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INVESTMENT SECURITIES | 6 Months Ended
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Jun. 30, 2024
Investments [Abstract] |
INVESTMENT SECURITIES | NOTE 3 — INVESTMENT SECURITIES The following tables include the amortized cost and fair value of investment securities at June 30, 2024 and December 31, 2023. Amortized Cost and Fair Value - Investment Securities
dollars in millions | June 30, 2024
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
U.S. Treasury | $ | 11,818 |  |  | $ | 3 |  |  | $ | (70) |  |  | $ | 11,751 |
Government agency | 99 |  |  | — |  |  | (2) |  |  | 97 |
Residential mortgage-backed securities | 12,561 |  |  | 33 |  |  | (619) |  |  | 11,975 |
Commercial mortgage-backed securities | 2,938 |  |  | 1 |  |  | (212) |  |  | 2,727 |
Corporate bonds | 526 |  |  | — |  |  | (40) |  |  | 486 |
Municipal bonds | 17 |  |  | — |  |  | — |  |  | 17 |
Total investment securities available for sale | $ | 27,959 |  |  | $ | 37 |  |  | $ | (943) |  |  | $ | 27,053 |
Investment in marketable equity securities | $ | 75 |  |  | $ | 13 |  |  | $ | (10) |  |  | $ | 78 |
Investment securities held to maturity |  |  |  |  |  |  |
U.S. Treasury | $ | 481 |  |  | $ | — |  |  | $ | (41) |  |  | $ | 440 |
Government agency | 1,510 |  |  | — |  |  | (143) |  |  | 1,367 |
Residential mortgage-backed securities | 4,793 |  |  | 5 |  |  | (705) |  |  | 4,093 |
Commercial mortgage-backed securities | 3,450 |  |  | — |  |  | (668) |  |  | 2,782 |
Supranational securities | 299 |  |  | — |  |  | (37) |  |  | 262 |
Other | 2 |  |  | — |  |  | — |  |  | 2 |
Total investment securities held to maturity | $ | 10,535 |  |  | $ | 5 |  |  | $ | (1,594) |  |  | $ | 8,946 |
Total investment securities | $ | 38,569 |  |  | $ | 55 |  |  | $ | (2,547) |  |  | $ | 36,077 |
| December 31, 2023
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
U.S. Treasury | $ | 10,554 |  |  | $ | 34 |  |  | $ | (80) |  |  | $ | 10,508 |
Government agency | 120 |  |  | — |  |  | (3) |  |  | 117 |
Residential mortgage-backed securities | 7,154 |  |  | 72 |  |  | (540) |  |  | 6,686 |
Commercial mortgage-backed securities | 2,319 |  |  | 9 |  |  | (197) |  |  | 2,131 |
Corporate bonds | 529 |  |  | — |  |  | (47) |  |  | 482 |
Municipal bonds | 12 |  |  | — |  |  | — |  |  | 12 |
Total investment securities available for sale | $ | 20,688 |  |  | $ | 115 |  |  | $ | (867) |  |  | $ | 19,936 |
Investment in marketable equity securities | $ | 75 |  |  | $ | 17 |  |  | $ | (8) |  |  | $ | 84 |
Investment securities held to maturity |  |  |  |  |  |  |
U.S. Treasury | $ | 479 |  |  | $ | — |  |  | $ | (40) |  |  | $ | 439 |
Government agency | 1,506 |  |  | — |  |  | (143) |  |  | 1,363 |
Residential mortgage-backed securities | 4,205 |  |  | — |  |  | (644) |  |  | 3,561 |
Commercial mortgage-backed securities | 3,489 |  |  | — |  |  | (614) |  |  | 2,875 |
Supranational securities | 298 |  |  | — |  |  | (35) |  |  | 263 |
Other | 2 |  |  | — |  |  | — |  |  | 2 |
Total investment securities held to maturity | $ | 9,979 |  |  | $ | — |  |  | $ | (1,476) |  |  | $ | 8,503 |
Total investment securities | $ | 30,742 |  |  | $ | 132 |  |  | $ | (2,351) |  |  | $ | 28,523 |
U.S. Treasury investments include Treasury bills and Notes issued by the U.S. Treasury. Investments in government agency securities represent securities issued by the Small Business Administration (“SBA”), Federal Home Loan Bank (“FHLB”) and other U.S. 