v3.25.2
Investment Securities
 6 Months Ended
Jun. 30, 2025
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
2. INVESTMENT SECURITIES
The carrying amounts and fair values of investment securities are summarized as follows:
June 30, 2025
Amortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
(in millions)
Held-to-maturity
Tax-exempt$1,369 $2 $(141)$1,230 
Private label residential MBS171 — (33)138 
Total HTM securities$1,540 $2 $(174)$1,368 
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$6,986 $35 $(355)$6,666 
U.S. Treasury securities5,470 38 (4)5,504 
CLO1,895 6 — 1,901 
Private label residential MBS1,164 1 (175)990 
Tax-exempt909 — (113)796 
Commercial MBS issued by GSEs and GNMA604 4 (9)599 
Corporate debt securities391 — (17)374 
Other75 1 (8)68 
Total AFS debt securities$17,494 $85 $(681)$16,898 
December 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
(in millions)
Held-to-maturity
Tax-exempt$1,350 $1 $(180)$1,171 
Private label residential MBS176 — (38)138 
Total HTM securities$1,526 $1 $(218)$1,309 
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$6,225 $16 $(410)$5,831 
U.S. Treasury securities4,385 1 (3)4,383 
Private label residential MBS1,148 — (201)947 
Tax-exempt921 — (76)845 
CLO570 — — 570 
Commercial MBS issued by GSEs and GNMA447 1 (11)437 
Corporate debt securities407 — (21)386 
Other75 1 (7)69 
Total AFS debt securities$14,178 $19 $(729)$13,468 
In addition, the Company held equity securities, which primarily consisted of preferred stock, CRA investments, and common stock, with a fair value of $122 million and $117 million at June 30, 2025 and December 31, 2024, respectively. Unrealized losses of $1.3 million and $1.2 million on equity securities for the three months ended June 30, 2025 and 2024, respectively, and unrealized losses of less than $0.1 million and unrealized gains of $2.7 million for the six months ended June 30, 2025 and 2024, respectively, were recognized in earnings as a component of Fair value gain adjustments, net.
Securities with carrying amounts of approximately $4.9 billion and $4.0 billion at June 30, 2025 and December 31, 2024, respectively, were pledged for various purposes as required or permitted by law.
The following tables summarize the Company's AFS debt securities in an unrealized loss position, aggregated by major security type and length of time in a continuous unrealized loss position: 
June 30, 2025
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$3 $1,061 $352 $1,471 $355 $2,532 
U.S. Treasury securities4 1,948 — — 4 1,948 
Private label residential MBS— — 175 893 175 893 
Tax-exempt— — 113 723 113 723 
Corporate debt securities (1)— — 17 339 17 339 
Commercial MBS issued by GSEs and GNMA1 170 8 66 9 236 
Other4 31 4 16 8 47 
Total AFS securities$12 $3,210 $669 $3,508 $681 $6,718 
(1)Includes securities with an ACL that have a fair value of $8 million and unrealized losses of $1 million.
December 31, 2024
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$18 $1,793 $392 $1,482 $410 $3,275 
U.S. Treasury securities3 2,185 — — 3 2,185 
Private label residential MBS— — 201 939 201 939 
Tax-exempt1 32 75 813 76 845 
Corporate debt securities (1)— — 21 362 21 362 
Commercial MBS issued by GSEs and GNMA10 220 1 16 11 236 
Other2 32 5 25 7 57 
Total AFS securities$34 $4,262 $695 $3,637 $729 $7,899 
(1)Includes securities with an ACL that have a fair value of $8 million and unrealized losses of $1 million.
The total number of AFS debt securities in an unrealized loss position at June 30, 2025 was 680, compared to 796 at December 31, 2024.
On a quarterly basis, the Company performs an impairment analysis on its AFS debt securities in an unrealized loss position at the end of the period to determine whether credit losses should be recognized on these securities.
Qualitative considerations made by the Company in its impairment analysis are further discussed below.
