Investment Securities

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

5. Investment Securities

Investment securities principally include available-for-sale debt securities carried at fair value on the Consolidated Balance Sheets, with unrealized gains and losses recorded in AOCI, net of income taxes. Realized gains and losses are recognized upon disposition of the securities using the specific identification method.

Investment securities also include equity securities carried at fair value on the Consolidated Balance Sheets. Effective January 1, 2018, unrealized gains and losses are recorded in the Consolidated Statements of Income; prior to January 1, 2018, unrealized gains and losses were recorded in AOCI, net of income taxes.

The following is a summary of investment securities as of March 31, 2018 and December 31, 2017:

		2018								2017
					Gross		Gross		Estimated				Gross		Gross		Estimated
					Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
Description of Securities (Millions)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
Available-for-sale debt securities:
	State and municipal obligations	$	1,122	$	8	$	(5)	$	1,125	$	1,369	$	11	$	(3)	$	1,377
	U.S. Government agency obligations		10		―		―		10		11		―		―		11
	U.S. Government treasury obligations		1,678		4		(21)		1,661		1,051		3		(9)		1,045
	Corporate debt securities		29		―		―		29		28		―		―		28
	Mortgage-backed securities ^(a)		63		2		(1)		64		67		2		―		69
	Foreign government bonds and obligations		451		―		―		451		581		―		―		581
Equity securities ^(b)			51		―		(3)		48		51		―		(3)		48
Total		$	3,404	$	14	$	(30)	$	3,388	$	3,158	$	16	$	(15)	$	3,159

Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
Equity securities comprise investments in common stock and mutual funds.

The following table provides information about our available-for-sale debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2018 and December 31, 2017:

	2018								2017
	Less than 12 months				12 months or more				Less than 12 months				12 months or more
				Gross				Gross				Gross				Gross
Description of Securities (Millions)		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
State and municipal obligations	$	144	$	(4)	$	―	$	―	$	157	$	(3)	$	―	$	―
U.S. Government treasury obligations		811		(14)		173		(7)		650		(3)		175		(6)
Equity securities ^(a)		―		N/A		―		N/A		―		―		36		(2)
Total	$	955	$	(18)	$	173	$	(7)	$	807	$	(6)	$	211	$	(8)

Effective January 1, 2018, unrealized gains and losses on equity securities are recorded in the Consolidated Statements of Income and are no longer assessed for other-than-temporary impairment.

The following table summarizes the gross unrealized losses due to temporary impairments by ratio of fair value to amortized cost as of March 31, 2018 and December 31, 2017:

	Less than 12 months					12 months or more					Total
Ratio of Fair Value to					Gross					Gross					Gross
Amortized Cost	Number of		Estimated		Unrealized	Number of		Estimated		Unrealized	Number of		Estimated		Unrealized
(Dollars in millions)	Securities		Fair Value		Losses	Securities		Fair Value		Losses	Securities		Fair Value		Losses
2018:
90%–100%	30	$	955	$	(18)	5	$	173	$	(7)	35	$	1,128	$	(25)
Total as of March 31, 2018	30	$	955	$	(18)	5	$	173	$	(7)	35	$	1,128	$	(25)

2017:
90%–100%	34	$	807	$	(6)	13	$	211	$	(8)	47	$	1,018	$	(14)
Total as of December 31, 2017	34	$	807	$	(6)	13	$	211	$	(8)	47	$	1,018	$	(14)

The gross unrealized losses for available-for-sale debt securities are attributed to wider credit spreads for specific issuers, adverse changes in benchmark interest rates, or a combination thereof, all compared to those prevailing when the investment securities were purchased.

Overall, for the available-for-sale debt securities in gross unrealized loss positions, (i) we do not intend to sell the securities, (ii) it is more likely than not that we will not be required to sell the securities before recovery of the unrealized losses, and (iii) we expect that the contractual principal and interest will be received on the securities. As a result, we recognized no other-than-temporary impairment during the periods presented.

Contractual maturities for investment securities with stated maturities as of March 31, 2018 were as follows:

				Estimated
(Millions)		Cost		Fair Value
Due within 1 year	$	465	$	465
Due after 1 year but within 5 years		1,653		1,639
Due after 5 years but within 10 years		218		214
Due after 10 years		1,017		1,022
Total	$	3,353	$	3,340

The expected payments on state and municipal obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.