US Bank 2015 Annual Report Download - page 101

Download and view the complete annual report

Please find page 101 of the 2015 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 173

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173

At December 31, 2015, 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 investment securities with unrealized losses, aggregated by investment category
and length of time the individual investment securities have been in continuous unrealized loss positions, at December 31, 2015:
Less Than 12 Months 12 Months or Greater Total
(Dollars in Millions)
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Held-to-maturity
U.S. Treasury and agencies ........................ $ 1,306 $ (19) $ 60 $ (1) $ 1,366 $ (20)
Residential agency mortgage-backed securities ....... 17,819 (150) 4,156 (123) 21,975 (273)
Other asset-backed securities ...................... – – 6 – 6 –
Obligations of state and political subdivisions .......... – – 2 (1) 2 (1)
Other debt securities ............................. – – 17 (2) 17 (2)
Total held-to-maturity ......................... $19,125 $(169) $4,241 $(127) $23,366 $(296)
Available-for-sale
U.S. Treasury and agencies ........................ $ 2,919 $ (27) $ 8 $ – $ 2,927 $ (27)
Residential mortgage-backed securities
Agency ...................................... 18,603 (171) 6,267 (193) 24,870 (364)
Non-agency(a)
Prime(b) .................................... 59 (1) 107 (3) 166 (4)
Non-prime(c) ................................ – – 17 (1) 17 (1)
Other asset-backed securities ...................... – – 2 – 2 –
Obligations of state and political subdivisions .......... 35 – 62 (2) 97 (2)
Corporate debt securities ......................... – – 425 (70) 425 (70)
Perpetual preferred securities ...................... – – 73 (12) 73 (12)
Other investments ............................... 1 – – – 1 –
Total available-for-sale ........................ $21,617 $(199) $6,961 $(281) $28,578 $(480)
(a) The Company had $5 million of unrealized losses on residential non-agency mortgage-backed securities. Credit-related other-than-temporary impairment on these securities may occur if there
is further deterioration in the underlying collateral pool performance. Borrower defaults may increase if economic conditions worsen. Additionally, deterioration in home prices may increase the
severity of projected losses.
(b) 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).
(c) Includes all securities not meeting the conditions to be designated as prime.
The Company does not consider these unrealized losses
to be credit-related. These unrealized losses primarily relate to
changes in interest rates and market spreads subsequent to
purchase. A substantial portion of investment securities that
have unrealized losses are either corporate debt issued with
high investment grade credit ratings or agency mortgage-
backed securities. 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 investment securities. At December 31,
2015, the Company had no plans to sell investment securities
with unrealized losses, and believes it is more likely than not it
would not be required to sell such investment securities
before recovery of their amortized cost.
—99 —