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Investment Securities
 12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities as of December 31, 2019, December 31, 2018, and December 31, 2017, were as follows:
(dollars in thousands)
Amortized
Cost

 
Gross
Unrealized
Gains

 
Gross
Unrealized
Losses

 
Fair
Value

December 31, 2019
 
 
 
 
 
 
 
Available-for-Sale:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
222,365

 
$
213

 
$
(1,447
)
 
$
221,131

Debt Securities Issued by States and Political Subdivisions
54,480

 
631

 
(14
)
 
55,097

Debt Securities Issued by U.S. Government-Sponsored Enterprises
22,128

 
19

 
—

 
22,147

Debt Securities Issued by Corporations
335,553

 
1,401

 
(633
)
 
336,321

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
1,164,466

 
11,627

 
(3,267
)
 
1,172,826

    Residential - U.S. Government-Sponsored Enterprises
584,272

 
4,363

 
(1,874
)
 
586,761

    Commercial - Government Agencies
224,372

 
2,889

 
(2,541
)
 
224,720

Total Mortgage-Backed Securities
1,973,110

 
18,879

 
(7,682
)
 
1,984,307

Total
$
2,607,636

 
$
21,143

 
$
(9,776
)
 
$
2,619,003

Held-to-Maturity:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
274,375

 
$
1,319

 
$
(31
)
 
$
275,663

Debt Securities Issued by States and Political Subdivisions
54,811

 
1,236

 
—

 
56,047

Debt Securities Issued by Corporations
14,975

 
—

 
(138
)
 
14,837

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
1,067,416

 
13,247

 
(5,348
)
 
1,075,315

    Residential - U.S. Government-Sponsored Enterprises
1,546,479

 
13,871

 
(2,478
)
 
1,557,872

    Commercial - Government Agencies
84,238

 
317

 
(1,407
)
 
83,148

Total Mortgage-Backed Securities
2,698,133

 
27,435

 
(9,233
)
 
2,716,335

Total
$
3,042,294

 
$
29,990

 
$
(9,402
)
 
$
3,062,882

 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
Available-for-Sale:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
394,485

 
$
493

 
$
(2,577
)
 
$
392,401

Debt Securities Issued by States and Political Subdivisions
559,800

 
5,227

 
(1,031
)
 
563,996

Debt Securities Issued by U.S. Government-Sponsored Enterprises
56

 
—

 
—

 
56

Debt Securities Issued by Corporations
224,997

 
—

 
(1,857
)
 
223,140

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
189,645

 
1,726

 
(929
)
 
190,442

    Residential - U.S. Government-Sponsored Enterprises
589,311

 
1,779

 
(12,563
)
 
578,527

    Commercial - Government Agencies
63,864

 
—

 
(4,484
)
 
59,380

Total Mortgage-Backed Securities
842,820

 
3,505

 
(17,976
)
 
828,349

Total
$
2,022,158

 
$
9,225

 
$
(23,441
)
 
$
2,007,942

Held-to-Maturity:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
353,122

 
$
186

 
$
(1,093
)
 
$
352,215

Debt Securities Issued by States and Political Subdivisions
234,602

 
6,150

 
—

 
240,752

Debt Securities Issued by Corporations
97,266

 
—

 
(1,755
)
 
95,511

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
1,861,874

 
3,886

 
(51,773
)
 
1,813,987

    Residential - U.S. Government-Sponsored Enterprises
758,835

 
1,590

 
(20,259
)
 
740,166

    Commercial - Government Agencies
176,393

 
147

 
(5,177
)
 
171,363

Total Mortgage-Backed Securities
2,797,102

 
5,623

 
(77,209
)
 
2,725,516

Total
$
3,482,092

 
$
11,959

 
$
(80,057
)
 
$
3,413,994

 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
Available-for-Sale:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
424,912

 
$
2,053

 
$
(1,035
)
 
$
425,930

Debt Securities Issued by States and Political Subdivisions
618,167

 
9,894

 
(1,042
)
 
627,019

Debt Securities Issued by Corporations
268,003

 
199

 
(2,091
)
 
