4. SECURITIES

The following table summarizes the amortized cost and fair value of the available for sale and held to maturity investment securities portfolio at September 30, 2016 and December 31, 2015 and the corresponding amounts of unrealized gains and losses therein:

	September 30, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
*(In thousands)*	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	64,993	$	102	$	(7	)	$	65,088
State and municipal obligations		115,643		1,772		(129	)		117,286
U.S. GSE residential mortgage-backed securities		103,897		1,424		(44	)		105,277
U.S. GSE residential collateralized mortgage obligations		264,866		1,014		(625	)		265,255
U.S. GSE commercial mortgage-backed securities		6,448		189		-			6,637
U.S. GSE commercial collateralized mortgage obligations		54,026		337		(91	)		54,272
Other asset backed securities		24,250		-		(1,940	)		22,310
Corporate bonds		32,000		-		(1,124	)		30,876
Total available for sale		666,123		4,838		(3,960	)		667,001

Held to maturity:
State and municipal obligations		64,058		2,791		(5	)		66,844
U.S. GSE residential mortgage-backed securities		13,914		100		-			14,014
U.S. GSE residential collateralized mortgage obligations		66,699		1,203		(44	)		67,858
U.S. GSE commercial mortgage-backed securities		28,947		684		(57	)		29,574
U.S. GSE commercial collateralized mortgage obligations		42,648		722		(124	)		43,246
Corporate bonds		11,000		35		-			11,035
Total held to maturity		227,266		5,535		(230	)		232,571
Total securities	$	893,389	$	10,373	$	(4,190	)	$	899,572

	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	63,238	$	-	$	(564	)	$	62,674
State and municipal obligations		87,830		427		(322	)		87,935
U.S. GSE residential mortgage-backed securities		201,297		237		(1,270	)		200,264
U.S. GSE residential collateralized mortgage obligations		321,253		513		(3,888	)		317,878
U.S. GSE commercial mortgage-backed securities		12,491		7		(80	)		12,418
U.S. GSE commercial collateralized mortgage obligations		64,809		9		(620	)		64,198
Other asset backed securities		24,250		-		(1,879	)		22,371
Corporate bonds		33,000		-		(535	)		32,465
Total available for sale		808,168		1,193		(9,158	)		800,203

Held to maturity:
U.S. GSE securities	$	7,466	$	1	$	-		$	7,467
State and municipal obligations		64,878		1,715		(113	)		66,480
U.S. GSE residential mortgage-backed securities		7,609		-		(106	)		7,503
U.S. GSE residential collateralized mortgage obligations		60,933		617		(498	)		61,052
U.S. GSE commercial mortgage-backed securities		23,056		210		(313	)		22,953
U.S. GSE commercial collateralized mortgage obligations		33,409		282		(185	)		33,506
Corporate bonds		11,000		42		-			11,042
Total held to maturity		208,351		2,867		(1,215	)		210,003
Total securities	$	1,016,519	$	4,060	$	(10,373	)	$	1,010,206

The following table summarizes the amortized cost and fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at September 30, 2016. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2016
(In thousands)	Amortized Cost		Fair Value
Maturity
Available for sale:
Within one year	$	14,715	$	14,727
One to five years		71,930		72,220
Five to ten years		135,976		136,360
Beyond ten years		443,502		443,694
Total	$	666,123	$	667,001

Held to maturity:
Within one year	$	18,380	$	18,426
One to five years		20,940		21,500
Five to ten years		66,494		69,318
Beyond ten years		121,452		123,327
Total	$	227,266	$	232,571

