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SECURITIES (Tables)
 9 Months Ended
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Schedule of securities held
The following table presents the major components of securities at amortized cost and fair value:
 
September 30, 2019
 
December 31, 2018
(in millions)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
 
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
U.S. Treasury and other

$120


$—


$—


$120

 

$24


$—


$—


$24

State and political subdivisions
5

—

—

5

 
5

—

—

5

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
Federal agencies and U.S. government sponsored entities
20,434

166

(80
)
20,520

 
20,211

28

(605
)
19,634

Other/non-agency
827

34

(4
)
857

 
236

3

(7
)
232

Total mortgage-backed securities, at fair value
21,261

200

(84
)
21,377

 
20,447

31

(612
)
19,866

Total debt securities available for sale, at fair value

$21,386


$200


($84
)

$21,502

 

$20,476


$31


($612
)

$19,895

Federal agencies and U.S. government sponsored entities

$3,319


$48


($5
)

$3,362

 

$3,425


$—


($132
)

$3,293

Other/non-agency
—

—

—

—

 
740

8

—

748

Total mortgage-backed securities, at cost
3,319

48

(5
)
3,362

 
4,165

8

(132
)
4,041

Total debt securities held to maturity

$3,319


$48


($5
)

$3,362

 

$4,165


$8


($132
)

$4,041

Money market mutual fund investments

$47


$—


$—


$47

 

$181


$—


$—


$181

Total equity securities, at fair value

$47


$—


$—


$47

 

$181


$—


$—


$181

Federal Reserve Bank stock

$577


$—


$—


$577

 

$463


$—


$—


$463

Federal Home Loan Bank stock
149

—

—

149

 
364

—

—

364

Other equity securities
8

—

—

8

 
7

—

—

7

Total equity securities, at cost

$734


$—


$—


$734

 

$834


$—


$—


$834
Schedule of investments classified by maturity date
The amortized cost and fair value of debt securities by contractual maturity as of September 30, 2019 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.
 
September 30, 2019
 
Distribution of Maturities
(in millions)
1 Year or Less
1-5 Years
5-10 Years
After 10 Years
Total

Amortized cost:
 
 
 
 
 
U.S. Treasury and other

$120


$—


$—


$—


$120

State and political subdivisions
—

—

—

5

5

Mortgage-backed securities:
 
 
 
 
 
Federal agencies and U.S. government sponsored entities
—

193

1,683

18,558

20,434

Other/non-agency
4

2

—

821

827

Total debt securities available for sale
124

195

1,683

19,384

21,386

Mortgage-backed securities:
 
 
 
 
 
Federal agencies and U.S. government sponsored entities
—

—

—

3,319

3,319

Total debt securities held to maturity
—

—

—

3,319

3,319

Total amortized cost of debt securities

$124


$195


$1,683


$22,703


$24,705

 
 
 
 
 
 
Fair value:
 
 
 
 
 
U.S. Treasury and other

$120


$—


$—


$—


$120

State and political subdivisions
—

—

—

5

5

Mortgage-backed securities:
 
 
 
 
 
Federal agencies and U.S. government sponsored entities
—

193

1,707

18,620

20,520

Other/non-agency
4

2

—

851

857

Total debt securities available for sale
124

195

1,707

19,476

21,502

Mortgage-backed securities:
 
 
 
 
 
Federal agencies and U.S. government sponsored entities
—

—

—

3,362

3,362

Total debt securities held to maturity
—

—

—

3,362

3,362

Total fair value of debt securities

$124


$195


$1,707


$22,838


$24,864
Schedule of income recognized on investment securities
Realized gains and losses on securities are presented below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2019

 
2018

 
2019

 
2018

Gains on sale of debt securities(1)

$5

 

$3

 

$21

 

$13

Losses on sale of debt securities
—

 
—

 
—

 
—

Debt securities gains, net

$5

 

$3

 

$21

 

$13


(1) For the three and nine months ended September 30, 2019, $2 million and $6 million of gains on sale of debt securities were recognized in mortgage banking fees in the Consolidated Statement of Operations, respectively, as they related to AFS securities held as economic hedges of the value of the MSR portfolio recognized using the amortization method.    
Schedule of financial instruments owned and pledged as collateral

The amortized cost and fair value of debt securities pledged are presented below:
 
September 30, 2019
 
December 31, 2018
(in millions)
Amortized Cost
Fair Value
 
Amortized Cost
Fair Value
Pledged against repurchase agreements

$265


$268

 

$344


$338

Pledged against FHLB borrowed funds
670

701

 
745

752

Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law
3,281

3,282

 
3,592

3,460
Schedule of unrealized loss on investments
The following tables present mortgage-backed debt securities whose fair values are below carrying values, separated by the duration the securities have been in a continuous unrealized loss position:
 
September 30, 2019
 
Less than 12 Months
 
12 Months or Longer
 
Total
(dollars in millions)
Number of Issues
Fair Value
Gross Unrealized Losses
 
Number of Issues
Fair Value
Gross Unrealized Losses
 
Number of Issues
Fair Value
Gross Unrealized Losses
Federal agencies and U.S. government sponsored entities
156


$3,180


($16
)
 
175


$4,907


($69
)
 
331


$8,087


($85
)
Other/non-agency
—

—

—

 
5

32

(4
)
 
5

32

(4
)
Total
156


$3,180


($16
)
 
180


$4,939


($73
)
 
336


$8,119


($89
)

 
December 31, 2018
 
Less than 12 Months
 
12 Months or Longer
 
Total
(dollars in millions)
Number of Issues
Fair Value
Gross Unrealized Losses
 
Number of Issues
Fair Value
Gross Unrealized Losses
 
Number of Issues
Fair Value
Gross Unrealized Losses
Federal agencies and U.S. government sponsored entities
166


$4,881


($89
)
 
429


$15,124


($648
)
 
595


$20,005


($737
)
Other/non-agency
10

139

(1
)
 
11

72

(6
)
 
21

211

(7
)
Total
176


$5,020


($90
)
 
440


$15,196


($654
)
 
616


$20,216


($744
)
Schedule of credit losses recognized in earnings
The following table presents the cumulative credit-related losses recognized in earnings on the Company’s debt securities:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2019

 
2018

 
2019

 
2018

Cumulative balance at beginning of period

$57

 

$81

 

$81

 

$80

Credit impairments recognized in earnings on debt securities that have been previously impaired
1

 
1

 
2

 
3

Reductions due to increases in cash flow expectations on impaired debt securities(1)
—

 
(1
)
 
—

 
(2
)
Reductions for securities sold or matured during the period
(1
)
 
—

 
(26
)
 
—

Cumulative balance at end of period

$57

 

$81

 

$57

 

$81


(1) Reported in interest income from investment securities on the Consolidated Statements of Operations.