Government Issued Securities
U.S. Treasury securities and commercial and residential MBS are issued by either government agencies or GSEs. These securities are either explicitly or implicitly guaranteed by the U.S. government, and are highly rated by major rating agencies. Further, principal and interest payments on these securities continue to be made on a timely basis.
Non-Government Issued Securities
Qualitative factors used in the Company's credit loss assessment of its securities that are not issued and guaranteed by the U.S. government include consideration of any adverse conditions related to a specific security, industry, or geographic region of its securities, any credit ratings below investment grade, the payment structure of the security and the likelihood of the issuer to be able to make payments that increase in the future, and failure of the issuer to make any scheduled principal or interest payments.
For the Company's corporate debt and tax-exempt securities, the Company also considers various metrics of the issuer including days of cash on hand, the ratio of long-term debt to total assets, the net change in cash between reporting periods, and consideration of any breach in covenant requirements. The Company's corporate debt securities are primarily investment grade, issuers continue to make timely principal and interest payments, and the unrealized losses on these security portfolios primarily relate to changes in interest rates and other market conditions not considered to be credit-related issues. The Company continues to receive timely principal and interest payments on its tax-exempt securities and the majority of these issuers have revenues pledged for payment of debt service prior to payment of other types of expenses.
For the Company's private label residential MBS, which consist of non-agency collateralized mortgage obligations secured by pools of residential mortgage loans, the Company also considers metrics such as securitization risk weight factor, current credit support, whether there were any mortgage principal losses resulting from defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities primarily carry investment grade credit ratings, principal and interest payments on these securities continue to be made on a timely basis, and credit support for these securities is considered adequate.
The Company's CLO portfolio consists of highly rated securitization tranches, containing pools of medium- to large-sized corporate, high-yield loans. These are variable rate securities that have an investment grade rating of Single-A or better. Unrealized losses on these securities are primarily a function of the differential from the offer price and the valuation mid-market price as well as changes in interest rates.
Unrealized losses on the Company's other securities portfolio relate to taxable municipal and trust preferred securities. The Company is continuing to receive timely principal and interest payments on its taxable municipal securities, these securities continue to be highly rated and the number of days of cash on hand is strong. The Company's trust preferred securities are investment grade and the issuers continue to make timely principal and interest payments.
The Company's impairment analysis on its AFS debt securities resulted in recognition of an ACL on certain securities within its Corporate debt portfolio. The following table presents a rollforward of the ACL on these AFS debt securities:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Balance, beginning of period$0.2 $1.3 $0.4 $1.4 
Provision for (recovery of) credit losses0.1 (0.5)(0.1)(0.6)
Charge-offs— — — — 
Recoveries— — — — 
Balance, end of period$0.3 $0.8 $0.3 $0.8 
The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased.
The following table presents a rollforward of the ACL on the Company's HTM tax-exempt debt securities:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Balance, beginning of period$11.6 $8.2 $16.4 $7.8 
Provision for (recovery of) credit losses— 0.5 (4.8)0.9 
Charge-offs— — — — 
Recoveries— — — — 
Balance, end of period$11.6 $8.7 $11.6 $8.7 
No allowance has been recognized on the Company's HTM private label residential MBS as losses are not expected due to the Company holding a senior position in these securities.
Accrued interest receivable on HTM debt securities totaled $5 million at both June 30, 2025 and December 31, 2024 and is excluded from the estimate of expected credit losses.
