Securities

Available-for-Sales Securities

The following table summarizes available-for-sale securities held by the Company at September 30, 2017:



	Available-for-Sale Securities
September 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	532,958	$	2,466	$	1,222	$	534,202
Obligations of U.S. states and political subdivisions	91,771		558		286		92,043
Mortgage-backed securities – residential, issued by
U.S. Government agencies	145,470		903		1,700		144,673
U.S. Government sponsored entities	639,454		1,561		8,869		632,146
Non-U.S. Government agencies or sponsored entities	85		0		0		85
U.S. corporate debt securities	2,500		0		338		2,162
Total debt securities	1,412,238		5,488		12,415		1,405,311
Equity securities	1,000		0		80		920
Total available-for-sale securities	$	1,413,238	$	5,488	$	12,495	$	1,406,231

The following table summarizes available-for-sale securities held by the Company at December 31, 2016:



	Available-for-Sale Securities
December 31, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	527,057	$	2,873	$	2,303	$	527,627
Obligations of U.S. states and political subdivisions	89,910		286		1,140		89,056
Mortgage-backed securities – residential, issued by
U.S. Government agencies	159,417		1,081		2,272		158,226
U.S. Government sponsored entities	662,724		1,993		13,287		651,430
Non-U.S. Government agencies or sponsored entities	116		0		0		116
U.S. corporate debt securities	2,500		0		338		2,162
Total debt securities	1,441,724		6,233		19,340		1,428,617
Equity securities	1,000		0		79		921
Total available-for-sale securities	$	1,442,724	$	6,233	$	19,419	$	1,429,538

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at September 30, 2017:



	Held-to-Maturity Securities
September 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	131,805	$	1,941	$	41	$	133,705
Obligations of U.S. states and political subdivisions	8,163		143		4		8,302
Total held-to-maturity debt securities	$	139,968	$	2,084	$	45	$	142,007

The following table summarizes held-to-maturity securities held by the Company at December 31, 2016:



	Held-to-Maturity Securities
December 31, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	132,098	$	804	$	283	$	132,619
Obligations of U.S. states and political subdivisions	10,021		195		3		10,213
Total held-to-maturity debt securities	$	142,119	$	999	$	286	$	142,832

The Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on available-for-sale securities were $3,000 for the three and nine months ended September 30, 2017 and $455,000 and $$926,000 for the same periods during 2016. Realized losses on available-for-sale securities were $426,000 for the three and nine months ended September 30, 2017 and $0 for the same periods during 2016. The sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management.

The following table summarizes available-for-sale securities that had unrealized losses at September 30, 2017:



	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	130,038	$	1,109	$	7,446	$	113	$	137,484	$	1,222
Obligations of U.S. states and political subdivisions	20,411		185		12,029		101		32,440		286

Mortgage-backed securities – residential, issued by
U.S. Government agencies	62,581		682		55,561		1,018		118,142		1,700
U.S. Government sponsored entities	300,477		2,794		242,432		6,075		542,909		8,869
U.S. corporate debt securities	0		0		2,163		338		2,163		338
Equity securities	0		0		920		80		920		80
Total available-for-sale securities	$	513,507	$	4,770	$	320,551	$	7,725	$	834,058	$	12,495

The following table summarizes available-for-sale securities that had unrealized losses at December 31, 2016:



	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	208,940	$	2,303	$	0	$	0	$	208,940	$	2,303
Obligations of U.S. states and political subdivisions	58,852		1,139		751		1		59,603		1,140

Mortgage-backed securities – residential, issued by
U.S. Government agencies	98,307		1,570		22,376		702		120,683		2,272
U.S. Government sponsored entities	463,009		8,933		123,915		4,354		586,924		13,287
U.S. corporate debt securities	0		0		2,162		338		2,162		338
Equity securities	0		0		921		79		921		79
Total available-for-sale securities	$	829,108	$	13,945	$	150,125	$	5,474	$	979,233	$	19,419

The following table summarizes held-to-maturity securities that had unrealized losses at September 30, 2017.



	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	4,959	$	41	$	0	$	0	$	4,959	$	41

Obligations of U.S. states and political subdivisions	1,121		4		0		0		1,121		4
Total held-to-maturity securities	$	6,080	$	45	$	0	$	0	$	6,080	$	45

The following table summarizes held-to-maturity securities that had unrealized losses at December 31, 2016.



