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Note 4 INVESTMENT SECURITIES
The amortized cost, gross unrealized holding gains and losses, and fair value of held-to-maturity and available-for-sale securities
at December 31 was as follows:
December 31 (Dollars in Millions)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
2007 2006
Held-to-maturity (a)
Mortgage-backed securities . .............. $ 6 $ – $ – $ 6 $ 7 $ – $ – $ 7
Obligations of state and political subdivisions. . . . 56 4 – 60 67 5 – 72
Other debt securities ................... 12 – – 12 13 – – 13
Total held-to-maturity securities . . . ....... $ 74 $ 4 $ – $ 78 $ 87 $ 5 $ – $ 92
Available-for-sale (b)
U.S. Treasury and agencies . .............. $ 407 $ 1 $ (3) $ 405 $ 472 $ 1 $ (6) $ 467
Mortgage-backed securities . .............. 31,300 48 (745) 30,603 34,465 103 (781) 33,787
Asset-backed securities (c) . . . ............ 2,922 6 – 2,928 7 – – 7
Obligations of state and political subdivisions. . . . 7,131 18 (94) 7,055 4,463 82 (6) 4,539
Other securities and investments ........... 2,346 5 (300) 2,051 1,223 13 (6) 1,230
Total available-for-sale securities . . ....... $44,106 $78 $(1,142) $43,042 $40,630 $199 $(799) $40,030
(a) Held-to-maturity securities are carried at historical cost adjusted for amortization of premiums and accretion of discounts.
(b) Available-for-sale securities are carried at fair value with unrealized net gains or losses reported within other comprehensive income in shareholders’ equity.
(c) Primarily includes investments in structured investment vehicles with underlying collateral that includes a mix of various mortgage and other asset-backed securities.
The weighted-average maturity of the available-for-sale
investment securities was 7.4 years at December 31, 2007,
compared with 6.6 years at December 31, 2006. The
corresponding weighted-average yields were 5.51 percent
and 5.32 percent, respectively. The weighted-average
maturity of the held-to-maturity investment securities was
8.3 years at December 31, 2007, compared with 8.4 years at
December 31, 2006. The corresponding weighted-average
yields were 5.92 percent and 6.03 percent, respectively.
For amortized cost, fair value and yield by maturity
date of held-to-maturity and available-for-sale securities
outstanding at December 31, 2007, refer to Table 11
included in Management’s Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements.
Securities carried at $39.6 billion at December 31,
2007, and $35.8 billion at December 31, 2006, were
pledged to secure public, private and trust deposits,
repurchase agreements and for other purposes required by
law. Securities sold under agreements to repurchase where
the buyer/lender has the right to sell or pledge the securities
were collateralized by securities with an amortized cost of
$10.5 billion at December 31, 2007, and $9.8 billion at
December 31, 2006, respectively.
The following table provides information as to the amount of interest income from taxable and non-taxable investment
securities:
Year Ended December 31 (Dollars in Millions) 2007 2006 2005
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,833 $1,882 $1,938
Non-taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 119 16
Total interest income from investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,095 $2,001 $1,954
The following table provides information as to the amount of gross gains and losses realized through the sales of available-for-
sale investment securities:
Year Ended December 31 (Dollars in Millions) 2007 2006 2005
Realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 $15 $ 13
Realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (1) (119)
Net realized gains (losses). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 $14 $(106)
Income tax (benefit) on realized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6 $ 5 $ (40)
78 U.S. BANCORP