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Investment Securities
 12 Months Ended
Dec. 31, 2018
Investment Securities Disclosure [Abstract]  
Investment Securities
NOTE 5 INVESTMENT SECURITIES
Table 45: Investment Securities Summary
 
 
December 31, 2018
 
 
December 31, 2017
In millions
 
Amortized
Cost

 
Unrealized
 
Fair
Value

 
 
Amortized
Cost

 
Unrealized
 
Fair
Value

Gains

 
Losses

 
 
 
Gains

 
Losses

 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
18,104

 
$
133

 
$
(137
)
 
$
18,100

 
 
$
14,432

 
$
173

 
$
(84
)
 
$
14,521

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
29,413

 
104

 
(524
)
 
28,993

 
 
25,534

 
121

 
(249
)
 
25,406

Non-agency
 
1,924

 
300

 
(13
)
 
2,211

 
 
2,443

 
336

 
(21
)
 
2,758

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
2,630

 
13

 
(66
)
 
2,577

 
 
1,960

 
2

 
(58
)
 
1,904

Non-agency
 
2,689

 
5

 
(37
)
 
2,657

 
 
2,603

 
19

 
(9
)
 
2,613

Asset-backed
 
4,933

 
59

 
(20
)
 
4,972

 
 
5,331

 
74

 
(8
)
 
5,397

Other debt
 
3,821

 
96

 
(38
)
 
3,879

 
 
4,322

 
129

 
(17
)
 
4,434

Total debt securities
 
63,514

 
710

 
(835
)
 
63,389

 
 
56,625


854


(446
)

57,033

Other (a)
 


 
 
 


 
 
 
 
587

 
 
 
(2
)
 
585

Total securities available for sale
 
$
63,514

 
$
710

 
$
(835
)
 
$
63,389

 
 
$
57,212


$
854


$
(448
)

$
57,618

Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
758

 
$
28

 
$
(23
)
 
$
763

 
 
$
741

 
$
37

 
$
(13
)
 
$
765

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
15,740

 
32

 
(358
)
 
15,414

 
 
14,503

 
77

 
(139
)
 
14,441

Non-agency
 
152

 
2

 

 
154

 
 
167

 
7

 
 
 
174

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
143

 
1

 
(1
)
 
143

 
 
407

 
4

 
 
 
411

Non-agency
 
488

 
1

 
(1
)
 
488

 
 
538

 
10

 
 
 
548

Asset-backed
 
182

 
1

 

 
183

 
 
200

 
1

 
 
 
201

Other debt
 
1,849

 
53

 
(28
)
 
1,874

 
 
1,957

 
88

 
(20
)
 
2,025

Total securities held to maturity
 
$
19,312

 
$
118

 
$
(411
)
 
$
19,019

 
 
$
18,513


$
224


$
(172
)

$
18,565


(a)
On January 1, 2018, $.6 billion of available for sale securities, primarily money market funds, were reclassified to equity investments in accordance with the adoption of ASU 2016-01. See the Recently Adopted Accounting Standards portion of Note 1 Accounting Policies for additional detail.

The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. Net unrealized gains and losses in the securities available for sale portfolio are included in Shareholders’ equity as AOCI unless credit-related. Securities held to maturity are carried at amortized cost. Investment securities at December 31, 2018 included $430 million of net unsettled purchases which represent non-cash investing activity, and accordingly, are not reflected on the Consolidated Statement of Cash Flows. The amount for December 31, 2017 was insignificant.

At December 31, 2018, AOCI included an insignificant amount of pretax gains from derivatives that hedged the purchase of investment securities classified as held to maturity. The gains will be accreted into interest income as an adjustment of yield on the securities.

