4. Securities

The amortized cost and fair value of available for sale securities are summarized as follows (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized
September 30, 2013	Cost		Gains		Losses			Fair Value
U.S. Treasury securities	$	23,746	$	86	$	(17	)	$	23,815
U.S. government agencies:
Bonds	773,723		6,431		(37,491		)	742,663
Residential mortgage-backed securities	62,825		1,462		(499		)	63,788
Collateralized mortgage obligations	132,563		720		(2,749		)	130,534
Corporate debt securities	73,566		5,071		(276		)	78,361
States and political subdivisions	164,813		498		(6,493		)	158,818
Commercial mortgage-backed securities	741		63		—			804
Equity securities	19,756		1,240		—			20,996
Note receivable	42,102		6,385		—			48,487
Warrant	12,068		—		(953		)	11,115
Totals	$	1,305,903	$	21,956	$	(48,478	)	$	1,279,381

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2012	Cost		Gains		Losses			Fair Value
U.S. Treasury securities	$	7,046	$	141	$	(2	)	$	7,185
U.S. government agencies:
Bonds	524,888		1,663		(314		)	526,237
Residential mortgage-backed securities	18,473		490		(70		)	18,893
Collateralized mortgage obligations	97,812		191		(79		)	97,924
Corporate debt securities	79,716		7,461		—			87,177
States and political subdivisions	177,701		196		(2,138		)	175,759
Commercial mortgage-backed securities	1,001		72		—			1,073
Equity securities	19,289		1,139		—			20,428
Note receivable	40,508		3,652		—			44,160
Warrant	12,068		49		—			12,117
Totals	$	978,502	$	15,054	$	(2,603	)	$	990,953

Available for sale equity securities includes 1,475,387 shares of SWS common stock, a note made by SWS in the aggregate principal amount of $50.0 million and a warrant to purchase 8,695,652 shares of SWS common stock. SWS issued the note in July 2011 under a credit agreement pursuant to a senior unsecured loan from Hilltop. The note bears interest at a rate of 8.0% per annum, is prepayable by SWS subject to certain conditions after three years, and has a maturity of five years. The warrant provides for the purchase of 8,695,652 shares of SWS common stock at an exercise price of $5.75 per share, subject to anti-dilution adjustments. If the warrant was fully exercised, Hilltop would beneficially own 24.4% of SWS.

Information regarding available for sale securities that were in an unrealized loss position is shown in the following table (dollars in thousands).

	September 30, 2013					December 31, 2012
	Number of			Unrealized		Number of			Unrealized
	Securities	Fair Value		Losses		Securities	Fair Value		Losses
U.S. treasury securities:
Unrealized loss for less than twelve months	4	$	17,709	$	17	2	$	2,427	$	2
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	4	17,709		17		2	2,427		2
U.S. government agencies:
Bonds:
Unrealized loss for less than twelve months	38	560,938		37,491		14	236,305		314
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	38	560,938		37,491		14	236,305		314
Residential mortgage-backed securities:
Unrealized loss for less than twelve months	5	11,735		499		7	12,279		70
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	5	11,735		499		7	12,279		70
Collateralized mortgage obligations:
Unrealized loss for less than twelve months	9	78,896		2,749		8	38,887		79
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	9	78,896		2,749		8	38,887		79
Corporate debt securities:
Unrealized loss for less than twelve months	4	4,671		276		—	—		—
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	4	4,671		276		—	—		—
States and political subdivisions:
Unrealized loss for less than twelve months	192	127,377		6,493		225	156,664		2,138
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	192	127,377		6,493		225	156,664		2,138
Warrants:
Unrealized loss for less than twelve months	1	11,115		953		—	—		—
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	1	11,115		953		—	—		—
Total available for sale:
Unrealized loss for less than twelve months	253	812,441		48,478		256	446,562		2,603
Unrealized loss for twelve months or longer	—	—		—		—	—		—
	253	$	812,441	$	48,478	256	$	446,562	$	2,603

During the three and nine months ended September 30, 2013 and 2012, the Company did not record any other-than-temporary impairments. While all of the investments are monitored for potential other-than-temporary impairment, our analysis and experience indicate that these available for sale investments generally do not present a great risk of other-than-temporary-impairment, as fair value should recover over time. Factors considered in the Company’s analysis include the reasons for the unrealized loss position, the severity and duration of the unrealized loss position, credit worthiness, and forecasted performance of the investee. While some of the securities held in the investment portfolio have decreased in value since the date of acquisition, the severity of loss and the duration of the loss position are not believed to be significant enough to warrant other-than-temporary impairment of the securities. The Company does not intend, nor is it likely that the Company will be required, to sell these securities before the recovery of the cost basis. Therefore, management does not believe any other-than-temporary impairments exist at September 30, 2013.

Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The amortized cost and fair value of securities, excluding trading and available for sale equity securities and the available for sale warrant, at September 30, 2013 are shown by contractual maturity below (in thousands).

	Amortized
	Cost		Fair Value
Due in one year or less	$	44,895	$	45,076
Due after one year through five years	110,294		120,931
Due after five years through ten years	87,047		89,034
Due after ten years	835,714		797,103
	1,077,950		1,052,144

Residential mortgage-backed securities	62,825		63,788
Collateralized mortgage obligations	132,563		130,534
Commercial mortgage-backed securities	741		804
	$	1,274,079	$	1,247,270

The Company realized a net gain from its trading securities portfolio of $0.1 million during the three months ended September 30, 2013 and a net loss of $2.6 million during the nine months ended September 30, 2013, which are recorded as a component of other noninterest income within the consolidated statements of operations.

Securities with a carrying amount of $928.7 million and $635.2 million (with a fair value of $884.6 million and $633.4 million) at September 30, 2013 and December 31, 2012, respectively, were pledged to secure public and trust deposits, federal funds purchased and securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

At September 30, 2013 and December 31, 2012, NLC had investments on deposit in custody for various state insurance departments with carrying values of $9.4 million and $9.3 million, respectively.