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Note 5 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
2008 2007
Held-to-maturity (a)
Mortgage-backed securities ............... $ 5 $ – $ – $ 5 $ 6 $ – $ – $ 6
Obligations of state and political subdivisions. . . . 38 2 (1) 39 56 4 – 60
Other debt securities . .................. 10 – – 10 12 – – 12
Total held-to-maturity securities .......... $ 53 $ 2 $ (1) $ 54 $ 74 $ 4 $ – $ 78
Available-for-sale (b)
U.S. Treasury and agencies ............... $ 664 $ 18 $ – $ 682 $ 407 $ 1 $ (3) $ 405
Mortgage-backed securities ............... 31,266 429 (1,562) 30,133 31,300 48 (745) 30,603
Asset-backed securities (c) ............... 616 8 (14) 610 2,922 6 – 2,928
Obligations of state and political subdivisions. . . . 7,220 4 (808) 6,416 7,131 18 (94) 7,055
Other securities and investments . .......... 2,517 1 (891) 1,627 2,346 5 (300) 2,051
Total available-for-sale securities ......... $42,283 $460 $(3,275) $39,468 $44,106 $78 $(1,142) $43,042
(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 accumulated other comprehensive income (loss) 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 7.7 years at December 31, 2008,
and 7.4 years at December 31, 2007. The corresponding
weighted-average yields were 4.56 percent and 5.51 percent,
respectively. The weighted-average maturity of the held-to-
maturity investment securities was 8.5 years at
December 31, 2008, and 8.3 years at December 31, 2007.
The corresponding weighted-average yields were
5.78 percent and 5.92 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, 2008, refer to Table 11
included in Management’s Discussion and Analysis which is
incorporated by reference into these Notes to Consolidated
Financial Statements.
Securities with carrying amounts of $33.4 billion at
December 31, 2008, and $39.6 billion at December 31,
2007, were pledged to secure public, private and trust
deposits, repurchase agreements, derivative positions and for
other purposes required by law. Included in these amounts
were securities sold under agreements to repurchase where
the buyer/lender has the right to sell or pledge the securities
and which were collateralized by securities with a carrying
amount of $9.5 billion at December 31, 2008, and
$10.5 billion at December 31, 2007, 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) 2008 2007 2006
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,666 $1,833 $1,882
Non-taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 262 119
Total interest income from investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,984 $2,095 $2,001
U.S. BANCORP 77