266,111

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
233,268

 
3,129

 
(1,037
)
 
235,360

    Residential - U.S. Government-Sponsored Enterprises
619,795

 
420

 
(10,403
)
 
609,812

    Commercial - Government Agencies
71,999

 
—

 
(3,252
)
 
68,747

Total Mortgage-Backed Securities
925,062

 
3,549

 
(14,692
)
 
913,919

Total
$
2,236,144

 
$
15,695

 
$
(18,860
)
 
$
2,232,979

Held-to-Maturity:
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury and Government Agencies
$
375,074

 
$
18

 
$
(1,451
)
 
$
373,641

Debt Securities Issued by States and Political Subdivisions
238,504

 
9,125

 
—

 
247,629

Debt Securities Issued by Corporations
119,635

 
123

 
(1,591
)
 
118,167

Mortgage-Backed Securities:
 
 
 
 
 
 
 
    Residential - Government Agencies
2,229,985

 
9,975

 
(37,047
)
 
2,202,913

    Residential - U.S. Government-Sponsored Enterprises
763,312

 
911

 
(11,255
)
 
752,968

    Commercial - Government Agencies
201,660

 
797

 
(3,654
)
 
198,803

Total Mortgage-Backed Securities
3,194,957

 
11,683

 
(51,956
)
 
3,154,684

Total
$
3,928,170

 
$
20,949

 
$
(54,998
)
 
$
3,894,121


As mentioned in Note 1 the FASB issued ASU No. 2019-04 in April 2019. In June 2019, the Company elected to early adopt the amendments to Topic 815, Derivatives and Hedging, which allowed the Company a one-time reclassification of certain prepayable debt securities from HTM to AFS. On June 10, 2019, prepayable debt securities with a carrying value of $1.0 billion and a net unrealized gain of $3.1 million were transferred from held-to-maturity to available-for-sale. The reclassified securities consisted of mortgage-backed securities issued by U.S. government agencies and government-sponsored enterprises, municipal debt securities, and corporate debt securities.

The table below presents an analysis of the contractual maturities of the Company’s investment securities as of December 31, 2019. Debt securities issued by government agencies (Small Business Administration securities) and mortgage-backed securities are disclosed separately in the table below as these investment securities may prepay prior to their scheduled contractual maturity dates.
(dollars in thousands)
Amortized
Cost

 
Fair Value

Available-for-Sale:
 
 
 
Due in One Year or Less
$
126,483

 
$
126,672

Due After One Year Through Five Years
114,822

 
114,858

Due After Five Years Through Ten Years
171,950

 
173,137

Due After Ten Years
51

 
52

 
413,306

 
414,719

 
 
 
 
Debt Securities Issued by Government Agencies
221,220

 
219,977

Mortgage-Backed Securities:
 
 
 
    Residential - Government Agencies
1,164,466

 
1,172,826

    Residential - U.S. Government-Sponsored Enterprises
584,272

 
586,761

    Commercial - Government Agencies
224,372

 
224,720

Total Mortgage-Backed Securities
1,973,110

 
1,984,307

Total
$
2,607,636

 
$
2,619,003

 
 
 
 
Held-to-Maturity:
 
 
 
Due in One Year or Less
$
294,760

 
$
296,286

Due After One Year Through Five Years
49,401

 
50,261

 
344,161

 
346,547

Mortgage-Backed Securities:
 
 
 
    Residential - Government Agencies
1,067,416

 
1,075,315

    Residential - U.S. Government-Sponsored Enterprises
1,546,479

 
1,557,872

    Commercial - Government Agencies
84,238

 
83,148

Total Mortgage-Backed Securities
2,698,133

 
2,716,335

Total
$
3,042,294

 
$
3,062,882



Investment securities with carrying values of $2.6 billion, $2.3 billion, $2.4 billion as of December 31, 2019, December 31, 2018, and December 31, 2017, respectively, were pledged to secure deposits of governmental entities and securities sold under agreements to repurchase.

