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SECURITIES | 12 Months Ended
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Dec. 31, 2024
Investments, Debt and Equity Securities [Abstract] |
SECURITIES | NOTE 4 - SECURITIES Investments include debt, equity and other securities. The Company classifies debt securities as AFS, HTM, or trading based on management’s intent to hold to maturity at the time of purchase. Management reserves the right to change the initial classification of a security based on its intent to hold to maturity or as permitted by periodic changes in accounting guidance. Equity securities are recorded at fair value or at cost if there is not a readily determinable fair value. Debt securities that will be held for indefinite periods of time and may be sold in response to changes in liquidity, interest rates or prepayment risk, among other factors, are classified as AFS and reported at fair value, with unrealized gains and losses, net of taxes, reported in AOCI. Gains and losses on the sale of AFS securities are recognized in noninterest income in the Consolidated Statements of Operations and are computed using the specific identification method. Debt securities for which the Company has the ability and intent to hold to maturity are classified as HTM and reported at amortized cost. Transfers of debt securities to the HTM classification are recognized at fair value at the date of transfer. Interest income for AFS and HTM debt securities is recorded on the accrual basis, including the amortization of premiums and the accretion of discounts, utilizing the effective interest method over the estimated lives of the individual securities. The Company uses actual prepayment experience and estimates of future prepayments to determine the constant effective yield necessary to apply the effective interest method of income recognition. Estimates of future prepayments are based on the underlying collateral characteristics of each security and are derived from market sources. Judgment is involved in making determinations about prepayment expectations and in changing those expectations in response to changes in interest rates and macroeconomic conditions. Securities classified as trading are held principally for sale in the near-term and carried at fair value, with changes in fair value recognized in earnings. Realized and unrealized gains and losses on such securities are reported in noninterest income in the Consolidated Statements of Operations. Equity securities primarily consist of FHLB and FRB stock carried at cost and money market mutual fund investments held by the Company’s broker-dealers carried at fair value with changes in fair value recognized in noninterest income. Equity securities are recorded in other assets on the Consolidated Balance Sheets, with those carried at cost reviewed at least annually for impairment. Valuation adjustments, to the extent necessary, are reported in noninterest income in the Consolidated Statements of Operations. The following table presents the major components of securities at amortized cost and fair value:
| December 31, 2024 |  | December 31, 2023
(dollars in millions) | Amortized Cost(1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |  | Amortized Cost(1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value
U.S. Treasury and other | $3,631 |  | $3 |  | ($109) |  | $3,525 |  |  | $4,493 |  | $26 |  | ($139) |  | $4,380 |
State and political subdivisions | 1 |  | — |  | — |  | 1 |  |  | 1 |  | — |  | — |  | 1 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Federal agencies and U.S. government sponsored entities | 30,897 |  | 33 |  | (2,135) |  | 28,795 |  |  | 26,289 |  | 45 |  | (1,857) |  | 24,477 |
Other/non-agency | 273 |  | — |  | (13) |  | 260 |  |  | 279 |  | — |  | (24) |  | 255 |
Total mortgage-backed securities | 31,170 |  | 33 |  | (2,148) |  | 29,055 |  |  | 26,568 |  | 45 |  | (1,881) |  | 24,732 |
Collateralized loan obligations | 184 |  | — |  | — |  | 184 |  |  | 667 |  | — |  | (3) |  | 664 |
Total debt securities available for sale, at fair value | $34,986 |  | $36 |  | ($2,257) |  | $32,765 |  |  | $31,729 |  | $71 |  | ($2,023) |  | $29,777 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |
Federal agencies and U.S. government sponsored entities | $8,187 |  | $— |  | ($1,051) |  | $7,136 |  |  | $8,696 |  | $9 |  | ($818) |  | $7,887 |
Total mortgage-backed securities | 8,187 |  | — |  | (1,051) |  | 7,136 |  |  | 8,696 |  | 9 |  | (818) |  | 7,887 |
Asset-backed securities | 412 |  | 1 |  | (9) |  | 404 |  |  | 488 |  | — |  | (25) |  | 463 |
Total debt securities held to maturity | $8,599 |  | $1 |  | ($1,060) |  | $7,540 |  |  | $9,184 |  | $9 |  | ($843) |  | $8,350 |
Equity securities, at cost(2) | $710 |  | $— |  | $— |  | $710 |  |  | $869 |  | $— |  | $— |  | $869 |
Equity securities, at fair value(2) | 220 |  | — |  | — |  | 220 |  |  | 173 |  | — |  | — |  | 173 |
(1) Excludes portfolio level basis adjustments of $(75) million and $60 million, respectively, for securities designated in active fair value hedge relationships under the portfolio layer method at December 31, 2024 and 2023. (2) Included in other assets in the Consolidated Balance Sheets. Accrued interest receivable on debt securities totaled $125 million as of December 31, 2024 and 2023 and is included in other assets in the Consolidated Balance Sheets. The following table presents the amortized cost and fair value of debt securities by contractual maturity as of December 31, 2024. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.
