XML 85 R11.htm IDEA: XBRL DOCUMENT v3.19.3
Investments
 9 Months Ended
Sep. 30, 2019
Investments [Abstract]  
Investments INVESTMENTS

The amortized cost and fair value of investment securities at September 30, 2019 and December 31, 2018, were as follows:
 
September 30, 2019
(Dollars in thousands)
Cost
 
Gross
unrealized
gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
748,206

 
$
1,114

 
$
2

 
$
749,318

Government agency
666,029

 
1,404

 
1,812

 
665,621

Mortgage-backed securities
3,329,593

 
10,369

 
7,343

 
3,332,619

Corporate bonds
154,943

 
2,707

 
325

 
157,325

Total investment securities available for sale
4,898,771

 
15,594

 
9,482

 
4,904,883

Investment in marketable equity securities
87,588

 
29,605

 
339

 
116,854

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
2,115,141

 
71,857

 
—

 
2,186,998

Other
30,802

 
—

 
—

 
30,802

Total investment securities held to maturity
2,145,943

 
71,857

 
—

 
2,217,800

Total investment securities
$
7,132,302

 
$
117,056

 
$
9,821

 
$
7,239,537

 
 
 
 
 
 
 
 
 
December 31, 2018
(Dollars in thousands)
Cost
 
Gross
unrealized
gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
1,249,243

 
$
633

 
$
2,166

 
$
1,247,710

Government agency
257,252

 
222

 
639

 
256,835

Mortgage-backed securities
2,956,793

 
5,309

 
52,763

 
2,909,339

Corporate bonds
143,829

 
261

 
864

 
143,226

Total investment securities available for sale
4,607,117

 
6,425

 
56,432

 
4,557,110

Investment in marketable equity securities
73,809

 
19,010

 
220

 
92,599

Investment securities held to maturity
 
 
 
 
 
 
 
Mortgage-backed securities
2,184,653

 
17,339

 
490

 
2,201,502

Total investment securities
$
6,865,579

 
$
42,774

 
$
57,142

 
$
6,851,211


Investments in 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 298,000 shares of Visa Class B common stock. BancShares' Visa Class B shares are not considered to have a readily determinable fair value and are included in the Consolidated Balance Sheet with no fair value.
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 borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Repayments of mortgage-backed securities and government agency securities are dependent on the repayments of the underlying loan balances. Repayments of certain corporate bonds are subject to call provisions that can be exercised by the issuer at their discretion.
 
September 30, 2019
 
December 31, 2018
(Dollars in thousands)
Cost
 
Fair value
 
Cost
 
Fair value
Investment securities available for sale
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
$
748,206

 
$
749,318

 
$
1,049,253

 
$
1,047,380

One through five years
13,364

 
13,795

 
205,526

 
205,805

Five through 10 years
137,638

 
139,430

 
134,370

 
133,626

Over 10 years
3,941

 
4,100

 
3,923

 
4,125

Government agency
666,029

 
665,621

 
257,252

 
256,835

Mortgage-backed securities
3,329,593

 
3,332,619

 
2,956,793

 
2,909,339

Total investment securities available for sale
$
4,898,771

 
$
4,904,883

 
$
4,607,117

 
$
4,557,110

Investment securities held to maturity
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
30,552

 
30,552

 
—

 
—

One through five years
250

 
250

 
—

 
—

Mortgage-backed securities
2,115,141

 
2,186,998

 
2,184,653

 
2,201,502

Total investment securities held to maturity
$
2,145,943

 
$
2,217,800

 
$
2,184,653

 
$
2,201,502


There were gross gains of $1.3 million and $7.0 million on sales of investment securities available for sale for the three and nine months ended September 30, 2019, respectively. There were gross losses of $190.0 thousand on sales of investment securities available for sale during the three and nine month periods ended September 30, 2019. There were no gross gains or losses on sales of investment securities available for sale for the three and nine months ended September 30, 2018.
The following table provides the realized and unrealized gains and losses on marketable equity securities for the three and nine months ended September 30, 2019 and September 30, 2018:
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Marketable equity securities (losses) gains, net
$
(967
)
 
$
3,854

 
$
13,505

 
$
9,265

Less net gains recognized on marketable equity securities sold
714

 
946

 
3,029

 
1,181

Unrealized (losses) gains recognized on marketable equity securities held
$
(1,681
)
 
$
2,908

 
$
10,476

 
$
8,084


The following table provides information regarding securities with unrealized losses as of September 30, 2019 and December 31, 2018:
 
September 30, 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
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
$
49,867

 
$
2

 
$
—

 
$
—

 
$
49,867

 
$
2

Government agency
323,470

 
1,471

 
66,278

 
341

 
389,748

 
1,812

Mortgage-backed securities
1,413,342

 
4,165

 
477,249

 
3,178

 
1,890,591

 
7,343

Corporate bonds
31,168

 
203

 
6,563

 
122

 
37,731

 
325

Total
$
1,817,847

 
$
5,841

 
$
550,090

 
$
3,641

 
$
2,367,937

 
$
9,482

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 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
$
248,983

 
$
113

 
$
848,622

 
$
2,053

 
$
1,097,605

 
$
2,166

Government agency
115,273

 
601

 
2,310

 
38

 
117,583

 
639

Mortgage-backed securities
262,204

 
2,387

 
1,940,695

 
50,376

 
2,202,899

 
52,763

Corporate bonds
79,066

 
842

 
5,000

 
22

 
84,066

 
864

Total
$
705,526

 
$
3,943

 
$
2,796,627

 
$
52,489

 
$
3,502,153

 
$
56,432

Investment securities held to maturity
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
5,111

 
$
181

 
$
10,131

 
$
309

 
$
15,242

 
$
490


As of September 30, 2019, there were 108 investment securities available for sale that had continuous losses for more than 12 months of which 107 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, 2019 or December 31, 2018 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 $3.40 billion at September 30, 2019 and $4.03 billion at December 31, 2018 were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.