SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE EQUITY SECURITIES

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE EQUITY SECURITIES

SECURITIES AVAILABLE FOR SALE, HELD TO MATURITY, AND MARKETABLE

EQUITY SECURITIES

The Company adopted ASU-2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities" in the first quarter of 2018. All changes in the fair value of marketable equity securities, including other-than-temporary impairment, are immediately recognized in earnings.

The following is a summary of securities available for sale, held to maturity, and marketable equity securities:



(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2019
Securities available for sale
Municipal bonds and obligations	$	114,401	$	5,477	$	(5	)	$	119,873
Agency collateralized mortgage obligations	882,124		7,419		(581		)	888,962
Agency mortgage-backed securities	182,598		739		(1,079		)	182,258
Agency commercial mortgage-backed securities	61,275		465		(1,089		)	60,651
Corporate bonds	119,917		880		(1,054		)	119,743
Trust preferred securities	8,323		231		(4		)	8,550
Other bonds and obligations	29,084		963		(6		)	30,041
Total securities available for sale	1,397,722		16,174		(3,818		)	1,410,078
Securities held to maturity
Municipal bonds and obligations	257,232		10,835		—			268,067
Agency collateralized mortgage obligations	70,726		2,975		(115		)	73,586
Agency mortgage-backed securities	6,758		—		(57		)	6,701
Agency commercial mortgage-backed securities	10,385		46		—			10,431
Tax advantaged economic development bonds	19,063		172		(1,263		)	17,972
Other bonds and obligations	299		—		—			299
Total securities held to maturity	364,463		14,028		(1,435		)	377,056

Marketable equity securities	55,831		4,820		(1,073		)	59,578
Total	$	1,818,016	$	35,022	$	(6,326	)	$	1,846,712



(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2018
Securities available for sale
Municipal bonds and obligations	$	109,648	$	2,272	$	(713	)	$	111,207
Agency collateralized mortgage obligations	944,946		1,130		(15,192		)	930,884
Agency mortgage-backed securities	175,406		36		(5,121		)	170,321
Agency commercial mortgage-backed securities	62,200		—		(3,275		)	58,925
Corporate bonds	112,404		342		(1,256		)	111,490
Trust preferred securities	8,314		251		(99		)	8,466
Other bonds and obligations	8,355		34		(35		)	8,354
Total securities available for sale	1,421,273		4,065		(25,691		)	1,399,647
Securities held to maturity
Municipal bonds and obligations	264,524		3,569		(3,601		)	264,492
Agency collateralized mortgage obligations	71,637		533		(778		)	71,392
Agency mortgage-backed securities	7,219		—		(297		)	6,922
Agency commercial mortgage-backed securities	10,417		—		(289		)	10,128
Tax advantaged economic development bonds	19,718		22		(1,698		)	18,042
Other bonds and obligations	248		—		—			248
Total securities held to maturity	373,763		4,124		(6,663		)	371,224

Marketable equity securities	55,471		4,370		(3,203		)	56,638
Total	$	1,850,507	$	12,559	$	(35,557	)	$	1,827,509

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities segregated by contractual maturity at June 30, 2019 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.



	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Within 1 year	$	15,204	$	15,245	$	2,875	$	2,875
Over 1 year to 5 years	31,179		31,213		14,729		14,844
Over 5 years to 10 years	71,721		72,831		15,086		15,180
Over 10 years	153,621		158,918		243,904		253,439
Total bonds and obligations	271,725		278,207		276,594		286,338
Mortgage-backed securities	1,125,997		1,131,871		87,869		90,718
Total	$	1,397,722	$	1,410,078	$	364,463	$	377,056

During the three and six months ended June 30, 2019 , the proceeds from the sale of AFS securities totaled $80.4 million and $83.0 million, respectively. During the three months ended June 30,2019, gross gains on AFS securities totaled $5 thousand and gross losses totaled $7 thousand. During the six months ended June 30, 2019 gross gains totaled $11 thousand and gross losses totaled $7 thousand. These gains and losses are included in Gain/(loss) on securities, net on the consolidated statements of income. There were no sales of AFS securities during the three and six months ended June 30, 2018.

