Investment Securities

Our investment portfolio includes various debt and equity securities. Our debt securities, which are classified as available-for-sale and held-to-maturity, include government securities, corporate bonds, asset-backed securities, and mortgage-backed securities. The cost, fair value, and gross unrealized gains and losses on available-for-sale and held-to-maturity debt securities were as follows.



	2018									2017
	Amortized cost		Gross unrealized					Fair value		Amortized cost		Gross unrealized					Fair value
December 31, ($ in millions)	Amortized cost		gains		losses			Fair value		Amortized cost		gains		losses			Fair value
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	1,911	$	—	$	(60	)	$	1,851	$	1,831	$	—	$	(54	)	$	1,777
U.S. States and political subdivisions	816		3		(17		)	802		850		11		(7		)	854
Foreign government	145		1		(1		)	145		153		2		(1		)	154
Agency mortgage-backed residential	17,486		47		(395		)	17,138		14,412		35		(156		)	14,291
Mortgage-backed residential	2,796		1		(111		)	2,686		2,517		11		(34		)	2,494
Mortgage-backed commercial	718		1		(2		)	717		541		1		(1		)	541
Asset-backed	723		2		(2		)	723		933		4		(1		)	936
Corporate debt	1,286		1		(46		)	1,241		1,262		5		(11		)	1,256
Total available-for-sale securities (a) (b) (c)	$	25,881	$	56	$	(634	)	$	25,303	$	22,499	$	69	$	(265	)	$	22,303
Held-to-maturity securities
Debt securities
Agency mortgage-backed residential (d)	$	2,319	$	6	$	(61	)	$	2,264	$	1,863	$	3	$	(37	)	$	1,829
Asset-backed retained notes	43		—		—			43		36		—		—			36
Total held-to-maturity securities	$	2,362	$	6	$	(61	)	$	2,307	$	1,899	$	3	$	(37	)	$	1,865


(a)	Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $12 million at both December 31, 2018, and December 31, 2017.


(b)	Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 21 for additional information.

(c)

Available-for-sale securities with a fair value of $9.2 billion and $7.8 billion at December 31, 2018, and December 31, 2017, respectively, were pledged to secure advances from the FHLB, short-term borrowings or repurchase agreements, or for other purposes as required by contractual obligation or law. Under these agreements, we have granted the counterparty the right to sell or pledge $821 million and $1.0 billion of the underlying investment securities at December 31, 2018, and December 31, 2017, respectively.


(d)	Held-to-maturity securities with a fair value of $1.2 billion and $664 million at December 31, 2018, and December 31, 2017, respectively, were pledged to secure advances from the FHLB.

The maturity distribution of debt securities outstanding is summarized in the following tables. Call or prepayment options may cause actual maturities to differ from contractual maturities.



	Total				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years
($ in millions)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
December 31, 2018
Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies	$	1,851	1.9	%	$	12	1.0	%	$	1,277	1.8	%	$	562	2.0	%	$	—	—	%
U.S. States and political subdivisions	802		3.0		49		1.9		43		2.3		252		2.6		458		3.4
Foreign government	145		2.4		18		3.1		60		2.3		67		2.4		—		—
Agency mortgage-backed residential	17,138		3.3		—		—		—		—		54		1.9		17,084		3.3
Mortgage-backed residential	2,686		3.3		—		—		—		—		—		—		2,686		3.3
Mortgage-backed commercial	717		3.8		—		—		3		3.1		46		3.9		668		3.8
Asset-backed	723		3.5		—		—		478		3.4		121		4.0		124		3.3
Corporate debt	1,241		3.1		144		2.8		496		2.9		581		3.3		20		5.5
Total available-for-sale securities	$	25,303	3.2		$	223	2.6		$	2,357	2.4		$	1,683	2.8		$	21,040	3.3
Amortized cost of available-for-sale securities	$	25,881			$	224			$	2,405			$	1,743			$	21,509
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	$	2,319	3.2	%	$	—	—	%	$	—	—	%	$	—	—	%	$	2,319	3.2	%
Asset-backed retained notes	43		2.0		—		—		42		2.0		1		3.3		—		—
Total held-to-maturity securities	$	2,362	3.2		$	—	—		$	42	2.0		$	1	3.3		$	2,319	3.2
December 31, 2017
Fair value of available-for-sale securities (a)
U.S. Treasury	$	1,777	1.7	%	$	—	—	%	$	487	1.7	%	$	1,290	1.8	%	$	—	—	%
U.S. States and political subdivisions	854		2.9		76		1.8		36		2.3		203		2.5		539		3.3
Foreign government	154		2.5		—		—		80		2.5		74		2.4		—		—
Agency mortgage-backed residential	14,291		3.1		—		—		—		—		3		2.9		14,288		3.1
Mortgage-backed residential	2,494		3.1		—		—		—		—		—		—		2,494		3.1
Mortgage-backed commercial	541		3.2		—		—		30		3.1		31		3.1		480		3.2
Asset-backed	936		3.1		—		—		698		3.1		106		3.1		132		2.8
Corporate debt	1,256		2.9		140		2.6		513		2.6		564		3.2		39		4.7
Total available-for-sale securities	$	22,303	3.0		$	216	2.3		$	1,844	2.5		$	2,271	2.3		$	17,972	3.1
Amortized cost of available-for-sale securities	$	22,499			$	217			$	1,852			$	2,314			$	18,116
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	$	1,863	3.1	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,863	3.1	%
Asset-backed retained notes	36		1.7		—		—		35		1.7		1		3.0		—		—
Total held-to-maturity securities	$	1,899	3.1		$	—	—		$	35	1.7		$	1	3.0		$	1,863	3.1


