US Bank 2013 Annual Report Download - page 92

The weighted-average maturity of the available-for-sale
investment securities was 6.0 years at December 31, 2013,
compared with 4.1 years at December 31, 2012. The
corresponding weighted-average yields were 2.64 percent
and 2.93 percent, respectively. The weighted-average
maturity of the held-to-maturity investment securities was 4.5
years at December 31, 2013, and 3.3 years at December 31,
2012. The corresponding weighted-average yields were 2.00
percent and 1.94 percent, respectively.
For amortized cost, fair value and yield by maturity date
of held-to-maturity and available-for-sale investment
securities outstanding at December 31, 2013, refer to Table
13 included 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 $17.3 billion at
December 31, 2013, and $20.1 billion at December 31,
2012, 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 delivered under these types of arrangements had
a fair value of $2.1 billion at December 31, 2013, and $3.5
billion at December 31, 2012.
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) 2013 2012 2011
Taxable ............................................................................................................. $1,375 $1,515 $1,517
Non-taxable......................................................................................................... 256 277 303
Total interest income from investment securities ................................................................. $1,631 $1,792 $1,820
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) 2013 2012 2011
Realized gains ......................................................................................................... $23 $158 $11
Realized losses ........................................................................................................ – (99) (7)
Net realized gains (losses) .......................................................................................... $23 $ 59 $ 4
Income tax (benefit) on net realized gains (losses) .................................................................... $9 $23 $2
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 following table summarizes other-than-temporary impairment by investment category:
2013 2012 2011
Year Ended December 31 (Dollars in Millions)
Losses
Recorded in
Earnings
Other Gains
(Losses) (c) Total
Losses
Recorded
in Earnings
Other Gains
(Losses) (c) Total
Losses
Recorded
in Earnings
Other Gains
(Losses) (c) Total
Available-for-sale
Mortgage-backed securities
Non-agency residential
Prime (a) ................................. $ (6) $2 $(4) $(12) $ (9) $(21) $ (3) $ (5) $ (8)
Non-prime (b)............................ (8) 6 (2) (33) 21 (12) (24) (23) (47)
Commercial non-agency ................... – – – (1) (1) (2) – – –
Other asset-backed securities ................ – – – (1) 1 – (4) 3 (1)
Obligations of state and political
subdivisions ................................ – – – – – – (4) – (4)
Perpetual preferred securities ................ – – – (27) – (27) – – –
Total available-for-sale .................. $(14) $8 $(6) $(74) $12 $(62) $(35) $(25) $(60)
(a) 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).
(b) Includes all securities not meeting the conditions to be designated as prime.
(c) Losses represent the non-credit portion of other-than-temporary impairment recorded in other comprehensive income (loss) for investment securities determined to be other-than-
temporarily impaired during the period. Gains represent recoveries in the fair value of securities that had non-credit other-than-temporary impairment during the period.
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