The following table summarizes securities with unrealized losses at September 30, 2016 and December 31, 2015, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	September 30, 2016
	Less than 12 months					Greater than 12 months
			Unrealized					Unrealized
(In thousands)	Fair Value		Losses			Fair Value		Losses
Available for sale:
U.S. GSE securities	$	16,993	$	(7	)	$	-	$	-
State and municipal obligations		34,556		(128	)		241		(1	)
U.S. GSE residential mortgage-backed securities		9,343		(40	)		245		(4	)
U.S. GSE residential collateralized mortgage obligations		116,196		(495	)		16,863		(130	)
U.S. GSE commercial mortgage-backed securities		-		-			-		-
U.S. GSE commercial collateralized mortgage obligations		13,051		(41	)		7,060		(50	)
Other asset backed securities		-		-			22,310		(1,940	)
Corporate bonds		21,244		(755	)		9,631		(369	)
Total available for sale		211,383		(1,466	)		56,350		(2,494	)

Held to maturity:
State and municipal obligations		2,745		(5	)		-		-
U.S. GSE residential mortgage-backed securities		-		-			-		-
U.S. GSE residential collateralized mortgage obligations		4,907		(3	)		4,168		(41	)
U.S. GSE commercial mortgage-backed securities		6,120		(57	)		-		-
U.S. GSE commercial collateralized mortgage obligations		10,007		(79	)		3,945		(45	)
Corporate bonds		-		-			-		-
Total held to maturity	$	23,779	$	(144	)	$	8,113	$	(86	)

	December 31, 2015
	Less than 12 months					Greater than 12 months
			Unrealized					Unrealized
(In thousands)	Fair Value		Losses			Fair Value		Losses
Available for sale:
U.S. GSE securities	$	37,759	$	(235	)	$	24,914	$	(329	)
State and municipal obligations		39,621		(298	)		5,118		(24	)
U.S. GSE residential mortgage-backed securities		136,025		(1,224	)		1,510		(46	)
U.S. GSE residential collateralized mortgage obligations		187,543		(1,781	)		66,830		(2,107	)
U.S. GSE commercial mortgage-backed securities		8,594		(80	)		-		-
U.S. GSE commercial collateralized mortgage obligations		51,178		(503	)		10,034		(117	)
Other asset backed securities		-		-			22,371		(1,879	)
Corporate bonds		27,640		(360	)		4,825		(175	)
Total available for sale	$	488,360	$	(4,481	)	$	135,602	$	(4,677	)

Held to maturity:
U.S. GSE securities	$	-	$	-		$	-	$	-
State and municipal obligations		18,375		(113	)		-		-
U.S. GSE residential mortgage-backed securities		7,503		(106	)		-		-
U.S. GSE residential collateralized mortgage obligations		15,918		(149	)		15,679		(349	)
U.S. GSE commercial mortgage-backed securities		13,982		(313	)		-		-
U.S. GSE commercial collateralized mortgage obligations		7,912		(8	)		3,813		(177	)
Corporate bonds		-		-			-		-
Total held to maturity	$	63,690	$	(689	)	$	19,492	$	(526	)

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are generally evaluated for OTTI under FASB ASC 320, “Accounting for Certain Investments in Debt and Equity Securities”. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet these criteria, the amount of impairment is split into two components: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At September 30, 2016, the majority of unrealized losses on the available for sale securities are related to the Company’s other asset backed securities and corporate bonds. The decrease in fair value of the other asset backed securities and corporate bonds is attributable to changes in interest rates and not credit quality. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2016.

There were no sales of securities for the three months ended September 30, 2016. There were $264.4 million of proceeds from sales of securities with gross gains of $1.6 million and gross losses of $1.2 million realized for the nine months ended September 30, 2016. There were no sales of securities during the three months ended September 30, 2015. There were $73.8 million of proceeds from sales of securities with gross gains of $0.5 million and gross losses of $0.5 million realized for the nine months ended September 30, 2015. Proceeds from calls of securities were $13.3 million and $66.2 million for the three and nine months ended September 30, 2016, respectively. Proceeds from calls of securities were $0.4 million and $10.9 million for the three and nine months ended September 30, 2015, respectively.

Securities having a fair value of $558.1 million and $611.0 million at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

The Company did not hold any trading securities during the nine months ended September 30, 2016 or the year ended December 31, 2015.

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $24.5 million and $24.8 million in FHLB, ACBB and FRB stock at September 30, 2016 and December 31, 2015, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.