Investment Securities (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Debt Securities, Available-for-sale

The major components of our AFS investment securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Carrying Value
AFS securities, at fair value:
U.S. Treasury securities	$	17,101	$	—	$	(709)	$	16,392
U.S. agency debentures	138		—		(16)		122
Foreign government debt securities	40		—		—		40
Residential MBS:
Agency-issued MBS	8,315		—		(975)		7,340
Agency-issued CMO—fixed rate	853		—		(63)		790
Agency-issued CMBS	1,694		—		(155)		1,539
Total AFS securities	$	28,141	$	—	$	(1,918)	$	26,223

	December 31, 2021
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Carrying Value
AFS securities, at fair value:
U.S. Treasury securities	$	15,799	$	121	$	(70)	$	15,850
U.S. agency debentures	200		—		(4)		196
Foreign government debt securities	61		—		—		61
Residential MBS:
Agency-issued MBS	8,786		13		(210)		8,589
Agency-issued CMO—fixed rate	988		3		(9)		982
Agency-issued CMBS	1,536		27		(20)		1,543
Total AFS securities	$	27,370	$	164	$	(313)	$	27,221

Activity of Available-for-Sale Securities

The following table summarizes sale activity of AFS securities during the three and six months ended June 30, 2022 and 2021 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:

	Three months ended June 30,				Six months ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Sales proceeds	$	3,412	$	—	$	8,511	$	—
Net realized gains and losses:
Gross realized gains	2		—		146		—
Gross realized losses	(3)		—		(98)		—
Net realized gains/(losses)	$	(1)	$	—	$	48	$	—

Summary of Unrealized Losses on Available for Sale Securities

The following tables summarize our AFS securities in an unrealized loss position for which an ACL has not been recorded and summarized into categories of AFS securities that were in an unrealized loss for position for less than 12 months, or 12 months or longer, as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Less than 12 months				12 months or longer				Total
(Dollars in millions)	Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses
AFS securities:
U.S. Treasury securities	$	14,816	$	(656)	$	1,576	$	(53)	$	16,392	$	(709)
U.S. agency debentures	52		(2)		70		(14)		122		(16)
Residential MBS:
Agency-issued MBS	4,306		(449)		3,034		(526)		7,340		(975)
Agency-issued CMO —fixed rate	723		(55)		67		(8)		790		(63)
Agency-issued CMBS	1,366		(121)		174		(34)		1,540		(155)
Total AFS securities (1)	$	21,263	$	(1,283)	$	4,921	$	(635)	$	26,184	$	(1,918)

(1)As of June 30, 2022, we identified a total of 767 investments that were in unrealized loss positions with 143 investments in an unrealized loss position for a period of time greater than 12 months. Based on our analysis of the securities in an unrealized loss position as of June 30, 2022, the decline in value is unrelated to credit loss and is related to changes in market interest rates since purchase and therefore changes in value for securities are included in other comprehensive income. Market valuations and credit loss analyses on assets in the AFS securities portfolio are reviewed and monitored on a quarterly basis. As of June 30, 2022, we do not intend to sell any of our securities in an unrealized loss position prior to recovery of our amortized cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our amortized cost basis. None of the investments in our AFS securities portfolio were past due as of June 30, 2022.

	December 31, 2021
	Less than 12 months				12 months or longer				Total
(Dollars in millions)	Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses
AFS securities:
U.S. Treasury securities	$	7,777	$	(70)	$	—	$	—	$	7,777	$	(70)
U.S. agency debentures	196		(4)		—		—		196		(4)
Residential MBS:
Agency-issued MBS	8,280		(210)		—		—		8,280		(210)
Agency-issued CMO—fixed rate	740		(9)		—		—		740		(9)
Agency-issued CMBS	603		(11)		163		(9)		766		(20)
Total AFS securities (1)	$	17,596	$	(304)	$	163	$	(9)	$	17,759	$	(313)

(1)As of December 31, 2021, we identified a total of 475 investments that were in unrealized loss positions, of which 4 investments are in an unrealized loss position for a period of time greater than 12 months. None of the investments in our AFS securities portfolio were past due as of December 31, 2021.

Summary of Remaining Contractual Principal Maturities and Fully Taxable Equivalent Yields on Securities

The following table summarizes the fixed income securities, carried at fair value, classified as AFS as of June 30, 2022 by the remaining contractual principal maturities. For U.S. Treasury securities, U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. Expected maturities for MBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. MBS classified as AFS typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments.

