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Investment Securities | 9 Months Ended
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Sep. 30, 2023
Investments [Abstract] |
INVESTMENT SECURITIES | NOTE 3 — INVESTMENT SECURITIES The following tables include the amortized cost and fair value of investment securities at September 30, 2023 and December 31, 2022. Amortized Cost and Fair Value - Investment Securities
dollars in millions | September 30, 2023
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
U.S. Treasury | $ | 8,765 |  |  | $ | — |  |  | $ | (118) |  |  | $ | 8,647 |
Government agency | 132 |  |  | — |  |  | (3) |  |  | 129 |
Residential mortgage-backed securities | 6,352 |  |  | — |  |  | (752) |  |  | 5,600 |
Commercial mortgage-backed securities | 2,042 |  |  | — |  |  | (245) |  |  | 1,797 |
Corporate bonds | 535 |  |  | — |  |  | (57) |  |  | 478 |
Municipal bonds | 10 |  |  | — |  |  | — |  |  | 10 |
Total investment securities available for sale | $ | 17,836 |  |  | $ | — |  |  | $ | (1,175) |  |  | $ | 16,661 |
Investment in marketable equity securities | $ | 75 |  |  | $ | 11 |  |  | $ | (11) |  |  | $ | 75 |
Investment securities held to maturity |  |  |  |  |  |  |
U.S. Treasury | $ | 478 |  |  | $ | — |  |  | $ | (53) |  |  | $ | 425 |
Government agency | 1,504 |  |  | — |  |  | (196) |  |  | 1,308 |
Residential mortgage-backed securities | 4,296 |  |  | — |  |  | (866) |  |  | 3,430 |
Commercial mortgage-backed securities | 3,505 |  |  | — |  |  | (769) |  |  | 2,736 |
Supranational securities | 297 |  |  | — |  |  | (46) |  |  | 251 |
Other | 2 |  |  | — |  |  | — |  |  | 2 |
Total investment securities held to maturity | $ | 10,082 |  |  | $ | — |  |  | $ | (1,930) |  |  | $ | 8,152 |
Total investment securities | $ | 27,993 |  |  | $ | 11 |  |  | $ | (3,116) |  |  | $ | 24,888 |
| December 31, 2022
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
U.S. Treasury | $ | 2,035 |  |  | $ | — |  |  | $ | (137) |  |  | $ | 1,898 |
Government agency | 164 |  |  | — |  |  | (2) |  |  | 162 |
Residential mortgage-backed securities | 5,424 |  |  | 1 |  |  | (630) |  |  | 4,795 |
Commercial mortgage-backed securities | 1,774 |  |  | — |  |  | (170) |  |  | 1,604 |
Corporate bonds | 570 |  |  | — |  |  | (34) |  |  | 536 |
Total investment securities available for sale | $ | 9,967 |  |  | $ | 1 |  |  | $ | (973) |  |  | $ | 8,995 |
Investment in marketable equity securities | $ | 75 |  |  | $ | 21 |  |  | $ | (1) |  |  | $ | 95 |
Investment securities held to maturity |  |  |  |  |  |  |
U.S. Treasury | $ | 474 |  |  | $ | — |  |  | $ | (50) |  |  | $ | 424 |
Government agency | 1,548 |  |  | — |  |  | (186) |  |  | 1,362 |
Residential mortgage-backed securities | 4,605 |  |  | — |  |  | (723) |  |  | 3,882 |
Commercial mortgage-backed securities | 3,355 |  |  | — |  |  | (484) |  |  | 2,871 |
Supranational securities | 295 |  |  | — |  |  | (41) |  |  | 254 |
Other | 2 |  |  | — |  |  | — |  |  | 2 |
Total investment securities held to maturity | $ | 10,279 |  |  | $ | — |  |  | $ | (1,484) |  |  | $ | 8,795 |
Total investment securities | $ | 20,321 |  |  | $ | 22 |  |  | $ | (2,458) |  |  | $ | 17,885 |
U.S. Treasury investments represents T-bills and Notes issued by the U.S. Treasury. Investments in government agency securities represent securities issued by the Small Business Association (“SBA”), Federal Home Loan Bank (“FHLB”) and other agencies. 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 corporate bonds represent positions in debt securities of other financial institutions. Municipal bonds are general obligation bonds. Investments in marketable equity securities represent positions in common stock of publicly traded financial institutions. Investments in supranational securities represent securities issued by the Supranational Entities and Multilateral Development Banks. 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 stockholders 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 have no carrying value. 