The following tables summarize the carrying amount of the Company’s investment ratings position, which are updated quarterly and used to monitor the credit quality of the Company's securities: 
June 30, 2025
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Tax-exempt$— $— $— $— $— $— $1,369 $1,369 
Private label residential MBS— — — — — — 171 171 
Total HTM securities (1)$— $— $— $— $— $— $1,540 $1,540 
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$— $— $6,666 $— $— $— $— $6,666 
U.S. Treasury securities— — 5,504 — — — — 5,504 
CLO190 — 1,475 236 — — — 1,901 
Private label residential MBS963 — 27 — — — — 990 
Tax-exempt22 — 327 354 — — 93 796 
Commercial MBS issued by GSEs and GNMA— — 599 — — — — 599 
Corporate debt securities— — — 79 217 78 — 374 
Other— — 11 2 38 1 16 68 
Total AFS securities (1)$1,175 $— $14,609 $671 $255 $79 $109 $16,898 
Trading securities
Residential MBS issued by GSEs and GNMA$— $— $53 $— $— $— $— $53 
Total trading securities (1)$— $— $53 $— $— $— $— $53 
Equity securities
Preferred stock$— $— $— $— $33 $30 $— $63 
Common stock— — — — — — 32 32 
CRA investments— 27 — — — — — 27 
Total equity securities (1)$— $27 $— $— $33 $30 $32 $122 
(1)For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
December 31, 2024
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Tax-exempt$— $— $— $— $— $— $1,350 $1,350 
Private label residential MBS— — — — — — 176 176 
Total HTM securities (1)$— $— $— $— $— $— $1,526 $1,526 
Available-for-sale debt securities
Residential MBS issued by GSEs and GNMA$— $5,831 $— $— $— $— $— $5,831 
U.S. Treasury securities— 4,383 — — — — — 4,383 
Private label residential MBS921 — 26 — — — — 947 
Tax-exempt9 19 348 375 — — 94 845 
CLO50 — 465 55 — — — 570 
Commercial MBS issued by GSEs and GNMA— 437 — — — — — 437 
Corporate debt securities— — — 78 226 82 — 386 
Other— 1 8 2 40 1 17 69 
Total AFS securities (1)$980 $10,671 $847 $510 $266 $83 $111 $13,468 
Equity securities
Preferred stock$— $— $— $— $50 $29 $12 $91 
CRA investments— 26 — — — — — 26 
Total equity securities (1)$— $26 $— $— $50 $29 $12 $117 
(1)For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement. As of June 30, 2025, the Company did not have a significant amount of investment securities that were past due or on nonaccrual status.
The amortized cost and fair value of the Company's debt securities as of June 30, 2025, by contractual maturities are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities.
June 30, 2025
Amortized CostEstimated Fair Value
(in millions)
Held-to-maturity
Due in one year or less$24 $24 
After one year through five years18 18 
After five years through ten years173 162 
After ten years1,154 1,026 
Mortgage-backed securities171 138 
Total HTM securities$1,540 $1,368 
Available-for-sale
Due in one year or less$1,632 $1,630 
After one year through five years1,912 1,909 
After five years through ten years840 828 
After ten years4,356 4,276 
Mortgage-backed securities8,754 8,255 
Total AFS securities$17,494 $16,898 
The following table presents gross gains and losses on sales of investment securities:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(in millions)
Available-for-sale securities
Gross gains$11.8 $2.7 $13.9 $3.6 
Gross losses— (0.4)— (2.2)
Net gain on AFS securities$11.8 $2.3 $13.9 $1.4 
Equity securities
Gross gains $0.2 $— $0.2 $— 
Gross losses(0.6)— (0.6)— 
Net loss on equity securities$(0.4)$— $(0.4)$— 
During the three and six months ended June 30, 2025, the Company sold AFS securities with a carrying value of $2.4 billion and $2.8 billion, respectively, and recognized a net gain of $11.8 million and $13.9 million, respectively. U.S. Treasury securities and MBS were sold to secure gains, including hedged U.S. Treasury securities sold as part of an interest rate swap termination that resulted in a $7.7 million gain. See "Note 12. Derivatives and Hedging Activities" for further discussion of the interest rate swap. During the three and six months ended June 30, 2024, the Company sold securities with a carrying value of $329 million and $1.7 billion, respectively, and recognized a net gain of $2.3 million and $1.4 million, respectively. CLOs were sold as part of the Company's efforts to shift the investment portfolio mix toward high quality liquid assets.