XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Investments (Tables)
 6 Months Ended
Jun. 30, 2018
Gain (Loss) on Securities [Line Items]  
Aggregate Values And Unrealized Gains And Losses Of Investment Securities
The amortized cost and fair value of investment securities classified as available for sale and held to maturity at June 30, 2018 and December 31, 2017, were as follows:
 
June 30, 2018
(Dollars in thousands)
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,508,435

 
$
—

 
$
4,461

 
$
1,503,974

Government agency
131,233

 
157

 
355

 
131,035

Mortgage-backed securities
3,104,316

 
1,621

 
71,872

 
3,034,065

Corporate bonds
108,649

 
391

 
250

 
108,790

Other
5,545

 
98

 
—

 
5,643

Total investment securities available for sale
$
4,858,178

 
$
2,267

 
$
76,938

 
$
4,783,507

 
 
 
 
 
 
 
 
 
December 31, 2017
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,658,410

 
$
—

 
$
546

 
$
1,657,864

Government agency
8,695

 
15

 
40

 
8,670

Mortgage-backed securities
5,419,379

 
1,529

 
80,152

 
5,340,756

Equity securities
75,471

 
29,737

 
—

 
105,208

Corporate bonds
59,414

 
557

 
8

 
59,963

Other
7,645

 
256

 
182

 
7,719

Total investment securities available for sale
$
7,229,014

 
$
32,094

 
$
80,928

 
$
7,180,180

 
 
 
 
 
 
 
 
 
June 30, 2018
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
2,299,774

 
$
3,778

 
$
1,459

 
$
2,302,093

 
 
 
 
 
 
 
 
 
December 31, 2017
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
76

 
$
5

 
$
—

 
$
81
Investment Securities Maturity Information
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. Repayments of mortgage-backed securities are dependent on the repayments of the underlying loan balances.
 
June 30, 2018
 
December 31, 2017
(Dollars in thousands)
Cost
 
Fair
value
 
Cost
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
$
1,255,746

 
$
1,252,487

 
$
808,768

 
$
808,301

One through five years
252,689

 
251,487

 
849,642

 
849,563

Five through 10 years
108,649

 
108,790

 
59,414

 
59,963

Over 10 years
5,545

 
5,643

 
7,645

 
7,719

Government agency
131,233

 
131,035

 
8,695

 
8,670

Mortgage-backed securities
3,104,316

 
3,034,065

 
5,419,379

 
5,340,756

Equity securities
—

 
—

 
75,471

 
105,208

Total investment securities available for sale
$
4,858,178

 
$
4,783,507

 
$
7,229,014

 
$
7,180,180

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities held to maturity
$
2,299,774

 
$
2,302,093

 
$
76

 
$
81
Marketable Securities Gains (Losses)
The following table provides the realized and unrealized gains or losses on marketable equity securities for the three and six months ended June 30, 2018.
(Dollars in thousands)
 
Three months ended June 30, 2018
 
Six months ended June 30, 2018
Marketable equity securities gains, net
 
$
4,440

 
$
5,411

Less net gains recognized on marketable equity securities sold
 
139

 
235

Unrealized gains recognized on marketable equity securities held
 
$
4,301

 
$
5,176
Investment Securities With Unrealized Losses
The following table provides information regarding securities available for sale with unrealized losses as of June 30, 2018 and December 31, 2017.
 
June 30, 2018
 
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:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
1,503,974

 
$
4,461

 
$
—

 
$
—

 
$
1,503,974

 
$
4,461

Government agency
83,383

 
328

 
2,004

 
27

 
85,387

 
355

Mortgage-backed securities
1,923,954

 
50,765

 
654,212

 
21,107

 
2,578,166

 
71,872

Corporate bonds
24,673

 
248

 
5,025

 
2

 
29,698

 
250

Total
$
3,535,984

 
$
55,802

 
$
661,241

 
$
21,136

 
$
4,197,225

 
$
76,938

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
1,126,683

 
$
1,249

 
$
11,219

 
$
210

 
$
1,137,902

 
$
1,459

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
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
$
1,408,166

 
$
345

 
$
249,698

 
$
201

 
$
1,657,864

 
$
546

Government agency
848

 
12

 
2,527

 
28

 
3,375

 
40

Mortgage-backed securities
2,333,254

 
20,911

 
2,723,406

 
59,241

 
5,056,660

 
80,152

Corporate bonds
5,025

 
8

 
—

 
—

 
5,025

 
8

Other
5,349

 
182

 
—

 
—

 
5,349

 
182

Total
$
3,752,642

 
$
21,458

 
$
2,975,631

 
$
59,470

 
$
6,728,273

 
$
80,928
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
INVESTMENTS
The amortized cost and fair value of investment securities classified as available for sale and held to maturity at June 30, 2018 and December 31, 2017, were as follows:
 
June 30, 2018
(Dollars in thousands)
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,508,435

 
$
—

 
$
4,461

 
$
1,503,974

Government agency
131,233

 
157

 
355

 
131,035

Mortgage-backed securities
3,104,316

 
1,621

 
71,872

 
3,034,065

Corporate bonds
108,649

 
391

 
250

 
108,790

Other
5,545

 
98

 
—

 
5,643

Total investment securities available for sale
$
4,858,178

 
$
2,267

 
$
76,938

 
$
4,783,507

 
 
 
 
 
 
 
 
 
December 31, 2017
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,658,410

 
$
—

 
$
546

 
$
1,657,864

Government agency
8,695

 
15

 
40

 
8,670

Mortgage-backed securities
5,419,379

 
1,529

 
80,152

 
5,340,756

Equity securities
75,471

 
29,737

 
—

 
105,208

Corporate bonds
59,414

 
557

 
8

 
59,963

Other
7,645

 
256

 
182

 
7,719

Total investment securities available for sale
$
7,229,014

 
$
32,094

 
$
80,928

 
$
7,180,180

 
 