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. Accrued interest receivables for available for sale and held to maturity debt securities were excluded from the estimate for credit losses. At September 30, 2023, accrued interest receivables for available for sale and held to maturity debt securities were $67 million and $17 million, respectively. At December 31, 2022, accrued interest receivables for available for sale and held to maturity debt securities were $33 million and $19 million, respectively. During the three and nine months ended September 30, 2023 and 2022, there was no accrued interest that was deemed uncollectible and written off against interest income. The following table provides the amortized cost and fair value by contractual maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers 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. Maturities - Debt Securities
dollars in millions | September 30, 2023 |  | December 31, 2022
| Cost |  | Fair Value |  | Cost |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 4,829 |  |  | $ | 4,802 |  |  | $ | 37 |  |  | $ | 37 |
After one through five years | 4,036 |  |  | 3,937 |  |  | 2,068 |  |  | 1,928 |
After five through 10 years | 419 |  |  | 374 |  |  | 483 |  |  | 455 |
After 10 years | 26 |  |  | 22 |  |  | 17 |  |  | 14 |
Government agency | 132 |  |  | 129 |  |  | 164 |  |  | 162 |
Residential mortgage-backed securities | 6,352 |  |  | 5,600 |  |  | 5,424 |  |  | 4,795 |
Commercial mortgage-backed securities | 2,042 |  |  | 1,797 |  |  | 1,774 |  |  | 1,604 |
Total investment securities available for sale | $ | 17,836 |  |  | $ | 16,661 |  |  | $ | 9,967 |  |  | $ | 8,995 |
Investment securities held to maturity |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 2 |  |  | $ | 2 |  |  | $ | 51 |  |  | $ | 51 |
After one through five years | 1,609 |  |  | 1,440 |  |  | 1,479 |  |  | 1,328 |
After five through 10 years | 670 |  |  | 544 |  |  | 789 |  |  | 663 |
Residential mortgage-backed securities | 4,296 |  |  | 3,430 |  |  | 4,605 |  |  | 3,882 |
Commercial mortgage-backed securities | 3,505 |  |  | 2,736 |  |  | 3,355 |  |  | 2,871 |
Total investment securities held to maturity | $ | 10,082 |  |  | $ | 8,152 |  |  | $ | 10,279 |  |  | $ | 8,795 |
T he following table presents interest and dividend income on investment securities: Interest and Dividends on Investment Securities
dollars in millions | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Interest income - taxable investment securities | $ | 178 |  |  | $ | 89 |  |  | $ | 402 |  |  | $ | 260 |
Interest income - nontaxable investment securities | 2 |  |  | — |  |  | 4 |  |  | — |
Dividend income - marketable equity securities | — |  |  | 1 |  |  | 1 |  |  | 2 |
Interest on investment securities | $ | 180 |  |  | $ | 90 |  |  | $ | 407 |  |  | $ | 262 |
The following table presents the gross realized losses on the sales of investment securities available for sale, including the current quarter loss on sale of municipal bonds that were acquired in the SVBB Acquisition. Realized Losses on Debt Securities Available For Sale
dollars in millions | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Gross realized gains on sales of investment securities available for sale | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Gross realized losses on sales of investment securities available for sale | (12) |  |  | — |  |  | (26) |  |  | — |
Net realized losses on sales of investment securities available for sale | $ | (12) |  |  | $ | — |  |  | $ | (26) |  |  | $ | — |
The following table provides the fair value adjustment on marketable equity securities: Fair Value Adjustment on Marketable Equity Securities
dollars in millions | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Fair value adjustment on marketable equity securities, net | $ | (1) |  |  | $ | (2) |  |  | $ | (20) |  |  | $ | (5) |
The following table provides information regarding investment securities available for sale with unrealized losses: Gross Unrealized Losses on Debt Securities Available For Sale
dollars in millions | September 30, 2023
