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Investments | 9 Months Ended
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Sep. 30, 2021
Investments [Abstract] |
Investments | INVESTMENTS The amortized cost and fair value of investment securities at September 30, 2021 and December 31, 2020, were as follows:
| September 30, 2021
(Dollars in thousands) | Amortized cost(1) |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |
Government agency | $ | 851,860 |  |  | $ | 5,348 |  |  | $ | 3,480 |  |  | $ | 853,728 |
Residential mortgage-backed securities | 4,800,194 |  |  | 19,219 |  |  | 17,767 |  |  | 4,801,646 |
Commercial mortgage-backed securities | 1,092,183 |  |  | 9,875 |  |  | 11,406 |  |  | 1,090,652 |
Corporate bonds | 600,906 |  |  | 25,295 |  |  | 1,098 |  |  | 625,103 |
Total investment securities available for sale | $ | 7,345,143 |  |  | $ | 59,737 |  |  | $ | 33,751 |  |  | $ | 7,371,129 |
Investment in marketable equity securities | 85,554 |  |  | 37,744 |  |  | 151 |  |  | 123,147 |
Investment securities held to maturity |  |  |  |  |  |  |
Residential mortgage-backed securities | 2,122,299 |  |  | 5,313 |  |  | 15,051 |  |  | 2,112,561 |
Commercial mortgage-backed securities | 1,256,771 |  |  | 3 |  |  | 18,265 |  |  | 1,238,509 |
Other | 2,008 |  |  | — |  |  | — |  |  | 2,008 |
Total investment securities held to maturity | 3,381,078 |  |  | 5,316 |  |  | 33,316 |  |  | 3,353,078 |
Total investment securities | $ | 10,811,775 |  |  | $ | 102,797 |  |  | $ | 67,218 |  |  | $ | 10,847,354 |
| December 31, 2020
(Dollars in thousands) | Amortized cost(1) |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |
U.S. Treasury | $ | 499,832 |  |  | $ | 101 |  |  | $ | — |  |  | $ | 499,933 |
Government agency | 706,241 |  |  | 723 |  |  | 5,573 |  |  | 701,391 |
Residential mortgage-backed securities | 4,369,130 |  |  | 70,283 |  |  | 1,310 |  |  | 4,438,103 |
Commercial mortgage-backed securities | 745,892 |  |  | 25,645 |  |  | — |  |  | 771,537 |
Corporate bonds | 590,870 |  |  | 14,437 |  |  | 2,028 |  |  | 603,279 |
Total investment securities available for sale | $ | 6,911,965 |  |  | $ | 111,189 |  |  | $ | 8,911 |  |  | $ | 7,014,243 |
Investment in marketable equity securities | 84,837 |  |  | 8,654 |  |  | 1,811 |  |  | 91,680 |
Investment securities held to maturity |  |  |  |  |  |  |
Residential mortgage-backed securities | 1,877,692 |  |  | 17,689 |  |  | — |  |  | 1,895,381 |
Commercial mortgage-backed securities | 937,034 |  |  | 3,884 |  |  | 56 |  |  | 940,862 |
Other | 2,256 |  |  | — |  |  | — |  |  | 2,256 |
Total investment securities held to maturity | 2,816,982 |  |  | 21,573 |  |  | 56 |  |  | 2,838,499 |
Total investment securities | $ | 9,813,784 |  |  | $ | 141,416 |  |  | $ | 10,778 |  |  | $ | 9,944,422 |
(1)Amortized cost includes any recorded ACL. |  |  |  |  |  |  |
On November 1, 2020, mortgage-backed securities with an amortized cost of $1.46 billion were transferred from investment securities available for sale to the held to maturity portfolio. At the time of transfer, the mortgage-backed securities had a fair value of $1.47 billion and a weighted average contractual maturity of 18 years. The unrealized gain on these securities at the date of transfer was $5.9 million, or $4.5 million net of tax, and was reported as a component of accumulated other comprehensive income. This unrealized gain is accreted over the remaining expected life of the securities as an adjustment of yield. 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 SBA. 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 Class B common stock of Visa, Inc. (“Visa”). Until the resolution of certain litigation, at which time the Visa Class B common stock will convert to publicly traded Visa Class A common stock, these shares are only transferable to other shareholders of Visa Class B common stock. As a result, there is limited transfer activity in private transactions between buyers and sellers. Given this limited trading activity and the continuing uncertainty regarding the likelihood, ultimate timing and eventual exchange rate for shares of Visa Class B common stock into shares of Visa Class A common stock, these shares are not considered to have a readily determinable fair value and are recorded at $0. BancShares continues to monitor the trading activity in Visa Class B common stock and the status of the resolution of certain litigation matters at Visa that would trigger the conversion of the Visa Class B common stock into Visa Class A common stock. BancShares held Federal Housing Loan Bank (“ FHLB”) stock of $40.5 million and $45.4 million and other non-marketable equity securities of $9.6 million and $11.6 million at September 30, 2021 and December 31, 2020, respectively. These securities are recorded at cost within other assets. As of September 30, 2021 and December 31, 2020, no ACL was required for available for sale and held to maturity debt securities. Accrued interest receivables for available for sale and held to maturity debt securities were excluded from the estimate for credit losses. At September 30, 2021, accrued interest receivables for available for sale and held to maturity debt securities were $21.1 million and $6.0 million, respectively. At December 31, 2020, accrued interest receivables for available for sale and held to maturity debt securities were $17.6 million and $5.4 million, respectively. During the three and nine months ended September 30, 2021 and 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. Residential and commercial mortgage-backed and government agency securities are stated separately as they are not due at a single maturity date.
