Securities Available for Sale

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

NOTE 5 – INVESTMENT SECURITIES

Investment Securities Portfolio Composition



	September 30, 2019
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities AFS:
U.S. Treasury securities		$3,915		$103		$—		$4,018
Federal agency securities	123		1		—		124
U.S. states and political subdivisions	564		9		1		572
MBS - agency residential	22,069		520		4		22,585
MBS - agency commercial	2,881		103		1		2,983
MBS - non-agency commercial	1,008		56		—		1,064
Corporate and other debt securities	12		—		—		12
Total securities AFS		$30,572		$792		$6		$31,358

	December 31, 2018
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities AFS:
U.S. Treasury securities		$4,277		$—		$66		$4,211
Federal agency securities	221		2		2		221
U.S. states and political subdivisions	606		4		21		589
MBS - agency residential	23,161		128		425		22,864
MBS - agency commercial	2,688		8		69		2,627
MBS - non-agency commercial	943		—		27		916
Corporate and other debt securities	14		—		—		14
Total securities AFS		$31,910		$142		$610		$31,442

The following table presents interest on securities AFS:



	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2019		2018		2019		2018
Taxable interest		$211		$207		$646		$614
Tax-exempt interest	4		5		13		14
Total interest on securities AFS		$215		$212		$659		$628

Investment securities pledged to secure public deposits, repurchase agreements, trusts, certain derivative agreements, and other funds had a fair value of $4.0 billion and $3.3 billion at September 30, 2019 and December 31, 2018, respectively.

The following table presents the amortized cost, fair value, and weighted average yield of the Company's investment securities at September 30, 2019, by remaining contractual maturity, with the exception of MBS, which are based on estimated average life. Receipt of cash flows may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.



	Distribution of Remaining Maturities
(Dollars in millions)	Due in 1 Year or Less			Due After 1 Year through 5 Years			Due After 5 Years through 10 Years			Due After 10 Years			Total
Amortized Cost:
Securities AFS:
U.S. Treasury securities		$632			$2,331			$952			$—			$3,915
Federal agency securities	50			10			6			57			123
U.S. states and political subdivisions	—			90			317			157			564
MBS - agency residential	1,435			9,389			10,890			355			22,069
MBS - agency commercial	—			835			1,683			363			2,881
MBS - non-agency commercial	—			12			996			—			1,008
Corporate and other debt securities	—			12			—			—			12
Total securities AFS		$2,117			$12,679			$14,844			$932			$30,572
Fair Value:
Securities AFS:
U.S. Treasury securities		$634			$2,389			$995			$—			$4,018
Federal agency securities	50			10			6			58			124
U.S. states and political subdivisions	—			95			320			157			572
MBS - agency residential	1,485			9,630			11,108			362			22,585
MBS - agency commercial	—			851			1,752			380			2,983
MBS - non-agency commercial	—			12			1,052			—			1,064
Corporate and other debt securities	—			12			—			—			12
Total securities AFS		$2,169			$12,999			$15,233			$957			$31,358
Weighted average yield ¹	3.09		%	2.81		%	2.93		%	3.02		%	2.89		%

¹Weighted average yields are based on amortized cost and presented on an FTE basis.

Investment Securities in an Unrealized Loss Position

The Company held certain investment securities where amortized cost exceeded fair value, resulting in unrealized loss positions. Market changes in interest rates and credit spreads may result in temporary unrealized losses as the market prices of securities fluctuate. At September 30, 2019, 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 reviewed its portfolio for OTTI in accordance with the accounting policies described in Note 1, "Significant Accounting Policies," to the Company's 2018 Annual Report on Form 10-K.

