US Bank 2014 Annual Report Download - page 98

NOTE 5 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:
2014 2013
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 ............ $ 2,717 $ 15 $ – $ (18) $ 2,714 $ 3,114 $ 5 $ – $ (79) $ 3,040
Mortgage-backed securities
Residential
Agency ............................ 42,204 335 – (176) 42,363 35,671 187 – (665) 35,193
Non-agency non-prime(d) .......... 1– ––1 1– ––1
Asset-backed securities
Collateralized debt obligations/
Collateralized loan obligations .... –7 ––7 –9 ––9
Other ................................ 13 4 – – 17 16 4 (1) (1) 18
Obligations of state and political
subdivisions ......................... 9 1 – (1) 9 12 – – – 12
Obligations of foreign governments .... 9– ––9 7– ––7
Other debt securities ................... 21 – – (1) 20 99 – – (11) 88
Total held-to-maturity ............ $44,974 $362 $ – $(196) $45,140 $38,920 $205 $ (1) $(756) $38,368
Available-for-sale(b)
U.S. Treasury and agencies ............ $ 2,622 $ 14 $ – $ (4) $ 2,632 $ 1,108 $ 4 $ – $ (67) $ 1,045
Mortgage-backed securities
Residential
Agency ............................ 44,668 593 – (244) 45,017 31,633 449 – (529) 31,553
Non-agency
Prime(c) ......................... 399 9 (2) (1) 405 486 4 (8) (4) 478
Non-prime(d) .................... 261 20 (1) – 280 297 5 (5) – 297
Commercial agency ................. 112 3 – – 115 148 4 – – 152
Asset-backed securities
Collateralized debt obligations/
Collateralized loan obligations .... 18 4 – – 22 20 4 – – 24
Other ................................ 607 13 – (1) 619 616 13 – – 629
Obligations of state and political
subdivisions ......................... 5,604 265 – (1) 5,868 5,673 116 – (51) 5,738
Obligations of foreign governments .... 6– ––6 6– ––6
Corporate debt securities .............. 690 3 – (79) 614 734 – – (94) 640
Perpetual preferred securities ......... 200 27 – (10) 217 205 24 – (17) 212
Other investments ...................... 245 29 – – 274 133 28 – – 161
Total available-for-sale ........... $55,432 $980 $(3) $(340) $56,069 $41,059 $651 $(13) $(762) $40,935
(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.
The weighted-average maturity of the available-for-sale
investment securities was 4.3 years at December 31, 2014,
compared with 6.0 years at December 31, 2013. The
corresponding weighted-average yields were 2.32 percent
and 2.64 percent, respectively. The weighted-average
maturity of the held-to-maturity investment securities was
4.0 years at December 31, 2014, and 4.5 years at
December 31, 2013. The corresponding weighted-average
yields were 1.92 percent and 2.00 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, 2014, 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 $12.6 billion at
December 31, 2014, and $17.3 billion at December 31, 2013,
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 $856 million at
December 31, 2014, and $2.1 billion at December 31, 2013.
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