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Investment Securities (Tables)
 6 Months Ended
Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities
Our investment portfolio includes various debt and equity securities. Our debt securities, which are classified as available-for-sale or 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 securities were as follows.
 
 
June 30, 2020
 
December 31, 2019


Amortized cost

Gross unrealized

Fair value

Amortized cost

Gross unrealized

Fair value
($ in millions)

gains

losses

gains

losses

Available-for-sale securities
















Debt securities
















U.S. Treasury and federal agencies

$
784

 
$
23

 
$
—

 
$
807


$
2,059


$
6


$
(17
)

$
2,048

U.S. States and political subdivisions

876

 
38

 
(1
)
 
913


623


19


(1
)

641

Foreign government

153

 
9

 
—

 
162


184


3


(1
)

186

Agency mortgage-backed residential

19,136

 
752

 
(4
)
 
19,884


21,183


257


(36
)

21,404

Mortgage-backed residential
 
3,387

 
42

 
(4
)
 
3,425

 
2,841

 
20

 
(11
)
 
2,850

Agency mortgage-backed commercial
 
1,647

 
139

 
—

 
1,786

 
1,344

 
44

 
(6
)
 
1,382

Mortgage-backed commercial

41

 
—

 
(3
)
 
38


41


1


—


42

Asset-backed

352

 
4

 
—

 
356


365


3


—


368

Corporate debt

1,761

 
97

 
(4
)
 
1,854


1,327


37


(1
)

1,363

Total available-for-sale securities (a) (b) (c) (d) (e)
 
$
28,137

 
$
1,104

 
$
(16
)
 
$
29,225

 
$
29,967

 
$
390

 
$
(73
)
 
$
30,284

Held-to-maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed residential
 
$
1,376

 
$
86

 
$
—

 
$
1,462

 
$
1,547

 
$
38

 
$
(6
)
 
$
1,579

Asset-backed retained notes
 
14

 
—

 
—

 
14

 
21

 
—

 
—

 
21

Total held-to-maturity securities (e) (f) (g)
 
$
1,390

 
$
86

 
$
—

 
$
1,476

 
$
1,568

 
$
38

 
$
(6
)
 
$
1,600

(a)
Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $13 million and $12 million at June 30, 2020, and December 31, 2019, respectively.
(b)
Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 18 for additional information.
(c)
Available-for-sale securities with a fair value of $215 million and $1.9 billion at June 30, 2020, and December 31, 2019, respectively, were pledged to secure advances from the FHLB, repurchase agreements, other short-term borrowings, or for other purposes as required by contractual obligation or law. Under these agreements, we granted the counterparty the right to sell or pledge $215 million and $118 million of the underlying investment securities at June 30, 2020, and December 31, 2019, respectively.
(d)
Totals do not include accrued interest receivable, which was $90 million and $98 million at June 30, 2020, and December 31, 2019, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.
(e)
There was no allowance for credit losses recorded at June 30, 2020, as management determined that credit losses did not exist for our portfolio of available-for-sale and held-to-maturity securities.
(f)
Held-to-maturity securities with a fair value of $915 million at December 31, 2019, were pledged to secure advances from the FHLB. We did not pledge any held-to-maturity securities at June 30, 2020.
(g)
Totals do not include accrued interest receivable, which was $3 million at both June 30, 2020, and December 31, 2019. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet
Investments Classified by Contractual Maturity Date
The maturity distribution of debt securities outstanding is summarized in the following tables based upon contractual maturities. 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
June 30, 2020




















Fair value of available-for-sale securities (a)




















