Quarterly report pursuant to Section 13 or 15(d)

Investment Securities

v2.4.0.8
Investment Securities
 6 Months Ended
Jun. 30, 2013
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Note 8.
Investment Securities

Investment securities on the Condensed Consolidated Balance Sheets include:

•
Investments within the scope of Investment Accounting that are held by ML & Co. and certain of its non-broker-dealer subsidiaries consist of debt securities, which are classified as available-for-sale or as other debt securities carried at fair value, and are used for investment, liquidity management, and/or collateral management purposes.

•
Non-qualifying investments are those that are not within the scope of Investment Accounting and consist principally of equity investments, including investments in partnerships and joint ventures. Included in non-qualifying investments are investments accounted for under the equity method of accounting, which consist of investments in (i) partnerships and certain limited liability corporations where Merrill Lynch has more than a minor influence (generally defined as three to five percent interest) and (ii) corporate entities where Merrill Lynch has the ability to exercise significant influence over the investee (generally defined as ownership and voting interest of 20% to 50%). Also included in non-qualifying investments are private equity investments that Merrill Lynch holds for capital appreciation and/or current income and which are accounted for at fair value in accordance with the Investment Company Guide, as well as private equity investments accounted for at fair value under the fair value option election.
Investment securities reported on the Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012 are presented below.
(dollars in millions)
 
June 30, 2013
 
 
December 31, 2012
Investment securities
 

 
 
 

Available-for-sale
$
612

 
 
$
656

Other debt securities carried at fair value (1)
8,748

 
 
7,722

Non-qualifying
 

 
 
 

       Equity investments
1,789

 
 
2,627

       Other investments
2,928

 
 
2,620

Total
$
14,077

 
 
$
13,625

 
 
 
 
 

(1) During the six months ended June 30, 2013, certain assets that are used for liquidity management purposes were reclassified from Trading assets to Other debt securities carried at fair value. Prior period amounts have also been reclassified to conform with the current period presentation.
For both the three and six months ended June 30, 2013, there were no other-than-temporary impairment ("OTTI") losses related to non-agency mortgage-backed available-for-sale securities. For the three and six months ended June 30, 2012, OTTI losses related to non-agency mortgage-backed available-for-sale securities were $4 million and $6 million, respectively. Net impairment losses recognized in earnings represent the credit component of OTTI losses on available-for-sale debt securities and total OTTI losses for available-for-sale debt securities that Merrill Lynch does not intend to hold to recovery. Those amounts were $0 million for both the three and six months ended June 30, 2013 and $4 million and $6 million for the three and six months ended June 30, 2012, respectively. See Note 1 for Merrill Lynch's accounting policy regarding OTTI of investment securities.
Information regarding investment securities subject to Investment Accounting follows.
(dollars in millions)
 
June 30, 2013
 
Amortized
Cost
 
Fair
Value
Available-for-Sale
 
 
 
Securities, mortgage-backed and asset-backed:
 
 
 
Corporate ABS
$
209

 
$
209

Non-agency mortgage backed securities
1

 
1

Subtotal
210

 
210

U.S. Government and agencies
402

 
402

Total available-for-sale securities
$
612

 
$
612

 
 
 
 

(dollars in millions)
 
December 31, 2012
 
Amortized
Cost
 
Fair
Value
Available-for-Sale
 

 
 

Securities, mortgage-backed and asset-backed:
 

 
 

Corporate ABS
$
226

 
$
226

Non-agency mortgage backed securities
40

 
40

Subtotal
266

 
266

U.S. Government and agencies
390

 
390

Total available-for-sale securities
$
656

 
$
656

 
 
 
 


There were no material gross unrealized gains or losses associated with available-for-sale securities as of June 30, 2013 or December 31, 2012. Additionally, there were no individual securities that had been in a continuous unrealized loss position for a year or more as of June 30, 2013 or December 31, 2012.

The amortized cost and fair value of available-for-sale debt securities by expected maturity for mortgage-backed securities and contractual maturity for other debt securities at June 30, 2013 are as follows:
 
 
Available-for-Sale
 
 
Amortized
Cost
 
Fair
Value
 
Due in one year or less
$
410

 
$
410

 
Due after one year through five years
2

 
2

 
Due after five years through ten years
200

 
200

 
Total(1)
$
612

 
$
612

 
 
 
 
 
 
(1)
Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay their obligations with or without prepayment penalties.
The proceeds and gross realized gains (losses) from the sale of available-for-sale securities were not material during the three or six months ended June 30, 2013 and June 30, 2012.

Equity Method Investments

At June 30, 2013 and December 31, 2012, Merrill Lynch held certain investments that were accounted for under the equity method of accounting, none of which were individually material.