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 & Multilateral Development Banks. Other held to maturity investments include certificates of deposit with other financial institutions. BancShares initially held approximately 354,000 shares of Visa, Inc. (“Visa”) Class B common stock (“Visa Class B common stock”). Effective January 24, 2024, all outstanding shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock (“Visa Class B-1 common stock”) pursuant to Visa’s eighth amended and restated certificate of incorporation. BancShares currently holds approximately 354,000 shares of Visa Class B-1 common stock. Until the resolution of certain litigation, at which time the Visa Class B-1 common stock will convert to publicly traded Visa Class A common stock, or the potential exchange of Visa Class B-1 common stock for other marketable classes of Visa common stock, these shares are only transferable to other stockholders of Visa Class B-1 common stock or certain new denominations of Visa’s former 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 of Visa Class B-1 common stock for shares of Visa Class A common stock or other marketable classes of Visa 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-1 common stock, the status of the resolution of certain litigation matters at Visa, and other potential exchange alternatives that would trigger the conversion of the Visa Class B-1 common stock into Visa Class A common stock or other marketable classes of Visa common stock. Accrued interest receivable for available for sale and held to maturity debt securities was excluded from the estimate for credit losses. At June 30, 2024, accrued interest receivable for available for sale and held to maturity debt securities was $136 million and $20 million, respectively. At December 31, 2023, accrued interest receivable for available for sale and held to maturity debt securities was $87 million and $18 million, respectively. During the three and six months ended June 30, 2024 and 2023, there was no accrued interest that was deemed uncollectible and written off against interest income. 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 June 30, 2024 or December 31, 2023. 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 | June 30, 2024 |  | December 31, 2023
| Cost |  | Fair Value |  | Cost |  | Fair Value
Investment securities available for sale |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 5,995 |  |  | $ | 5,961 |  |  | $ | 5,674 |  |  | $ | 5,658 |
After one through five years | 5,962 |  |  | 5,921 |  |  | 4,996 |  |  | 4,959 |
After five through 10 years | 382 |  |  | 351 |  |  | 408 |  |  | 369 |
After 10 years | 22 |  |  | 21 |  |  | 17 |  |  | 16 |
Government agency | 99 |  |  | 97 |  |  | 120 |  |  | 117 |
Residential mortgage-backed securities | 12,561 |  |  | 11,975 |  |  | 7,154 |  |  | 6,686 |
Commercial mortgage-backed securities | 2,938 |  |  | 2,727 |  |  | 2,319 |  |  | 2,131 |
Total investment securities available for sale | $ | 27,959 |  |  | $ | 27,053 |  |  | $ | 20,688 |  |  | $ | 19,936 |
Investment securities held to maturity |  |  |  |  |  |  |
Non-amortizing securities maturing in: |  |  |  |  |  |  |
One year or less | $ | 27 |  |  | $ | 26 |  |  | $ | 27 |  |  | $ | 26 |
After one through five years | 1,641 |  |  | 1,514 |  |  | 1,636 |  |  | 1,508 |
After five through 10 years | 624 |  |  | 531 |  |  | 622 |  |  | 533 |
Residential mortgage-backed securities | 4,793 |  |  | 4,093 |  |  | 4,205 |  |  | 3,561 |
Commercial mortgage-backed securities | 3,450 |  |  | 2,782 |  |  | 3,489 |  |  | 2,875 |
Total investment securities held to maturity | $ | 10,535 |  |  | $ | 8,946 |  |  | $ | 9,979 |  |  | $ | 8,503 |
T he following table presents interest and dividend income on investment securities: Interest and Dividends on Investment Securities
dollars in millions | Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Interest income - taxable investment securities | $ | 330 |  |  | $ | 118 |  |  | $ | 611 |  |  | $ | 224 |  |  |
Interest income - nontaxable investment securities | — |  |  | 2 |  |  | — |  |  | 2 |  |  |
Dividend income - marketable equity securities | — |  |  | — |  |  | 1 |  |  | 1 |  |  |
Interest on investment securities | $ | 330 |  |  | $ | 120 |  |  | $ | 612 |  |  | $ | 227 |  |  |
