Investment Securities

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Securities

Investment Securities

The following tables summarize the Company's AFS securities:

March 31, 2020 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
AFS securities:
U.S. Treasury	$	2,272	$	47	$	—	$	2,319
GSE	1,846		87		—		1,933
Agency MBS - residential	69,307		2,468		22		71,753
Agency MBS - commercial	1,489		31		1		1,519
States and political subdivisions	513		34		8		539
Non-agency MBS	185		127		14		298
Other	38		—		1		37
Total AFS securities	$	75,650	$	2,794	$	46	$	78,398
December 31, 2019 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
AFS securities:
U.S. Treasury	$	2,275	$	7	$	6	$	2,276
GSE	1,847		34		—		1,881
Agency MBS - residential	67,983		411		158		68,236
Agency MBS - commercial	1,335		13		7		1,341
States and political subdivisions	557		34		6		585
Non-agency MBS	190		178		—		368
Other	40		—		—		40
Total AFS securities	$	74,227	$	677	$	177	$	74,727

Certain securities issued by FNMA and FHLMC exceeded 10% of shareholders' equity at March 31, 2020. The FNMA investments had total amortized cost and fair value of $15.4 billion and $15.9 billion, respectively. The FHLMC investments had total amortized cost and fair value of $11.3 billion and $11.7 billion, respectively.

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 may have the right to prepay their obligations with or without penalties.

	Amortized Cost										Fair Value
March 31, 2020 (Dollars in millions)	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total
AFS securities:
U.S. Treasury	$	1,381	$	876	$	15	$	—	$	2,272	$	1,399	$	903	$	17	$	—	$	2,319
GSE	—		1,769		—		77		1,846		—		1,853		—		80		1,933
Agency MBS - residential	—		1		556		68,750		69,307		—		1		570		71,182		71,753
Agency MBS - commercial	—		2		9		1,478		1,489		—		2		10		1,507		1,519
States and political subdivisions	39		114		151		209		513		39		116		163		221		539
Non-agency MBS	—		—		—		185		185		—		—		—		298		298
Other	2		6		1		29		38		2		6		1		28		37
Total AFS securities	$	1,422	$	2,768	$	732	$	70,728	$	75,650	$	1,440	$	2,881	$	761	$	73,316	$	78,398

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
March 31, 2020 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
GSE	$	3	$	—	$	—	$	—	$	3	$	—
Agency MBS - residential	1,147		13		262		9		1,409		22
Agency MBS - commercial	66		—		35		1		101		1
States and political subdivisions	96		1		121		7		217		8
Non-agency MBS	42		14		—		—		42		14
Other	36		1		—		—		36		1
Total	$	1,390	$	29	$	418	$	17	$	1,808	$	46
	Less than 12 months				12 months or more				Total
December 31, 2019 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
U.S. Treasury	$	702	$	6	$	—	$	—	$	702	$	6
GSE	6		—		—		—		6		—
Agency MBS - residential	20,328		145		1,326		13		21,654		158
Agency MBS - commercial	545		5		124		2		669		7
States and political subdivisions	65		1		144		5		209		6
Total	$	21,646	$	157	$	1,594	$	20	$	23,240	$	177

At March 31, 2020, no ACL was established for AFS securities. Substantially all of the unrealized losses on the securities portfolio were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. The majority 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. The unrealized loss on non-agency MBS was due to a wider discount relative to previous periods on the Re-REMIC tranches to the underlying securities rather than credit. At March 31, 2020, the Company did not intend to sell these securities nor was it more-likely-than-not that the Company would be required to sell these securities before their anticipated recovery or maturity.

The following table presents gross securities gains and losses recognized in earnings:

Three Months Ended March 31, (Dollars in millions)	2020		2019
Gross realized gains	$	—	$	22
Gross realized losses	(2)		(22)
Securities gains (losses), net	$	(2)	$	—