The table below presents the gains and losses from the sales of investment securities for the years ended December 31, 2019, December 31, 2018, and December 31, 2017.
(dollars in thousands)
2019

 
2018

 
2017

Gross Gains on Sales of Investment Securities
$
7,810

 
$
—

 
$
12,467

Gross Losses on Sales of Investment Securities
(11,796
)
 
(3,938
)
 
(2,037
)
Net Gains (Losses) on Sales of Investment Securities
$
(3,986
)
 
$
(3,938
)
 
$
10,430



The gross gains and losses on sales of investment securities during the year ended December 31, 2019, included sales of AFS municipal debt securities, mortgage-backed securities, and corporate debt securities as part of a portfolio repositioning. In addition, fees paid to the counterparties of our prior Visa Class B share sale transactions which are expensed as incurred also contributed to the losses during the year ended December 31, 2019, December 31, 2018, and December 31, 2017. In addition, losses during the year ended December 31, 2019, and December 31, 2018, included $0.5 million and $1.0 million, respectively, related to a change in the Visa Class B conversion ratio.

The Company’s investment securities in an unrealized loss position, segregated by continuous length of impairment, were as follows:
 
Less Than 12 Months
 
12 Months or Longer
 
Total
(dollars in thousands)
Fair Value

 
Gross
Unrealized
Losses

 
Fair Value

 
Gross
Unrealized
Losses

 
Fair Value

 
Gross
Unrealized
Losses

December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Available-for-Sales:
 
 
 
 
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury
 and Government Agencies
$
65,479

 
$
(188
)
 
$
101,761

 
$
(1,259
)
 
$
167,240

 
$
(1,447
)
Debt Securities Issued by States
 and Political Subdivisions
6,788

 
(14
)
 
440

 
—

 
7,228

 
(14
)
Debt Securities Issued by Corporations
25,892

 
(326
)
 
74,693

 
(307
)
 
100,585

 
(633
)
Mortgage-Backed Securities:
 
 
 
 
 
 
 
 
 
 
 
    Residential - Government Agencies
119,271

 
(526
)
 
170,805

 
(2,741
)
 
290,076

 
(3,267
)
    Residential - U.S. Government-Sponsored Enterprises
187,861

 
(816
)
 
73,720

 
(1,058
)
 
261,581

 
(1,874
)
    Commercial - Government Agencies
59,826

 
(319
)
 
52,965

 
(2,222
)
 
112,791

 
(2,541
)
Total Mortgage-Backed Securities
366,958

 
(1,661
)
 
297,490

 
(6,021
)
 
664,448

 
(7,682
)
Total
$
465,117

 
$
(2,189
)
 
$
474,384

 
$
(7,587
)
 
$
939,501

 
$
(9,776
)
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-Maturity:
 
 
 
 
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury
 and Government Agencies
$
—

 
$
—

 
$
39,984

 
$
(31
)
 
$
39,984

 
$
(31
)
Debt Securities Issued by Corporations
4,416

 
(15
)
 
10,421

 
(123
)
 
14,837

 
(138
)
Mortgage-Backed Securities:
 
 
 
 
 
 
 
 
 
 
 
    Residential - Government Agencies
88,061

 
(422
)
 
255,816

 
(4,926
)
 
343,877

 
(5,348
)
    Residential - U.S. Government-Sponsored Enterprises
340,453

 
(909
)
 
156,018

 
(1,569
)
 
496,471

 
(2,478
)
    Commercial - Government Agencies
10,529

 
(19
)
 
52,052

 
(1,388
)
 
62,581

 
(1,407
)
Total Mortgage-Backed Securities
439,043

 
(1,350
)
 
463,886

 
(7,883
)
 
902,929

 
(9,233
)
Total
$
443,459

 
$
(1,365
)
 
$
514,291

 
$
(8,037
)
 
$
957,750

 
$
(9,402
)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Available-for-Sales:
 
 
 
 
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury
 and Government Agencies
$
157,058

 
$
(964
)
 
$
173,763

 
$
(1,613
)
 
$
330,821

 
$
(2,577
)
Debt Securities Issued by States
 and Political Subdivisions
38,138

 
(59
)
 
156,772

 
(972
)
 
