Securities

6 Months Ended

Jun. 30, 2014

Securities

Securities

NOTE 3.Securities

			Amortized		Gross Unrealized				Fair
June 30, 2014			Cost		Gains		Losses		Value
			(Dollars in millions)
AFS securities:
	U.S. Treasury		$	1,094	$	1	$	—	$	1,095
	MBS issued by GSE			16,512		92		370		16,234
	States and political subdivisions			1,899		113		58		1,954
	Non-agency MBS			247		30		—		277
	Other			43		—		—		43
	Covered			942		391		—		1,333
		Total AFS securities	$	20,737	$	627	$	428	$	20,936
HTM securities:
	U.S. Treasury		$	1,096	$	13	$	—	$	1,109
	GSE			5,604		18		203		5,419
	MBS issued by GSE			13,282		65		76		13,271
	States and political subdivisions			33		2		—		35
	Other			417		13		—		430
		Total HTM securities	$	20,432	$	111	$	279	$	20,264

			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

The fair value of covered securities includednon-agency MBS of $1.0 billion and $1.1 billionas of June 30, 2014 and December 31, 2013, respectively, and state and political subdivisionsecurities of $316 million and $314 million as of June 30, 2014 and December 31, 2013 respectively.

Certain investments in marketable debt securities and MBS issued by FNMA and FHLMC exceeded ten percent of shareholders' equity at June 30, 2014. The FNMA investments had total amortized cost and fair value of $12.4 billion and $12.1 billion, respectively. The FHLMC investments had total amortized cost and fair value of $5.8 billion and $5.6 billion, respectively.

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.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2014		2013		2014		2013
	(Dollars in millions)
Balance at beginning of period	$	76	$	93	$	78	$	98
Credit losses on securities without previously recognized OTTI		―		―		1		―
Reductions for securities sold/settled during the period		(3)		(7)		(6)		(12)
Credit recoveries through yield		(1)		―		(1)		―
Balance at end of period	$	72	$	86	$	72	$	86

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
June 30, 2014		Cost		Value		Cost		Value
		(Dollars in millions)
Due in one year or less		$	491	$	491	$	―	$	―
Due after one year through five years			807		819		1		1
Due after five years through ten years			545		577		6,639		6,467
Due after ten years			18,894		19,049		13,792		13,796
	Total debt securities	$	20,737	$	20,936	$	20,432	$	20,264

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
	June 30, 2014			Value		Losses		Value		Losses		Value		Losses
				(Dollars in millions)
	AFS securities:
		MBS issued by GSE		$	1,977	$	40	$	7,023	$	330	$	9,000	$	370
		States and political subdivisions			—		—		496		58		496		58
			Total	$	1,977	$	40	$	7,519	$	388	$	9,496	$	428
	HTM securities:
		GSE		$	—	$	—	$	4,788	$	203	$	4,788	$	203
		MBS issued by GSE			5,542		69		713		7		6,255		76
			Total	$	5,542	$	69	$	5,501	$	210	$	11,043	$	279

			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

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 or underlying loans.

At June 30, 2014, $48 million of the unrealized loss on states and political subdivisions securities was the result of fair value hedge basis adjustments that are a component of amortized cost. States and political subdivisions 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 state and political subdivision securitiesresulted in the OTTI recognized during the six months ended June 30, 2014.