6. Securities

Securities available for sale. These are securities that we intend to hold for an indefinite period of time but that may be sold in response to changes in interest rates, prepayment risk, liquidity needs or other factors. Securities available for sale are reported at fair value. Unrealized gains and losses (net of income taxes) deemed temporary are recorded in equity as a component of AOCI on the balance sheet. Unrealized losses on equity securities deemed to be “other-than-temporary,” and realized gains and losses resulting from sales of securities using the specific identification method, are included in “other income” on the income statement. Unrealized losses on debt securities deemed to be “other-than-temporary” are included in “other income” on the income statement or AOCI in accordance with the applicable accounting guidance related to the recognition of OTTI of debt securities.

“Other securities” held in the available-for-sale portfolio are primarily marketable equity securities that are traded on a public exchange such as the NYSE or NASDAQ.

Held-to-maturity securities. These are debt securities that we have the intent and ability to hold until maturity. Debt securities are carried at cost and adjusted for amortization of premiums and accretion of discounts using the interest method. This method produces a constant rate of return on the adjusted carrying amount.

“Other securities” held in the held-to-maturity portfolio consist of foreign bonds and capital securities.

Unrealized losses on equity securities deemed to be “other-than-temporary,” and realized gains and losses resulting from sales of securities using the specific identification method, are included in “other income” on the income statement. Unrealized losses on debt securities deemed to be “other-than-temporary” are included in “other income” on the income statement or AOCI in accordance with the applicable accounting guidance related to the recognition of OTTI of debt securities.

The amortized cost, unrealized gains and losses, and approximate fair value of our securities available for sale and held-to-maturity securities are presented in the following tables. Gross unrealized gains and losses represent the difference between the amortized cost and the fair value of securities on the balance sheet as of the dates indicated. Accordingly, the amount of these gains and losses may change in the future as market conditions change.


	September 30, 2013
in millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
SECURITIES AVAILABLE FOR SALE
States and political subdivisions	$	40	$	1		—	$	41
Collateralized mortgage obligations		11,810		194	$	225		11,779
Other mortgage-backed securities		733		31		2		762
Other securities		20		4				24

Total securities available for sale	$	12,603	$	230	$	227	$	12,606

HELD-TO-MATURITY SECURITIES
Collateralized mortgage obligations	$	4,815	$	10	$	115	$	4,710
Other securities		20		—		—		20

Total held-to-maturity securities	$	4,835	$	10	$	115	$	4,730


	December 31, 2012
in millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
SECURITIES AVAILABLE FOR SALE
States and political subdivisions	$	47	$	2		—	$	49
Collateralized mortgage obligations		11,148		316		—		11,464
Other mortgage-backed securities		491		47		—		538
Other securities		42		1		—		43

Total securities available for sale	$	11,728	$	366		—	$	12,094

HELD-TO-MATURITY SECURITIES
Collateralized mortgage obligations	$	3,913	$	61		—	$	3,974
Other securities		18		—		—		18

Total held-to-maturity securities	$	3,931	$	61		—	$	3,992


	September 30, 2012
in millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
SECURITIES AVAILABLE FOR SALE
States and political subdivisions	$	52	$	2		—	$	54
Collateralized mortgage obligations		10,949		334		—		11,283
Other mortgage-backed securities		543		55		—		598
Other securities		25		2		—		27

Total securities available for sale	$	11,569	$	393		—	$	11,962

HELD-TO-MATURITY SECURITIES
Collateralized mortgage obligations	$	4,135	$	59		—	$	4,194
Other securities		18		—		—		18

Total held-to-maturity securities	$	4,153	$	59		—	$	4,212

The following table summarizes our securities that were in an unrealized loss position as of September 30, 2013, December 31, 2012, and September 30, 2012.


	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
in millions	Fair Value		Gross Unrealized Losses ^(a)		Fair Value		Gross Unrealized Losses ^(b)		Fair Value		Gross Unrealized Losses ^(a)
September 30, 2013
Securities available for sale:
Collateralized mortgage obligations	$	5,380	$	225		—		—	$	5,380	$	225
Other mortgage-backed securities		94		2		—		—		94		2
Other securities		2		—		—		—		2		—
Held-to-maturity:
Collateralized mortgage obligations		3,659		115		—		—		3,659		115
Other securities		5		—		—		—		5		—

Total temporarily impaired securities	$	9,140	$	342		—		—	$	9,140	$	342

December 31, 2012
Securities available for sale:
Other securities	$	31		—	$	3		—	$	34		—

Total temporarily impaired securities	$	31		—	$	3		—	$	34		—

September 30, 2012
Securities available for sale:
Collateralized mortgage obligations	$	7		—		—		—	$	7		—
Other securities		14		—	$	3		—		17		—
Held-to-maturity:
Collateralized mortgage obligations		—		—		—		—		—		—

Total temporarily impaired securities	$	21		—	$	3		—	$	24		—

(a)	There were less than $1 million of gross unrealized losses for the period ended December 31, 2012 and September 30, 2012.

(b)	There were less than $1 million of gross unrealized losses for the period ended September 30, 2013, December 31, 2012 and September 30, 2012.

At September 30, 2013, we had $225 million of gross unrealized losses related to 55 fixed-rate collateralized mortgage obligations that were invested in as part of our overall A/LM strategy. These securities have a weighted-average maturity of 4.9 years at September 30, 2013. Since these securities have a fixed interest rate, their fair value is sensitive to movements in market interest rates. We also had $2 million of gross unrealized losses related to 20 other mortgage-backed securities positions, which have a weighted-average maturity of 3.4 years at September 30, 2013. These unrealized losses are considered temporary since we expect to collect all contractually due amounts from these securities. Accordingly, these investments have been reduced to their fair value through OCI, not earnings.

We regularly assess our securities portfolio for OTTI. The assessments are based on the nature of the securities, the underlying collateral, the financial condition of the issuer, the extent and duration of the loss, our intent related to the individual securities, and the likelihood that we will have to sell securities prior to expected recovery.

The debt securities identified to have OTTI are written down to their current fair value. For those debt securities that we intend to sell, or more-likely-than-not will be required to sell, prior to the expected recovery of the amortized cost, the entire impairment (i.e., the difference between amortized cost and the fair value) is recognized in earnings. For those debt securities that we do not intend to sell, or more-likely-than-not will not be required to sell, prior to expected recovery, the credit portion of OTTI is recognized in earnings, while the remaining OTTI is recognized in equity as a component of AOCI on the balance sheet. As shown in the following table, we did not have any impairment losses recognized in earnings for the three months ended September 30, 2013.

Three months ended September 30, 2013


in millions
Balance at June 30, 2013	$	4
Impairment recognized in earnings		—

Balance at September 30, 2013	$	4

Realized gains and losses related to securities available for sale were as follows:

Nine months ended September 30, 2013


in millions
Realized gains			—
Realized losses			—

Net securities gains (losses)			—

At September 30, 2013, securities available for sale and held-to-maturity securities totaling $11.1 billion were pledged to secure securities sold under repurchase agreements, to secure public and trust deposits, to facilitate access to secured funding, and for other purposes required or permitted by law.

The following table shows securities by remaining maturity. CMOs and other mortgage-backed securities (both of which are included in the securities available-for-sale portfolio) as well the CMOs in the held-to-maturity portfolio are presented based on their expected average lives. The remaining securities, in both the available-for-sale and held-to-maturity portfolios, are presented based on their remaining contractual maturity. Actual maturities may differ from expected or contractual maturities since borrowers have the right to prepay obligations with or without prepayment penalties.


	Securities Available for Sale				Held-to-Maturity Securities
September 30, 2013 in millions	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	492	$	500	$	7	$	6
Due after one through five years		10,938		10,982		4,682		4,584
Due after five through ten years		1,169		1,119		146		140
Due after ten years		4		5		—		—

Total	$	12,603	$	12,606	$	4,835	$	4,730