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Investments | 9 Months Ended
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Sep. 30, 2020
Investments [Abstract] |
Investments | INVESTMENTS Information for reporting periods beginning after January 1, 2020 are presented in accordance with ASC 326 and reflect changes required by the adoption of this standard which includes evaluating held to maturity and available for sale debt securities to determine the need to record a related allowance for credit losses. Prior period information continues to be reported in accordance with previously applicable GAAP. See Note A - Accounting Policies and Basis for Presentation for more detail on our policies and adoption. The amortized cost and fair value of investment securities at September 30, 2020 and December 31, 2019, were as follows:
| September 30, 2020
(Dollars in thousands) | Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Allowance for credit losses |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 654,588 |  |  | $ | 174 |  |  | $ | — |  |  | $ | — |  |  | $ | 654,762 |
Government agency | 659,260 |  |  | 642 |  |  | 4,961 |  |  | — |  |  | 654,941 |
Residential mortgage-backed securities | 5,968,192 |  |  | 101,788 |  |  | 312 |  |  | — |  |  | 6,069,668 |
Commercial mortgage-backed securities | 1,058,640 |  |  | 32,004 |  |  | 434 |  |  | — |  |  | 1,090,210 |
Corporate bonds | 543,868 |  |  | 9,132 |  |  | 2,793 |  |  | — |  |  | 550,207 |
Total investment securities available for sale | $ | 8,884,548 |  |  | $ | 143,740 |  |  | $ | 8,500 |  |  | $ | — |  |  | $ | 9,019,788 |
Investment in marketable equity securities | 100,408 |  |  | 3,353 |  |  | 10,687 |  |  |  |  | 93,074 |
Investment securities held to maturity |  |  |  |  |  |  |  |  |
Residential mortgage-backed securities | 614,489 |  |  | 12,905 |  |  | — |  |  | — |  |  | 627,394 |
Commercial mortgage-backed securities | 130,987 |  |  | 650 |  |  | 35 |  |  |  |  | 131,602 |
Other | 2,256 |  |  | — |  |  | — |  |  | — |  |  | 2,256 |
Total investment securities held to maturity | 747,732 |  |  | 13,555 |  |  | 35 |  |  | — |  |  | 761,252 |
Total investment securities | $ | 9,732,688 |  |  | $ | 160,648 |  |  | $ | 19,222 |  |  | $ | — |  |  | $ | 9,874,114 |
|  |  | December 31, 2019
(Dollars in thousands) |  |  | Cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |  |  |
U.S. Treasury |  |  | $ | 409,397 |  |  | $ | 602 |  |  | $ | — |  |  | $ | 409,999 |
Government agency |  |  | 684,085 |  |  | 928 |  |  | 2,241 |  |  | 682,772 |
Residential mortgage-backed securities |  |  | 5,269,060 |  |  | 13,417 |  |  | 15,387 |  |  | 5,267,090 |
Commercial mortgage-backed securities |  |  | 373,105 |  |  | 6,974 |  |  | 59 |  |  | 380,020 |
Corporate bonds |  |  | 198,278 |  |  | 3,420 |  |  | 132 |  |  | 201,566 |
State, county and municipal |  |  | 118,227 |  |  | — |  |  | — |  |  | 118,227 |
Total investment securities available for sale |  |  | $ | 7,052,152 |  |  | $ | 25,341 |  |  | $ | 17,819 |  |  | $ | 7,059,674 |
Investment in marketable equity securities |  |  | 59,262 |  |  | 23,304 |  |  | 233 |  |  | 82,333 |
Investment securities held to maturity |  |  |  |  |  |  |  |  |
Other |  |  | 30,996 |  |  | — |  |  | — |  |  | 30,996 |
Total investment securities held to maturity |  |  | 30,996 |  |  | — |  |  | — |  |  | 30,996 |
Total investment securities |  |  | $ | 7,142,410 |  |  | $ | 48,645 |  |  | $ | 18,052 |  |  | $ | 7,173,003 |
Investments in residential and commercial mortgage-backed securities represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Investments in government agency securities represent securities issued by the United States Small Business Administration. Investments in corporate bonds and marketable equity securities represent positions in securities of other financial institutions. Other held to maturity investments include certificates of deposit with other financial institutions. BancShares also holds approximately 354,000 shares of Visa Class B common stock. BancShares’ Visa Class B shares are not considered to have a readily determinable fair value and are recorded at $0. BancShares held FHLB stock of $45.4 million and $43.0 million and other non-marketable equity securities of $13.5 million and $12.5 million at September 30, 2020 and December 31, 2019, respectively. These securities are recorded at cost within other assets. As of September 30, 2020 and January 1, 2020, no ACL was required for available for sale and held to maturity debt securities. At September 30, 2020, accrued interest receivables for available for sale and held to maturity debt securities were $23.6 million and $1.7 million, respectively, and were excluded from the estimate of credit losses. During the three and nine months ended September 30, 2020, no accrued interest was deemed uncollectible and written off against interest income. The following table provides the amortized cost and fair value by contractual maturity for investment securities available for sale and held to maturity. Expected maturities will differ from contractual maturities on certain securities because issuers and borrowers of underlying collateral may have the right to call or prepay obligations with or without prepayment penalties.
