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Investment Securities | 9 Months Ended
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Sep. 30, 2011
Investment Securities [Abstract] |
Investment Securities | 6. Investment Securities Investment securities include debt and equity securities and are classified as available for sale. The Company's investment securities, principally debt securities, are carried at fair value on the Consolidated Balanc e Sheets with unrealized gains (losses) recorded in Accumulated Other Comprehensive Income (AOCI), net of income tax provisions (benefits). Realized gains and losses are recognized in results of operations upon disposition of the securities using the specific identification method on a trade date basis. Refer to Note 3 for a description of the Company's methodology for determining the fair value of its investment securities. The following is a summary of investment securities as of September 30, 2011 and December 31, 2010:
|  |  |  | 2011 |  | 2010
|  |  |  |  |  |  |  | Gross |  |  | Gross |  |  | Estimated |  |  |  |  |  | Gross |  |  | Gross |  |  | Estimated
|  |  |  |  |  |  | Unrealized |  | Unrealized |  |  | Fair |  |  |  | Unrealized |  | Unrealized |  |  | Fair
(Millions) |  |  | Cost |  | Gains |  | Losses |  |  | Value |  | Cost |  | Gains |  | Losses |  |  | Value
State and municipal obligations |  | $ | 5,205 |  | $ | 82 |  | $ | (102) |  | $ | 5,185 |  | $ | 6,140 |  | $ | 24 |  | $ | (367) |  | $ | 5,797
U.S. Government agency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | obligations |  |  | 352 |  |  | 3 |  |  | ― |  |  | 355 |  |  | 3,402 |  |  | 12 |  |  | (1) |  |  | 3,413
U.S. Government treasury |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | obligations |  |  | 1,932 |  |  | 11 |  |  | ― |  |  | 1,943 |  |  | 2,450 |  |  | 6 |  |  | ― |  |  | 2,456
Corporate debt securities(a) |  |  | 1,006 |  |  | 11 |  |  | (3) |  |  | 1,014 |  |  | 1,431 |  |  | 15 |  |  | (1) |  |  | 1,445
Mortgage-backed securities(b) |  |  | 272 |  |  | 16 |  |  | ― |  |  | 288 |  |  | 272 |  |  | 6 |  |  | (2) |  |  | 276
Equity securities(c) |  |  | 98 |  |  | 215 |  |  | ― |  |  | 313 |  |  | 98 |  |  | 377 |  |  | ― |  |  | 475
Foreign government bonds and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | obligations |  |  | 107 |  |  | 6 |  |  | ― |  |  | 113 |  |  | 95 |  |  | 4 |  |  | ― |  |  | 99
Other(d) |  |  | 57 |  |  | 1 |  |  | ― |  |  | 58 |  |  | 49 |  |  | ― |  |  | ― |  |  | 49
Total |  | $ | 9,029 |  | $ | 345 |  | $ | (105) |  | $ | 9,269 |  | $ | 13,937 |  | $ | 444 |  | $ | (371) |  | $ | 14,010
(a) The September 30, 2011 and December 31, 2010 balances include, on a cost basis, $0.9 billion and $1.3 billion, respectively, of corporate debt obligations issued under the Temporary Liquidity Guarantee Program (TLGP) that are guaranteed by the Federal Deposit Insurance Corporation (FDIC). (b) Represents mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. (c) Represents the Company's investment in the Industrial and Commercial Bank of China (ICBC). E ffective August 1, 2011, the Company has hedged its exposure to changes in fair value on its investment in ICBC, and as a result from August 1, 2011, unrealized gains (losses) are recorded in other revenues in the Consolidated Statement of Income. Refer to Note 9 for further information. (d) Other is comprised of investments in various mutual funds. O ther-T han-T emporary I mpairment Realized losses are recognized upon management's determination that a decline in fair value is other than temporary. The determination of other-than-temporary impairment is a subjective process, requiring the use of judgments and assumptions regarding the amount and timing of recovery. The Company reviews and evaluates its investments at least quarterly and more often, as market conditions may require, to identify investments that have indications of other-than-temporary impairments. It is reasonably possible that a change in estimate could occur in the near term relating to other-than-temporary impairment. Accordingly, the Company considers several factors when evaluating debt securities for other-than-temporary impairment including the determination of t he extent to which the decline in fair value of the security is due to increased default risk for the specific issuer or market interest rate risk. With respect to increased default risk, the Company assesses the collect i bility of principal and interest payments by monitoring issuers' credit ratings, related changes to those ratings, specific credit events associated with the individual issuers as well as the credit ratings of a financial guarantor, where applicable, and the extent to which amortized cost exceeds fair value and the duration and size of that difference. With respect to market interest rate risk, including benchmark interest rates and credit spreads, the Company assesses whether it has th e intent to sell the securities and whether it is more likely than not that the Company will not be required to sell the securities before recovery of any unrealized losses. The following table provides information about the Company's investment securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2011 and December 31, 2010:
|  |  |  | 2011 |  | 2010
(Millions) |  | Less than 12 months |  | 12 months or more |  | Less than 12 months |  | 12 months or more
|  |  |  |  |  |  |  | Gross |  |  |  |  |  | Gross |  |  |  |  |  | Gross |  |  |  |  |  | Gross
|  |  |  |  | Estimated |  | Unrealized |  | Estimated |  | Unrealized |  |  | Estimated |  | Unrealized |  | Estimated |  | Unrealized