U.S. Treasury and federal agencies

$
807

 
1.2
%
 
$
14

 
0.3
%
 
$
709

 
1.1
%
 
$
84

 
1.7
%
 
$
—

 
—
%
U.S. States and political subdivisions

913

 
3.2

 
20

 
2.5

 
88

 
2.4

 
176

 
2.9

 
629

 
3.4

Foreign government

162

 
2.1

 
8

 
1.7

 
79

 
2.3

 
75

 
2.0

 
—

 
—

Agency mortgage-backed residential
 
19,884

 
3.2

 
—

 
—

 
—

 
—

 
44

 
2.0

 
19,840

 
3.2

Mortgage-backed residential
 
3,425

 
3.2

 
—

 
—

 
—

 
—

 
—

 
—

 
3,425

 
3.2

Agency mortgage-backed commercial
 
1,786

 
2.5

 
—

 
—

 
3

 
3.3

 
1,247

 
2.6

 
536

 
2.2

Mortgage-backed commercial

38

 
3.6

 
—

 
—

 
—

 
—

 
—

 
—

 
38

 
3.6

Asset-backed

356

 
3.4

 
—

 
—

 
294

 
3.5

 
28

 
2.6

 
34

 
3.1

Corporate debt

1,854

 
3.0

 
153

 
2.9

 
705

 
2.9

 
973

 
3.1

 
23

 
2.4

Total available-for-sale securities

$
29,225

 
3.1

 
$
195

 
2.6

 
$
1,878

 
2.3

 
$
2,627

 
2.8

 
$
24,525

 
3.2

Amortized cost of available-for-sale securities

$
28,137

 
 
 
$
193

 
 
 
$
1,821

 
 
 
$
2,431

 
 
 
$
23,692

 
 
Amortized cost of held-to-maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed residential
 
$
1,376

 
3.2
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
1,376

 
3.2
%
Asset-backed retained notes
 
14

 
2.4

 
—

 
—

 
14

 
2.4

 
—

 
—

 
—

 
—

Total held-to-maturity securities
 
$
1,390

 
3.2

 
$
—

 
—

 
$
14

 
2.4

 
$
—

 
—

 
$
1,376

 
3.2

December 31, 2019




















Fair value of available-for-sale securities (a)




















U.S. Treasury and federal agencies

$
2,048


1.5
%

$
65


2.1
%

$
1,590


1.4
%

$
393


1.7
%

$
—


—
%
U.S. States and political subdivisions

641


3.1


22


2.7


75


2.3


159


2.8


385


3.4

Foreign government

186


1.9


35


0.4


65


2.3


86


2.3


—


—

Agency mortgage-backed residential
 
21,404

 
3.2

 
—

 
—

 
—

 
—

 
47

 
2.0

 
21,357

 
3.2

Mortgage-backed residential

2,850

 
3.2

 
—

 
—

 
—

 
—

 
—

 
—

 
2,850

 
3.2

Agency mortgage-backed commercial
 
1,382

 
2.9

 
—

 
—

 
3

 
3.2

 
1,109

 
3.0

 
270

 
2.4

Mortgage-backed commercial

42


3.5


—


—


—


—


—


—


42


3.5

Asset-backed

368


3.5


—


—


317


3.6


5


2.7


46


3.0

Corporate debt

1,363


3.2


125


2.9


580


3.0


649


3.4


9


3.3

Total available-for-sale securities

$
30,284


3.1


$
247


2.3


$
2,630


2.1


$
2,448


2.8


$
24,959


3.2

Amortized cost of available-for-sale securities

$
29,967





$
246





$
2,624





$
2,378





$
24,719




Amortized cost of held-to-maturity securities

 






















Agency mortgage-backed residential
 
$
1,547

 
3.2
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
1,547

 
3.2
%
Asset-backed retained notes
 
21

 
2.2

 
—

 
—

 
21

 
2.2

 
—

 
—

 
—

 
—

Total held-to-maturity securities
 
$
1,568

 
3.2

 
$
—

 
—

 
$
21

 
2.2

 
$
—

 
—

 
$
1,547

 
3.2

(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.
Investment Income
The following table presents interest and dividends on investment securities.
 
Three months ended June 30,
 
Six months ended June 30,
($ in millions)
2020
 
2019
 
2020
 
2019
Taxable interest
$
177


$
220

 
$
382

 
$
434

Taxable dividends
5


3

 
10

 
6

Interest and dividends exempt from U.S. federal income tax
5


4

 
8

 
9

Interest and dividends on investment securities
$
187


$
227

 
$
400

 
$
449
Schedule of Realized Gain (Loss)
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.
 
