NOTE 5 – SECURITIES AVAILABLE FOR SALE

Securities Portfolio Composition



	December 31, 2012
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$212		$10		$—		$222
Federal agency securities	1,987		85		3		2,069
U.S. states and political subdivisions	310		15		5		320
MBS - agency	17,416		756		3		18,169
MBS - private	205		4		—		209
ABS	214		5		3		216
Corporate and other debt securities	42		4		—		46
Other equity securities¹	701		1		—		702
Total securities AFS		$21,087		$880		$14		$21,953

	December 31, 2011
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$671		$23		$—		$694
Federal agency securities	1,843		89		—		1,932
U.S. states and political subdivisions	437		21		4		454
MBS - agency	20,480		743		—		21,223
MBS - private	252		—		31		221
CDO/CLO securities	50		—		—		50
ABS	460		11		7		464
Corporate and other debt securities	49		2		—		51
Coke common stock	—		2,099		—		2,099
Other equity securities¹	928		1		—		929
Total securities AFS		$25,170		$2,989		$42		$28,117

¹At December 31, 2012, other equity securities was comprised of the following: $229 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $69 million in mutual fund investments, and $2 million of other. At December 31, 2011, other equity securities was comprised of the following: $342 million in FHLB of Atlanta stock, $398 million in Federal Reserve Bank stock, $187 million in mutual fund investments, and $2 million of other.

The following table presents interest and dividends on securities AFS:



	Year Ended December 31
(Dollars in millions)	2012		2011		2010
Taxable interest		$579		$688		$709
Tax-exempt interest	15		21		31
Dividends¹	61		82		76
Total interest and dividends		$655		$791		$816

¹Includes dividends on the Coke common stock of $31 million, $56 million, and $53 million, for the years ended December 31, 2012, 2011, and 2010, respectively.

Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $10.6 billion and $9.1 billion as of December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, there were no securities AFS pledged under which the transferee may repledge the collateral.

During the year ended December 31, 2012, the Company accelerated the termination of the Agreements that hedged the Coke common stock, and the Company sold, in the market or to the Coke Counterparty, 59 million of its 60 million shares of Coke and contributed the remaining 1 million shares of Coke to the SunTrust Foundation for a net gain of $1.9 billion. The $38 million contribution to the SunTrust Foundation was recognized in noninterest expense. Details of the transactions are discussed in Note 16, "Derivative Financial Instruments."

The amortized cost and fair value of investments in debt securities at December 31, 2012, by estimated average life, are shown below. Actual cash flows may differ from estimated average lives and contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.



	Distribution of Maturities
(Dollars in millions)	1 Year or Less			1-5 Years			5-10 Years			After 10 Years			Total
Amortized Cost:
U.S. Treasury securities		$11			$201			$—			$—			$212
Federal agency securities	130			1,381			340			136			1,987
U.S. states and political subdivisions	91			152			19			48			310
MBS - agency	980			12,875			3,006			555			17,416
MBS - private	—			127			78			—			205
ABS	112			72			2			28			214
Corporate and other debt securities	4			16			22			—			42
Total debt securities		$1,328			$14,824			$3,467			$767			$20,386
Fair Value:
U.S. Treasury securities		$11			$211			$—			$—			$222
Federal agency securities	131			1,449			348			141			2,069
U.S. states and political subdivisions	93			161			20			46			320
MBS - agency	1,035			13,520			3,051			563			18,169
MBS - private	—			130			79			—			209
ABS	113			71			2			30			216
Corporate and other debt securities	4			19			23			—			46
Total debt securities		$1,387			$15,561			$3,523			$780			$21,251

Weighted average yield¹	3.15		%	2.98		%	2.33		%	2.83		%	2.87		%

¹Average yields are based on amortized cost and presented on a fully taxable-equivalent basis.

Securities in an Unrealized Loss Position

The Company held certain investment securities where amortized cost exceeded fair market value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market price of securities fluctuates. As of December 31, 2012, the Company did not intend to sell these securities nor was it more-likely-than-not that the Company would be required to sell these securities before their anticipated recovery or maturity. The Company has reviewed its portfolio for OTTI in accordance with the accounting policies outlined in Note 1, "Significant Accounting Policies."



	December 31, 2012
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Temporarily impaired securities:
Federal agency securities		$298		$3		$—		$—		$298		$3
U.S. states and political subdivisions	1		—		24		5		25		5
MBS - agency	1,212		3		—		—		1,212		3
ABS	—		—		13		2		13		2
Total temporarily impaired securities	1,511		6		37		7		1,548		13
OTTI securities¹:
ABS	—		—		3		1		3		1
Total OTTI securities	—		—		3		1		3		1
Total impaired securities		$1,511		$6		$40		$8		$1,551		$14



	December 31, 2011
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Temporarily impaired securities:
Federal agency securities		$10		$—		$—		$—		$10		$—
U.S. states and political subdivisions	1		—		28		4		29		4
MBS - agency	224		—		1		—		225		—
CDO/CLO securities	50		—		—		—		50		—
ABS	—		—		11		5		11		5
Total temporarily impaired securities	285		—		40		9		325		9
OTTI securities¹:
MBS - private	15		1		206		30		221		31
ABS	1		—		3		2		4		2
Total OTTI securities	16		1		209		32		225		33
Total impaired securities		$301		$1		$249		$41		$550		$42

¹Includes OTTI securities for which credit losses have been recorded in earnings in current or prior periods.

