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)
September 30, 2013
Investment securities available for sale:
U.S. Treasury and federal agencies	$	37,432		480		25	$	37,887
Obligations of states and political subdivisions		17,614		355		6		17,963
Mortgage-backed securities:
Government issued or guaranteed		4,214,895		116,758		1,254		4,330,399
Privately issued		2,789		1,032		5		3,816
Collateralized debt obligations		42,686		17,724		1,107		59,303
Other debt securities		137,661		1,758		20,015		119,404
Equity securities		102,032		22,221		845		123,408

		4,555,109		160,328		23,257		4,692,180

Investment securities held to maturity:
Obligations of states and political subdivisions		170,370		4,279		88		174,561
Mortgage-backed securities:
Government issued or guaranteed		2,914,687		39,987		29,015		2,925,659
Privately issued		224,767		—		56,891		167,876
Other debt securities		9,290		—		—		9,290

		3,319,114		44,266		85,994		3,277,386

Other securities		298,479		—		—		298,479

Total	$	8,172,702		204,594		109,251	$	8,268,045


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 nine-month period ended September 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 nine-month period ended September 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 period ended September 30, 2013 and for the three-month and nine-month periods ended September 30, 2012.

The Company recognized $10 million of pre-tax other-than-temporary impairment (“OTTI”) losses during the nine months ended September 30, 2013 and $6 million and $33 million during the three months and nine months ended September 30, 2012, respectively, related to privately issued mortgage-backed securities. There were no other-than-temporary impairment losses during the third 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 for 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 nine months ended September 30, 2013 and 2012 follows:


	Three months ended September 30
	2013			2012
	(in thousands)
Beginning balance	$	794			264,197
Additions for credit losses not previously recognized		—			5,672
Reductions for realized losses		(626	)		(67,926	)

Ending balance	$	168			201,943


	Nine months ended September 30
	2013			2012
	(in thousands)
Beginning balance	$	197,809			285,399
Additions for credit losses not previously recognized		9,800			33,331
Reductions for realized losses		(207,441	)		(116,787	)

Ending balance	$	168			201,943

At September 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	$	24,886		24,971
Due after one year through five years		21,212		22,016
Due after five years through ten years		8,282		8,553
Due after ten years		181,013		179,017

		235,393		234,557
Mortgage-backed securities available for sale		4,217,684		4,334,215

	$	4,453,077		4,568,772


Debt securities held to maturity:
Due in one year or less	$	18,617		18,751
Due after one year through five years		65,392		67,400
Due after five years through ten years		86,361		88,410
Due after ten years		9,290		9,290

		179,660		183,851
Mortgage-backed securities held to maturity		3,139,454		3,093,535

	$	3,319,114		3,277,386

A summary of investment securities that as of September 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)
September 30, 2013
Investment securities available for sale:
U.S. Treasury and federal agencies	$	6,346		(25	)		—		—
Obligations of states and political subdivisions		577		(2	)		559		(4	)
Mortgage-backed securities:
Government issued or guaranteed		174,503		(1,126	)		5,731		(128	)
Privately issued		—		—			107		(5	)
Collateralized debt obligations		—		—			5,995		(1,107	)
Other debt securities		1,576		(7	)		102,898		(20,008	)
Equity securities		2,777		(845	)		—		—

		185,779		(2,005	)		115,290		(21,252	)


Investment securities held to maturity:
Obligations of states and political subdivisions		14,751		(70	)		1,558		(18	)
Mortgage-backed securities:
Government issued or guaranteed		1,259,353		(29,015	)		—		—
Privately issued		—		—			167,876		(56,891	)

		1,274,104		(29,085	)		169,434		(56,909	)


Total	$	1,459,883		(31,090	)		284,724		(78,161	)


	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		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 299 individual investment securities with aggregate gross unrealized losses of $109 million at September 30, 2013. Approximately $57 million of the unrealized losses pertained to privately issued mortgage-backed securities with a cost basis of $225 million. The Company also had $21 million of unrealized losses on trust preferred securities issued by financial institutions and securities backed by trust preferred securities having a cost basis of $132 million. Based on a review of each of the remaining securities in the investment securities portfolio at September 30, 2013, the Company concluded that it expected to recover the amortized cost basis of its investment. As of September 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 September 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 $298 million of cost method investment securities.