| Distribution of Maturities
(dollars in millions) | 1 Year or Less | After 1 Year through 5 Years | After 5 Years through 10 Years | After 10 Years | Total
Amortized cost: |  |  |  |  |
U.S. Treasury and other | $— |  | $3,115 |  | $516 |  | $— |  | $3,631 |
State and political subdivisions | — |  | — |  | — |  | 1 |  | 1 |
Mortgage-backed securities: |  |  |  |  |
Federal agencies and U.S. government sponsored entities | — |  | 2,221 |  | 1,151 |  | 27,525 |  | 30,897 |
Other/non-agency | — |  | — |  | — |  | 273 |  | 273 |
Collateralized loan obligations | — |  | — |  | 100 |  | 84 |  | 184 |
Total debt securities available for sale | — |  | 5,336 |  | 1,767 |  | 27,883 |  | 34,986 |
Mortgage-backed securities: |  |  |  |  |
Federal agencies and U.S. government sponsored entities | — |  | — |  | — |  | 8,187 |  | 8,187 |
Asset-backed securities | — |  | 412 |  | — |  | — |  | 412 |
Total debt securities held to maturity | — |  | 412 |  | — |  | 8,187 |  | 8,599 |
Total amortized cost of debt securities | $— |  | $5,748 |  | $1,767 |  | $36,070 |  | $43,585 |
Fair value: |  |  |  |  |
U.S. Treasury and other | $— |  | $3,008 |  | $517 |  | $— |  | $3,525 |
State and political subdivisions | — |  | — |  | — |  | 1 |  | 1 |
Mortgage-backed securities: |  |  |  |  |
Federal agencies and U.S. government sponsored entities | — |  | 2,135 |  | 1,079 |  | 25,581 |  | 28,795 |
Other/non-agency | — |  | — |  | — |  | 260 |  | 260 |
Collateralized loan obligations | — |  | — |  | 100 |  | 84 |  | 184 |
Total debt securities available for sale | — |  | 5,143 |  | 1,696 |  | 25,926 |  | 32,765 |
Mortgage-backed securities: |  |  |  |  |
Federal agencies and U.S. government sponsored entities | — |  | — |  | — |  | 7,136 |  | 7,136 |
Asset-backed securities | — |  | 404 |  | — |  | — |  | 404 |
Total debt securities held to maturity | — |  | 404 |  | — |  | 7,136 |  | 7,540 |
Total fair value of debt securities | $— |  | $5,547 |  | $1,696 |  | $33,062 |  | $40,305 |
Taxable interest income from investment securities as presented in the Consolidated Statements of Operations was $1.7 billion, $1.2 billion and $840 million for the years ended December 31, 2024, 2023 and 2022, respectively. The following table presents realized gains and losses on sale of securities:
| Year Ended December 31,
(dollars in millions) | 2024 |  | 2023 |  | 2022
Gains | $32 |  |  | $36 |  |  | $13 |
Losses | (14) |  |  | (8) |  |  | (4) |
Securities gains, net | $18 |  |  | $28 |  |  | $9 |
The following table presents the amortized cost and fair value of debt securities pledged:
| December 31, 2024 |  | December 31, 2023
(dollars in millions) | Amortized Cost | Fair Value |  | Amortized Cost | Fair Value
Pledged against derivatives, to qualify for fiduciary powers, or to secure public and other deposits as required by law | $3,975 |  | $3,644 |  |  | $5,619 |  | $5,305 |
Pledged as collateral for FHLB borrowing capacity | 237 |  | 224 |  |  | 242 |  | 220 |
Pledged against repurchase agreements | — |  | — |  |  | — |  | — |
From time to time, the Company may enter into security repurchase agreements with unrelated counterparties, which involve the transfer of a security from one party to another, and a subsequent transfer of substantially the same security back to the original party. These repurchase agreements are typically short-term in nature and are accounted for as secured borrowed funds in the Company’s Consolidated Balance Sheets. The Company recognized no offsetting short-term receivables or payables associated with security repurchase agreements as of December 31, 2024 or 2023. Securitizations of mortgage loans retained in the investment portfolio for the years ended December 31, 2024 and 2023 were $329 million and $102 million, respectively. These securitizations include a substantive guarantee by a third party. The guarantors were FNMA and FHLMC in 2024 and 2023. The debt securities received from the guarantors are classified as AFS. Impairment Upon purchase, and at each subsequent measurement date, the Company is required to evaluate HTM securities for risk of loss over their life and establish an associated reserve, if necessary. Recognition of a reserve for expected credit losses is not required if the Company does not expect to realize a loss (commonly referred to as “zero expected credit losses”). The Company evaluated its existing HTM portfolio as of December 31, 2024 and concluded that 95% of HTM securities met the zero expected credit loss criteria and, therefore, no ACL was recognized. Lifetime expected credit losses on the remainder of the HTM portfolio were determined to be insignificant based on the modeling of the Company’s