INVESTMENTS

The amortized cost and fair value of investment securities classified as available for sale and held to maturity at September 30, 2014 and December 31, 2013, are as follows:



	September 30, 2014
(Dollars in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Investment securities available for sale
U.S. Treasury	$	1,888,647	$	583	$	1,420	$	1,887,810
Government agency	1,128,752		1,294		393		1,129,653
Mortgage-backed securities	2,591,641		7,322		21,498		2,577,465
Equity securities	543		29,485		—		30,028
Municipal securities	125		1		—		126
Other	23,012		—		—		23,012
Total investment securities available for sale	$	5,632,720	$	38,685	$	23,311	$	5,648,094

	December 31, 2013
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
U.S. Treasury	$	373,223	$	259	$	45	$	373,437
Government agency	2,543,223		1,798		792		2,544,229
Mortgage-backed securities	2,486,297		4,526		43,950		2,446,873
Equity securities	543		21,604		—		22,147
Municipal securities	186		1		—		187
Other	863		—		33		830
Total investment securities available for sale	$	5,404,335	$	28,188	$	44,820	$	5,387,703

	September 30, 2014
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Investment securities held to maturity
Mortgage-backed securities	$	607	$	31	$	—	$	638

	December 31, 2013
	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Mortgage-backed securities	$	907	$	67	$	—	$	974

As of September 30, 2014, equity securities included an investment in Bancorporation stock of $29.6 million. Pursuant to the Merger Agreement, the shares of capital stock of Bancorporation held were canceled and ceased to exist when the merger became effective October 1, 2014. Included in Other at September 30, 2014 are Trust Preferred Securities issued by a former business trust subsidiary of Bancorporation, FCB/SC Capital Trust II, which were purchased by BancShares during the third quarter of 2014 with a contractual maturity of June 15, 2034. These are the only securities included within Other as the previous amount was a single subordinated debt security that was called during the second quarter of 2014. Upon completion of the merger with Bancorporation on October 1, 2014, the issuer of the Trust Preferred Securities became a subsidiary of BancShares and, for future financial statement purposes, the investment in the Trust Preferred Securities will be eliminated in consolidation at BancShares.

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.

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. Equity securities do not have a stated maturity date.



	September 30, 2014				December 31, 2013
(Dollars in thousands)	Cost		Fair value		Cost		Fair value
Investment securities available for sale
Non-amortizing securities maturing in:
One year or less	$	529,931	$	530,363	$	839,956	$	840,883
One through five years	2,487,593		2,487,226		2,077,539		2,077,800
Over 10 years	23,012		23,012		—		—
Mortgage-backed securities	2,591,641		2,577,465		2,486,297		2,446,873
Equity securities	543		30,028		543		22,147
Total investment securities available for sale	$	5,632,720	$	5,648,094	$	5,404,335	$	5,387,703
Investment securities held to maturity
Mortgage-backed securities held to maturity	$	607	$	638	$	907	$	974

There were no realized securities gains (losses) during any period presented.

The following table provides information regarding securities with unrealized losses as of September 30, 2014 and December 31, 2013.



	September 30, 2014
	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	$	999,783	$	1,420	$	—	$	—	$	999,783	$	1,420
Government agency	291,783		393		—		—		291,783		393
Mortgage-backed securities	486,678		2,210		1,090,467		19,288		1,577,145		21,498
Total	$	1,778,244	$	4,023	$	1,090,467	$	19,288	$	2,868,711	$	23,311

	December 31, 2013
	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	$	102,105	$	45	$	—	$	—	$	102,105	$	45
Government agency	780,552		761		29,969		31		810,521		792
Mortgage-backed securities	2,221,213		42,876		26,861		1,074		2,248,074		43,950
Other	830		33		—		—		830		33
Total	$	3,104,700	$	43,715	$	56,830	$	1,105	$	3,161,530	$	44,820

Investment securities with an aggregate fair value of $1.09 billion and $56.8 million had continuous unrealized losses for more than 12 months as of September 30, 2014 and December 31, 2013, with an aggregate unrealized loss of $19.3 million and $1.1 million, respectively. As of September 30, 2014, all 107 of these investments are U.S. government agency and government sponsored enterprise-issued mortgage-backed securities. None of the unrealized losses identified as of September 30, 2014 or December 31, 2013 relate to the marketability of the securities or the issuer’s ability to honor redemption obligations. For all periods presented, BancShares had 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.

Investment securities having an aggregate carrying value of $2.78 billion at September 30, 2014 and $2.75 billion at December 31, 2013 were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.