Investment Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

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.



	March 31, 2022								December 31, 2021
	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	$	2,517	$	—	$	(130)	$	2,387	$	2,173	$	2	$	(20)	$	2,155
U.S. States and political subdivisions	886		3		(47)		842		841		27		(4)		864
Foreign government	161		—		(8)		153		157		2		(2)		157
Agency mortgage-backed residential	20,100		12		(1,178)		18,934		19,044		219		(224)		19,039
Mortgage-backed residential	5,158		1		(320)		4,839		4,448		11		(34)		4,425
Agency mortgage-backed commercial	4,371		12		(433)		3,950		4,573		66		(113)		4,526

Asset-backed	499		—		(16)		483		536		1		(3)		534
Corporate debt	1,900		3		(106)		1,797		1,878		30		(21)		1,887
Total available-for-sale securities (a) (b) (c) (d) (e)	$	35,592	$	31	$	(2,238)	$	33,385	$	33,650	$	358	$	(421)	$	33,587


Held-to-maturity securities
Debt securities
Agency mortgage-backed residential	$	1,159	$	8	$	(61)	$	1,106	$	1,170	$	48	$	(14)	$	1,204

Total held-to-maturity securities (e) (f)	$	1,159	$	8	$	(61)	$	1,106	$	1,170	$	48	$	(14)	$	1,204

(a)Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $12 million and $13 million at March 31, 2022, and December 31, 2021, respectively.

(b)Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 19 for additional information.

(c)Available-for-sale securities with a fair value of $227 million and $203 million at March 31, 2022, and December 31, 2021, respectively, were pledged for purposes as required by contractual obligation or law. Under these agreements, we granted the counterparty the right to sell or pledge the underlying investment securities.

(d)Totals do not include accrued interest receivable, which was $88 million and $84 million at March 31, 2022, and December 31, 2021, 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 March 31, 2022, or December 31, 2021, as management determined that there were no expected credit losses in our portfolio of available-for-sale and held-to-maturity securities.

(f)Totals do not include accrued interest receivable, which was $2 million and $3 million at March 31, 2022, and December 31, 2021, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.

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
March 31, 2022
Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies	$	2,387	1.3	%	$	286	1.0	%	$	600	1.1	%	$	1,501	1.4	%	$	—	—	%
U.S. States and political subdivisions	842		3.0		37		2.3		75		2.8		131		3.3		599		3.0
Foreign government	153		1.6		1		1.0		88		1.6		64		1.7		—		—
Agency mortgage-backed residential	18,934		2.5		—		—		—		—		23		2.0		18,911		2.5
Mortgage-backed residential	4,839		2.6		—		—		—		—		20		2.9		4,819		2.6
Agency mortgage-backed commercial	3,950		2.0		—		—		—		—		1,117		2.3		2,833		1.8

Asset-backed	483		1.8		—		—		336		1.9		139		1.5		8		3.4
Corporate debt	1,797		2.3		69		2.4		814		2.2		901		2.3		13		3.0
Total available-for-sale securities	$	33,385	2.3		$	393	1.4		$	1,913	1.8		$	3,896	2.0		$	27,183	2.4
Amortized cost of available-for-sale securities	$	35,592			$	394			$	1,979			$	4,135			$	29,084
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	$	1,159	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,159	2.8	%

Total held-to-maturity securities	$	1,159	2.8		$	—	—		$	—	—		$	—	—		$	1,159	2.8
December 31, 2021
Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies	$	2,155	1.1	%	$	288	1.0	%	$	525	0.9	%	$	1,342	1.2	%	$	—	—	%
U.S. States and political subdivisions	864		3.0		26		1.6		77		2.8		128		3.3		633		3.0
Foreign government	157		1.9		2		2.1		97		2.0		58		1.8		—		—
Agency mortgage-backed residential	19,039		2.5		—		—		—		—		26		2.0		19,013		2.5
Mortgage-backed residential	4,425		2.6		—		—		—		—		23		2.9		4,402		2.6
Agency mortgage-backed commercial	4,526		1.9		—		—		26		2.4		1,578		2.4		2,922		1.7