Fair value adjustment on marketable equity securities and net realized losses on sales of investment securities available for sale are presented on the Consolidated Statements of Income. The following table presents the gross realized losses and gains on the sales of investment securities available for sale. Realized Losses on Debt Securities Available For Sale
dollars in millions | Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Gross realized gains on sales of investment securities available for sale | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |
Gross realized losses on sales of investment securities available for sale | — |  |  | — |  |  | — |  |  | (14) |  |  |
Net realized losses on sales of investment securities available for sale | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (14) |  |  |
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 | June 30, 2024
| 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 | $ | 7,954 |  |  | $ | (18) |  |  | $ | 1,745 |  |  | $ | (52) |  |  | $ | 9,699 |  |  | $ | (70) |
Government agency | — |  |  | — |  |  | 97 |  |  | (2) |  |  | 97 |  |  | (2) |
Residential mortgage-backed securities | 5,129 |  |  | (42) |  |  | 3,884 |  |  | (577) |  |  | 9,013 |  |  | (619) |
Commercial mortgage-backed securities | 822 |  |  | (6) |  |  | 1,322 |  |  | (206) |  |  | 2,144 |  |  | (212) |
Corporate bonds | 71 |  |  | (7) |  |  | 399 |  |  | (33) |  |  | 470 |  |  | (40) |
Total | $ | 13,976 |  |  | $ | (73) |  |  | $ | 7,447 |  |  | $ | (870) |  |  | $ | 21,423 |  |  | $ | (943) |
| December 31, 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 | $ | 955 |  |  | $ | — |  |  | $ | 1,919 |  |  | $ | (80) |  |  | $ | 2,874 |  |  | $ | (80) |
Government agency | 23 |  |  | — |  |  | 94 |  |  | (3) |  |  | 117 |  |  | (3) |
Residential mortgage-backed securities | 293 |  |  | (3) |  |  | 4,073 |  |  | (537) |  |  | 4,366 |  |  | (540) |
Commercial mortgage-backed securities | 157 |  |  | (1) |  |  | 1,386 |  |  | (196) |  |  | 1,543 |  |  | (197) |
Corporate bonds | 89 |  |  | (9) |  |  | 393 |  |  | (38) |  |  | 482 |  |  | (47) |
Total | $ | 1,517 |  |  | $ | (13) |  |  | $ | 7,865 |  |  | $ | (854) |  |  | $ | 9,382 |  |  | $ | (867) |
As of June 30, 2024, there were 524 investment securities available for sale with continuous unrealized losses for more than 12 months, of which 453 were government sponsored enterprise-issued mortgage-backed securities, government agency securities, or U.S. treasury securities and the remaining 71 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 June 30, 2024, no allowance for credit loss was required. For corporate 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 no allowance for credit loss was required for investment securities available for sale as of June 30, 2024. 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 & Multilateral Development Banks. Given the consistently strong credit rating of the U.S. Treasury, the Supranational Entities & Multilateral Development Banks and the long history of no credit losses on debt securities issued by government agencies and government sponsored entities, no allowance for credit loss was required for debt securities held to maturity as of June 30, 2024. There were no debt securities on nonaccrual status as of June 30, 2024 or December 31, 2023. Investment securities having an aggregate carrying value of $3.89 billion at June 30, 2024, and $3.77 billion at December 31, 2023, were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law. Certain investments held by BancShares are reported in other assets, including FHLB stock and nonmarketable securities without readily determinable fair values that are recorded at cost, and investments in qualified affordable housing projects, all of which are accounted for under the PAM. See Note 9—Other Assets for the respective balances.

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