NOTE 5 – SECURITIES AVAILABLE FOR SALE

Securities Portfolio Composition



	December 31, 2014
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$1,913		$9		$1		$1,921
Federal agency securities	471		15		2		484
U.S. states and political subdivisions	200		9		—		209
MBS - agency	22,573		558		83		23,048
MBS - private	122		2		1		123
ABS	19		2		—		21
Corporate and other debt securities	38		3		—		41
Other equity securities ¹	921		2		—		923
Total securities AFS		$26,257		$600		$87		$26,770

	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 December 31, 2014, other equity securities was comprised of the following: $376 million in FHLB of Atlanta stock, $402 million in Federal Reserve Bank of Atlanta stock, $138 million in mutual fund investments, and $7 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 of Atlanta stock, $103 million in mutual fund investments, and $1 million of other.

The following table presents interest and dividends on securities AFS:



	Year Ended December 31
(Dollars in millions)	2014		2013		2012
Taxable interest		$565		$537		$579
Tax-exempt interest	10		10		15
Dividends	38		32		61
Total interest and dividends		$613		$579		$655

Securities AFS pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $2.6 billion and $11.0 billion at December 31, 2014 and 2013, respectively.

During the year ended December 31, 2012, the Company accelerated the termination of the Agreements that hedged the Company's investment in The Coca-Cola Company common stock, and the Company sold, in the market or to The Coca-Cola Company Counterparty, 59 million of its 60 million shares of The Coca-Cola Company and contributed the remaining 1 million shares of The Coca-Cola Company 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 17, "Derivative Financial Instruments."

The amortized cost and fair value of investments in debt securities at December 31, 2014, by estimated average life, are shown below. Receipt of 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		$200			$1,217			$496			$—			$1,913
Federal agency securities	64			234			36			137			471
U.S. states and political subdivisions	43			34			101			22			200
MBS - agency	2,550			8,992			7,106			3,925			22,573
MBS - private	—			122			—			—			122
ABS	14			3			2			—			19
Corporate and other debt securities	5			33			—			—			38
Total debt securities		$2,876			$10,635			$7,741			$4,084			$25,336
Fair Value:
U.S. Treasury securities		$203			$1,221			$497			$—			$1,921
Federal agency securities	64			244			38			138			484
U.S. states and political subdivisions	43			36			106			24			209
MBS - agency	2,704			9,202			7,219			3,923			23,048
MBS - private	—			123			—			—			123
ABS	14			5			2			—			21
Corporate and other debt securities	5			36			—			—			41
Total debt securities		$3,033			$10,867			$7,862			$4,085			$25,847
Weighted average yield ¹	2.34		%	2.40		%	2.78		%	2.90		%	2.59		%

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, 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 in Note 1, "Significant Accounting Policies."



	December 31, 2014
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²		Fair Value		Unrealized Losses ²
Temporarily impaired securities:
U.S. Treasury securities		$150		$1		$—		$—		$150		$1
Federal agency securities	20		—		132		2		152		2
MBS - agency	2,347		6		4,911		77		7,258		83
ABS	—		—		14		—		14		—
Total temporarily impaired securities	2,517		7		5,057		79		7,574		86
OTTI securities ¹:
MBS - private	69		1		—		—		69		1
Total OTTI securities	69		1		—		—		69		1
Total impaired securities		$2,586		$8		$5,057		$79		$7,643		$87



	December 31, 2013
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses ²		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.

²Unrealized losses less than $0.5 million are shown as zero.

At December 31, 2014, unrealized losses on securities that have been in a temporarily impaired position for longer than twelve months included agency MBS, federal agency securities, and one ABS collateralized by 2004 vintage home equity loans. Unrealized losses on federal agency securities and agency MBS securities at December 31, 2014 are due to an increase in market interest rates exceeding the securities stated yield. 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 OTTI securities 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.

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



	Year Ended December 31
(Dollars in millions)	2014			2013			2012
Gross realized gains		$28			$39			$1,981
Gross realized losses	(42		)	(36		)	—
OTTI losses recognized in earnings	(1		)	(1		)	(7		)
Net securities (losses)/gains		($15	)		$2			$1,974

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, 2014, 2013, and 2012, all OTTI recognized in earnings related to private MBS collateralized by residential mortgage loans securitized in 2007 or ABS collateralized by 2004 vintage home equity loans.

The Company continues to reduce existing exposure to these securities 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. 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.

Credit impairment recognized on securities was immaterial during the years ended December 31, 2014, 2013, and 2012. The ending balance of credit losses recognized in earnings on securities for which a portion of OTTI was recognized in OCI as of the end of each period end was $25 million, $25 million, and $31 million for the years ended December 31, 2014, 2013, and 2012, respectively. 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:



	2014 ¹	2013	2012
Default rate	2%	2 - 9%	2 - 9%
Prepayment rate	16%	7 - 21%	7 - 21%
Loss severity	46%	46 - 74%	40 - 56%

¹ During the year ended December 31, 2014, all OTTI recognized in earnings related to one private MBS security with a fair value of approximately $16 million at December 31, 2014.

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.