Three months ended June 30,
 
Six months ended June 30,
($ in millions)
2020
 
2019
 
2020
 
2019
Available-for-sale securities
 
 
 
 
 
 
 
Gross realized gains
$
19

 
$
24

 
$
124

 
$
34

Gross realized losses (a)
—

 
—

 
—

 
(1
)
Net realized gains on available-for-sale securities
19

 
24

 
124

 
33

Net realized gain on equity securities
80

 
10

 
81

 
39

Net unrealized gain (loss) on equity securities
89

 
5

 
(96
)
 
75

Other gain on investments, net
$
188

 
$
39

 
$
109

 
$
147


(a)
Certain available-for-sale securities were sold at a loss during the six months ended June 30, 2019, as a result of identifiable market or credit events, or a loss was realized 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.
Held to Maturity Debt Securities by Credit Quality
The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of June 30, 2020. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch, and represent a composite of the ratings or, where credit ratings cannot be sourced from the agencies, are presented based on the asset type. All our held-to-maturity securities were current in their payment of principal and interest as of June 30, 2020. We have not recorded any interest income reversals on our held-to-maturity securities during the six months ended June 30, 2020.
 
 
June 30, 2020
($ in millions)
 
AAA
 
AA
 
Total (a)
Debt securities
 
 
 
 
 
 
Agency mortgage-backed residential
 
$
—

 
$
1,376

 
$
1,376

Asset-backed retained notes
 
14

 
—

 
14

Total held-to-maturity securities
 
$
14

 
$
1,376

 
$
1,390

(a)
Rating agencies indicate that they base their ratings on many quantitative and qualitative factors, which may include capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current operating, legislative, and regulatory environment. A credit rating is not a recommendation to buy, sell, or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency.
Schedule of Unrealized Loss on Investments
The following table summarizes held-to-maturity securities in an unrealized loss position at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard, and as defined by the previous accounting guidance in effect at that time.
 
 
December 31, 2019
 
 
Less than 12 months
 
12 months or longer
($ in millions)
 
Fair value
 
Unrealized loss
 
Fair value
 
Unrealized loss
Held-to-maturity securities
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
Agency mortgage-backed residential
 
$
283

 
$
(6
)
 
$
—

 
$
—

Asset-backed retained notes
 
—

 
—

 
3

 
—

Total held-to-maturity debt securities
 
$
283

 
$
(6
)
 
$
3

 
$
—


The table below summarizes available-for-sale securities in an unrealized loss position, which we evaluated to determine if a credit loss exists requiring the recognition of an allowance for credit losses. For additional information on our methodology, refer to Note 1. As of June 30, 2020, we did not have the intent to sell the available-for-sale 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, management determined that no credit reserves were required at June 30, 2020. We have not recorded any interest income reversals on our available-for-sale securities during the six months ended June 30, 2020.
 
 
June 30, 2020
 
December 31, 2019


Less than 12 months

12 months or longer

Less than 12 months

12 months or longer
($ 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

$
9

 
$
—

 
$
—

 
$
—


$
1,267


$
(11
)

$
279


$
(6
)
U.S. States and political subdivisions

55

 
—

 
5

 
(1
)

72


(1
)

5


—

Foreign government

2

 
—

 
—

 
—


40


(1
)

3


—

Agency mortgage-backed residential
 
404

 
(4
)
 
5

 
—

 
4,606

 
(23
)
 
908

 
(13
)
Mortgage-backed residential
 
350

 
(4
)
 
—

 
—

 
613

 
(4
)
 
203

 
(7
)
Agency mortgage-backed commercial
 
—

 
—

 
—

 
—

 
335

 
(6
)
 
—

 
—

Mortgage-backed commercial
 
34

 
(3
)
 
—

 
—

 
—

 
—

 
—

 
—

Asset-backed

38

 
—

 
1

 
—


8


—


11


—

Corporate debt

80

 
(3
)
 
14

 
(1
)

71


—


41


(1
)
Total available-for-sale securities

$
972

 
$
(14
)
 
$
25

 
$
(2
)

$
7,012


$
(46
)

$
1,450


$
(27
)