Investment Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Securities

Investment Securities

The following tables summarize the Company's AFS securities:

June 30, 2020 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
AFS securities:
U.S. Treasury	$	2,220	$	40	$	—	$	2,260
GSE	1,844		91		—		1,935
Agency MBS - residential	69,141		2,412		6		71,547
Agency MBS - commercial	1,420		71		—		1,491
States and political subdivisions	499		42		4		537
Other	36		—		1		35
Total AFS securities	$	75,160	$	2,656	$	11	$	77,805
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 June 30, 2020. The FNMA investments had total amortized cost and fair value of $16.5 billion and $17.0 billion, respectively. The FHLMC investments had total amortized cost and fair value of $12.0 billion and $12.4 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
June 30, 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	$	1,353	$	851	$	16	$	—	$	2,220	$	1,365	$	878	$	17	$	—	$	2,260
GSE	13		1,756		—		75		1,844		13		1,842		—		80		1,935
Agency MBS - residential	—		1		519		68,621		69,141		—		1		538		71,008		71,547
Agency MBS - commercial	—		2		10		1,408		1,420		—		2		10		1,479		1,491
States and political subdivisions	47		102		142		208		499		48		105		156		228		537
Other	1		6		1		28		36		1		6		1		27		35
Total AFS securities	$	1,414	$	2,718	$	688	$	70,340	$	75,160	$	1,427	$	2,834	$	722	$	72,822	$	77,805

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
June 30, 2020 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
U.S. Treasury	$	33	$	—	$	—	$	—	$	33	$	—
Agency MBS - residential	160		1		287		5		447		6
Agency MBS - commercial	—		—		21		—		21		—
States and political subdivisions	61		—		52		4		113		4
Other	32		1		—		—		32		1
Total	$	286	$	2	$	360	$	9	$	646	$	11
	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 June 30, 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 following table presents gross securities gains and losses recognized in earnings:

(Dollars in millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Gross realized gains	$	300	$	20	$	300	$	42
Gross realized losses	—		(20)		(2)		(42)
Securities gains (losses), net	$	300	$	—	$	298	$	—

For the second quarter of 2020, the realized gains primarily relate to the sale of non-agency MBS.