US Bank 2009 Annual Report Download - page 87

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At December 31, 2009, certain investment securities had a fair value below amortized cost. The following table shows the gross
unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and
length of time the individual securities have been in continuous unrealized loss positions, at December 31, 2009:
(Dollars in Millions)
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Less Than 12 Months 12 Months or Greater Total
Held-to-maturity
Obligations of state and political subdivisions ................... $ 1 $ – $ 10 $ (1) $ 11 $ (1)
Total held-to-maturity ................................. $ 1 $ – $ 10 $ (1) $ 11 $ (1)
Available-for-sale
U.S. Treasury and agencies. . ............................. $ 1,911 $ (21) $ 4 $ – $ 1,915 $ (21)
Mortgage-backed securities . . .............................
Residential
Agency . . . ..................................... 6,463 (40) 2,290 (7) 8,753 (47)
Non-agency
Prime........................................ 20 (5) 1,346 (198) 1,366 (203)
Non-prime..................................... 237 (74) 682 (328) 919 (402)
Commercial . . ..................................... 6 (1) – – 6 (1)
Asset-backed securities
Collateralized debt obligations/Collateralized loan obligations . ...... 26 (3) 2 (2) 28 (5)
Other ........................................... 20 (6) 21 (9) 41 (15)
Obligations of state and political subdivisions ................... 1,829 (25) 2,384 (134) 4,213 (159)
Corporate debt securities . . . ............................. 21 (12) 857 (289) 878 (301)
Perpetual preferred securities ............................. 4 – 308 (90) 312 (90)
Other investments ..................................... 179 (12) 6 (1) 185 (13)
Total available-for-sale. . ............................. $10,716 $(199) $7,900 $(1,058) $18,616 $(1,257)
The Company does not consider these unrealized losses
to be credit-related. These unrealized losses relate to changes
in interest rates and market spreads subsequent to purchase.
A substantial portion of securities that have unrealized losses
are either corporate debt or non-agency mortgage-backed
securities issued with high investment grade credit ratings. In
general, the issuers of the investment securities are
contractually prohibited from prepayment at less than par,
and the Company did not pay significant purchase premiums
for these securities. At December 31, 2009, the Company
had no plans to sell securities with unrealized losses and
believes it is more likely than not it would not be required to
sell such securities before recovery of their amortized cost.
U.S. BANCORP 85