Asset-backed	534		1.9		—		—		350		2.0		175		1.5		9		3.4
Corporate debt	1,887		2.3		54		2.9		830		2.3		994		2.3		9		2.5
Total available-for-sale securities	$	33,587	2.3		$	370	1.3		$	1,905	1.9		$	4,324	2.0		$	26,988	2.4
Amortized cost of available-for-sale securities	$	33,650			$	368			$	1,893			$	4,291			$	27,098
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	$	1,170	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,170	2.8	%

Total held-to-maturity securities	$	1,170	2.8		$	—	—		$	—	—		$	—	—		$	1,170	2.8

(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 $92 million and $40 million at March 31, 2022, and December 31, 2021, respectively, and were composed primarily of money-market funds and short-term securities, including U.S. Treasury bills. $33 million of these securities were pledged as collateral as of March 31, 2022. We granted the counterparty the right to sell or pledge these securities.

The following table presents interest and dividends on investment securities.


	Three months ended March 31,
($ in millions)		2022		2021
Taxable interest		$	174	$	114
Taxable dividends		4		5
Interest and dividends exempt from U.S. federal income tax		5		5
Interest and dividends on investment securities		$	183	$	124

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 March 31,
($ in millions)		2022		2021
Available-for-sale securities
Gross realized gains		$	18	$	32


Net realized gains on available-for-sale securities		18		32
Net realized gain on equity securities		52		74
Net unrealized (loss) gain on equity securities		(65)		17
Other gain on investments, net		$	5	$	123

The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of March 31, 2022, and December 31, 2021. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch. They represent a composite of the ratings or, where credit ratings cannot be sourced from the agencies, are presented based on the asset type. All of our held-to-maturity securities were current in their payment of principal and interest as of March 31, 2022, and December 31, 2021. We have not recorded any interest income reversals on our held-to-maturity securities during the three months ended March 31, 2022, or 2021.


	March 31, 2022		December 31, 2021
($ in millions)	AA		Total (a)		AA		Total (a)
Debt securities
Agency mortgage-backed residential	$	1,159	$	1,159	$	1,170	$	1,170

Total held-to-maturity securities	$	1,159	$	1,159	$	1,170	$	1,170

(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.

The following table 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 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K. As of March 31, 2022, and December 31, 2021, 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. We have not recorded any interest income reversals on our available-for-sale securities during the three months ended March 31, 2022, or 2021.


	March 31, 2022								December 31, 2021

	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	$	1,952	$	(93)	$	425	$	(37)	$	1,682	$	(20)	$	—	$	—
U.S. States and political subdivisions	541		(44)		41		(3)		160		(3)		31		(1)
Foreign government	115		(5)		26		(3)		76		(2)		7		—
Agency mortgage-backed residential	13,237		(709)		4,416		(469)		12,244		(223)		38		(1)
Mortgage-backed residential	4,716		(319)		19		(1)		3,243		(34)		22		—
Agency mortgage-backed commercial	2,713		(292)		868		(141)		2,553		(70)		749		(43)

Asset-backed	459		(16)		3		—		360		(3)		—		—
Corporate debt	1,249		(75)		261		(31)		970		(18)		49		(3)
Total available-for-sale securities	$	24,982	$	(1,553)	$	6,059	$	(685)	$	21,288	$	(373)	$	896	$	(48)

During the three months ended March 31, 2022, and 2021, management determined that there were no expected credit losses for securities in an unrealized loss position. This analysis considered a variety of factors including, but not limited to, performance indicators of the issuer, default rates, industry analyst reports, credit ratings, and other relevant information, which indicated that contractual cash flows are expected to occur. As a result of this evaluation, management determined that no credit reserves were required at March 31, 2022, or December 31, 2021.