Securities

12 Months Ended

Dec. 31, 2013

Securities

Securities

NOTE 2.Securities

			Amortized		Gross Unrealized				Fair
December 31, 2013			Cost		Gains		Losses		Value
			(Dollars in millions)
AFS securities:
	U.S. Treasury		$	595	$	—	$	—	$	595
	MBS issued by GSE			18,397		78		546		17,929
	States and political subdivisions			1,877		65		91		1,851
	Non-agency MBS			264		27		—		291
	Other			46		—		1		45
	Covered			989		404		—		1,393
		Total AFS securities	$	22,168	$	574	$	638	$	22,104
HTM securities:
	U.S. Treasury		$	392	$	—	$	8	$	384
	GSE			5,603		2		397		5,208
	MBS issued by GSE			11,636		38		220		11,454
	States and political subdivisions			33		2		—		35
	Other			437		12		—		449
		Total HTM securities	$	18,101	$	54	$	625	$	17,530

			Amortized		Gross Unrealized				Fair
December 31, 2012			Cost		Gains		Losses		Value
			(Dollars in millions)
AFS securities:
	U.S. Treasury		$	281	$	—	$	—	$	281
	GSE			9		—		—		9
	MBS issued by GSE			20,482		466		18		20,930
	States and political subdivisions			1,948		153		90		2,011
	Non-agency MBS			307		16		11		312
	Other			3		—		—		3
	Covered securities			1,147		444		—		1,591
		Total AFS securities	$	24,177	$	1,079	$	119	$	25,137
HTM securities:
	GSE		$	3,808	$	17	$	1	$	3,824
	MBS issued by GSE			9,273		238		1		9,510
	States and political subdivisions			34		1		1		34
	Other			479		4		3		480
		Total HTM securities	$	13,594	$	260	$	6	$	13,848

As of December 31, 2013 and December 31, 2012, the fair value of covered securities included $1.1 billion and $1.3 billion, respectively, of non-agency MBS and $314 million and $326 million, respectively, of municipal securities.

As of December 31, 2013 and December 31, 2012, securities with carrying values of approximately $11.9 billion and $19.0 billion, respectively, were pledged to secure municipal deposits, securities sold under agreements to repurchase, other borrowings, and for other purposes as required or permitted by law.

Certain investments in marketable debt securities and MBS issued by FNMA and FHLMC exceeded ten percent of shareholders' equity at December 31, 2013. The FNMA investments had total amortized cost and fair value of $13.2 billion and $12.7 billion, respectively. The FHLMC investments had total amortized cost and fair value of $7.1 billion and $7.0 billion, respectively.

The gross realized gains and losses recognized in income on the sale of securities are reflected in the following table:
			Years Ended December 31,
				2013		2012		2011
			(Dollars in millions)
	Gross gains		$	57	$	1	$	175
	Gross losses			(6)		(4)		(1)
		Net realized gains (losses)	$	51	$	(3)	$	174

The following table reflects changes in credit losses on securities with OTTI (excluding covered), which were primarily non-agency MBS, where a portion of the unrealized loss was recognized in OCI. OTTI of $4 million related to covered securities during 2012 is not reflected in this table.

			Years Ended December 31,
			2013		2012		2011
			(Dollars in millions)
Balance at beginning of period			$	98	$	130	$	31
	Credit losses on securities not previously considered
		other-than-temporarily impaired		―		―		1
	Credit losses on securities for which OTTI was previously recognized			―		5		111
	Reductions for securities sold/settled during the period			(20)		(37)		(13)
Balance at end of period			$	78	$	98	$	130

The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table.The expected life of MBS may differ from contractual maturities because borrowers have the right to prepay the underlying mortgage loans with or without prepayment penalties.

		AFS				HTM
		Amortized		Fair		Amortized		Fair
December 31, 2013		Cost		Value		Cost		Value
		(Dollars in millions)
Due in one year or less		$	189	$	189	$	―	$	―
Due after one year through five years			565		573		―		―
Due after five years through ten years			499		519		5,926		5,524
Due after ten years			20,915		20,823		12,175		12,006
	Total debt securities	$	22,168	$	22,104	$	18,101	$	17,530

The following tables present the fair values and gross unrealized losses of investments based on the length of time that individual securities have been in a continuous unrealized loss position:
				Less than 12 months				12 months or more				Total
				Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	December 31, 2013			Value		Losses		Value		Losses		Value		Losses
				(Dollars in millions)
	AFS securities:
		MBS issued by GSE		$	10,259	$	406	$	1,935	$	140	$	12,194	$	546
		States and political subdivisions			232		8		441		83		673		91
		Other			34		1		—		—		34		1
			Total	$	10,525	$	415	$	2,376	$	223	$	12,901	$	638
	HTM securities:
		U.S. Treasury		$	384	$	8	$	—	$	—	$	384	$	8
		GSE			4,996		397		—		—		4,996		397
		MBS issued by GSE			8,800		219		48		1		8,848		220
			Total	$	14,180	$	624	$	48	$	1	$	14,228	$	625

			Less than 12 months				12 months or more				Total
			Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012			Value		Losses		Value		Losses		Value		Losses
			(Dollars in millions)
AFS securities:
	MBS issued by GSE		$	2,662	$	18	$	—	$	—	$	2,662	$	18
	States and political subdivisions			52		1		478		89		530		90
	Non-agency MBS			—		—		113		11		113		11
		Total	$	2,714	$	19	$	591	$	100	$	3,305	$	119
HTM securities:
	GSE		$	805	$	1	$	—	$	—	$	805	$	1
	MBS issued by GSE			593		1		—		—		593		1
	States and political subdivisions			22		1		—		—		22		1
	Other			266		3		—		—		266		3
		Total	$	1,686	$	6	$	—	$	—	$	1,686	$	6

Periodic reviews are conducted to identify and evaluate each investment with an unrealized loss for OTTI. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in AOCI for AFS securities. The unrealized losses on GSE securities and MBS issued by GSE werethe result of increases in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers.

Cash flow modeling is used to evaluate non-agency MBS in an unrealized loss position for potential credit impairment. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance. At December 31, 2013, one non-agency MBSreflected an immaterial unrealized loss and was below investment grade.

At December 31, 2013, $60 million of the unrealized loss on municipal securities was the result of fair value hedge basis adjustments that are a component of amortized cost. Municipal securities in an unrealized loss position are evaluated for credit impairment through a qualitative analysis of issuer performance and the primary source of repayment. The evaluation of municipal securities indicated there were no credit losses evident.