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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:
2012 2011
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 ....... $ 3,154 $ 27 $ – $ – $ 3,181 $ 2,560 $ 35 $ – $ – $ 2,595
Mortgage-backed securities
Residential
Agency ....................... 31,064 545 – (6) 31,603 16,085 333 – (3) 16,415
Non-agency non-prime (d) . . . 1 – – – 1 2 – – – 2
Commercial non-agency ........ 2 – – – 2 4 – – (2) 2
Asset-backed securities
Collateralized debt obligations/
Collateralized loan
obligations ................... 7 15 – – 22 52 13 – (2) 63
Other............................ 19 2 (3) (1) 17 23 1 (6) (1) 17
Obligations of state and political
subdivisions .................... 20 1 – – 21 23 1 – (1) 23
Obligations of foreign
governments .................... 7 – – – 7 7 – – – 7
Other debt securities .............. 115 – – (17) 98 121 – – (29) 92
Total held-to-maturity ........ $34,389 $ 590 $ (3) $ (24) $34,952 $18,877 $ 383 $ (6) $ (38) $19,216
Available-for-sale (b)
U.S. Treasury and agencies ....... $ 1,211 $ 16 $ – $ (1) $ 1,226 $ 1,045 $ 13 $ – $ (1) $ 1,057
Mortgage-backed securities
Residential
Agency ....................... 28,754 746 – (5) 29,495 39,337 981 – (4) 40,314
Non-agency
Prime (c) ................... 641 3 (16) (4) 624 911 5 (63) (50) 803
Non-prime (d) .............. 372 4 (20) (1) 355 1,047 9 (247) (7) 802
Commercial
Agency ....................... 185 8 – – 193 133 7 – – 140
Non-agency .................. – – – – – 42 2 – (2) 42
Asset-backed securities
Collateralized debt obligations/
Collateralized loan
obligations ................... 32 10 – – 42 180 31 (3) (2) 206
Other............................ 579 14 – (1) 592 694 16 (5) (24) 681
Obligations of state and political
subdivisions .................... 6,059 396 – – 6,455 6,394 167 – (22) 6,539
Obligations of foreign
governments .................... 6 – – – 6 6 – – – 6
Corporate debt securities ......... 814 2 – (85) 731 1,000 1 – (174) 827
Perpetual preferred securities ..... 205 27 – (14) 218 379 25 – (86) 318
Other investments ................. 182 20 – – 202 188 15 – (1) 202
Total available-for-sale ....... $39,040 $1,246 $(36) $(111) $40,139 $51,356 $1,272 $(318) $(373) $51,937
(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