INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2024

Investment securities are classified as available-for-sale (“AFS”) or held-to-maturity (“HTM”). AFS securities are carried at fair value, and changes in fair value (unrealized gains and losses) are reported as net increases or decreases to accumulated other comprehensive income (“AOCI”), net of related taxes. HTM securities, which management has the intent and ability to hold until maturity, are carried at amortized cost. The amortized cost represents the original cost of the investment, adjusted for related amortization or accretion of any purchase premiums or discounts, and for any impairment losses, including credit-related impairment.

The carrying values of our investment securities do not include accrued interest receivables of $54 million and $65 million at September 30, 2024 and December 31, 2023, respectively. These receivables are included in “Other assets” on the consolidated balance sheet.

When a security is transferred from AFS to HTM, the difference between its amortized cost basis and fair value at the date of transfer is amortized as a yield adjustment through interest income, and the fair value at the date of transfer results in either a premium or discount to the amortized cost basis of the HTM securities. The amortization of unrealized gains or losses reported in AOCI will offset the effect of the amortization of the premium or discount in interest income that is created by the transfer. The discount associated with securities previously transferred from AFS to HTM was $1.9 billion ($1.4 billion after tax) at September 30, 2024, compared with $2.1 billion ($1.5 billion after tax) at December 31, 2023.

See Notes 3 and 5 of our 2023 Form 10-K for more information regarding our process to estimate the fair value and accounting for our investment securities, respectively. The following schedule presents the amortized cost and estimated fair values of our AFS and HTM securities:


	September 30, 2024
(In millions)	Amortized cost		Gross unrealized gains 1		Gross unrealized losses		Estimated fair value
Available-for-sale
U.S. Treasury securities	$	580	$	—	$	90	$	490
U.S. Government agencies and corporations:
Agency securities	478		—		20		458
Agency guaranteed mortgage-backed securities	7,914		2		1,047		6,869
Small Business Administration loan-backed securities	483		—		18		465
Municipal securities	1,251		—		62		1,189
Other debt securities	25		—		1		24
Total available-for-sale	10,731		2		1,238		9,495
Held-to-maturity
U.S. Government agencies and corporations:
Agency securities	149		—		5		144
Agency guaranteed mortgage-backed securities	9,384		215		29		9,570
Municipal securities	324		—		14		310
Total held-to-maturity	9,857		215		48		10,024
Total investment securities	$	20,588	$	217	$	1,286	$	19,519


	December 31, 2023
(In millions)	Amortized cost		Gross unrealized gains 1		Gross unrealized losses		Estimated fair value
Available-for-sale
U.S. Treasury securities	$	585	$	—	$	93	$	492
U.S. Government agencies and corporations:
Agency securities	663		—		33		630
Agency guaranteed mortgage-backed securities	8,530		—		1,239		7,291
Small Business Administration loan-backed securities	571		—		25		546
Municipal securities	1,385		—		67		1,318
Other debt securities	25		—		2		23
Total available-for-sale	11,759		—		1,459		10,300
Held-to-maturity
U.S. Government agencies and corporations:
Agency securities	93		—		6		87
Agency guaranteed mortgage-backed securities	9,935		156		50		10,041
Municipal securities	354		—		16		338
Total held-to-maturity	10,382		156		72		10,466
Total investment securities	$	22,141	$	156	$	1,531	$	20,766

1 Gross unrealized gains for the respective AFS security categories without values were individually less than $1 million.

Maturities

The following schedule presents the amortized cost and weighted average yields of debt securities by remaining contractual maturity of principal payments at September 30, 2024, and does not incorporate interest rate resets and fair value hedges. The remaining contractual principal maturities do not reflect the duration of the portfolio, which would incorporate amortization and expected prepayments; the effects of which result in measured durations shorter than contractual maturities.


