XML 22 R10.htm IDEA: XBRL DOCUMENT
v3.20.2

Investments | 9 Months Ended
--- | ---
Sep. 30, 2020
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments Trading Investments In March 2020, we sold approximately $1.7 billion of Private Education Loans through securitization transactions where we were required to retain a 5 percent vertical risk retention interest (i.e., 5 percent of each class issued in the securitizations). We classified those vertical risk retention interests related to the transactions as available-for-sale investments, except for the interest in the residual classes, which we classified as trading investments recorded at fair value with changes recorded through earnings. At September 30, 2020, we had $15 million classified as trading investments. Available-for-Sale Investments The amortized cost and fair value of securities available for sale are as follows:
|  | September 30, 2020 |  |  |  |  |  |  |  |
|  | Amortized Cost |  | Allowance for credit losses(1) |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Available-for-sale: |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 308,757 |  |  | $ | — |  |  | $ | 5,670 |  |  | $ | (100) |  |  | $ | 314,327 |
Utah Housing Corporation bonds |  | 12,357 |  |  | — |  |  | 170 |  |  | — |  |  | 12,527 |
U.S. government-sponsored enterprises and Treasuries |  | 1,687,856 |  |  | — |  |  | 3,688 |  |  | (10) |  |  | 1,691,534 |
Other securities |  | 72,266 |  |  | — |  |  | 396 |  |  | (343) |  |  | 72,319 |
Total |  | $ | 2,081,236 |  |  | $ | — |  |  | $ | 9,924 |  |  | $ | (453) |  |  | $ | 2,090,707 |
|  | December 31, 2019 |  |  |  |  |  |  |  |
|  | Amortized Cost |  | Allowance for credit losses(1) |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
Available-for-sale: |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | 215,888 |  |  | $ | — |  |  | $ | 1,895 |  |  | $ | (658) |  |  | $ | 217,125 |
Utah Housing Corporation bonds |  | 19,474 |  |  | — |  |  | 145 |  |  | (83) |  |  | 19,536 |
U.S. government-sponsored enterprises |  | 250,394 |  |  | — |  |  | 635 |  |  | (21) |  |  | 251,008 |
Total |  | $ | 485,756 |  |  | $ | — |  |  | $ | 2,675 |  |  | $ | (762) |  |  | $ | 487,669 |
___________ (1) Represents the amount of impairment that has resulted from credit-related factors, and that was recognized in the consolidated balance sheets (as a credit loss expense on available-for-sale securities). The amount excludes unrealized losses related to non-credit factors. The following table summarizes the amount of gross unrealized losses for our available-for-sale securities and the estimated fair value for securities having gross unrealized loss positions, categorized by length of time the securities have been in an unrealized loss position:
|  | Less than 12 months |  |  |  | 12 months or more |  |  |  | Total |  |
|  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value
As of September 30, 2020: |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | (100) |  |  | $ | 26,026 |  |  | $ | — |  |  | $ | — |  |  | $ | (100) |  |  | $ | 26,026 |
Utah Housing Corporation bonds |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
U.S. government-sponsored enterprises and Treasuries |  | (10) |  |  | 76,010 |  |  | — |  |  | — |  |  | (10) |  |  | 76,010 |
Other securities |  | (343) |  |  | 33,918 |  |  | — |  |  | — |  |  | (343) |  |  | 33,918 |
Total |  | $ | (453) |  |  | $ | 135,954 |  |  | $ | — |  |  | $ | — |  |  | $ | (453) |  |  | $ | 135,954 |
As of December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  | $ | (218) |  |  | $ | 25,624 |  |  | $ | (440) |  |  | $ | 42,448 |  |  | $ | (658) |  |  | $ | 68,072 |
Utah Housing Corporation bonds |  | — |  |  | — |  |  | (83) |  |  | 11,097 |  |  | (83) |  |  | 11,097 |
U.S. government-sponsored enterprises |  | (21) |  |  | 14,977 |  |  | — |  |  | — |  |  | (21) |  |  | 14,977 |
Total |  | $ | (239) |  |  | $ | 40,601 |  |  | $ | (523) |  |  | $ | 53,545 |  |  | $ | (762) |  |  | $ | 94,146 |
For available-for-sale debt securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, as well as any guarantees (e.g., guarantees by the U.S. Government) that may be applicable to the security. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security. Our investment portfolio contains mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, with amortized costs of $38 million, $93 million, and $178 million, respectively, at September 30, 2020. We own these securities to meet our requirements under the Community Reinvestment Act (“CRA”). As of September 30, 2020, three of the separate mortgage-backed securities in our investment portfolio had unrealized losses. Approximately 33 percent of our mortgage-backed securities were issued under Ginnie Mae programs that carry a full faith and credit guarantee from the U.S. Government. The remaining securities in our portfolio carry a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. We have the ability and the intent to hold each of