v2.4.0.8
Investment Securities
 12 Months Ended
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]  
Investment Securities

NOTE 6

Investment Securities

Investment securities include debt and equity securities classified as available for sale. The Company's investment securities, principally debt securities, are carried at fair value on the Consolidated Balance Sheets with unrealized gains (losses) recorded in AOCI, net of income taxes. Realized gains and losses are recognized in results of operations upon disposition of the securities using the specific identification method on a trade date basis. Refer to Note 3 for a description of the Company's methodology for determining the fair value of investment securities.

The following is a summary of investment securities as of December 31:

  2013 2012
     Gross Gross Estimated    Gross Gross Estimated
    UnrealizedUnrealized Fair  UnrealizedUnrealized Fair
Description of Securities (Millions)  CostGainsLosses Value CostGainsLosses Value
State and municipal obligations  $4,060 $54 $(79) $4,035 $4,280 $199 $(5) $4,474
U.S. Government agency obligations   3   ―   ―  3  3   ―   ―  3
U.S. Government treasury obligations   318  3  (1)  320  330  8   ―  338
Corporate debt securities   43  3   ―  46  73  6   ―  79
Mortgage-backed securities (a)  160  5  (1)  164  210  14   ―  224
Equity securities (b)  29  95   ―  124  64  232   ―  296
Foreign government bonds and obligations   272  5  (1)  276  134  15   ―  149
Other (c)  50   ―  (2)  48  51   ―   ―  51
Total  $4,935 $165 $(84) $5,016 $5,145 $474 $(5) $5,614

  • Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
  • Primarily represents the Company's investment in ICBC.
  • Other comprises investments in various mutual funds.

 

The following table provides information about the Company's investment securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of December 31:

    2013 2012
  Less than 12 months 12 months or more Less than 12 months 12 months or more
       Gross     Gross    Gross    Gross
    EstimatedUnrealizedEstimatedUnrealized EstimatedUnrealizedEstimatedUnrealized
Description of Securities (Millions) Fair ValueLossesFair ValueLosses Fair ValueLossesFair ValueLosses
State and municipal obligations $ 1,320 $ (63) $ 106 $ (16) $ 100 $ (1) $73 $(4)
Foreign government bonds and obligations   208   (1)   ―   ―   ―   ―   ―   ―
U.S. Government treasury obligations   166   (1)   ―   ―   ―   ―   ―   ―
Mortgage-backed securities   35   (1)   ―   ―   ―   ―   ―   ―
Other   30   (1)   17   (1)   ―   ―   ―   ―
Total $1,759 $(67) $123 $(17) $100 $(1) $73 $(4)

The following table summarizes the gross unrealized losses due to temporary impairments by ratio of fair value to amortized cost as of December 31:

 

  Less than 12 months 12 months or more Total
      Gross      Gross      Gross
Ratio of Fair Value to Number ofEstimatedUnrealized Number ofEstimatedUnrealized Number ofEstimatedUnrealized
Amortized Cost (Dollars in millions) SecuritiesFair ValueLosses SecuritiesFair ValueLosses SecuritiesFair ValueLosses
2013:                        
90%–100% 228 $1,665 $(53) 6 $24 $(2) 234 $1,689 $(55)
Less than 90% 13  94  (14) 5  99  (15) 18  193  (29)
Total as of December 31, 2013 241 $1,759 $(67) 11 $123 $(17) 252 $1,882 $(84)
2012:                        
90%–100% 46 $100 $ (1) 4 $73 $(4) 50 $173 $(5)
Total as of December 31, 2012 46 $100 $(1) 4 $73 $(4) 50 $173 $(5)
                          
                          

The gross unrealized losses are attributed to overall wider credit spreads for state and municipal securities, wider credit spreads for specific issuers, adverse changes in market benchmark interest rates, or a combination thereof, all as compared to those prevailing when the investment securities were acquired.

Overall, for the investment securities in gross unrealized loss positions identified above, (i) the Company does not intend to sell the investment securities, (ii) it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and (iii) the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairment during the periods presented.

 

Supplemental Information

Gross realized gains and losses on the sales of investment securities, included in other non-interest revenues, were as follows:

(Millions) 2013 2012 2011
Gains $136 $127 $ 16
Losses   ―   (1)   ―
Total $136 $ 126 $ 16
           

Contractual maturities of investment securities, excluding equity securities and other securities, as of December 31, 2013 were as follows:

      Estimated
(Millions)Cost Fair Value
Due within 1 year $505 $505
Due after 1 year but within 5 years  489  496
Due after 5 years but within 10 years  215  224
Due after 10 years  3,647  3,619
Total $4,856 $4,844

The expected payments on state and municipal obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.