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Investments
 12 Months Ended
Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Investments Investments
Trading Investments
In March 2020, we sold approximately $1.7 billion of Private Education Loans through securitization transactions where we were required to retain a 5 percent vertical risk retention interest (i.e., 5 percent of each class issued in the securitizations). We classified those vertical risk retention interests related to the transactions as available-for-sale investments, except for the interest in the residual classes, which we classified as trading investments recorded at fair value with changes recorded through earnings. At December 31, 2020, we had $17 million classified as trading investments.
Available-for-Sale Investments
The amortized cost and fair value of securities available for sale are as follows:
 
December 31, 2020
Amortized Cost
Allowance for credit losses(1)
Gross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Available for sale:
Mortgage-backed securities$308,913 $— $6,095 $(134)$314,874 
Utah Housing Corporation bonds12,357 — 210 — 12,567 
U.S. government-sponsored enterprises and Treasuries1,596,890 — 3,395 — 1,600,285 
Other securities68,797 — 462 (351)68,908 
Total $1,986,957 $— $10,162 $(485)$1,996,634 
December 31, 2019
Amortized Cost
Allowance for credit losses(1)
Gross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Available for sale:
Mortgage-backed securities$215,888 $— $1,895 $(658)$217,125 
Utah Housing Corporation bonds19,474 — 145 (83)19,536 
U.S. government-sponsored enterprises250,394 — 635 (21)251,008 
Total $485,756 $— $2,675 $(762)$487,669 
 
    ___________
(1) Represents the amount of impairment that has resulted from credit-related factors, and that was recognized in the consolidated balance sheets (as a credit loss expense on available-for-sale securities). The amount excludes unrealized losses related to non-credit factors.
The following table summarizes the amount of gross unrealized losses for our available-for-sale securities and the estimated fair value for securities having gross unrealized loss positions, categorized by length of time the securities have been in an unrealized loss position:
Less than 12 months12 months or moreTotal
Gross Unrealized LossesEstimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized LossesEstimated Fair Value
As of December 31, 2020:
Mortgage-backed securities$(134)$46,011 $— $— $(134)$46,011 
Utah Housing Corporation bonds— — — — — — 
U.S. government-sponsored enterprises and Treasuries— — — — — — 
Other securities(351)30,441 — — (351)30,441 
Total$(485)$76,452 $— $— $(485)$76,452 
As of December 31, 2019:
Mortgage-backed securities$(218)$25,624 $(440)$42,448 $(658)$68,072 
Utah Housing Corporation bonds— — (83)11,097 (83)11,097 
U.S. government-sponsored enterprises(21)14,977 — — (21)14,977 
Total$(239)$40,601 $(523)$53,545 $(762)$94,146 

For available-for-sale debt securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, as well as any guarantees (e.g., guarantees by the U.S. Government) that may be applicable to the security. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security.
Our investment portfolio is comprised primarily of mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, with amortized costs of $32 million, $80 million, and $197 million, respectively, at December 31, 2020. We own these securities to meet our requirements under the Community Reinvestment Act. In the second quarter of 2018, we elected to sell nine securities totaling $41 million to better align the portfolio with the Community Reinvestment Act requirements, and we recognized a $2 million loss upon the sale of those securities. As of December 31, 2020, six of the separate mortgage-backed securities in our investment portfolio had unrealized losses. Approximately 32 percent of our mortgage-backed securities were issued under Ginnie Mae programs that carry a full faith and credit guarantee from the U.S. Government. The remaining securities in a net loss position carry a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. We have the intent and ability to hold these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. As of December 31, 2019, 33 of the 107 separate mortgage-backed securities in our investment portfolio had unrealized losses, and 18 of the 33 securities in a net loss position were issued under Ginnie Mae programs that carry a full faith and credit guarantee from the U.S. Government. The remainder carried a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively.
We invest in Utah Housing Corporation bonds for the purpose of complying with the Community Reinvestment Act. These bonds are Aa3 rated by Moody’s Investors Service. The amortized cost of the investment on the consolidated balance sheet at December 31, 2020 and December 31, 2019 was $12 million and $19 million, respectively.
We invest in U.S. Treasuries and U.S. government-sponsored enterprise securities issued by the Federal Home Loan Bank, Freddie Mac and the Federal Farm Credit Bank. As of December 31, 2020, none of the 30 securities had unrealized losses and as of December 31, 2019, 1 of the 14 securities had unrealized losses. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. These bonds are rated Aaa by Standard and Poor’s or AA+ by Moody’s Investors Service. Based on this qualitative analysis, we have determined that no credit impairment exists.
In March 2020, we sold approximately $1.7 billion of Private Education Loans through a securitization transaction where we were required to retain a 5 percent vertical risk retention interest. We classify the non-residual vertical retention interests as available-for-sale investments. As of December 31, 2020, eight out of 10 of these investments had unrealized losses. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. We expect to receive all contractual cash flows related to these investments and do not consider a credit impairment to exist.
As of December 31, 2020, the amortized cost and fair value of securities, by contractual maturities, are summarized below. Contractual maturities versus actual maturities may differ due to the effect of prepayments.
Year of MaturityAmortized CostEstimated Fair Value
2021$454,193 $455,185 
2022978,017 979,802 
2023164,680 165,299 
2038170 195 
20392,032 2,249 
20424,767 4,769 
20438,745 9,153 
204411,586 12,139 
20459,739 10,133 
204615,292 15,748 
204725,056 25,574 
20486,466 6,743 
204944,711 46,681 
2050192,706 194,056 
205468,797 68,908 
Total$1,986,957 $1,996,634 


Some of the mortgage-backed securities and a portion of the government securities have been pledged to the FRB as collateral against any advances and accrued interest under the Primary Credit lending program sponsored by the FRB. We had $815 million and $252 million par value of securities pledged to this borrowing facility at December 31, 2020 and 2019, respectively, as discussed further in Note 11, “Borrowings.”
Other Investments
Investments in Non-Marketable Securities
We hold investments in non-marketable securities and account for these investments at cost, less impairment, plus or minus observable price changes of identical or similar securities of the same issuer. In the third quarter of 2019, we funded an additional investment, as part of a larger equity raise, in an issuer whose equity securities we purchased in the past. We used the valuation associated with the more recent securities investment to adjust the valuation of our previous investments and, as a result, recorded a gain of $8 million on our earlier equity securities investments. This gain was recorded in “other income” in the consolidated statements of income in 2019. At both December 31, 2020 and December 31, 2019, our total investment in the securities of this issuer was $26 million.
Low Income Housing Tax Credit Investments
We invest in affordable housing projects that qualify for the LIHTC, which is designed to promote private development of low income housing. We recognized $6 million, $6 million and $4 million of tax credits and other tax benefits associated with investments in affordable housing projects within income tax expense for the years ended December 31, 2020, 2019 and 2018, respectively. The amount of amortization of such investments reported in income tax expense was $5 million, $4 million and $4 million for the years ended December 31, 2020, 2019 and 2018, respectively. Total carrying value of the LIHTC investments was $54 million at December 31, 2020 and $58 million at December 31, 2019. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $19 million at December 31, 2020 and $29 million at December 31, 2019.