At December 31, 2012 and 2011, unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included municipal ARS and one ABS collateralized by 2004 vintage home equity loans. The municipal securities are backed by investment grade rated obligors; however, the fair value of these securities continues to be impacted by the lack of a functioning ARS market and the extension of time for expected refinance and repayment. No credit loss is expected on these securities. The ABS also continues to receive timely principal and interest payments, and is evaluated quarterly for credit impairment. Cash flow analysis shows that the underlying collateral can withstand highly stressed loss assumptions without incurring a credit loss.

The portion of unrealized losses on securities that have been other-than-temporarily impaired that relates to factors other than credit are recorded in AOCI. Losses related to credit impairment on these securities is determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods. The unrealized OTTI loss relating to ABS at December 31, 2012 is related to two securities within the portfolios that are 2004 vintage home equity issuances. The expectation of cash flows for the previously impaired ABS securities has improved since the credit-related impairment was recognized, and as a result, the amount of expected credit losses was reduced, and the expected increase in cash flows is being accreted into earnings as a yield adjustment over the remaining life of the securities.

Realized Gains and Losses and Other-than-Temporarily Impaired Securities



	Year Ended December 31
(Dollars in millions)	2012				2011			2010
Gross realized gains		$1,981		¹		$210			$210
Gross realized losses	—				(87		)	(17		)
OTTI	(7		)		(6		)	(2		)
Net securities gains		$1,974				$117			$191

¹Included in these amounts are $305 million in losses recognized during 2012 related to the accelerated termination of the Agreements that hedge the Coke common stock.

The securities that gave rise to credit impairments recognized during the years ended December 31, 2012, 2011, and 2010, as shown in the table below, consisted of private MBS with a fair value of $209 million, $167 million, and $1 million, respectively. Credit impairment that is determined through the use of cash flow models is estimated using cash flows on security specific collateral and the transaction structure. Future expected credit losses are determined by using various assumptions, the most significant of which include default rates, prepayment rates, and loss severities. For the majority of the securities that the Company has reviewed for credit-related OTTI, credit information is available and modeled for the collateral underlying each security. As part of that analysis, the model incorporates loan level information such as loan to collateral values, FICO scores, and home price appreciation/depreciation data specific to the geography of the loan. These inputs are updated on a regular basis to ensure the most current credit and other assumptions are utilized in the analysis. If, based on this analysis, the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. OTTI credit losses reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of these securities. During the years ended December 31, 2012, 2011, and 2010, all OTTI recognized in earnings on private MBS have underlying collateral of residential mortgage loans securitized in 2007.

The Company has not purchased any new private MBS during the year ended December 31, 2012, and continues to reduce existing exposure primarily through paydowns. In certain instances, the amount of impairment losses recognized in earnings includes credit losses on debt securities that exceeds the total impairment, and as a result, the securities may have unrealized gains in AOCI relating to factors other than credit.



	Year Ended December 31
(Dollars in millions)	2012		2011		2010
OTTI¹		$1		$2		$2
Portion of gains/(losses) recognized in OCI (before taxes)	6		4		—
Net impairment losses recognized in earnings		$7		$6		$2

¹The initial OTTI amount represents the excess of the amortized cost over the fair value of AFS debt securities. For subsequent impairments of the same security, amount includes additional declines in the fair value subsequent to the previously recorded OTTI, if applicable, until such time the security is no longer in an unrealized loss position, plus any additional credit losses taken through earnings that exceeds the total impairment.

The Company held stock in the FHLB of Atlanta totaling $229 million and $342 million at December 31, 2012 and December 31, 2011, respectively. The Company accounts for the stock based on relevant accounting guidance, which requires the investment be carried at cost and be evaluated for impairment based on the ultimate recoverability of the par value. The Company evaluated its holdings in FHLB stock at December 31, 2012 and believes its holdings in the stock are ultimately recoverable at par. Additionally, the Company does not have operational or liquidity needs that would require a redemption of the stock in the foreseeable future and therefore, determined that the stock was not other-than-temporarily impaired.

The following is a rollforward of credit losses recognized in earnings for the years ended December 31, 2012, 2011, and 2010, related to securities for which the Company does not intend to sell and it is not more-likely-than-not that the Company will be required to sell as of the end of each year presented. Subsequent credit losses may be recorded on securities without a corresponding further decline in fair value when there has been a decline in expected cash flows.



	Year Ended December 31
(Dollars in millions)	2012			2011			2010
Balance, beginning of period		$25			$20			$22
Additions:
OTTI credit losses on previously impaired securities	7			6			—			¹
Reductions:
Increases in expected cash flows recognized over the remaining life of the securities	(1		)	(1		)	(2		)
Balance, end of period		$31			$25			$20

¹During the year ended December 31, 2010, the Company recognized $2 million of OTTI through earnings on debt securities in which no portion of the OTTI loss was included in OCI at any time during the period. OTTI related to these securities are excluded from this amount.

The following table presents a summary of the significant inputs used in determining the measurement of credit losses recognized in earnings for private MBS for the years ended December 31:



	2012	2011	2010
Default rate	2 - 9%	4 - 8%	2 - 7%
Prepayment rate	7 - 21%	12 - 22%	14 - 22%
Loss severity	40 - 56%	39 - 46%	37 - 46%

Assumption ranges represent the lowest and highest lifetime average estimates of each security for which credit losses were recognized in earnings. During 2012, certain bonds experienced a deterioration in the significant inputs used to estimate expected credit losses, which resulted in the recognition of additional impairment.