Investment securities in an unrealized loss position at period end are presented in the following tables:



	September 30, 2019
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized ¹ Losses		Fair Value		Unrealized ¹ Losses		Fair Value		Unrealized ¹ Losses
Temporarily impaired securities AFS:
U.S. Treasury securities		$50		$—		$—		$—		$50		$—
Federal agency securities	20		—		—		—		20		—
U.S. states and political subdivisions	119		1		—		—		119		1
MBS - agency residential	1,089		4		—		—		1,089		4
MBS - agency commercial	207		1		—		—		207		1
Corporate and other debt securities	—		—		6		—		6		—
Total temporarily impaired securities AFS	1,485		6		6		—		1,491		6
OTTI securities AFS ²:
Total OTTI securities AFS	—		—		—		—		—		—
Total impaired securities AFS		$1,485		$6		$6		$—		$1,491		$6

¹ Unrealized losses less than $0.5 million are presented as zero within the table.

² OTTI securities AFS are impaired securities for which OTTI credit losses have been previously recognized in earnings.



	December 31, 2018
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized ¹ Losses		Fair Value		Unrealized ¹ Losses		Fair Value		Unrealized ¹ Losses
Temporarily impaired securities AFS:
U.S. Treasury securities		$—		$—		$4,177		$66		$4,177		$66
Federal agency securities	—		—		63		2		63		2
U.S. states and political subdivisions	49		1		430		20		479		21
MBS - agency residential	1,229		5		15,384		420		16,613		425
MBS - agency commercial	68		—		1,986		69		2,054		69
MBS - non-agency commercial	106		1		773		26		879		27
Corporate and other debt securities	—		—		9		—		9		—
Total temporarily impaired securities AFS	1,452		7		22,822		603		24,274		610
OTTI securities AFS ²:
Total OTTI securities AFS	—		—		—		—		—		—
Total impaired securities AFS		$1,452		$7		$22,822		$603		$24,274		$610

¹Unrealized losses less than $0.5 million are presented as zero within the table.

² OTTI securities AFS are impaired securities for which OTTI credit losses have been previously recognized in earnings.

The Company does not consider the unrealized losses on temporarily impaired securities AFS to be credit-related. These unrealized losses were due primarily to market interest rates

being higher than the securities' stated coupon rates, and therefore, the unrealized losses were recorded in AOCI, net of tax.

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

Net securities gains or losses are comprised of gross realized gains, gross realized losses, and OTTI credit losses recognized in earnings. During the nine months ended September 30, 2019, the Company recognized $38 million in net securities losses, driven by the Company's second quarter of 2019 repositioning of a portion of the securities AFS portfolio, which resulted in $42 million of gross realized losses. This repositioning in the second quarter of 2019 was not due to any requirement to sell the securities before their anticipated recovery or maturity.



	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2019		2018		2019			2018
Gross realized gains		$4		$—		$4			$7
Gross realized losses	—		—		(42		)	(6		)
OTTI credit losses recognized in earnings	—		—		—			—
Net securities gains/(losses)		$4		$—		($38	)		$1

Investment securities in an unrealized loss position are evaluated quarterly for other-than-temporary credit impairment, which is determined using cash flow analyses that take into account security specific collateral and transaction structure. Future expected credit losses are determined using various assumptions, the most significant of which include default rates, prepayment rates, and loss severities. If, based on this analysis, a 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. Credit losses on the OTTI security are recognized in earnings and reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security. Subsequent credit losses may be recorded on OTTI securities without a corresponding further decline in fair value when there has been a decline in expected cash flows. See Note 1, "Significant Accounting Policies," to the Company's 2018 Annual Report on Form 10-K for additional information regarding the Company's accounting policy on securities AFS and related impairments.

The Company seeks to reduce its exposure on any existing OTTI securities primarily through paydowns. In certain instances, the amount of credit losses recognized in earnings on a debt security exceeds the total unrealized losses on the security, which may result in unrealized gains relating to factors other than credit recorded in AOCI, net of tax.

During the three and nine months ended September 30, 2019 and 2018, there were no credit impairment losses recognized on securities AFS held at the end of the period. The accumulated balance of OTTI credit losses recognized in earnings on securities AFS held at period end was zero at both September 30, 2019 and 2018.