	September 30, 2024
	Total debt securities				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years
(Dollar amounts in millions)	Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield		Amortized cost		Average yield
Available-for-sale
U.S. Treasury securities	$	580	3.16	%	$	179	4.98	%	$	—	—	%	$	—	—	%	$	401	2.35	%
U.S. Government agencies and corporations:
Agency securities	478		3.10		43		3.59		107		3.10		194		2.96		134		3.14
Agency guaranteed mortgage-backed securities	7,914		2.03		16		1.17		108		1.92		1,372		2.11		6,418		2.02
Small Business Administration loan-backed securities	483		5.23		1		6.02		12		6.38		133		4.26		337		5.57
Municipal securities 1	1,251		2.25		166		2.99		362		2.61		682		1.87		41		2.31
Other debt securities	25		8.78		—		—		10		9.51		—		—		15		8.29
Total available-for-sale securities	10,731		2.32		405		3.87		599		2.77		2,381		2.23		7,346		2.23
Held-to-maturity
U.S. Government agencies and corporations:
Agency securities	149		4.19		—		—		—		—		—		—		149		4.19
Agency guaranteed mortgage-backed securities	9,384		1.85		—		—		—		—		42		1.90		9,342		1.85
Municipal securities 1	324		3.20		33		3.23		136		3.01		140		3.31		15		3.92
Total held-to-maturity securities	9,857		1.93		33		3.23		136		3.01		182		2.98		9,506		1.89
Total investment securities	$	20,588	2.13		$	438	3.82		$	735	2.81		$	2,563	2.28		$	16,852	2.04

1 The yields on tax-exempt securities are calculated on a tax-equivalent basis.

The following schedule presents gross unrealized losses for AFS securities and the estimated fair value by length of time the securities have been in an unrealized loss position:


	September 30, 2024
	Less than 12 months				12 months or more				Total
(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value






Available-for-sale
U.S. Treasury securities	$	—	$	—	$	90	$	311	$	90	$	311
U.S. Government agencies and corporations:
Agency securities	—		1		20		445		20		446
Agency guaranteed mortgage-backed securities	—		2		1,047		6,579		1,047		6,581
Small Business Administration loan-backed securities	—		4		18		412		18		416
Municipal securities	—		27		62		1,071		62		1,098
Other	—		—		1		14		1		14








Total available-for-sale investment securities	$	—	$	34	$	1,238	$	8,832	$	1,238	$	8,866


	December 31, 2023
	Less than 12 months				12 months or more				Total
(In millions)	Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value






Available-for-sale
U.S. Treasury securities	$	—	$	—	$	93	$	308	$	93	$	308
U.S. Government agencies and corporations:
Agency securities	—		5		33		605		33		610
Agency guaranteed mortgage-backed securities	71		312		1,168		6,902		1,239		7,214
Small Business Administration loan-backed securities	—		4		25		484		25		488
Municipal securities	2		229		65		1,061		67		1,290
Other	—		—		2		13		2		13








Total available-for-sale investment securities	$	73	$	550	$	1,386	$	9,373	$	1,459	$	9,923

At September 30, 2024 and December 31, 2023, approximately 2,589 and 2,998 AFS investment securities were in an unrealized loss position, respectively.

Impairment

On a quarterly basis, we review our investment securities portfolio for the presence of impairment on an individual security basis. For additional information on our policy and impairment evaluation process for investment securities, see Note 5 of our 2023 Form 10-K.

AFS Impairment

We did not recognize any impairment on our AFS investment securities portfolio during the first nine months of both 2024 and 2023. Unrealized losses primarily relate to higher interest rates subsequent to the purchase of securities and are not attributable to credit; as such, absent any future sales, we would expect to receive the full principal value at maturity. At September 30, 2024, we had not initiated any sales of AFS securities, nor did we have an intent to sell any identified securities with unrealized losses. We do not believe it is more likely than not that we would be required to sell such securities before recovery of their amortized cost basis.

HTM Impairment

For HTM securities, the allowance for credit losses (“ACL”) is assessed consistent with the approach described in Note 6 for loans and leases measured at amortized cost. At September 30, 2024, the ACL on HTM securities was less than $1 million, all HTM securities were risk-graded as “Pass” in terms of credit quality, and none were considered past due.

Investment Securities Gains and Losses Recognized in Income

The following schedule presents investment securities gains and losses recognized in income:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
(In millions)	Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses		Gross gains		Gross losses



Available-for-sale	$	—	$	—	$	—	$	—	$	—	$	—	$	72	$	73

The following schedule presents interest income by investment security type:


	Three Months Ended September 30,
	2024						2023
(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total


Available-for-sale	$	75	$	8	$	83	$	76	$	9	$	85
Held-to-maturity	54		1		55		58		1		59
Total investment securities	$	129	$	9	$	138	$	134	$	10	$	144


	Nine Months Ended September 30,
	2024						2023
(In millions)	Taxable		Nontaxable		Total		Taxable		Nontaxable		Total


Available-for-sale	$	227	$	24	$	251	$	214	$	23	$	237
Held-to-maturity	165		3		168		178		3		181
Total investment securities	$	392	$	27	$	419	$	392	$	26	$	418