Description of Securities |  |  | Fair Value |  | Losses |  | Fair Value |  | Losses |  |  | Fair Value |  | Losses |  | Fair Value |  | Losses
State and municipal obligations |  | $ | 370 |  | $ | (10) |  | $ | 1,112 |  | $ | (92) |  | $ | 2,535 |  | $ | (156) |  | $ | 1,076 |  | $ | (211)
U.S. Government agency obligations |  |  | ― |  |  | ― |  |  | ― |  |  | ― |  |  | 299 |  |  | (1) |  |  | ― |  |  | ―
Corporate debt securities |  |  | 95 |  |  | (2) |  |  | 2 |  |  | (1) |  |  | ― |  |  | ― |  |  | 3 |  |  | (1)
Mortgage-backed securities |  |  | ― |  |  | ― |  |  | ― |  |  | ― |  |  | 71 |  |  | (2) |  |  | ― |  |  | ―
Total |  | $ | 465 |  | $ | (12) |  | $ | 1,114 |  | $ | (93) |  | $ | 2,905 |  | $ | (159) |  | $ | 1,079 |  | $ | (212)
The following table summarizes the gross unrealized losses due to temporary impairments by ratio of fair value to amortized cost as of September 30, 2011 and December 31, 2010:
(Dollars in millions) |  | Less than 12 months |  | 12 months or more |  | Total
|  |  |  |  |  |  |  | Gross |  |  |  |  |  |  |  | Gross |  |  |  |  |  |  |  | Gross
Ratio of Fair Value to |  | Number of |  | Estimated |  | Unrealized |  | Number of |  | Estimated |  | Unrealized |  | Number of |  | Estimated |  | Unrealized
Amortized Cost |  | Securities |  | Fair Value |  | Losses |  | Securities |  | Fair Value |  | Losses |  | Securities |  | Fair Value |  | Losses
2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
90%–100% |  | 79 |  | $ | 430 |  | $ | (8) |  | 105 |  | $ | 812 |  | $ | (39) |  | 184 |  | $ | 1,242 |  | $ | (47)
Less than 90% |  | 2 |  |  | 35 |  |  | (4) |  | 32 |  |  | 302 |  |  | (54) |  | 34 |  |  | 337 |  |  | (58)
Total as of September 30, 2011 |  | 81 |  | $ | 465 |  | $ | (12) |  | 137 |  | $ | 1,114 |  | $ | (93) |  | 218 |  | $ | 1,579 |  | $ | (105)
2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
90%–100% |  | 457 |  | $ | 2,554 |  | $ | (113) |  | 31 |  | $ | 79 |  | $ | (7) |  | 488 |  | $ | 2,633 |  | $ | (120)
Less than 90% |  | 48 |  |  | 351 |  |  | (46) |  | 115 |  |  | 1,000 |  |  | (205) |  | 163 |  |  | 1,351 |  |  | (251)
Total as of December 31, 2010 |  | 505 |  | $ | 2,905 |  | $ | (159) |  | 146 |  | $ | 1,079 |  | $ | (212) |  | 651 |  | $ | 3,984 |  | $ | (371)
The gross unrealized losses on state and municipal securities a nd all other debt securities can be attributed to higher credit spreads generally for state and municipal securities, higher credit spreads for specific issuers, changes in market benchmark interest rates, or a combination thereof, all as compared to those prevailing wh en the investment securities were acquired. In assessing default risk on these investment securities, the Company has qualitatively considered the key factors identified above and determined that it expects to collect all of the contractual cash flows due on the investment securities. Overall, for the investment securities in gross unrealized loss positions identified above, (a) the Company does not intend to sell the investment securities, (b) it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and (c) the Company expects that the contractual principal and interest will be received on the investment securities. As a result, the Company recognized no other-than-temporary impairment s during the nine months ended September 30, 2011 or the year ended December 31, 2010. Supplemental Information Gross realized gains on sales of investment securities, included in other non-interest revenues for the three and nine months ended September 30, 2010, were nil and $1 million, respectively (there were no gross realized gains for the three and nine months ended September 30, 2011). Gross realized losses on sales of investment securities, included in other non-interest revenues for both the three and nine months ended September 30, 2010, were nil and $6 million (there were no gross realized losses for the three and nine months ended September 30, 2011). Contractual maturities of investment securities, excluding equity securities and other securities, as of September 30, 2011 we re as follows:
|  |  |  |  |  |  | Estimated
(Millions) |  | Cost |  | Fair Value
Due within 1 year |  | $ | 2,641 |  | $ | 2,649
Due after 1 year but within 5 years |  |  | 728 |  |  | 741
Due after 5 years but within 10 years |  |  | 242 |  |  | 253
Due after 10 years |  |  | 5,263 |  |  | 5,255
Total |  | $ | 8,874 |  | $ | 8,898
The expected payments on state and municipal obligations and mortgage-backed securities may not coincide with their contractual maturities because the issuers have the right to call or prepay certain obligations.

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- Definition Tabular disclosure of available-for-sale securities which consist of all investments in certain debt and equity securities neither classified as trading or held-to-maturity securities. A debt security represents a creditor relationship with an enterprise. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS115-1/124-1 -Paragraph 17 -Subparagraph a, b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62586-112803 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 115 -Paragraph 19, 20, 21 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 03-1 -Paragraph 21 -Subparagraph a, b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27198-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27337-111563 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563 + Details
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