	June 30, 2022
(Dollars in millions)	Total		One Year or Less		After One Year to Five Years		After Five Years to Ten Years		After Ten Years
U.S. Treasury securities	$	16,392	$	272	$	16,120	$	—	$	—
U.S. agency debentures	122		17		35		70		—
Foreign government debt securities	40		40		—		—		—
Residential MBS:
Agency-issued MBS	7,340		—		—		—		7,340
Agency-issued CMO—fixed rate	790		—		—		—		790
Agency-issued CMBS	1,539		—		104		1,435		—
Total	$	26,223	$	329	$	16,259	$	1,505	$	8,130

The following table summarizes the remaining contractual principal maturities on fixed income investment securities classified as HTM as of June 30, 2022. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for MBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. MBS classified as HTM typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary

based upon structure and prepayments in lower interest rate environments; however, we expect to collect substantially all of the recorded investment on these securities.

	June 30, 2022
	Total				One Year or Less				After One Year to Five Years				After Five Years to Ten Years				After Ten Years
(Dollars in millions)	Net Carry Value		Fair Value		Net Carry Value		Fair Value		Net Carry Value		Fair Value		Net Carry Value		Fair Value		Net Carry Value		Fair Value
U.S. agency debentures	$	536	$	500	$	4	$	4	$	109	$	105	$	423	$	391	$	—	$	—
Residential MBS:
Agency-issued MBS	61,112		54,115		—		—		4		4		1,102		1,074		60,006		53,037
Agency-issued CMO—fixed rate	11,103		9,884		—		—		28		27		239		232		10,836		9,625
Agency-issued CMO—variable rate	87		86		—		—		—		—		—		—		87		86
Agency-issued CMBS	14,821		13,133		32		31		175		165		969		858		13,645		12,079
Municipal bonds and notes	7,450		6,240		27		27		199		196		1,294		1,201		5,930		4,816
Corporate bonds	705		621		—		—		52		48		653		573		—		—
Total	$	95,814	$	84,579	$	63	$	62	$	567	$	545	$	4,680	$	4,329	$	90,504	$	79,643

Held-to-maturity Securities

The components of our HTM investment securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		ACL
HTM securities, at cost:
U.S. agency debentures (1)	$	536	$	—	$	(36)	$	500	$	—
Residential MBS:
Agency-issued MBS	61,112		—		(6,997)		54,115		—
Agency-issued CMO—fixed rate	11,103		—		(1,219)		9,884		—
Agency-issued CMO—variable rate	87		—		(1)		86		—
Agency-issued CMBS	14,821		—		(1,688)		13,133		—
Municipal bonds and notes	7,451		3		(1,214)		6,240		1
Corporate bonds	710		—		(89)		621		5
Total HTM securities	$	95,820	$	3	$	(11,244)	$	84,579	$	6

(1)    Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

	December 31, 2021
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		ACL
HTM securities, at amortized cost:
U.S. agency debentures (1)	$	609	$	8	$	(2)	$	615	$	—
Residential MBS:
Agency-issued MBS	64,439		124		(887)		63,676		—
Agency-issued CMO—fixed rate	10,226		9		(145)		10,090		—
Agency-issued CMO—variable rate	100		1		—		101		—
Agency-issued CMBS	14,959		39		(277)		14,721		—
Municipal bonds and notes	7,157		185		(27)		7,315		1
Corporate bonds	712		2		(5)		709		6
Total HTM securities	$	98,202	$	368	$	(1,343)	$	97,227	$	7

(1)    Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

Debt Securities, Held-to-maturity, Credit Quality Indicator

On a quarterly basis, management monitors the credit quality for HTM securities through the use of standard credit ratings. The following table summarizes our amortized cost of HTM securities aggregated by credit quality indicator at June 30, 2022 and December 31, 2021:

(Dollars in millions)	June 30, 2022		December 31, 2021
Municipal bonds and notes:
Aaa	$	4,143	$	3,774
Aa1	1,944		2,031
Aa2	1,166		1,154
Aa3	171		172
A1	27		26
Total municipal bonds and notes	$	7,451	$	7,157
Corporate bonds:
Aaa	$	39	$	39
Aa2	42		42
Aa3	105		105
A1	282		251
A2	231		264
A3	11		11
Total corporate bonds	$	710	$	712

Schedule of Nonmarketable and Other Securities

The major components of our non-marketable and other equity securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

(Dollars in millions)	June 30, 2022		December 31, 2021
Non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments (1)	$	174	$	130
Unconsolidated venture capital and private equity fund investments (2)	172		208
Other investments without a readily determinable fair value (3)	188		164
Other equity securities in public companies (fair value accounting) (4)	32		117
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments	663		671
Debt funds	5		5
Other investments	277		294
Investments in qualified affordable housing projects, net (6)	1,134		954
Total non-marketable and other equity securities	$	2,645	$	2,543