	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government sponsored entities	$	40,802	$	283	$	0	$	0	$	40,802	$	283

Obligations of U.S. states and political subdivisions	2,567		3		0		0		2,567		3
Total held-to-maturity securities	$	43,369	$	286	$	0	$	0	$	43,369	$	286

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.

The Company does not intend to sell other-than-temporarily impaired investment securities that are in an unrealized loss position until recovery of unrealized losses (which may be until maturity), and it is not more-likely-than not that the Company will be required to sell the investment securities, before recovery of their amortized cost basis, which may be at maturity. Accordingly, as of September 30, 2017, and December 31, 2016, management has determined that the unrealized losses detailed in the tables above are not other-than-temporary.

Ongoing Assessment of Other-Than-Temporary Impairment

On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered other-than-temporary impairment (“OTTI”). A debt security is considered impaired if the fair value is less than its amortized cost basis (including any previous OTTI charges) at the reporting date. If impaired, the Company then assesses whether the unrealized loss is other-than-temporary. An unrealized loss on a debt security is generally deemed to be other-than-temporary and a credit loss is deemed to exist if the present value, discounted at the security’s effective rate, of the expected future cash flows is less than the amortized cost basis of the debt security. As a result, the credit loss component of an other-than-temporary impairment write-down for debt securities is recorded in earnings while the remaining portion of the impairment loss is recognized, net of tax, in other comprehensive income provided that the Company does not intend to sell the underlying debt security and it is more-likely-than not that the Company would not have to sell the debt security prior to recovery of the unrealized loss, which may be to maturity. If the Company intended to sell any securities with an unrealized loss or it is more-likely-than not that the Company would be required to sell the investment securities, before recovery of their amortized cost basis, then the entire unrealized loss would be recorded in earnings.

The Company considers the following factors in determining whether a credit loss exists.


•	The length of time and the extent to which the fair value has been less than the amortized cost basis;


•	The level of credit enhancement provided by the structure which includes, but is not limited to, credit subordination positions, excess spreads, overcollateralization, protective triggers;


•	Changes in the near term prospects of the issuer or underlying collateral of a security, such as changes in default rates, loss severities given default and significant changes in prepayment assumptions;


•	The level of excess cash flow generated from the underlying collateral supporting the principal and interest payments of the debt securities; and


•	Any adverse change to the credit conditions of the issuer or the security such as credit downgrades by the rating agencies.

As a result of the other-than-temporarily impairment review process, the Company does not consider any investment security held at September 30, 2017 to be other-than-temporarily impaired.

The amortized cost and estimated fair value of debt securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are shown separately since they are not due at a single maturity date.



September 30, 2017
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	32,167	$	32,279
Due after one year through five years	403,739		405,216
Due after five years through ten years	172,316		172,276
Due after ten years	19,007		18,636
Total	627,229		628,407
Mortgage-backed securities	785,009		776,904
Total available-for-sale debt securities	$	1,412,238	$	1,405,311



December 31, 2016
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	17,878	$	18,034
Due after one year through five years	376,777		378,631
Due after five years through ten years	210,985		208,999
Due after ten years	13,827		13,181
Total	619,467		618,845
Mortgage-backed securities	822,257		809,772
Total available-for-sale debt securities	$	1,441,724	$	1,428,617



September 30, 2017
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	6,483	$	6,495
Due after one year through five years	42,080		42,764
Due after five years through ten years	91,405		92,748
Total held-to-maturity debt securities	$	139,968	$	142,007



December 31, 2016
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	7,452	$	7,469
Due after one year through five years	27,480		27,866
Due after five years through ten years	107,187		107,497
Due after ten years	0		0
Total held-to-maturity debt securities	$	142,119	$	142,832

The Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home Loan Bank Pittsburgh (“FHLBPITT”) stock and non-marketable Atlantic Community Bankers Bank stock ("ACBB"), all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock, FHLBPITT stock, and ACBB stock totaled $26.6 million, $13.6 million and $95,000 at September 30, 2017, respectively. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2017, we have determined that no impairment write-downs are currently required.