Table 46 presents gross unrealized losses and fair value of debt securities at December 31, 2018 and 2017. The securities are segregated between investments that have been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis. The table includes debt securities where the noncredit portion of OTTI has been recognized in AOCI.
Table 46: Gross Unrealized Loss and Fair Value of Debt Securities
 
 
Unrealized loss position
less than 12 months
 
Unrealized loss position
12 months or more
 
Total
In millions
 
Unrealized
Loss

 
Fair
Value

 
Unrealized
Loss

 
Fair
Value

 
Unrealized
Loss

 
Fair
Value

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
(21
)
 
$
4,125

 
$
(116
)
 
$
5,423

 
$
(137
)
 
$
9,548

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
(57
)
 
4,823

 
(467
)
 
13,830

 
(524
)
 
18,653

Non-agency
 
(1
)
 
74

 
(12
)
 
310

 
(13
)
 
384

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
(1
)
 
65

 
(65
)
 
1,516

 
(66
)
 
1,581

Non-agency
 
(23
)
 
1,809

 
(14
)
 
498

 
(37
)
 
2,307

Asset-backed
 
(11
)
 
2,149

 
(9
)
 
1,032

 
(20
)
 
3,181

Other debt
 
(12
)
 
868

 
(26
)
 
1,293

 
(38
)
 
2,161

Total debt securities available for sale
 
$
(126
)
 
$
13,913

 
$
(709
)
 
$
23,902

 
$
(835
)
 
$
37,815

Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
 
 
 
 
$
(23
)
 
$
446

 
$
(23
)
 
$
446

Residential mortgage-backed - Agency
 
$
(58
)
 
$
4,191

 
(300
)
 
7,921

 
(358
)
 
12,112

Commerical mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
(1
)
 
88

 


 


 
(1
)
 
88

Non-agency
 
(1
)
 
152

 


 


 
(1
)
 
152

Other debt
 
(2
)
 
75

 
(26
)
 
123

 
(28
)
 
198

Total debt securities held to maturity
 
$
(62
)
 
$
4,506

 
$
(349
)
 
$
8,490

 
$
(411
)
 
$
12,996

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
(42
)
 
$
6,099

 
$
(42
)
 
$
1,465

 
$
(84
)
 
$
7,564

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
(47
)
 
8,151

 
(202
)
 
9,954

 
(249
)
 
18,105

Non-agency
 


 


 
(21
)
 
383

 
(21
)
 
383

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
(11
)
 
524

 
(47
)
 
1,302

 
(58
)
 
1,826

Non-agency
 
(3
)
 
400

 
(6
)
 
333

 
(9
)
 
733

Asset-backed
 
(4
)
 
1,697

 
(4
)
 
462

 
(8
)
 
2,159

Other debt
 
(3
)
 
966

 
(14
)
 
798

 
(17
)
 
1,764

Total debt securities available for sale
 
$
(110
)
 
$
17,837

 
$
(336
)
 
$
14,697

 
$
(446
)
 
$
32,534

Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
(3
)
 
$
195

 
$
(10
)
 
$
255

 
$
(13
)
 
$
450

Residential mortgage-backed - Agency
 
(10
)
 
3,167

 
(129
)
 
6,168

 
(139
)
 
9,335

Other debt
 
(12
)
 
83

 
(8
)
 
67

 
(20
)
 
150

Total debt securities held to maturity
 
$
(25
)
 
$
3,445

 
$
(147
)
 
$
6,490

 
$
(172
)
 
$
9,935



Evaluating Investment Securities for Other-than-Temporary Impairments
For the securities in Table 46, as of December 31, 2018 we do not intend to sell and believe we will not be required to sell the securities prior to recovery of the amortized cost basis.
On at least a quarterly basis, we review all debt securities that are in an unrealized loss position for OTTI, as discussed in Note 1 Accounting Policies. For those securities on our balance sheet at December 31, 2018, where during our quarterly security-level impairment assessments we determined losses represented OTTI, we have recorded cumulative credit losses of $1.1 billion in earnings and accordingly have reduced the amortized cost of our securities.
The majority of these cumulative impairment charges related to non-agency residential mortgage-backed and asset-backed securities rated BB or lower. During 2018, 2017 and 2016, the OTTI credit losses recognized in noninterest income and the OTTI noncredit losses recognized in AOCI on securities were not significant.

