3. Investment securities

The amortized cost and estimated fair value of investment securities were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In thousands)
December 31, 2012
Investment securities available for sale:
U.S. Treasury and federal agencies	$	38,422	$	922	$	—	$	39,344
Obligations of states and political subdivisions		20,375		534		8		20,901
Mortgage-backed securities:
Government issued or guaranteed		3,163,210		208,060		229		3,371,041
Privately issued residential		1,133,639		4,894		125,647		1,012,886
Privately issued commercial		8,648		2,378		26		11,000
Collateralized debt obligations		43,228		19,663		1,022		61,869
Other debt securities		136,603		2,247		26,900		111,950
Equity securities		98,945		14,921		3,420		110,446

		4,643,070		253,619		157,252		4,739,437

Investment securities held to maturity:
Obligations of states and political subdivisions		182,103		7,647		27		189,723
Mortgage-backed securities:
Government issued or guaranteed		597,340		31,727		—		629,067
Privately issued		242,378		160		94,900		147,638
Other debt securities		10,455		—		—		10,455

		1,032,276		39,534		94,927		976,883

Other securities		302,648		—		—		302,648

Total	$	5,977,994	$	293,153	$	252,179	$	6,018,968

December 31, 2011
Investment securities available for sale:
U.S. Treasury and federal agencies	$	69,468	$	1,255	$	—	$	70,723
Obligations of states and political subdivisions		39,518		771		20		40,269
Mortgage-backed securities:
Government issued or guaranteed		4,344,116		177,392		275		4,521,233
Privately issued residential		1,369,371		6,373		239,488		1,136,256
Privately issued commercial		17,679		—		2,650		15,029
Collateralized debt obligations		43,834		11,154		2,488		52,500
Other debt securities		216,700		4,588		44,443		176,845
Equity securities		211,737		8,468		4,500		215,705

		6,312,423		210,001		293,864		6,228,560

Investment securities held to maturity:
Obligations of states and political subdivisions		188,680		9,141		28		197,793
Mortgage-backed securities:
Government issued or guaranteed		608,533		24,881		—		633,414
Privately issued		268,642		—		99,140		169,502
Other debt securities		11,853		—		—		11,853

		1,077,708		34,022		99,168		1,012,562

Other securities		366,886		—		—		366,886

Total	$	7,757,017	$	244,023	$	393,032	$	7,608,008

No investment in securities of a single non-U.S. Government or government agency issuer exceeded ten percent of shareholders’ equity at December 31, 2012.

As of December 31, 2012, the latest available investment ratings of all obligations of states and political subdivisions, privately issued mortgage-backed securities, collateralized debt obligations and other debt securities were:


	Amortized Cost		Estimated Fair Value		Average Credit Rating of Fair Value Amount
	Amortized Cost		Estimated Fair Value		A or Better		BBB		BB		B or Less		Not Rated
	(In thousands)
Obligations of states and political subdivisions	$	202,478	$	210,624	$	169,660	$	7,215	$	200	$	—	$	33,549
Mortgage-backed securities:
Privately issued residential		1,376,017		1,160,524		206,479		87,866		151,980		712,765		1,434
Privately issued commercial		8,648		11,000		—		—		—		11,000		—
Collateralized debt obligations		43,228		61,869		4,268		10,298		10,770		36,533		—
Other debt securities		147,058		122,405		11,852		57,387		27,029		14,532		11,605

Total	$	1,777,429	$	1,566,422	$	392,259	$	162,766	$	189,979	$	774,830	$	46,588

The amortized cost and estimated fair value of collateralized mortgage obligations included in mortgage-backed securities were as follows:


	December 31
	2012		2011
	(In thousands)
Collateralized mortgage obligations:
Amortized cost	$	1,414,691	$	1,750,922
Estimated fair value		1,202,243		1,417,822

Gross realized gains and losses from sales of investment securities were not significant in 2012 or 2010. In 2011, gross realized gains from sales of investment securities were $150,223,000 and gross realized losses were $36,000. During 2011, the Company sold residential mortgage-backed securities guaranteed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) having an aggregate amortized cost of approximately $1.5 billion which resulted in a gain of $104 million (pre-tax). The Company also sold trust preferred securities and collateralized debt securities during 2011 having an aggregate amortized cost of $136 million and $100 million, respectively, which resulted in gains of $25 million (pre-tax) and $20 million (pre-tax), respectively.

The Company recognized $48 million, $77 million and $68 million of pre-tax other-than-temporary impairment losses related to privately issued mortgage-backed securities in 2012, 2011 and 2010, respectively. The impairment charges were recognized in light of deterioration of real estate values and a rise in delinquencies and charge-offs of underlying mortgage loans collateralizing those securities. In addition to those charges, impairment charges in 2010 were recognized for approximately $6 million related to collateralized debt obligations backed largely by trust preferred securities issued by financial institutions and for $12 million related to American Depositary Shares (“ADSs”) of Allied Irish Banks, p.l.c. (“AIB”) obtained in M&T’s 2003 acquisition of a former subsidiary of AIB. The other-than-temporary impairment losses represent management’s estimate of credit losses inherent in the debt securities considering projected cash flows using assumptions of delinquency rates, loss severities, and other estimates of future collateral performance.

