.S. government-sponsored entities | 190 |
| | — |
| | (1 | ) | | 189 |
| Residential mortgage-backed securities: | | | | | | | | Agency mortgage-backed securities | 1,001 |
| | 7 |
| | (3 | ) | | 1,005 |
| Agency collateralized mortgage obligations | 686 |
| | 7 |
| | (5 | ) | | 688 |
| Commercial mortgage-backed securities | 202 |
| | 4 |
| | — |
| | 206 |
| States of the U.S. and political subdivisions | 1,110 |
| | 29 |
| | (1 | ) | | 1,138 |
| Total debt securities held to maturity | $ | 3,192 |
| | $ | 47 |
| | $ | (10 | ) | | $ | 3,229 |
| December 31, 2018 | | | | | | | | U.S. Treasury | $ | 1 |
| | $ | — |
| | $ | — |
| | $ | 1 |
| U.S. government agencies | 2 |
| | — |
| | — |
| | 2 |
| U.S. government-sponsored entities | 215 |
| | — |
| | (4 | ) | | 211 |
| Residential mortgage-backed securities: | | | | | | | | Agency mortgage-backed securities | 1,036 |
| | — |
| | (26 | ) | | 1,010 |
| Agency collateralized mortgage obligations | 794 |
| | 1 |
| | (24 | ) | | 771 |
| Commercial mortgage-backed securities | 126 |
| | 1 |
| | (1 | ) | | 126 |
| States of the U.S. and political subdivisions | 1,080 |
| | 3 |
| | (49 | ) | | 1,034 |
| Total debt securities held to maturity | $ | 3,254 |
| | $ | 5 |
| | $ | (104 | ) | | $ | 3,155 |
|
There were no significant gross gains or gross losses realized on securities during the nine months ended September 30, 2019 or 2018. As of September 30, 2019, the amortized cost and fair value of debt securities, by contractual maturities, were as follows: TABLE 3.2 | | | | | | | | | | | | | | | | | | Available for Sale | | Held to Maturity | (in millions) | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | Due in one year or less | $ | 113 |
| | $ | 113 |
| | $ | 34 |
| | $ | 34 |
| Due after one year but within five years | 147 |
| | 148 |
| | 177 |
| | 176 |
| Due after five years but within ten years | 68 |
| | 68 |
| | 106 |
| | 108 |
| Due after ten years | 92 |
| | 91 |
| | 986 |
| | 1,012 |
| | 420 |
| | 420 |
| | 1,303 |
| | 1,330 |
| Residential mortgage-backed securities: | | | | | | | | Agency mortgage-backed securities | 1,337 |
| | 1,338 |
| | 1,001 |
| | 1,005 |
| Agency collateralized mortgage obligations | 1,178 |
| | 1,188 |
| | 686 |
| | 688 |
| Commercial mortgage-backed securities | 309 |
| | 316 |
| | 202 |
| | 206 |
| Total debt securities | $ | 3,244 |
| | $ | 3,262 |
| | $ | 3,192 |
| | $ | 3,229 |
|
Maturities may differ from contractual terms because borrowers may have the right to call or prepay obligations with or without penalties. Periodic payments are received on residential mortgage-backed securities based on the payment patterns of the underlying collateral. Following is information relating to securities pledged: TABLE 3.3 | | | | | | | | | (dollars in millions) | September 30,
2019 | | December 31,
2018 | Securities pledged (carrying value): | | | | To secure public deposits, trust deposits and for other purposes as required by law | $ | 4,503 |
| | $ | 3,874 |
| As collateral for short-term borrowings | 282 |
| | 279 |
| Securities pledged as a percent of total securities | 74.1 | % | | 63.0 | % |
Following are summaries of the fair values and unrealized losses of temporarily-impaired debt securities, segregated by length of impairment:
TABLE 3.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Less than 12 Months | | 12 Months or More | | Total | (dollars in millions) | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | Debt Securities Available for Sale | | | | | | | | | | | | | | | | | September 30, 2019 | | | | | | | | | | | | | | | | | | U.S. government agencies | 6 |
| | $ | 48 |
| | $ | — |
| | 13 |
| | $ | 59 |
| | $ | (1 | ) | | 19 |
| | $ | 107 |
| | $ | (1 | ) | U.S. government-sponsored entities | — |
| | — |
| | — |
| | 7 |
| | 149 |
| | (1 | ) | | 7 |
| | 149 |
| | (1 | ) | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | | Agency mortgage-backed securities | 17 |
| | 281 |
| | (1 | ) | | 25 |
| | 343 |
| | (3 | ) | | 42 |
| | 624 |
| | (4 | ) | Agency collateralized mortgage obligations | 4 |
| | 113 |
| | — |
| | 33 |
| | 229 |
| | (3 | ) | | 37 |
| | 342 |
| | (3 | ) | Commercial mortgage-backed securities | 1 |
| | 54 |
| | (1 | ) | | — |
| | — |
| | — |
| | 1 |
| | 54 |
| | (1 | ) | States of the U.S. and political subdivisions | — |
| | — |
| | — |
| | 1 |
| | 1 |
| | — |
| | 1 |
| | 1 |
| | — |
| Other debt securities | — |
| | — |
| | — |
| | 1 |
| | 2 |
| | — |
| | 1 |
| | 2 |
| | — |
| Total temporarily impaired debt securities AFS | 28 |
| | $ | 496 |
| | $ | (2 | ) | | 80 |
| | $ | 783 |
| | $ | (8 | ) | | 108 |
| | $ | 1,279 |
| | $ | (10 | ) | December 31, 2018 | | | | | | | | | | | | | | | | | | U.S. government agencies | 20 |