| September 30, 2021 |  | December 31, 2020
(Dollars in thousands) | Amortized cost(1) |  | Fair value |  | Amortized cost(1) |  | Fair value
Investment securities available for sale |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 1,204 |  |  | $ | 1,208 |  |  | $ | 500,846 |  |  | $ | 500,954 |
One through five years | 37,248 |  |  | 38,540 |  |  | 72,565 |  |  | 73,881 |
Five through 10 years | 545,754 |  |  | 568,692 |  |  | 508,320 |  |  | 519,570 |
Over 10 years | 16,700 |  |  | 16,663 |  |  | 8,971 |  |  | 8,807 |
Government agency | 851,860 |  |  | 853,728 |  |  | 706,241 |  |  | 701,391 |
Residential mortgage-backed securities | 4,800,194 |  |  | 4,801,646 |  |  | 4,369,130 |  |  | 4,438,103 |
Commercial mortgage-backed securities | 1,092,183 |  |  | 1,090,652 |  |  | 745,892 |  |  | 771,537 |
Total investment securities available for sale | $ | 7,345,143 |  |  | $ | 7,371,129 |  |  | $ | 6,911,965 |  |  | $ | 7,014,243 |
Investment securities held to maturity |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | 1,259 |  |  | 1,259 |  |  | 1,507 |  |  | 1,507 |
One through five years | 749 |  |  | 749 |  |  | 749 |  |  | 749 |
Residential mortgage-backed securities | 2,122,299 |  |  | 2,112,561 |  |  | 1,877,692 |  |  | 1,895,381 |
Commercial mortgage-backed securities | 1,256,771 |  |  | 1,238,509 |  |  | 937,034 |  |  | 940,862 |
Total investment securities held to maturity | $ | 3,381,078 |  |  | $ | 3,353,078 |  |  | $ | 2,816,982 |  |  | $ | 2,838,499 |
(1)Amortized cost includes any recorded ACL. |  |  |  |  |  |  |
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, 2021 and 2020:
| Three months ended September 30 |  | Nine months ended September 30
(Dollars in thousands) | 2021 |  | 2020 |  | 2021 |  | 2020
Gross realized gains on sales of investment securities available for sale | $ | 8,082 |  |  | $ | 21,425 |  |  | $ | 33,133 |  |  | $ | 55,651 |
Gross realized losses on sales of investment securities available for sale | — |  |  | — |  |  | (14) |  |  | (679) |
Net realized gains on sales of investment securities available for sale | $ | 8,082 |  |  | $ | 21,425 |  |  | $ | 33,119 |  |  | $ | 54,972 |
The following table provides the realized and unrealized gains and losses on marketable equity securities for the three and nine months ended September 30, 2021 and 2020:
| Three months ended September 30 |  | Nine months ended September 30
(Dollars in thousands) | 2021 |  | 2020 |  | 2021 |  | 2020
Marketable equity securities gains (losses), net | $ | 3,350 |  |  | $ | (2,701) |  |  | $ | 31,015 |  |  | $ | 10,461 |
Less net gains recognized on marketable equity securities sold | — |  |  | 2,568 |  |  | 263 |  |  | 39,884 |
Unrealized gains (losses) recognized on marketable equity securities held | $ | 3,350 |  |  | $ | (5,269) |  |  | $ | 30,752 |  |  | $ | (29,423) |
The following table provides information regarding securities with unrealized losses as of September 30, 2021 and December 31, 2020:
| September 30, 2021
| 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 | $ | 302,114 |  |  | $ | 2,857 |  |  | $ | 119,231 |  |  | $ | 623 |  |  | $ | 421,345 |  |  | $ | 3,480 |
Residential mortgage-backed securities | 2,137,675 |  |  | 17,752 |  |  | 1,762 |  |  | $ | 15 |  |  | 2,139,437 |  |  | 17,767 |
Commercial mortgage-backed securities | 758,798 |  |  | 11,406 |  |  | — |  |  | $ | — |  |  | 758,798 |  |  | 11,406 |
Corporate bonds | 42,593 |  |  | 1,042 |  |  | 10,444 |  |  | $ | 56 |  |  | 53,037 |  |  | 1,098 |
Total | $ | 3,241,180 |  |  | $ | 33,057 |  |  | $ | 131,437 |  |  | $ | 694 |  |  | $ | 3,372,617 |  |  | $ | 33,751 |
| December 31, 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 | $ | 268,622 |  |  | $ | 3,197 |  |  | $ | 328,777 |  |  | $ | 2,376 |  |  | $ | 597,399 |  |  | $ | 5,573 |
Residential mortgage-backed securities | 433,816 |  |  | 1,241 |  |  | 23,064 |  |  | 69 |  |  | 456,880 |  |  | 1,310 |
Corporate bonds | 57,715 |  |  | 2,028 |  |  | — |  |  | — |  |  | 57,715 |  |  | 2,028 |
Total | $ | 760,153 |  |  | $ | 6,466 |  |  | $ | 351,841 |  |  | $ | 2,445 |  |  | $ | 1,111,994 |  |  | $ | 8,911 |
As of September 30, 2021, there were 36 investment securities available for sale with continuous losses for more than 12 months, of which 34 were government sponsored enterprise-issued mortgage-backed securities or government agency securities and two were corporate bonds. None of the unrealized losses identified as of September 30, 2021, or December 31, 2020, relate to the issuer’s 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 $5.5 billion at September 30, 2021, and $4.6 billion at December 31, 2020, 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, 2021. 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, 2021.

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