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NOTE 4 Investment Securities
The amortized cost, other-than-temporary impairment recorded in other comprehensive income (loss), gross unrealized
holding gains and losses, and fair value of held-to-maturity and available-for-sale investment securities at December 31 were
as follows:
2013 2012
Unrealized Losses Unrealized Losses
(Dollars in Millions)
Amortized
Cost
Unrealized
Gains
Other-than-
Temporary (e) Other (f) Fair Value
Amortized
Cost
Unrealized
Gains
Other-than-
Temporary (e) Other (f) Fair Value
Held-to-maturity (a)
U.S. Treasury and agencies ....... $ 3,114 $ 5 $ – $ (79) $ 3,040 $ 3,154 $ 27 $ – $ – $ 3,181
Mortgage-backed securities
Residential
Agency ....................... 35,671 187 – (665) 35,193 31,064 545 – (6) 31,603
Non-agency non-prime (d) ... 1– –– 1 1– –– 1
Commercial non-agency........ –– –– – 2– –– 2
Asset-backed securities
Collateralized debt obligations/
Collateralized loan
obligations ................... – 9 – – 9 7 15 – – 22
Other ............................ 16 4 (1) (1) 18 19 2 (3) (1) 17
Obligations of state and political
subdivisions .................... 12 – – – 12 20 1 – – 21
Obligations of foreign
governments .................... 7– –– 7 7– –– 7
Other debt securities .............. 99 – – (11) 88 115 – – (17) 98
Total held-to-maturity ......... $38,920 $205 $ (1) $(756) $38,368 $34,389 $ 590 $ (3) $ (24) $34,952
Available-for-sale (b)
U.S. Treasury and agencies ....... $ 1,108 $ 4 $ – $ (67) $ 1,045 $ 1,211 $ 16 $ – $ (1) $ 1,226
Mortgage-backed securities
Residential
Agency ....................... 31,633 449 – (529) 31,553 28,754 746 – (5) 29,495
Non-agency
Prime (c) ................... 486 4 (8) (4) 478 641 3 (16) (4) 624
Non-prime (d) ............. 297 5 (5) – 297 372 4 (20) (1) 355
Commercial agency ............ 148 4 – – 152 185 8 – – 193
Asset-backed securities
Collateralized debt obligations/
Collateralized loan
obligations ................... 20 4 ––24 3210 ––42
Other ............................ 616 13 – – 629 579 14 – (1) 592
Obligations of state and political
subdivisions .................... 5,673 116 – (51) 5,738 6,059 396 – – 6,455
Obligations of foreign
governments .................... 6– –– 6 6– –– 6
Corporate debt securities ......... 734 – – (94) 640 814 2 – (85) 731
Perpetual preferred securities ..... 205 24 – (17) 212 205 27 – (14) 218
Other investments ................. 133 28 – – 161 182 20 – – 202
Total available-for-sale ....... $41,059 $651 $(13) $(762) $40,935 $39,040 $1,246 $(36) $(111) $40,139
(a) Held-to-maturity investment securities are carried at historical cost or at fair value at the time of transfer from the available-for-sale to held-to-maturity category, adjusted for amortization
of premiums and accretion of discounts and credit-related other-than-temporary impairment.
(b) Available-for-sale investment securities are carried at fair value with unrealized net gains or losses reported within accumulated other comprehensive income (loss) in shareholders’
equity.
(c) Prime securities are those designated as such by the issuer at origination. When an issuer designation is unavailable, the Company determines at acquisition date the categorization
based on asset pool characteristics (such as weighted-average credit score, loan-to-value, loan type, prevalence of low documentation loans) and deal performance (such as pool
delinquencies and security market spreads). When the Company determines the designation, prime securities typically have a weighted average credit score of 725 or higher and a
loan-to-value of 80 percent or lower; however, other pool characteristics may result in designations that deviate from these credit score and loan-to-value thresholds.
(d) Includes all securities not meeting the conditions to be designated as prime.
(e) Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.
(f) Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired.
U.S. BANCORP 89