NOTE 5 – SECURITIES AVAILABLE FOR SALE

Securities Portfolio Composition



	December 31, 2013
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$1,334		$6		$47		$1,293
Federal agency securities	1,028		13		57		984
U.S. states and political subdivisions	232		7		2		237
MBS - agency	18,915		421		425		18,911
MBS - private	155		1		2		154
ABS	78		2		1		79
Corporate and other debt securities	39		3		—		42
Other equity securities¹	841		1		—		842
Total securities AFS		$22,622		$454		$534		$22,542

	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

¹At December 31, 2013, other equity securities was comprised of the following: $336 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $103 million in mutual fund investments, and $1 million of other. At 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.

The following table presents interest and dividends on securities AFS:



	Year Ended December 31
(Dollars in millions)	2013		2012		2011
Taxable interest		$537		$579		$688
Tax-exempt interest	10		15		21
Dividends¹	32		61		82
Total interest and dividends		$579		$655		$791

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

Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $11.0 billion and $10.6 billion at December 31, 2013 and 2012, respectively. At December 31, 2013 and 2012, there were no securities AFS pledged under secured borrowing arrangements under which the secured party has possession of the collateral and would customarily sell or repledge that collateral, other than in an event of default of the Company.

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, 2013, 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		$1			$645			$688			$—			$1,334
Federal agency securities	51			261			566			150			1,028
U.S. states and political subdivisions	102			66			21			43			232
MBS - agency	1,575			5,780			7,800			3,760			18,915
MBS - private	—			155			—			—			155
ABS	58			18			2			—			78
Corporate and other debt securities	—			22			17			—			39
Total debt securities		$1,787			$6,947			$9,094			$3,953			$21,781
Fair Value:
U.S. Treasury securities		$1			$647			$645			$—			$1,293
Federal agency securities	51			271			518			144			984
U.S. states and political subdivisions	104			70			21			42			237
MBS - agency	1,665			5,969			7,756			3,521			18,911
MBS - private	—			154			—			—			154
ABS	57			20			2			—			79
Corporate and other debt securities	—			25			17			—			42
Total debt securities		$1,878			$7,156			$8,959			$3,707			$21,700
Weighted average yield¹	2.95		%	2.72		%	2.83		%	2.85		%	2.81		%

¹Average yields are based on amortized cost and presented on a FTE 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. At December 31, 2013, 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 in Note 1, "Significant Accounting Policies."



	December 31, 2013
	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:
U.S. Treasury securities		$1,036		$47		$—		$—		$1,036		$47
Federal agency securities	398		29		264		28		662		57
U.S. states and political subdivisions	12		—		20		2		32		2
MBS - agency	9,173		358		618		67		9,791		425
ABS	—		—		13		1		13		1
Total temporarily impaired securities	10,619		434		915		98		11,534		532
OTTI securities¹:
MBS - private	105		2		—		—		105		2
Total OTTI securities	105		2		—		—		105		2
Total impaired securities		$10,724		$436		$915		$98		$11,639		$534



	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

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

Unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included municipal ARS, federal agency securities, agency MBS, 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 fair value of federal agency and agency MBS securities has declined due to the increase in market interest rates. The ABS 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 OTTI that relates to factors other than credit is recorded in AOCI. Losses related to credit impairment on these securities are determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods. The unrealized OTTI loss at December 31, 2013 is related to one security within the portfolio that is collateralized by residential mortgage loans securitized in 2007.

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



	Year Ended December 31
(Dollars in millions)	2013			2012				2011
Gross realized gains		$39			$1,981		¹		$210
Gross realized losses	(36		)	—				(87		)
OTTI	(1		)	(7		)		(6		)
Net securities gains		$2			$1,974				$117

¹ Included in this amount is $305 million in losses recognized during the year ended December 31, 2012 related to the termination of the Agreements that hedged the Coke common stock.

Credit impairment that is determined through the use of 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. If, based on this analysis, the security is in an unrealized loss position and 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, 2013, 2012, and 2011, all OTTI recognized in earnings related to private MBS that have underlying collateral of residential mortgage loans securitized in 2007 or ABS collateralized by 2004 vintage home equity loans.

The Company 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 unrealized losses, and as a result, the securities may have unrealized gains in AOCI relating to factors other than credit.

The securities that gave rise to credit impairments recognized during the years ended December 31, 2013, 2012, and 2011, as shown in the table below, consisted of private MBS and ABS with a fair value of approximately $22 million, $209 million, and $167 million, respectively.



	Year Ended December 31
(Dollars in millions)	2013		2012		2011
OTTI¹		$—		$1		$2
Portion of gains/(losses) recognized in OCI (before taxes)	1		6		4
Net impairment losses recognized in earnings		$1		$7		$6

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.

The following is a rollforward of credit losses recognized in earnings for the years ended December 31, 2013, 2012, and 2011, 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 period 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)	2013			2012			2011
Balance, beginning of period		$31			$25			$20
Additions:
OTTI credit losses on previously impaired securities	1			7			6
Reductions:
Credit impaired securities sold, matured, or written off	(6		)	—			—
Increases in expected cash flows recognized over the remaining life of the securities	(1		)	(1		)	(1		)
Balance, end of period		$25			$31			$25

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



	2013	2012	2011
Default rate	2 - 9%	2 - 9%	4 - 8%
Prepayment rate	7 - 21%	7 - 21%	12 - 22%
Loss severity	46 - 74%	40 - 56%	39 - 46%

Assumption ranges represent the lowest and highest lifetime average estimates of each security for which credit losses were recognized in earnings. Ranges may vary from period to period as the securities for which credit losses are recognized vary. Additionally, severity may vary widely when losses are few and large.