these securities for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. As of December 31, 2019, 33 of the 107 separate mortgage-backed securities in our investment portfolio had unrealized losses, and 18 of the 33 securities in a net loss position were issued under Ginnie Mae programs that carry a full faith and credit guarantee from the U.S. Government. The remainder carried a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. We also invest in Utah Housing Corporation bonds for the purpose of complying with the CRA. As of September 30, 2020, none of the three separate bonds was in a net loss position. These bonds are rated Aa3 by Moody’s Investors Service, and the majority of the underlying assets are insured by the Federal Housing Administration or the Department of Veterans Affairs. Based on this qualitative analysis, we have determined that no credit impairment exists. We also invest in U.S. government-sponsored enterprise securities issued by the Federal Home Loan Bank, Freddie Mac, and the Federal Farm Credit Bank. As of September 30, 2020, two of the 32 securities had unrealized losses. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. These bonds are rated AA+ by Moody’s Investors Service. Based on this qualitative analysis, we have determined that no credit impairment exists. In March 2020, we sold approximately $1.7 billion of Private Education Loans through a securitization transaction where we were required to retain a 5 percent vertical risk retention interest. We classify the non-residual vertical retention interests as available-for-sale investments. As of September 30, 2020, eight out of 10 of these investments had unrealized losses. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. We expect to receive all contractual cash flows related to these investments and do not consider a credit impairment to exist. As of September 30, 2020, the amortized cost and fair value of securities, by contractual maturities, are summarized below. Contractual maturities versus actual maturities may differ due to the effect of prepayments.
Year of Maturity |  | Amortized Cost |  | Estimated Fair Value
2020 |  | $ | 214,950 |  |  | $ | 214,970 |
2021 |  | 454,287 |  |  | 455,932 |
2022 |  | 878,920 |  |  | 880,483 |
2023 |  | 139,699 |  |  | 140,147 |
2038 |  | 172 |  |  | 195 |
2039 |  | 2,058 |  |  | 2,271 |
2042 |  | 5,738 |  |  | 5,750 |
2043 |  | 9,572 |  |  | 10,027 |
2044 |  | 12,993 |  |  | 13,540 |
2045 |  | 12,176 |  |  | 12,611 |
2046 |  | 19,044 |  |  | 19,485 |
2047 |  | 28,940 |  |  | 29,448 |
2048 |  | 6,907 |  |  | 7,209 |
2049 |  | 56,060 |  |  | 58,279 |
2050 |  | 167,454 |  |  | 168,041 |
2054 |  | 72,266 |  |  | 72,319 |
Total |  | $ | 2,081,236 |  |  | $ | 2,090,707 |
Some mortgage-backed and U.S. government securities have been pledged to the Federal Reserve Bank (the “FRB”) as collateral against any advances and accrued interest under the Primary Credit lending program sponsored by the FRB. We had $748 million and $252 million par value of securities pledged to this borrowing facility at September 30, 2020 and December 31, 2019, respectively, as discussed further in Note 6, “Borrowings.” Other Investments Investments in Non-Marketable Securities We hold investments in non-marketable securities and account for these investments at cost, less impairment, plus or minus observable price changes of identical or similar securities of the same issuer. In the third quarter of 2019, we funded an additional investment in an issuer whose equity securities we purchased in the past. We used the valuation associated with the more recent securities investment to adjust the valuation of our previous investments and, as a result, recorded a gain of $8 million in the third quarter of 2019 on our earlier equity securities investments. As of September 30, 2020 and December 31, 2019, our total investment in the securities of this issuer was $26 million and $26 million, respectively. Low Income Housing Tax Credit Investments We invest in affordable housing projects that qualify for the low income housing tax credit (“LIHTC”), which is designed to promote private development of low income housing. These investments generate a return mostly through realization of federal tax credits. Total carrying value of the LIHTC investments was $55 million at September 30, 2020 and $58 million at December 31, 2019. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $22 million at September 30, 2020 and $29 million at December 31, 2019. Related to these investments, we recognized tax credits and other tax benefits through tax expense of $1 million at September 30, 2020 and $6 million at December 31, 2019. Tax credits and other tax benefits are recognized as part of our annual effective tax rate used to determine tax expense in a given quarter. Accordingly, the portion of a year’s expected tax benefits recognized in any given quarter may differ from 25 percent.

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration