Investment Securities

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

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. The unrealized gains and losses on equity securities are recorded in the Consolidated Statements of Income.

The following is a summary of investment securities as of September 30, 2019 and December 31, 2018:


	2019															2018
Description of Securities (Millions)	Cost		Gross Unrealized Gains			Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
State and municipal obligations	$	230	$	10		$	—	$	240	$	594	$	4	$	(2)	$	596
U.S. Government agency obligations	10		—			—		10		10		—		—		10
U.S. Government treasury obligations	7,401		40			(2)		7,439		3,452		5		(17)		3,440
Corporate debt securities	27		—			—		27		28		—		—		28
Mortgage-backed securities ^(a)	41		2			—		43		50		1		—		51
Foreign government bonds and obligations	610		1			—		611		474		—		—		474
Equity securities ^(b)	62		15		(c)	(2)		75		51		—		(3)		48
Total	$	8,381	$	68		$	(4)	$	8,445	$	4,659	$	10	$	(22)	$	4,647

(a)Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

(b)Equity securities comprise investments in common stocks, exchange-traded funds and mutual funds.

(c)During the second quarter of 2019, an equity investment was reclassified from Other assets to Investment securities following the completion of an initial public offering by the issuer of the securities. The investment had a fair value of $25 million with an associated cost basis of $10 million as of September 30, 2019. The gross unrealized gains amount includes $29 million that was recognized during 2018.

The following table provides information about our investment securities with gross unrealized losses and the length of time that individual securities have been in an unrealized loss position as of September 30, 2019 and December 31, 2018:


	2019														2018
	Less than 12 months						12 months or more						Less than 12 months				12 months or more
Description of Securities (Millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
State and municipal obligations	$	—	$	—	$	—	$	—	$	—	$	—	$	82	$	(1)
U.S. Government treasury obligations	—		—		475		(2)		224		(2)		791		(15)
Total	$	—	$	—	$	475	$	(2)	$	224	$	(2)	$	873	$	(16)

The following table summarizes the gross unrealized losses due to temporary impairments by ratio of fair value to amortized cost as of September 30, 2019 and December 31, 2018:


	Less than 12 months								12 months or more							Total
Ratio of Fair Value to Amortized Cost (Dollars in millions)	Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses		Number of Securities	Estimated Fair Value		Gross Unrealized Losses
2019:
90%–100%	—	$	—	$	—	5	$	475	$	(2)	5	$	475	$	(2)
Total as of September 30, 2019	—	$	—	$	—	5	$	475	$	(2)	5	$	475	$	(2)


2018:
90%–100%	2	$	224	$	(2)	29	$	873	$	(16)	31	$	1,097	$	(18)
Total as of December 31, 2018	2	$	224	$	(2)	29	$	873	$	(16)	31	$	1,097	$	(18)

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 September 30, 2019 were as follows:


(Millions)	Cost		Estimated Fair Value
Due within 1 year	$	6,642	$	6,649
Due after 1 year but within 5 years	1,309		1,335
Due after 5 years but within 10 years	150		157
Due after 10 years	218		229
Total	$	8,319	$	8,370

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