(1)The following table shows the amounts of venture capital and private equity fund investments held by the following consolidated funds and our ownership percentage of each fund at June 30, 2022 and December 31, 2021 (fair value accounting):

	June 30, 2022				December 31, 2021
(Dollars in millions)	Amount		Ownership %		Amount		Ownership %
Strategic Investors Fund, LP	$	2	12.6	%	$	2	12.6	%
Capital Preferred Return Fund, LP	53		20.0		61		20.0
Growth Partners, LP	59		33.0		67		33.0
Redwood Evergreen Fund, LP	60		100.0		—		—
Total consolidated venture capital and private equity fund investments	$	174			$	130

(2)The carrying value represents investments in 142 and 150 funds (primarily venture capital funds) at June 30, 2022 and December 31, 2021, respectively, where our ownership interest is typically less than 5% of the voting interests of each such fund and in which we do not have the ability to exercise significant influence over the partnerships operating activities and financial policies. We carry our unconsolidated venture capital and private equity fund investments at fair value based on the fund investments' net asset values per share as obtained from the general partners of the investments. For each fund investment, we adjust the net asset value per share for differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example March 31st for our June 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.

(3)These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the six months ended June 30, 2022:

(Dollars in millions)	Six months ended June 30, 2022		Cumulative Adjustments
Measurement alternative:
Carrying value at June 30, 2022	$	188
Carrying value adjustments:
Impairment	$	—	$	(1)
Upward changes for observable prices	1		68
Downward changes for observable prices	(6)		(10)

(4)Investments classified as other equity securities (fair value accounting) represent shares held in public companies as a result of exercising public equity warrant assets and direct equity investments in public companies held by our consolidated funds. Changes in equity securities measured at fair value are recognized through net income.

(5)The following table shows the carrying value and our ownership percentage of each investment at June 30, 2022 and December 31, 2021 (equity method accounting):

	June 30, 2022				December 31, 2021
(Dollars in millions)	Amount		Ownership %		Amount		Ownership %
Venture capital and private equity fund investments:
Strategic Investors Fund II, LP	$	2	8.6	%	$	3	8.6	%
Strategic Investors Fund III, LP	16		5.9		25		5.9
Strategic Investors Fund IV, LP	28		5.0		36		5.0
Strategic Investors Fund V funds	75		Various		87		Various
CP II, LP (i)	2		5.1		2		5.1
Other venture capital and private equity fund investments	540		Various		518		Various
Total venture capital and private equity fund investments	$	663			$	671
Debt funds:
Gold Hill Capital 2008, LP (ii)	$	4	15.5	%	$	4	15.5	%
Other debt funds	1		Various		1		Various
Total debt funds	$	5			$	5
Other investments:
SPD Silicon Valley Bank Co., Ltd.	$	146	50.0	%	$	154	50.0	%
Other investments	131		Various		140		Various
Total other investments	$	277			$	294

(i)Our ownership includes direct ownership interest of 1.3 percent and indirect ownership interest of 3.8 percent through our investments in Strategic Investors Fund II, LP.

(ii)Our ownership includes direct ownership interest of 11.5 percent and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.

(6)The following table presents the balances of our investments in qualified affordable housing projects and related unfunded commitments included as a component of “Other liabilities” on our consolidated balance sheets at June 30, 2022 and December 31, 2021:

(Dollars in millions)	June 30, 2022		December 31, 2021
Investments in qualified affordable housing projects, net	$	1,134	$	954
Other liabilities	614		482

The following table presents other information relating to our investments in qualified affordable housing projects for the three and six months ended June 30, 2022 and 2021:

	Three months ended June 30,				Six months ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Tax credits and other tax benefits recognized	$	23	$	26	$	50	$	54
Amortization expense included in provision for income taxes (i)	16		14		35		30

(i)All investments are amortized using the proportional amortization method and amortization expense is included in the provision for income taxes.

Gain Loss On Investment Securities

The following table presents the net gains and losses on non-marketable and other equity securities for the three and six months ended June 30, 2022 and 2021 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:

	Three months ended June 30,				Six months ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Net (losses) gains on non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments	$	(51)	$	19	$	(48)	$	36
Unconsolidated venture capital and private equity fund investments	(22)		15		(19)		32
Other investments without a readily determinable fair value	(4)		(1)		(3)		12
Other equity securities in public companies (fair value accounting)	(12)		18		(44)		92
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments	(67)		250		(8)		295
Debt funds	—		1		—		2
Other investments	—		3		2		3
Total net (losses) gains on non-marketable and other equity securities	$	(156)	$	305	$	(120)	$	472
Less: realized net (losses) gains on sales of non-marketable and other equity securities	(10)		61		(29)		127
Net (losses) gains on non-marketable and other equity securities still held	$	(146)	$	244	$	(91)	$	345