| Less than 12 months |  | 12 months or more |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 6,322 |  |  | $ | (6) |  |  | $ | 1,887 |  |  | $ | (112) |  |  | $ | 8,209 |  |  | $ | (118) |
Government agency | 26 |  |  | — |  |  | 103 |  |  | (3) |  |  | 129 |  |  | (3) |
Residential mortgage-backed securities | 1,465 |  |  | (28) |  |  | 4,030 |  |  | (724) |  |  | 5,495 |  |  | (752) |
Commercial mortgage-backed securities | 331 |  |  | (3) |  |  | 1,364 |  |  | (242) |  |  | 1,695 |  |  | (245) |
Corporate bonds | 96 |  |  | (12) |  |  | 382 |  |  | (45) |  |  | 478 |  |  | (57) |
Total | $ | 8,240 |  |  | $ | (49) |  |  | $ | 7,766 |  |  | $ | (1,126) |  |  | $ | 16,006 |  |  | $ | (1,175) |
| December 31, 2022
| Less than 12 months |  | 12 months or more |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Investment securities available for sale |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 403 |  |  | $ | (27) |  |  | $ | 1,495 |  |  | $ | (110) |  |  | $ | 1,898 |  |  | $ | (137) |
Government agency | 65 |  |  | (1) |  |  | 62 |  |  | (1) |  |  | 127 |  |  | (2) |
Residential mortgage-backed securities | 1,698 |  |  | (165) |  |  | 3,001 |  |  | (465) |  |  | 4,699 |  |  | (630) |
Commercial mortgage-backed securities | 836 |  |  | (53) |  |  | 752 |  |  | (117) |  |  | 1,588 |  |  | (170) |
Corporate bonds | 499 |  |  | (30) |  |  | 37 |  |  | (4) |  |  | 536 |  |  | (34) |
Total | $ | 3,501 |  |  | $ | (276) |  |  | $ | 5,347 |  |  | $ | (697) |  |  | $ | 8,848 |  |  | $ | (973) |
As of September 30, 2023, there were 482 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 415 were government sponsored enterprise-issued mortgage-backed securities, government agency securities, or U.S. treasury securities and the remaining 67 were corporate bonds. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. 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, as of September 30, 2023, no allowance for credit loss was required. For corporate bonds and municipal bonds, we analyzed the changes in interest rates relative to when the investment securities were purchased or acquired, and considered other factors including changes in credit ratings, delinquencies, and other macroeconomic factors. As a result of this analysis, we determined that one corporate bond carries an insignificant credit-related loss as of September 30, 2023, which is reflected in the provision for credit losses. BancShares’ portfolio of held to maturity debt securities consists of mortgage-backed securities issued by government agencies and government sponsored entities, U.S. Treasury notes, unsecured bonds issued by government agencies and government sponsored entities, and securities issued by the Supranational Entities and Multilateral Development Banks. Given the consistently strong credit rating of the U.S. Treasury, the Supranational Entities and Multilateral Development Banks and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, as of September 30, 2023, no allowance for credit loss was required for held to maturity debt securities. Investment securities having an aggregate carrying value of $3.66 billion at September 30, 2023, and $4.20 billion at December 31, 2022, were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law. 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, 2023 or December 31, 2022. There were no debt securities held to maturity on non-accrual status as of September 30, 2023 or December 31, 2022. Certain investments held by BancShares were recorded in other assets. BancShares held FHLB stock of $19 million and $197 million at September 30, 2023 and December 31, 2022, respectively; these securities are recorded at cost. BancShares held $95 million and $58 million of nonmarketable securities without readily determinable fair values, which are measured at cost at September 30, 2023 and December 31, 2022, respectively. Investments in qualified affordable housing projects, all of which are accounted for under the proportional amortization method were $1.81 billion and $598 million at September 30, 2023 and December 31, 2022, respectively.

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