Investment Securities

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investment securities principally include available-for-sale debt securities carried at fair value on the Consolidated Balance Sheets. Unrealized losses attributable to credit deterioration are recorded in the Consolidated Statements of Income in Other loans Provision for credit losses. Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in the Consolidated Statements of Comprehensive Income, net of tax. We had accrued interest on our available-for-sale debt securities totaling $15 million and $12 million as of September 30, 2022 and December 31, 2021, respectively, presented as Other assets on the Consolidated Balance Sheets.

Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets with unrealized gains and losses recorded in the Consolidated Statements of Income as Other, net expense.

Realized gains and losses are recognized upon disposition of the securities using the specific identification method and recorded in the Consolidated Statements of Income as Other, net expense.

The following is a summary of investment securities as of September 30, 2022 and December 31, 2021:


	2022								2021
Description of Securities (Millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
State and municipal obligations	$	66	$	—	$	(11)	$	55	$	106	$	5	$	—	$	111
U.S. Government agency obligations	5		—		—		5		6		—		—		6
U.S. Government treasury obligations	3,844		—		(77)		3,767		1,680		25		(1)		1,704
Mortgage-backed securities (a)	13		—		—		13		17		1		—		18
Foreign government bonds and obligations	627		—		(3)		624		630		—		—		630
Other (b)	32		—		—		32		43		—		—		43
Equity securities (c)	53		—		(10)		43		66		17		(4)		79
Total	$	4,640	$	—	$	(101)	$	4,539	$	2,548	$	48	$	(5)	$	2,591

(a)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

(b)Represents investments in Corporate debt securities and debt securities issued by Community Development Financial Institutions.

(c)Equity securities comprise investments in common stock, exchange-traded funds and mutual funds.

The following table provides information about our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2022 and December 31, 2021:


	2022								2021
	Less than 12 months				12 months or more				Less than 12 months				12 months or more
Description of Securities (Millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
State and municipal obligations	$	52	$	(11)	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government treasury obligations	3,709		(75)		48		(2)		477		(1)		—		—
Foreign government bonds and obligations	600		(3)		—		—		—		—		—		—
Total	$	4,361	$	(89)	$	48	$	(2)	$	477	$	(1)	$	—	$	—

The gross unrealized losses on our available-for-sale debt securities are primarily attributable to an increase in the current benchmark interest rate. Overall, for the available-for-sale debt securities in gross unrealized loss positions, (i) we do not intend to sell the securities, (ii) it is not more likely than not that we will be required to sell the securities before recovery of the unrealized losses, and (iii) we expect that the contractual principal and interest will be received on the securities. We concluded that there was no credit loss attributable to the securities in an unrealized loss position for the periods presented.

The following table summarizes the gross unrealized losses by ratio of fair value to amortized cost as of September 30, 2022 and December 31, 2021:


	Less than 12 months					12 months or more					Total
Ratio of Fair Value to Amortized Cost (Dollars in millions)	Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses
2022:
90–100%	84	$	4,333	$	(79)	1	$	48	$	(2)	85	$	4,381	$	(81)
Less than 90%	12	28		(10)		—	$	—	$	—	12	$	28	$	(10)
Total as of September 30, 2022	96	$	4,361	$	(89)	1	$	48	$	(2)	97	$	4,409	$	(91)
2021:
90–100%	5	$	477	$	(1)	—	$	—	$	—	5	$	477	$	(1)
Less than 90%	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Total as of December 31, 2021	5	$	477	$	(1)	—	$	—	$	—	5	$	477	$	(1)

Contractual maturities for available-for-sale debt securities with stated maturities as of September 30, 2022 were as follows:


(Millions)	Cost		Estimated Fair Value
Due within 1 year	$	2,359	$	2,328
Due after 1 year but within 5 years	2,137		2,088
Due after 5 years but within 10 years	30		30
Due after 10 years	61		50
Total	$	4,587	$	4,496

The expected payments on state and municipal obligations, U.S. Government agency obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.