| | $ | 145 |
| | $ | (1 | ) | | — |
| | $ | — |
| | $ | — |
| | 20 |
| | $ | 145 |
| | $ | (1 | ) | U.S. government-sponsored entities | 1 |
| | 36 |
| | — |
| | 11 |
| | 227 |
| | (4 | ) | | 12 |
| | 263 |
| | (4 | ) | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | | Agency mortgage-backed securities | 16 |
| | 259 |
| | (4 | ) | | 71 |
| | 1,159 |
| | (32 | ) | | 87 |
| | 1,418 |
| | (36 | ) | Agency collateralized mortgage obligations | 2 |
| | 82 |
| | (1 | ) | | 47 |
| | 590 |
| | (22 | ) | | 49 |
| | 672 |
| | (23 | ) | Non-agency collateralized mortgage obligations | 1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1 |
| | — |
| | — |
| Commercial mortgage-backed securities | 4 |
| | 155 |
| | (1 | ) | | — |
| | — |
| | — |
| | 4 |
| | 155 |
| | (1 | ) | States of the U.S. and political subdivisions | 2 |
| | 2 |
| | — |
| | 6 |
| | 10 |
| | — |
| | 8 |
| | 12 |
| | — |
| Other debt securities | — |
| | — |
| | — |
| | 1 |
| | 2 |
| | — |
| | 1 |
| | 2 |
| | — |
| Total temporarily impaired debt securities AFS | 46 |
| | $ | 679 |
| | $ | (7 | ) | | 136 |
| | $ | 1,988 |
| | $ | (58 | ) | | 182 |
| | $ | 2,667 |
| | $ | (65 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Less than 12 Months | | 12 Months or More | | Total | (dollars in millions) | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | Debt Securities Held to Maturity | | | | | | | | | | | | | | | | | September 30, 2019 | | | | | | | | | | | | | | | | | | U.S. government-sponsored entities | — |
| | $ | — |
| | $ | — |
| | 10 |
| | $ | 189 |
| | $ | (1 | ) | | 10 |
| | $ | 189 |
| | $ | (1 | ) | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | | Agency mortgage-backed securities | 6 |
| | 163 |
| | (1 | ) | | 11 |
| | 143 |
| | (2 | ) | | 17 |
| | 306 |
| | (3 | ) | Agency collateralized mortgage obligations | 1 |
| | 11 |
| | — |
| | 35 |
| | 345 |
| | (5 | ) | | 36 |
| | 356 |
| | (5 | ) | Commercial mortgage-backed securities | 2 |
| | 77 |
| | — |
| | 2 |
| | 9 |
| | — |
| | 4 |
| | 86 |
| | — |
| States of the U.S. and political subdivisions | 10 |
| | 36 |
| | — |
| | 7 |
| | 30 |
| | (1 | ) | | 17 |
| | 66 |
| | (1 | ) | Total temporarily impaired debt securities HTM | 19 |
| | $ | 287 |
| | $ | (1 | ) | | 65 |
| | $ | 716 |
| | $ | (9 | ) | | 84 |
| | $ | 1,003 |
| | $ | (10 | ) | December 31, 2018 | | | | | | | | | | | | | | | | | | U.S. government-sponsored entities | — |
| | $ | — |
| | $ | — |
| | 12 |
| | $ | 211 |
| | $ | (4 | ) | | 12 |
| | $ | 211 |
| | $ | (4 | ) | Residential mortgage-backed securities: | | | | | | | | | | | | | | | | | | Agency mortgage-backed securities | 43 |
| | 294 |
| | (4 | ) | | 47 |
| | 694 |
| | (22 | ) | | 90 |
| | 988 |
| | (26 | ) | Agency collateralized mortgage obligations | 3 |
| | 42 |
| | — |
| | 49 |
| | 611 |
| | (24 | ) | | 52 |
| | 653 |
| | (24 | ) | Commercial mortgage-backed securities | 5 |
| | 26 |
| | — |
| | 4 |
| | 43 |
| | (1 | ) | | 9 |
| | 69 |
| | (1 | ) | States of the U.S. and political subdivisions | 159 |
| | 590 |
| | (27 | ) | | 51 |
| | 161 |
| | (22 | ) | | 210 |
| | 751 |
| | (49 | ) | Total temporarily impaired debt securities HTM | 210 |
| | $ | 952 |
| | $ | (31 | ) | | 163 |
| | $ | 1,720 |
| | $ | (73 | ) | | 373 |
| | $ | 2,672 |
| | $ | (104 | ) |
We do not intend to sell the debt securities and it is not more likely than not that we will be required to sell the securities before recovery of their amortized cost basis. Other-Than-Temporary Impairment We evaluate our investment securities portfolio for OTTI on a quarterly basis. Impairment is assessed at the individual security level. We consider an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. We did not recognize any OTTI losses on securities for the nine months ended September 30, 2019 or 2018. States of the U.S. and Political Subdivisions Our municipal bond portfolio with a carrying amount of $1.1 billion as of September 30, 2019 is highly rated with an average rating of AA and 100% of the portfolio rated A or better, while 99% have stand-alone ratings of A or better. All of the securities in the municipal portfolio are general obligation bonds. Geographically, municipal bonds support our primary footprint as 65% of the securities are from municipalities located in the primary states within which we conduct business. The average holding size of the securities in the municipal bond portfolio is $3.3 million. In addition to the strong stand-alone ratings, 63% of the municipalities have some formal credit enhancement insurance that strengthens the creditworthiness of their issue. Management reviews the credit profile of each issuer on a quarterly basis.
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