| September 30, 2020 |  | December 31, 2019
(Dollars in thousands) | Cost |  | Fair value |  | Cost |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 655,609 |  |  | $ | 655,779 |  |  | $ | 406,325 |  |  | $ | 406,927 |
One through five years | 71,262 |  |  | 72,446 |  |  | 24,496 |  |  | 24,971 |
Five through 10 years | 456,620 |  |  | 461,847 |  |  | 185,209 |  |  | 187,868 |
Over 10 years | 14,965 |  |  | 14,897 |  |  | 109,872 |  |  | 110,026 |
Government agency | 659,260 |  |  | 654,941 |  |  | 684,085 |  |  | 682,772 |
Residential mortgage-backed securities | 5,968,192 |  |  | 6,069,668 |  |  | 5,269,060 |  |  | 5,267,090 |
Commercial mortgage-backed securities | 1,058,640 |  |  | 1,090,210 |  |  | 373,105 |  |  | 380,020 |
Total investment securities available for sale | $ | 8,884,548 |  |  | $ | 9,019,788 |  |  | $ | 7,052,152 |  |  | $ | 7,059,674 |
Investment securities held to maturity |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | 1,507 |  |  | 1,507 |  |  | 30,746 |  |  | 30,746 |
One through five years | 749 |  |  | 749 |  |  | 250 |  |  | 250 |
Residential mortgage-backed securities | 614,489 |  |  | 627,394 |  |  | — |  |  | — |
Commercial mortgage-backed securities | 130,987 |  |  | 131,602 |  |  | — |  |  | — |
Total investment securities held to maturity | $ | 747,732 |  |  | $ | 761,252 |  |  | $ | 30,996 |  |  | $ | 30,996 |
The following table provides the gross realized gains and losses on the sales of investment securities available for sale for the three and nine months ended September 30, 2020 and 2019:
| Three months ended September 30 |  | Nine months ended September 30
(Dollars in thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Gross realized gains on sales of investment securities available for sale | $ | 21,425 |  |  | $ | 1,326 |  |  | $ | 55,651 |  |  | $ | 7,045 |
Gross realized losses on sales of investment securities available for sale | — |  |  | 190 |  |  | 679 |  |  | 190 |
Net realized gains on sales of investment securities available for sale | $ | 21,425 |  |  | $ | 1,136 |  |  | $ | 54,972 |  |  | $ | 6,855 |
The following table provides the realized and unrealized gains and losses on marketable equity securities for the three and nine months ended September 30, 2020 and 2019:
| Three months ended September 30 |  | Nine months ended September 30
(Dollars in thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Marketable equity securities (losses) gains, net | $ | (2,701) |  |  | $ | (967) |  |  | $ | 10,461 |  |  | $ | 13,505 |
Less net gains recognized on marketable equity securities sold | 2,568 |  |  | 714 |  |  | 39,884 |  |  | 3,029 |
Unrealized gains (losses) recognized on marketable equity securities held | $ | (5,269) |  |  | $ | (1,681) |  |  | $ | (29,423) |  |  | $ | 10,476 |
The following table provides information regarding securities with unrealized losses as of September 30, 2020 and December 31, 2019:
| September 30, 2020
| Less than 12 months |  | 12 months or more |  | Total
(Dollars in thousands) | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |
Government agency | $ | 187,167 |  |  | $ | 2,570 |  |  | $ | 338,169 |  |  | $ | 2,391 |  |  | $ | 525,336 |  |  | $ | 4,961 |
Residential mortgage-backed securities | 161,578 |  |  | 259 |  |  | 23,717 |  |  | 53 |  |  | 185,295 |  |  | 312 |
Commercial mortgage-backed securities | 56,703 |  |  | 434 |  |  | — |  |  | — |  |  | 56,703 |  |  | 434 |
Corporate bonds | 81,825 |  |  | 2,738 |  |  | 4,744 |  |  | 55 |  |  | 86,569 |  |  | 2,793 |
Total | $ | 487,273 |  |  | $ | 6,001 |  |  | $ | 366,630 |  |  | $ | 2,499 |  |  | $ | 853,903 |  |  | $ | 8,500 |
| December 31, 2019
| Less than 12 months |  | 12 months or more |  | Total
(Dollars in thousands) | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses |  | Fair value |  | Unrealized losses
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |
Government agency | $ | 347,081 |  |  | $ | 1,827 |  |  | $ | 63,947 |  |  | $ | 414 |  |  | $ | 411,028 |  |  | $ | 2,241 |
Residential mortgage-backed securities | 2,387,293 |  |  | 14,016 |  |  | 264,257 |  |  | 1,371 |  |  | 2,651,550 |  |  | 15,387 |
Commercial mortgage-backed securities | 35,926 |  |  | 59 |  |  | — |  |  | — |  |  | 35,926 |  |  | 59 |
Corporate bonds | 7,714 |  |  | 123 |  |  | 4,749 |  |  | 9 |  |  | 12,463 |  |  | 132 |
Total | $ | 2,778,014 |  |  | $ | 16,025 |  |  | $ | 332,953 |  |  | $ | 1,794 |  |  | $ | 3,110,967 |  |  | $ | 17,819 |
As of September 30, 2020, there were 38 investment securities available for sale with continuous losses for more than 12 months, of which 37 were government sponsored enterprise-issued mortgage-backed securities or government agency securities and one was a corporate bond. None of the unrealized losses identified as of September 30, 2020, or December 31, 2019, relate to the marketability of the securities or the issuers’ ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. BancShares considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors in this determination. As a result, none of the securities were deemed to require an allowance for credit losses. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Investment securities having an aggregate carrying value of $4.48 billion at September 30, 2020, and $3.93 billion at December 31, 2019, were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law. BancShares’ portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities. Given the consistently strong credit rating of the U.S. Treasury and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no further credit monitoring is performed on these portfolios. Should there be downgrades to the credit rating of the U.S. Treasury or losses reported on securities issued by government agencies and government sponsored entities, BancShares will reevaluate its determination of zero expected credit losses on held to maturity debt securities. There were no debt securities held to maturity on nonaccrual status as of September 30, 2020. A security is considered past due once it is 30 days contractually past due under the terms of the agreement. There were no securities past due as of September 30, 2020.

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- 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
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