US Bank 2015 Annual Report Download - page 100

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in Management’s Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements.
Investment securities with a fair value of $13.1 billion at
December 31, 2015, and $12.6 billion at December 31, 2014,
were pledged to secure public, private and trust deposits,
repurchase agreements and for other purposes required by
contractual obligation or law. Included in these amounts were
securities where the Company and certain counterparties
have agreements granting the counterparties the right to sell
or pledge the securities. Investment securities securing these
types of arrangements had a fair value of $1.0 billion at
December 31, 2015, and $856 million at December 31, 2014.
The following table provides information about the amount of interest income from taxable and non-taxable investment securities:
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
Taxable .................................................................................. $1,778 $1,634 $1,375
Non-taxable .............................................................................. 223 232 256
Total interest income from investment securities ............................................... $2,001 $1,866 $1,631
The following table provides information about the amount of gross gains and losses realized through the sales of available-for-sale
investment securities:
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
Realized gains .................................................................................... $7 $11 $23
Realized losses ................................................................................... (6) – –
Net realized gains (losses) ........................................................................ $1 $11 $23
Income tax (benefit) on net realized gains (losses) ....................................................... $– $ 4 $ 9
The Company conducts a regular assessment of its
investment securities with unrealized losses to determine
whether investment securities are other-than-temporarily
impaired considering, among other factors, the nature of the
investment securities, credit ratings or financial condition of
the issuer, the extent and duration of the unrealized loss,
expected cash flows of underlying collateral, the existence of
any government or agency guarantees, market conditions and
whether the Company intends to sell or it is more likely than
not the Company will be required to sell the investment
securities. The Company determines other-than-temporary
impairment recorded in earnings for debt securities not
intended to be sold by estimating the future cash flows of
each individual investment security, using market information
where available, and discounting the cash flows at the original
effective rate of the investment security. Other-than-
temporary impairment recorded in other comprehensive
income (loss) is measured as the difference between that
discounted amount and the fair value of each investment
security. The total amount of other-than-temporary
impairment recorded was immaterial for the years ended
December 31, 2015, 2014 and 2013.
Changes in the credit losses on debt securities are summarized as follows:
Year Ended December 31 (Dollars in Millions) 2015 2014 2013
Balance at beginning of period .................................................................... $101 $116 $134
Additions to Credit Losses Due to Other-than-temporary Impairments
Decreases in expected cash flows on securities for which other-than-temporary impairment was previously
recognized ................................................................................ 1 3 14
Total other-than-temporary impairment on debt securities .......................................... 1 3 14
Other Changes in Credit Losses
Increases in expected cash flows ................................................................ (3) (5) (2)
Realized losses(a) ............................................................................. (15) (13) (23)
Credit losses on security sales and securities expected to be sold ...................................... – – (7)
Balance at end of period ......................................................................... $ 84 $101 $116
(a) Primarily represents principal losses allocated to mortgage and asset-backed securities in the Company’s portfolio under the terms of the securitization transaction documents.
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