Securities

Year-end securities held to maturity and available for sale consisted of the following:



	2013								2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Held to Maturity:
U.S. Treasury	$	248,592	$	20,139	$	—	$	268,731	$	248,188	$	29,859	$	—	$	278,047
Residential mortgage-backed securities	9,674		89		143		9,620		10,725		300		—		11,025
States and political subdivisions	2,880,482		7,691		137,861		2,750,312		2,696,468		15,397		4,993		2,706,872
Other	1,000		—		—		1,000		1,000		—		—		1,000
Total	$	3,139,748	$	27,919	$	138,004	$	3,029,663	$	2,956,381	$	45,556	$	4,993	$	2,996,944
Available for Sale:
U. S. Treasury	$	2,522,159	$	18,395	$	—	$	2,540,554	$	3,020,115	$	37,806	$	—	$	3,057,921
U.S. Government agencies/corporations	54,024		—		44		53,980		—		—		—		—
Residential mortgage-backed securities	1,710,664		66,791		1,439		1,776,016		2,382,514		135,514		25		2,518,003
States and political subdivisions	1,476,316		20,090		7,492		1,488,914		552,056		39,427		—		591,483
Other	35,972		—		—		35,972		35,892		—		—		35,892
Total	$	5,799,135	$	105,276	$	8,975	$	5,895,436	$	5,990,577	$	212,747	$	25	$	6,203,299

All mortgage-backed securities included in the above table were issued by U.S. government agencies and corporations. At December 31, 2013, approximately 96.3% of the securities in the Corporation’s municipal bond portfolio were issued by political subdivisions or agencies within the State of Texas, of which approximately 72.0% are either guaranteed by the Texas Permanent School Fund, which has a “triple-A” insurer financial strength rating, or secured by U.S. Treasury securities via defeasance of the debt by the issuers. Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other available for sale securities in the table above. The carrying value of securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law was $3.0 billion and $2.7 billion at December 31, 2013 and 2012.

During the fourth quarter of 2012, the Corporation reclassified certain securities from available for sale to held to maturity. The securities had an aggregate fair value of $2.3 billion with an aggregate net unrealized gain of $165.7 million ($107.7 million, net of tax) on the date of the transfer. The net unamortized, unrealized gain on the transferred securities included in accumulated other comprehensive income in the accompanying balance sheet totaled $129.3 million ($84.1 million, net of tax) at December 31, 2013 and $165.0 million ($107.3 million, net of tax) at December 31, 2012. This amount will be amortized out of accumulated other comprehensive income over the remaining life of the underlying securities as an adjustment of the yield on those securities.

Year-end securities with unrealized losses, segregated by length of impairment, were as follows:



	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
2013
Held to Maturity:
Residential mortgage-backed securities	$	6,934	$	143	$	—	$	—	$	6,934	$	143
States and political subdivisions	2,071,521		113,512		266,566		24,349		2,338,087		137,861
Total	$	2,078,455	$	113,655	$	266,566	$	24,349	$	2,345,021	$	138,004
Available for Sale:
U.S. government agencies/ corporations	$	53,980	$	44	$	—	$	—	$	53,980	$	44
Residential mortgage-backed securities	33,001		1,157		2,713		282		35,714		1,439
States and political subdivisions	679,923		7,492		—		—		679,923		7,492
Total	$	766,904	$	8,693	$	2,713	$	282	$	769,617	$	8,975
2012
Held to Maturity:
States and political subdivisions	$	353,626	$	4,993	$	—	$	—	$	353,626	$	4,993
Available for Sale:
Residential mortgage-backed securities	$	3,007	$	24	$	59	$	1	$	3,066	$	25

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost.

Management has the ability and intent to hold the securities classified as held to maturity in the table above until they mature, at which time the Corporation will receive full value for the securities. Furthermore, as of December 31, 2013, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that the Corporation will not have to sell any such securities before a recovery of cost. Any unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2013, management believes the impairments detailed in the table above are temporary and no impairment loss has been realized in the Corporation’s consolidated income statement.

The amortized cost and estimated fair value of securities, excluding trading securities, at December 31, 2013 are presented below by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage-backed securities and equity securities are shown separately since they are not due at a single maturity date.



	Held to Maturity				Available for Sale
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	117,581	$	119,833	$	1,529,324	$	1,531,389
Due after one year through five years	493,142		526,769		1,114,932		1,133,225
Due after five years through ten years	145,483		140,891		964,001		964,144
Due after ten years	2,373,868		2,232,550		444,242		454,690
Residential mortgage-backed securities	9,674		9,620		1,710,664		1,776,016
Equity securities	—		—		35,972		35,972
Total	$	3,139,748	$	3,029,663	$	5,799,135	$	5,895,436

Sales of securities available for sale were as follows:



	2013			2012			2011
Proceeds from sales	$	10,056,060		$	16,587,482		$	5,587,391
Gross realized gains	1,206			6,943			6,418
Gross realized losses	(30		)	(2,629		)	(4		)
Tax (expense) benefit of securities gains/losses	(412		)	(1,510		)	(2,245		)

Year-end trading account securities, at estimated fair value, were as follows:



	2013		2012
U.S. Treasury	$	15,389	$	14,038
States and political subdivisions	1,009		16,036
Total	$	16,398	$	30,074

Net gains and losses on trading account securities were as follows:



	2013			2012			2011
Net gain on sales transactions	$	878		$	1,219		$	1,607
Net mark-to-market gains (losses)	(429		)	(161		)	(15		)
Net gain on trading account securities	$	449		$	1,058		$	1,592