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)
June 30, 2013
Investment securities available for sale:
U.S. Treasury and federal agencies	$	37,486		622		—	$	38,108
Obligations of states and political subdivisions		18,874		364		7		19,231
Mortgage-backed securities:
Government issued or guaranteed		2,612,466		83,452		1,025		2,694,893
Privately issued		4,771		525		24		5,272
Collateralized debt obligations		42,911		18,140		1,135		59,916
Other debt securities		136,841		1,760		20,650		117,951
Equity securities		132,177		18,230		692		149,715

		2,985,526		123,093		23,533		3,085,086

Investment securities held to maturity:
Obligations of states and political subdivisions		177,824		4,355		73		182,106
Mortgage-backed securities:
Government issued or guaranteed		1,401,569		12,517		30,841		1,383,245
Privately issued		230,625		22		68,093		162,554
Other debt securities		9,673		—		—		9,673

		1,819,691		16,894		99,007		1,737,578

Other securities		305,749		—		—		305,749

Total	$	5,110,966		139,987		122,540	$	5,128,413

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		1,142,287		7,272		125,673		1,023,886
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

Gross realized gains on investment securities were $116 million for the three-month and six-month periods ended June 30, 2013. During the second quarter of 2013, the Company sold its holdings of Visa Class B shares for a gain of approximately $90 million and its holdings of MasterCard Class B shares for a gain of $13 million. Gross realized losses on investment securities were $60 million for the three-month and six-month periods ended June 30, 2013. During the second quarter of 2013, the Company sold substantially all of its privately issued mortgage-backed securities held in the available-for-sale investment securities portfolio. In total, $1.0 billion of such securities were sold for a net loss of approximately $46 million. Gross realized gains and losses from sales of investment securities were not significant for the three-month and six-month periods ended June 30, 2012.

The Company recognized $10 million of pre-tax other-than-temporary impairment (“OTTI”) losses during the six months ended June 30, 2013 and $16 million and $28 million during the three months and six months ended June 30, 2012, respectively, related to privately issued mortgage-backed securities. There were no other-than-temporary impairment losses during the second quarter of 2013. 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. The OTTI losses represented management’s estimate of credit losses inherent in the debt securities considering projected cash flows using assumptions for delinquency rates, loss severities, and other estimates of future collateral performance.

Changes in credit losses associated with debt securities for which OTTI losses have been recognized in earnings for the three months and six months ended June 30, 2013 and 2012 follows:


	Three months ended June 30
	2013			2012
	(in thousands)
Beginning balance	$	187,114			267,473
Additions for credit losses not previously recognized		—			16,173
Reductions for realized losses		(186,320	)		(19,449	)

Ending balance	$	794			264,197


	Six months ended June 30
	2013			2012
	(in thousands)
Beginning balance	$	197,809			285,399
Additions for credit losses not previously recognized		9,800			27,659
Reductions for realized losses		(206,815	)		(48,861	)

Ending balance	$	794			264,197

At June 30, 2013, 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	$	25,043		25,170
Due after one year through five years		21,020		21,951
Due after five years through ten years		8,772		9,189
Due after ten years		181,277		178,896

		236,112		235,206
Mortgage-backed securities available for sale		2,617,237		2,700,165

	$	2,853,349		2,935,371

Debt securities held to maturity:
Due in one year or less	$	24,360		24,490
Due after one year through five years		61,785		63,641
Due after five years through ten years		91,679		93,975
Due after ten years		9,673		9,673

		187,497		191,779
Mortgage-backed securities held to maturity		1,632,194		1,545,799

	$	1,819,691		1,737,578

A summary of investment securities that as of June 30, 2013 and December 31, 2012 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)
June 30, 2013
Investment securities available for sale:
Obligations of states and political subdivisions	$	—		—			676		(7	)
Mortgage-backed securities:
Government issued or guaranteed		199,273		(886	)		7,012		(139	)
Privately issued		326		(17	)		124		(7	)
Collateralized debt obligations		—		—			5,955		(1,135	)
Other debt securities		4,804		(18	)		102,116		(20,632	)
Equity securities		2,450		(692	)		—		—

		206,853		(1,613	)		115,883		(21,920	)

Investment securities held to maturity:
Obligations of states and political subdivisions		11,734		(54	)		1,558		(19	)
Mortgage-backed securities:
Government issued or guaranteed		1,080,577		(30,841	)		—		—
Privately issued		—		—			162,395		(68,093	)

		1,092,311		(30,895	)		163,953		(68,112	)

Total	$	1,299,164		(32,508	)		279,836		(90,032	)

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		121,487		(692	)		774,328		(124,981	)
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	)

The Company owned 278 individual investment securities with aggregate gross unrealized losses of $123 million at June 30, 2013. Approximately $68 million of the unrealized losses pertained to privately issued mortgage-backed securities with a cost basis of $231 million. The Company also had $22 million of unrealized losses on trust preferred securities issued by financial institutions and securities backed by trust preferred securities having a cost basis of $135 million. Based on a review of each of the remaining securities in the investment securities portfolio at June 30, 2013 the Company concluded that it expected to recover the amortized cost basis of its investment. As of June 30, 2013, 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 June 30, 2013, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $306 million of cost method investment securities.