(a)	Yield is calculated using the effective yield of each security at the end of the period, weighted based on the market value. The effective yield considers the contractual coupon and amortized cost, and excludes expected capital gains and losses.

The balances of cash equivalents were $35 million and $10 million at December 31, 2018, and December 31, 2017, respectively, and were composed primarily of money market accounts and short-term securities, including U.S. Treasury bills.

The following table presents interest and dividends on investment securities.



Year ended December 31, ($ in millions)	2018		2017		2016
Taxable interest	$	690	$	534	$	375
Taxable dividends	14		12		17
Interest and dividends exempt from U.S. federal income tax	25		22		19
Interest and dividends on investment securities	$	729	$	568	$	411

The following table presents gross gains and losses realized upon the sales of available-for-sale securities, and net gains or losses on equity securities held during the period. There were no other-than-temporary impairments of available-for-sale securities for the periods presented.



Year ended December 31, ($ in millions)	2018			2017			2016
Available-for-sale securities
Gross realized gains	$	12		$	106		$	187
Gross realized losses (a)	(1		)	(4		)	(2		)
Net realized gains on available-for-sale securities	11			102			185
Net realized gain on equity securities	60
Net unrealized loss on equity securities (b)	(121		)
Other (loss) gain on investments, net	$	(50	)	$	102		$	185


(a)	Certain available-for-sale securities were sold at a loss in 2018, 2017, and 2016 as a result of market conditions within these respective periods (e.g., a downgrade in the rating of a debt security) or based on corporate actions outside of our control (such as a call by the issuer). Any such sales were made in accordance with our risk-management policies and practices.

(b)

As a result of our adoption of ASU 2016-01, beginning January 1, 2018, changes in the fair value of our portfolio of equity securities are recognized in net income. Prior to adoption, equity securities were included in our available-for-sale portfolio and unrealized changes in fair value were recognized through other comprehensive (loss) income until realized, at which point we recorded a gain or loss on sale. We adopted ASU 2016-01 on January 1, 2018, on a modified retrospective basis with a cumulative effect adjustment as of the beginning of the fiscal year of initial adoption. Refer to the section titled Recently Adopted Accounting Standards in Note 1 for additional information.

The table below summarizes available-for-sale and held-to-maturity securities in an unrealized loss position, which we evaluated for other than temporary impairment applying the methodology described in Note 1. As of December 31, 2018, we did not have the intent to sell the available-for-sale or held-to-maturity securities with an unrealized loss position and we do not believe it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As a result of this evaluation, we believe that the securities with an unrealized loss position are not considered to be other-than-temporarily impaired at December 31, 2018.



	2018										2017
	Less than 12 months					12 months or longer					Less than 12 months					12 months or longer
December 31, ($ in millions)	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	31	$	—		$	1,758	$	(60	)	$	471	$	(8	)	$	1,305	$	(46	)
U.S. States and political subdivisions	259		(3		)	317		(14		)	242		(2		)	183		(5		)
Foreign government	6		—			74		(1		)	80		(1		)	4		—
Agency mortgage-backed residential	5,537		(94		)	7,808		(301		)	4,066		(19		)	5,671		(137		)
Mortgage-backed residential	1,024		(20		)	1,360		(91		)	857		(2		)	773		(32		)
Mortgage-backed commercial	347		(1		)	36		(1		)	76		(1		)	21		—
Asset-backed	294		(1		)	124		(1		)	220		(1		)	91		—
Corporate debt	576		(19		)	569		(27		)	529		(4		)	194		(7		)
Total temporarily impaired available-for-sale securities	$	8,074	$	(138	)	$	12,046	$	(496	)	$	6,541	$	(38	)	$	8,242	$	(227	)
Held-to-maturity securities
Debt securities
Agency mortgage-backed residential	$	457	$	(6	)	$	1,376	$	(55	)	$	773	$	(5	)	$	687	$	(32	)
Asset-backed retained notes	16		—			19		—			35		—			—		—
Total held-to-maturity debt securities	$	473	$	(6	)	$	1,395	$	(55	)	$	808	$	(5	)	$	687	$	(32	)