194,910

 
(1,031
)
Debt Securities Issued by Corporations
59,770

 
(231
)
 
163,371

 
(1,626
)
 
223,141

 
(1,857
)
Mortgage-Backed Securities:
 
 
 
 
 
 
 
 
 
 
 
    Residential - Government Agencies
6,299

 
(10
)
 
19,011

 
(919
)
 
25,310

 
(929
)
    Residential - U.S. Government-Sponsored Enterprises
—

 
—

 
473,380

 
(12,563
)
 
473,380

 
(12,563
)
    Commercial - Government Agencies
—

 
—

 
59,380

 
(4,484
)
 
59,380

 
(4,484
)
Total Mortgage-Backed Securities
6,299

 
(10
)
 
551,771

 
(17,966
)
 
558,070

 
(17,976
)
Total
$
261,265

 
$
(1,264
)
 
$
1,045,677

 
$
(22,177
)
 
$
1,306,942

 
$
(23,441
)
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-Maturity:
 
 
 
 
 
 
 
 
 
 
 
Debt Securities Issued by the U.S. Treasury
and Government Agencies
$
99,440

 
$
(237
)
 
$
134,239

 
$
(856
)
 
$
233,679

 
$
(1,093
)
Debt Securities Issued by Corporations
—

 
—

 
95,511

 
(1,755
)
 
95,511

 
(1,755
)
Mortgage-Backed Securities:
 
 
 
 
 
 
 
 
 
 
 
    Residential - Government Agencies
12,974

 
(45
)
 
1,491,747

 
(51,728
)
 
1,504,721

 
(51,773
)
    Residential - U.S. Government-Sponsored Enterprises
—

 
—

 
617,000

 
(20,259
)
 
617,000

 
(20,259
)
    Commercial - Government Agencies
19,217

 
(61
)
 
145,715

 
(5,116
)
 
164,932

 
(5,177
)
Total Mortgage-Backed Securities
32,191

 
(106
)
 
2,254,462

 
(77,103
)
 
2,286,653

 
(77,209
)
Total
$
131,631

 
$
(343
)
 
$
2,484,212

 
$
(79,714
)
 
$
2,615,843

 
$
(80,057
)


The Company does not believe that the investment securities that were in an unrealized loss position as of December 31, 2019, which were comprised of 254 securities, represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. As of December 31, 2019, the gross unrealized losses reported for mortgage-backed securities were mostly related to investment securities issued by the Government National Mortgage Association. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity.

Interest income from taxable and non-taxable investment securities for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, were as follows:
 
Year Ended December 31,
(dollars in thousands)
2019

 
2018

 
2017

Taxable
$
137,204

 
$
115,947

 
$
108,787

Non-Taxable
6,586

 
18,515

 
19,725

Total Interest Income from Investment Securities
$
143,790

 
$
134,462

 
$
128,512



As of December 31, 2019, and December 31, 2018, the carrying value of the Company’s Federal Home Loan Bank of Des Moines (“FHLB Des Moines”) stock and Federal Reserve Bank stock was as follows:
 
December 31,
(dollars in thousands)
2019

 
2018

Federal Home Loan Bank Stock
$
13,000

 
$
15,000

Federal Reserve Bank Stock
21,093

 
20,858

Total
$
34,093

 
$
35,858



These securities can only be redeemed or sold at their par value and only to the respective issuing government-supported institution or to another member institution.  The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment.  Management considers these non-marketable equity securities to be long-term investments.  Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value.

Visa Class B Restricted Shares

In 2008, the Company received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the settlement of certain litigation which is indemnified by Visa members, including the Company. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account not be sufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Class B conversion ratio to unrestricted Class A shares. As of December 31, 2019, the conversion ratio was 1.6228. See Note 17 Derivative Financial Instruments for more information.

The Company occasionally sells these Visa Class B shares to other financial institutions. Concurrent with every sale the Company enters into an agreement with the buyer that requires payment to the buyer in the event Visa further reduces the conversion ratio. Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation mentioned above, the remaining 80,214 Class B shares (130,171 Class A equivalents) that the Company owns as of December 31, 2019, are carried at a zero cost basis.