Information relating to gross realized securities gains and losses from the sales of securities is set forth in the following table.
Table 47: Gains (Losses) on Sales of Securities Available for Sale
Year ended December 31
In millions
Gross Gains

 
Gross Losses

 
Net Gains

 
Tax Expense

 
2018
$
57

 
$
(57
)
 
 
 
 
 
2017
$
38

 
$
(31
)
 
$
7

 
$
2

 
2016
$
24

 
$
(8
)
 
$
16

 
$
6

 
The following table presents, by remaining contractual maturity, the amortized cost, fair value and weighted-average yield of debt securities at December 31, 2018.
Table 48: Contractual Maturity of Debt Securities
December 31, 2018
 
1 Year or
Less

 
After 1 Year
through 5 Years

 
After 5 Years
through 10 Years

 
After 10
Years

 
Total

Dollars in millions
 
 
 
 
 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
$
678

 
$
13,285

 
$
3,546

 
$
595

 
$
18,104

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
Agency
 
1

 
64

 
629

 
28,719

 
29,413

Non-agency
 
 
 
 
 
 
 
1,924

 
1,924

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
Agency
 
4

 
596

 
306

 
1,724

 
2,630

Non-agency
 
 
 
 
 
425

 
2,264

 
2,689

Asset-backed
 
26

 
2,118

 
1,674

 
1,115

 
4,933

Other debt
 
572

 
1,616

 
713

 
920

 
3,821

Total debt securities available for sale
 
$
1,281

 
$
17,679

 
$
7,293

 
$
37,261

 
$
63,514

Fair value
 
$
1,277

 
$
17,567

 
$
7,343

 
$
37,202

 
$
63,389

Weighted-average yield, GAAP basis
 
2.33
%
 
2.27
%
 
3.03
%
 
3.19
%
 
2.90
%
Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government agencies
 
 
 
 
 
$
487

 
$
271

 
$
758

Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
Agency
 
 
 
$
74

 
529

 
15,137

 
15,740

Non-agency
 
 
 
 
 
 
 
152

 
152

Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
Agency
 
$
46

 
42

 
4

 
51

 
143

Non-agency
 
 
 
 
 
 
 
488

 
488

Asset-backed
 
 
 
12

 
100

 
70

 
182

Other debt
 
24

 
573

 
790

 
462

 
1,849

Total debt securities held to maturity
 
$
70

 
$
701

 
$
1,910

 
$
16,631

 
$
19,312

Fair value
 
$
70

 
$
713

 
$
1,948

 
$
16,288

 
$
19,019

Weighted-average yield, GAAP basis
 
4.79
%
 
3.81
%
 
3.55
%
 
3.31
%
 
3.35
%


Weighted-average yields are based on historical cost with effective yields weighted for the contractual maturity of each security. At December 31, 2018, there were no securities of a single issuer, other than FNMA, that exceeded 10% of Total shareholders’ equity. The FNMA investments had a total amortized cost of $37.4 billion and fair value of $36.8 billion.
The following table presents the fair value of securities that have been either pledged to or accepted from others to collateralize outstanding borrowings.
Table 49: Fair Value of Securities Pledged and Accepted as Collateral
In millions
December 31
2018

 
December 31
2017

Pledged to others
$
7,597

 
$
8,175

Accepted from others:
 
 
 
Permitted by contract or custom to sell or repledge (a)
$
6,905

 
$
1,152

Permitted amount repledged to others
$
923

 
$
1,097


(a)
Includes $6.0 billion in fair value of securities accepted from others to collateralize short-term investments in resale agreements at December 31, 2018 that were not repledged to others.

The securities pledged to others include positions held in our portfolio of investment securities, trading securities, and securities accepted as collateral from others that we are permitted by contract or custom to sell or repledge and were used to secure public and trust deposits and repurchase agreements, as well as for other purposes.