 
 
 
 
 
 
 
June 30, 2018
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
2,299,774

 
$
3,778

 
$
1,459

 
$
2,302,093

 
 
 
 
 
 
 
 
 
December 31, 2017
 
Cost
 
Gross
unrealized gains
 
Gross unrealized
losses
 
Fair
value
Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
$
76

 
$
5

 
$
—

 
$
81



As a result of adopting ASU 2016-01 in the first quarter of 2018, investments in marketable equity securities are no longer classified as investments available for sale. At June 30, 2018 and December 31, 2017, we had $107.3 million and $105.2 million, respectively, in marketable equity securities recorded at fair value. Prior to January 1, 2018 equity securities were classified as available for sale and stated at fair value with unrealized gains and losses reported in accumulated other comprehensive income. A cumulative-effect adjustment of $18.7 million was recorded on January 1, 2018 to reclassify the net unrealized gains from accumulated other comprehensive income to retained earnings with subsequent changes in fair value recognized in the Consolidated Statements of Income.
On May 1, 2018, mortgage-backed securities with an amortized cost of $2.49 billion were transferred from investments available for sale to the held to maturity portfolio. At the time of transfer, the mortgage-backed securities had a fair value of $2.38 billion and a weighted average contractual maturity of 13 years. The unrealized loss on these securities at the date of transfer was $109.5 million and continues to be reported as a component of AOCI. This unrealized loss will be accreted over the remaining expected life of the securities as an adjustment of yield and is offset by the amortization of the corresponding discount on the transferred securities. FCB has the intent and ability to retain these securities until maturity.
Investments in mortgage-backed securities primarily 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 investments include trust preferred securities of financial institutions. 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. Repayments of mortgage-backed securities are dependent on the repayments of the underlying loan balances.
 
June 30, 2018
 
December 31, 2017
(Dollars in thousands)
Cost
 
Fair
value
 
Cost
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
$
1,255,746

 
$
1,252,487

 
$
808,768

 
$
808,301

One through five years
252,689

 
251,487

 
849,642

 
849,563

Five through 10 years
108,649

 
108,790

 
59,414

 
59,963

Over 10 years
5,545

 
5,643

 
7,645

 
7,719

Government agency
131,233

 
131,035

 
8,695

 
8,670

Mortgage-backed securities
3,104,316

 
3,034,065

 
5,419,379

 
5,340,756

Equity securities
—

 
—

 
75,471

 
105,208

Total investment securities available for sale
$
4,858,178

 
$
4,783,507

 
$
7,229,014

 
$
7,180,180

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities held to maturity
$
2,299,774

 
$
2,302,093

 
$
76

 
$
81


There were no gross gains or losses on sales of investment securities available for sale for the three or six months ended June 30, 2018. Gross gains and gross losses on sales of investment securities available for sale were $3.4 million and $2 thousand, respectively for the three months ended June 30, 2017. Gross gains and gross losses on sales of investment securities available for sale were $3.4 million and $29 thousand, respectively for the six months ended June 30, 2017.
 
 
 
 
 
 
 
 

The following table provides the realized and unrealized gains or losses on marketable equity securities for the three and six months ended June 30, 2018.
(Dollars in thousands)
 
Three months ended June 30, 2018
 
Six months ended June 30, 2018
Marketable equity securities gains, net
 
$
4,440

 
$
5,411

Less net gains recognized on marketable equity securities sold
 
139

 
235

Unrealized gains recognized on marketable equity securities held
 
$
4,301

 
$
5,176



The following table provides information regarding securities available for sale with unrealized losses as of June 30, 2018 and December 31, 2017.
 
June 30, 2018
 
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:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
1,503,974

 
$
4,461

 
$
—

 
$
—

 
$
1,503,974

 
$
4,461

Government agency
83,383

 
328

 
2,004

 
27

 
85,387

 
355

Mortgage-backed securities
1,923,954

 
50,765

 
654,212

 
21,107

 
2,578,166

 
71,872

Corporate bonds
24,673

 
248

 
5,025

 
2

 
29,698

 
250

Total
$
3,535,984

 
$
55,802

 
$
661,241

 
$
21,136

 
$
4,197,225

 
$
76,938

Investment securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
1,126,683

 
$
1,249

 
$
11,219

 
$
210

 
$
1,137,902

 
$
1,459

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
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
$
1,408,166

 
$
345

 
$
249,698

 
$
201

 
$
1,657,864

 
$
546

Government agency
848

 
12

 
2,527

 
28

 
3,375

 
40

Mortgage-backed securities
2,333,254

 
20,911

 
2,723,406

 
59,241

 
5,056,660

 
80,152

Corporate bonds
5,025

 
8

 
—

 
—

 
5,025

 
8

Other
5,349

 
182

 
—

 
—

 
5,349

 
182

Total
$
3,752,642

 
$
21,458

 
$
2,975,631

 
$
59,470

 
$
6,728,273

 
$
80,928



As of June 30, 2018, there were 120 investment securities available for sale that had continuous losses for more than 12 months of which 119 are government sponsored enterprise-issued mortgage-backed securities or government agency securities and 1 is a corporate bond. There were 2 investment securities held to maturity, which were government sponsored enterprise-issued mortgage securities, that had continuous losses for more than 12 months at June 30, 2018.
None of the unrealized losses identified as of June 30, 2018 or December 31, 2017 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 debt securities were purchased. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Therefore, none of the securities were deemed to be other than temporarily impaired.
Debt securities having an aggregate carrying value of $3.67 billion at June 30, 2018 and $4.59 billion at December 31, 2017 were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.