Securities available for sale and held to maturity with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:



	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
June 30, 2019
Securities available for sale
Municipal bonds and obligations	$	—	$	—	$	5	$	1,319	$	5	$	1,319
Agency collateralized mortgage obligations	72		43,755		509		103,929		581		147,684
Agency mortgage-backed securities	5		2,191		1,074		93,990		1,079		96,181
Agency commercial mortgage-backed securities	—		—		1,089		55,319		1,089		55,319
Corporate bonds	434		37,147		620		30,036		1,054		67,183
Trust preferred securities	4		7,163		—		—		4		7,163
Other bonds and obligations	—		—		6		3,052		6		3,052
Total securities available for sale	515		90,256		3,303		287,645		3,818		377,901

Securities held to maturity
Agency collateralized mortgage obligations	—		—		115		10,648		115		10,648
Agency mortgage-backed securities	—		—		57		6,701		57		6,701
Tax advantaged economic development bonds	—		—		1,263		6,729		1,263		6,729
Total securities held to maturity	—		—		1,435		24,078		1,435		24,078
Total	$	515	$	90,256	$	4,738	$	311,723	$	5,253	$	401,979

December 31, 2018
Securities available for sale
Municipal bonds and obligations	$	55	$	3,186	$	658	$	11,787	$	713	$	14,973
Agency collateralized mortgage obligations	76		39,114		15,116		755,528		15,192		794,642
Agency mortgage-backed securities	53		5,500		5,068		162,439		5,121		167,939
Agency commercial mortgage-backed securities	44		1,503		3,231		57,422		3,275		58,925
Corporate bonds	1,249		74,434		7		2,561		1,256		76,995
Trust preferred securities	99		7,068		—		—		99		7,068
Other bonds and obligations	—		—		35		3,030		35		3,030
Total securities available for sale	1,576		130,805		24,115		992,767		25,691		1,123,572

Securities held to maturity
Municipal bonds and obligations	127		17,596		3,474		103,759		3,601		121,355
Agency collateralized mortgage obligations	—		—		778		43,138		778		43,138
Agency mortgage-backed securities	—		—		297		6,922		297		6,922
Agency commercial mortgage-backed securities	—		—		289		10,128		289		10,128
Tax advantaged economic development bonds	65		8,078		1,633		6,512		1,698		14,590
Total securities held to maturity	192		25,674		6,471		170,459		6,663		196,133
Total	$	1,768	$	156,479	$	30,586	$	1,163,226	$	32,354	$	1,319,705

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of June 30, 2019, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at June 30, 2019:

AFS municipal bonds and obligations

At June 30, 2019, 2 out of the total 246 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

AFS collateralized mortgage obligations

At June 30, 2019, 59 out of the total 253 securities in the Company’s portfolio of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s collateralized mortgage obligations. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS commercial and residential mortgage-backed securities

At June 30, 2019, 45 out of the total 97 securities in the Company’s portfolio of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.4% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

AFS corporate bonds

At June 30, 2019, 11 out of the total 23 securities in the Company’s portfolio of AFS corporate bonds were in unrealized loss positions. Aggregate unrealized losses represents 1.5% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

AFS trust preferred securities

At June 30, 2019, 1 out of the total 2 securities in the Company’s portfolio of AFS trust preferred securities were in an unrealized loss position. Aggregate unrealized losses represented 0.1% of the amortized cost of these securities in an unrealized loss position. The Company’s evaluation of the present value of expected cash flows on these securities supports its conclusions about the recoverability of these securities’ amortized cost basis. These securities are investment grade rated. The Company reviews the financial strength of all of the single issue trust issuers and has concluded that the amortized cost remains supported by the market value of these securities and they are performing.

AFS other bonds and obligations

At June 30, 2019, 6 out of the total 10 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.2% of the amortized cost of securities in

unrealized loss positions. The securities are all investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At June 30, 2019, 1 out of the total 9 securities in the Company’s portfolio of HTM collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.8% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM commercial and residential mortgage-backed securities

At June 30, 2019, 1 out of the total 2 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 0.8% of the amortized cost of securities in unrealized loss positions. The FNMA, FHLMC, and GNMA guarantee the contractual cash flows of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM tax-advantaged economic development bonds

At June 30, 2019, 1 out of the total 5 securities in the Company’s portfolio of tax-advantaged economic development bonds were in unrealized loss positions. Aggregate unrealized losses represented 15.8% of the amortized cost of the security in an unrealized loss position. The above mentioned tax-advantaged economic bond remains a special mention rated asset. The Company believes that more likely than not all the principal outstanding will be collected. All securities are performing.