NOTE 3 – SECURITIES AVAILABLE FOR SALE

Securities Portfolio Composition



	March 31, 2014
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$1,582		$7		$32		$1,557
Federal agency securities	1,015		15		43		987
U.S. states and political subdivisions	281		6		—		287
MBS - agency	19,317		447		317		19,447
MBS - private	147		2		—		149
ABS	65		3		1		67
Corporate and other debt securities	39		3		—		42
Other equity securities ¹	765		1		—		766
Total securities AFS		$23,211		$484		$393		$23,302

	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 securities ¹	841		1		—		842
Total securities AFS		$22,622		$454		$534		$22,542

¹At March 31, 2014, other equity securities was comprised of the following: $308 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank stock, $54 million in mutual fund investments, and $2 million of other. At 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.

The following table presents interest and dividends on securities AFS:



	Three Months Ended March 31
(Dollars in millions)	2014		2013
Taxable interest		$141		$132
Tax-exempt interest	3		3
Dividends	9		8
Total interest and dividends		$153		$143

Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $10.8 billion and $11.0 billion at March 31, 2014 and December 31, 2013, respectively. At March 31, 2014, there was $625 million of securities AFS pledged against repurchase arrangements under which the secured party has possession of the collateral and has the right to sell or repledge that collateral. At December 31, 2013, no securities AFS were pledged under such secured borrowing arrangements.

The amortized cost and fair value of investments in debt securities at March 31, 2014, 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			$893			$688			$—			$1,582
Federal agency securities	71			253			544			147			1,015
U.S. states and political subdivisions	97			57			94			33			281
MBS - agency	1,722			6,093			7,415			4,087			19,317
MBS - private	—			147			—			—			147
ABS	44			19			2			—			65
Corporate and other debt securities	—			22			17			—			39
Total debt securities		$1,935			$7,484			$8,760			$4,267			$22,446
Fair Value:
U.S. Treasury securities		$1			$896			$660			$—			$1,557
Federal agency securities	71			264			509			143			987
U.S. states and political subdivisions	98			60			95			34			287
MBS - agency	1,825			6,252			7,456			3,914			19,447
MBS - private	—			149			—			—			149
ABS	44			21			2			—			67
Corporate and other debt securities	—			25			17			—			42
Total debt securities		$2,039			$7,667			$8,739			$4,091			$22,536
Weighted average yield ¹	2.93		%	2.51		%	2.88		%	2.92		%	2.77		%

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 March 31, 2014, 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 described in the Company's 2013 Annual Report on Form 10-K.



	March 31, 2014
	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		$1,252		$32		$—		$—		$1,252		$32
Federal agency securities	352		21		269		22		621		43
U.S. states and political subdivisions	11		—		—		—		11		—
MBS - agency	8,269		262		633		55		8,902		317
ABS	—		—		13		1		13		1
Total temporarily impaired securities	9,884		315		915		78		10,799		393
OTTI securities ¹:
MBS - private	51		—		—		—		51		—
Total OTTI securities	51		—		—		—		51		—
Total impaired securities		$9,935		$315		$915		$78		$10,850		$393



	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 securities ¹:
MBS - private	105		2		—		—		105		2
Total OTTI securities	105		2		—		—		105		2
Total impaired securities		$10,724		$436		$915		$98		$11,639		$534

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 at March 31, 2014, included federal agency securities, agency MBS, and one ABS collateralized by 2004 vintage home equity loans. 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 prior periods.

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



	Three Months Ended March 31
(Dollars in millions)	2014			2013
Gross realized gains		$—			$3
Gross realized losses	(1		)	—
OTTI	—			(1		)
Net securities (losses)/gains		($1	)		$2

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 three months ended March 31, 2013, 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 three months ended March 31, 2013, as shown in the table below, consisted of private MBS and ABS with a combined fair value of approximately $2 million at March 31, 2013.



(Dollars in millions)	2014		2013
OTTI ¹		$—		$—
Portion of gains recognized in OCI (before taxes)	—		1
Net impairment losses recognized in earnings		$—		$1

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 three months ended March 31, 2014 and 2013, 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.



(Dollars in millions)	2014		2013
Balance, beginning of period		$25		$31
Additions:
OTTI credit losses on previously impaired securities	—		1
Balance, end of period		$25		$32

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 three months ended March 31:



	2014 ¹	2013
Default rate	N/A	6 - 9%
Prepayment rate	N/A	7 - 8%
Loss severity	N/A	61 - 74%

¹ "N/A" - Not applicable

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.