Changes in credit losses during 2012, 2011 and 2010 associated with debt securities for which other-than-temporary impairment losses have been recognized in earnings follows:


	Year Ended December 31
	2012			2011			2010
	(In thousands)
Estimated credit losses — beginning balance	$	285,399		$	327,912		$	284,513
Additions for credit losses not previously recognized		47,822			77,035			74,288
Reductions for increases in cash flows		—			(5,111	)		(754	)
Reductions for realized losses		(135,412	)		(114,437	)		(30,135	)

Estimated credit losses — ending balance	$	197,809		$	285,399		$	327,912

At December 31, 2012, the amortized cost and estimated fair value of debt securities by contractual maturity were as follows:


	Amortized Cost		Estimated Fair Value
	(In thousands)
Debt securities available for sale:
Due in one year or less	$	4,918	$	4,952
Due after one year through five years		41,800		43,139
Due after five years through ten years		9,524		10,217
Due after ten years		182,386		175,756

		238,628		234,064
Mortgage-backed securities available for sale		4,305,497		4,394,927

	$	4,544,125	$	4,628,991

Debt securities held to maturity:
Due in one year or less	$	26,716	$	26,850
Due after one year through five years		50,310		52,526
Due after five years through ten years		104,901		110,167
Due after ten years		10,631		10,635

		192,558		200,178
Mortgage-backed securities held to maturity		839,718		776,705

	$	1,032,276	$	976,883

A summary of investment securities that as of December 31, 2012 and 2011 had been in a continuous unrealized loss position for less than twelve months and those that had been in a continuous unrealized loss position for twelve months or longer follows:


	Less Than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
December 31, 2012
Investment securities available for sale:
Obligations of states and political subdivisions	$	166	$	(1	)	$	683	$	(7	)
Mortgage-backed securities:
Government issued or guaranteed		12,107		(65	)		8,804		(164	)
Privately issued residential		121,487		(692	)		773,409		(124,955	)
Privately issued commercial		—		—			919		(26	)
Collateralized debt obligations		—		—			6,043		(1,022	)
Other debt securities		—		—			95,685		(26,900	)
Equity securities		5,535		(1,295	)		2,956		(2,125	)

		139,295		(2,053	)		888,499		(155,199	)

Investment securities held to maturity:
Obligations of states and political subdivisions		1,026		(5	)		3,558		(22	)
Privately issued mortgage-backed securities		—		—			147,273		(94,900	)

		1,026		(5	)		150,831		(94,922	)

Total	$	140,321	$	(2,058	)	$	1,039,330	$	(250,121	)

December 31, 2011
Investment securities available for sale:
Obligations of states and political subdivisions	$	—	$	—		$	1,228	$	(20	)
Mortgage-backed securities:
Government issued or guaranteed		38,492		(190	)		6,017		(85	)
Privately issued residential		297,133		(14,188	)		751,077		(225,300	)
Privately issued commercial		—		—			15,029		(2,650	)
Collateralized debt obligations		2,871		(335	)		4,863		(2,153	)
Other debt securities		72,637		(9,883	)		73,635		(34,560	)
Equity securities		9,883		(4,500	)		—		—

		421,016		(29,096	)		851,849		(264,768	)

Investment securities held to maturity:
Obligations of states and political subdivisions		3,084		(4	)		1,430		(24	)
Privately issued mortgage-backed securities		1,883		(592	)		167,139		(98,548	)

		4,967		(596	)		168,569		(98,572	)

Total	$	425,983	$	(29,692	)	$	1,020,418	$	(363,340	)

The Company owned 249 individual investment securities with aggregate gross unrealized losses of $252 million at December 31, 2012. Approximately $221 million of the unrealized losses pertain to privately issued mortgage-backed securities with a cost basis of $1.3 billion. The Company also had $28 million of unrealized losses on available-for-sale trust preferred securities issued by financial institutions and securities backed by trust preferred securities having a cost basis of $130 million. Based on a review of each of the remaining securities in the investment securities portfolio at December 31, 2012, with the exception of the aforementioned securities for which other-than-temporary impairment losses were recognized, the Company concluded that it expected to recover the amortized cost basis of its investment. As of December 31, 2012, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities. At December 31, 2012, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $303 million of cost method investment securities.

At December 31, 2012, investment securities with a carrying value of $4,297,092,000, including $3,372,409,000 of investment securities available for sale, were pledged to secure borrowings from various FHLBs, repurchase agreements, governmental deposits, interest rate swap agreements and available lines of credit as described in note 9.

Investment securities pledged by the Company to secure obligations whereby the secured party is permitted by contract or custom to sell or repledge such collateral totaled $1,801,842,000 at December 31, 2012. The pledged securities included securities of the U.S. Treasury and federal agencies and mortgage-backed securities.