credit loss position in the securities. The Company monitors the credit exposure through the use of credit quality indicators. For these securities, the Company uses external credit ratings or an internally derived credit rating when an external rating is not available. All securities were determined to be investment grade at December 31, 2024. AFS debt securities are reviewed for impairment at the individual security level on a quarterly basis, or more frequently if a potential loss triggering event occurs. The initial indicator of impairment for AFS debt securities is a decline in fair value below its amortized cost basis. An impairment loss is recognized for any security that has declined in fair value below its amortized cost basis if management has the intent to sell the security or if it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. Estimating the recovery of the amortized cost basis of a debt security is based on an assessment of the present value of the cash flows expected to be collected, discounted at the security’s original effective yield. If the present value of the cash flows is less than the amortized cost basis then impairment equal to the shortfall in cash flows has occurred and the Company must evaluate whether the impairment is attributable to credit-related factors. If credit-related factors exist, a credit-related impairment has occurred regardless of the Company’s intent to hold the security until it recovers. The credit-related portion of impairment is recognized as provision expense through the establishment of an allowance for AFS securities, to the extent the allowance does not reduce the carrying value of the AFS security below its current fair value. The remaining non-credit related portion of impairment is recognized in OCI. Improvement in credit losses in subsequent periods results in a reversal of the allowance for AFS securities and a corresponding decrease to provision expense, to the extent the allowance does not become negative. Accrued interest receivable on AFS debt securities is excluded from the balances used to calculate the allowance for AFS securities. All accrued and uncollected interest is immediately reversed against interest income when it is deemed uncollectible. The following tables present AFS debt securities with fair values below their respective carrying values, separated by the duration the securities have been in a continuous unrealized loss position:
| December 31, 2024
| Less than 12 Months |  | 12 Months or Longer |  | Total
(dollars in millions) | Fair Value | Gross Unrealized Losses |  | Fair Value | Gross Unrealized Losses |  | Fair Value | Gross Unrealized Losses
U.S. Treasury and other | $— |  | $— |  |  | $2,544 |  | ($109) |  |  | $2,544 |  | ($109) |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Federal agencies and U.S. government sponsored entities | 9,560 |  | (265) |  |  | 14,304 |  | (1,870) |  |  | 23,864 |  | (2,135) |
Other/non-agency | — |  | — |  |  | 260 |  | (13) |  |  | 260 |  | (13) |
Total mortgage-backed securities | 9,560 |  | (265) |  |  | 14,564 |  | (1,883) |  |  | 24,124 |  | (2,148) |
Collateralized loan obligations | — |  | — |  |  | — |  | — |  |  | — |  | — |
Total | $9,560 |  | ($265) |  |  | $17,108 |  | ($1,992) |  |  | $26,668 |  | ($2,257) |
| December 31, 2023
| Less than 12 Months |  | 12 Months or Longer |  | Total
(dollars in millions) | Fair Value | Gross Unrealized Losses |  | Fair Value | Gross Unrealized Losses |  | Fair Value | Gross Unrealized Losses
U.S. Treasury and other | $49 |  | $— |  |  | $3,245 |  | ($139) |  |  | $3,294 |  | ($139) |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Federal agencies and U.S. government sponsored entities | 2,939 |  | (24) |  |  | 16,398 |  | (1,833) |  |  | 19,337 |  | (1,857) |
Other/non-agency | — |  | — |  |  | 255 |  | (24) |  |  | 255 |  | (24) |
Total mortgage-backed securities | 2,939 |  | (24) |  |  | 16,653 |  | (1,857) |  |  | 19,592 |  | (1,881) |
Collateralized loan obligations | 56 |  | — |  |  | 607 |  | (3) |  |  | 663 |  | (3) |
Total | $3,044 |  | ($24) |  |  | $20,505 |  | ($1,999) |  |  | $23,549 |  | ($2,023) |
The Company does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to recovery of their amortized cost bases. The Company determined that credit losses are not expected to be incurred on the AFS debt securities identified with unrealized losses as of December 31, 2024. The unrealized losses on these debt securities reflect non-credit-related factors driven by changes in interest rates. Therefore, the Company determined that these debt securities are not impaired.

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