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Investments
 12 Months Ended
Dec. 31, 2019
Investments [Abstract]  
Investments
INVESTMENTS
The amortized cost and fair value of investment and marketable equity securities at December 31, 2019 and 2018, were as follows:
 
December 31, 2019
(Dollars in thousands)
Cost
 
Gross
unrealized
gains
 
Gross unrealized
losses
 
Fair
value
Investment securities available for sale
 
 
 
 
 
 
 
U.S. Treasury
$
409,397

 
$
602

 
$
—

 
$
409,999

Government agency
684,085

 
928

 
2,241

 
682,772

Residential mortgage-backed securities
5,269,060

 
13,417

 
15,387

 
5,267,090

Commercial mortgage-backed securities
373,105

 
6,974

 
59

 
380,020

Corporate bonds
198,278

 
3,420

 
132

 
201,566

State, county and municipal
118,227

 
—

 
—

 
118,227

Total investment securities available for sale
$
7,052,152

 
$
25,341

 
$
17,819

 
$
7,059,674

Investment in marketable equity securities
59,262

 
23,304

 
233

 
82,333

Investment securities held to maturity
 
 
 
 
 
 
 
Other
30,996

 
—

 
—

 
30,996

Total investment securities
$
7,142,410

 
$
48,645

 
$
18,052

 
$
7,173,003

 
 
 
 
 
 
 
 
 
December 31, 2018
 
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

Residential 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
 
 
 
 
 
 
 
Residential mortgage-backed securities
2,087,024

 
16,592

 
490

 
2,103,126

Commercial mortgage-backed securities
97,629

 
747

 
—

 
98,376

Total investment securities held to maturity
2,184,653

 
17,339

 
490

 
2,201,502

Total investment securities
$
6,865,579

 
$
42,774

 
$
57,142

 
$
6,851,211



As described in Note A, Accounting Policies and Basis of Presentation, on November 1, 2019, as part of the adoption of ASU 2019-04, mortgage-backed securities with an amortized cost of $2.08 billion were transferred from investment securities held to maturity to the available for sale portfolio. At the time of the transfer, the securities had a fair value of $2.15 billion. The transfer resulted in a reclassification of unrealized losses of $72.5 million, or $55.8 million net of tax, previously frozen in AOCI as a result of the initial transfer to held to maturity. FCB still has the intent and ability to hold the remainder of the held to maturity portfolio to maturity.

On May 1, 2018, mortgage-backed securities with an amortized cost of $2.49 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 $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, or $84.3 million net of tax, and was reported as a component of AOCI. This unrealized loss was accreted over the remaining expected life of the securities as an adjustment of yield and was partially offset by the amortization of the corresponding discount on the transferred securities.

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 holds approximately 298,000 shares of Visa Class B common stock with a cost basis of zero. BancShares’ Visa Class B shares are not considered to have a readily determinable fair value and are recorded with no fair value.

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.
 
December 31, 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
$
406,325

 
$
406,927

 
$
1,049,253

 
$
1,047,380

One through five years
24,496

 
24,971

 
205,526

 
205,805

Five through 10 years
185,209

 
187,868

 
134,370

 
133,626

Over 10 years
109,872

 
110,026

 
3,923

 
4,125

Government agency
684,085

 
682,772

 
257,252

 
256,835

Residential mortgage-backed securities
5,269,060

 
5,267,090

 
2,956,793

 
2,909,339

Commercial mortgage-backed securities
373,105

 
380,020

 
—

 
—

Total investment securities available for sale
$
7,052,152

 
$
7,059,674

 
$
4,607,117

 
$
4,557,110

Investment securities held to maturity
 
 
 
 
 
 
 
Non-amortizing securities maturing in:
 
 
 
 
 
 
 
One year or less
30,746

 
30,746

 
—

 
—

One through five years
250

 
250

 
—

 
—

Residential mortgage-backed securities
—

 
—

 
2,087,024

 
2,103,126

Commercial mortgage-backed securities
—

 
—

 
97,629

 
98,376

Total investment securities held to maturity
$
30,996

 
$
30,996

 
$
2,184,653

 
$
2,201,502


For each period presented, realized gains on investment securities available for sale include the following:
 
Year ended December 31
(Dollars in thousands)
2019
 
2018
 
2017
Gross gains on retirement/sales of investment securities available for sale
$
8,993

 
$
353

 
$
11,635

Gross losses on sales of investment securities available for sale
(1,878
)
 
(2
)
 
(7,342
)
Realized gains on investment securities available for sale, net
$
7,115

 
$
351

 
$
4,293



For each period presented, realized and unrealized gains or losses on marketable equity securities include the following:
 
Year ended December 31
(Dollars in thousands)
2019
 
2018
Marketable equity securities gains (losses), net
$
20,625

 
$
(7,610
)
Less net gains recognized on marketable equity securities sold
16,344

 
1,190

Unrealized (losses) gains recognized on marketable equity securities held
$
4,281

 
$
(8,800
)


The following table provides information regarding investment securities with unrealized losses as of December 31, 2019 and 2018:
 
December 31, 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
 
 
 
 
 
 
 
 
 
 
 
Government agency
$
347,081

 
$
1,827

 
$
63,947

 
$
414

 
$
411,028

 
$
2,241

Residential mortgage-backed securities
2,387,293

 
14,016

 
264,257

 
1,371

 
2,651,550

 
15,387

Commercial mortgage-backed securities
35,926

 
59

 
—

 
—

 
35,926

 
59

Corporate bonds
7,714

 
123

 
4,749

 
9

 
12,463

 
132

Total
$
2,778,014

 
$
16,025

 
$
332,953

 
$
1,794

 
$
3,110,967

 
$
17,819

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
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
$
248,983

 
$
113

 
$
848,622

 
$
2,053

 
$
1,097,605


$
2,166

Government agency
115,273

 
601

 
2,310

 
38

 
117,583

 
639

Residential 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
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities
$
5,111

 
$
181

 
$
10,131

 
$
309

 
$
15,242

 
$
490


As of December 31, 2019, there were 91 investment securities available for sale with continuous losses for more than 12 months of which 90 are government sponsored, enterprise-issued mortgage-backed securities or government agency securities and 1 is a corporate bond.
None of the unrealized losses identified as of December 31, 2019 or December 31, 2018 relate to the marketability of the securities or the issuer’s ability to honor redemption obligations. Rather, the unrealized losses related to changes in interest rates and spreads relative to when the investment 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 losses on these securities were deemed to be OTTI.
Investment securities having an aggregate carrying value of $3.93 billion at December 31, 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.