Securities

Available-for-Sales Securities

The following table summarizes available-for-sale securities held by the Company at March 31, 2018:



	Available-for-Sale Securities
March 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	498,644	$	7	$	8,804	$	489,847
Obligations of U.S. states and political subdivisions	91,623		106		1,381		90,348
Mortgage-backed securities – residential, issued by
U.S. Government agencies	133,524		461		4,305		129,680
U.S. Government sponsored entities	681,110		422		22,877		658,655
Non-U.S. Government agencies or sponsored entities	64		0		0		64
U.S. corporate debt securities	2,500		0		325		2,175
Total debt securities	1,407,465		996		37,692		1,370,769
Equity securities	895		0		0		895
Total available-for-sale securities	$	1,408,360	$	996	$	37,692	$	1,371,664

The following table summarizes available-for-sale securities held by the Company at December 31, 2017:



	Available-for-Sale Securities
December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	507,248	$	278	$	3,333	$	504,193
Obligations of U.S. states and political subdivisions	91,659		281		421		91,519
Mortgage-backed securities – residential, issued by
U.S. Government agencies	139,747		659		2,671		137,735
U.S. Government sponsored entities	667,767		1,045		12,634		656,178
Non-U.S. Government agencies or sponsored entities	75		0		0		75
U.S. corporate debt securities	2,500		0		338		2,162
Total debt securities	1,408,996		2,263		19,397		1,391,862
Equity securities	1,000		0		87		913
Total available-for-sale securities	$	1,409,996	$	2,263	$	19,484	$	1,392,775

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at March 31, 2018:



	Held-to-Maturity Securities
March 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	131,607	$	0	$	1,327	$	130,280
Obligations of U.S. states and political subdivisions	7,524		46		7		7,563
Total held-to-maturity debt securities	$	139,131	$	46	$	1,334	$	137,843

The following table summarizes held-to-maturity securities held by the Company at December 31, 2017:



	Held-to-Maturity Securities
December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	131,707	$	1,103	$	90	$	132,720
Obligations of U.S. states and political subdivisions	7,509		93		7		7,595
Total held-to-maturity debt securities	$	139,216	$	1,196	$	97	$	140,315

The Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on available-for-sale securities were $124,000 for the three months ended March 31, 2018 and $0 for the three months ended March 31, 2017. Realized losses on available-for-sale securities were $0 for the three months ended March 31, 2018 and $0 for the three months ended March 31, 2017. 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 March 31, 2018:



	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	$	409,674	$	7,130	$	53,485	$	1,674	$	463,159	$	8,804
Obligations of U.S. states and political subdivisions	55,531		854		11,677		527		67,208		1,381

Mortgage-backed securities – residential, issued by
U.S. Government agencies	29,731		892		83,490		3,413		113,221		4,305
U.S. Government sponsored entities	254,886		5,999		387,360		16,878		642,246		22,877
U.S. corporate debt securities	0		0		2,175		325		2,175		325
Total available-for-sale securities	$	749,822	$	14,875	$	538,187	$	22,817	$	1,288,009	$	37,692

The following table summarizes available-for-sale securities that had unrealized losses at December 31, 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	$	319,545	$	2,301	$	39,791	$	1,032	$	359,336	$	3,333
Obligations of U.S. states and political subdivisions	39,571		219		11,729		202		51,300		421

Mortgage-backed securities – residential, issued by
U.S. Government agencies	33,056		452		86,562		2,219		119,618		2,671
U.S. Government sponsored entities	208,524		1,941		410,767		10,693		619,291		12,634
U.S. corporate debt securities	0		0		2,163		338		2,163		338
Equity securities	0		0		913		87		913		87
Total available-for-sale securities	$	600,696	$	4,913	$	551,925	$	14,571	$	1,152,621	$	19,484

The following table summarizes held-to-maturity securities that had unrealized losses at March 31, 2018.



	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	$	130,280	$	1,327	$	0	$	0	$	130,280	$	1,327

Obligations of U.S. states and political subdivisions	4,193		7		0		0		4,193		7
Total held-to-maturity securities	$	134,473	$	1,334	$	0	$	0	$	134,473	$	1,334

The following table summarizes held-to-maturity securities that had unrealized losses at December 31, 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	$	20,505	$	90	$	0	$	0	$	20,505	$	90

Obligations of U.S. states and political subdivisions	5,094		7		0		0		5,094		7
Total held-to-maturity securities	$	25,599	$	97	$	0	$	0	$	25,599	$	97

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 March 31, 2018, and December 31, 2017, 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 March 31, 2018 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.



March 31, 2018
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	36,830	$	36,761
Due after one year through five years	348,958		344,236
Due after five years through ten years	189,435		184,497
Due after ten years	17,544		16,876
Total	592,767		582,370
Mortgage-backed securities	814,698		788,399
Total available-for-sale debt securities	$	1,407,465	$	1,370,769



December 31, 2017
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	51,909	$	51,932
Due after one year through five years	368,846		367,377
Due after five years through ten years	162,061		160,374
Due after ten years	18,591		18,191
Total	601,407		597,874
Mortgage-backed securities	807,589		793,988
Total available-for-sale debt securities	$	1,408,996	$	1,391,862



March 31, 2018
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	6,636	$	6,638
Due after one year through five years	62,088		61,519
Due after five years through ten years	70,407		69,686
Total held-to-maturity debt securities	$	139,131	$	137,843



December 31, 2017
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	5,980	$	5,979
Due after one year through five years	51,936		52,227
Due after five years through ten years	81,300		82,109
Due after ten years	0		0
Total held-to-maturity debt securities	$	139,216	$	140,315

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, 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 $29.9 million, $17.0 million and $95,000 at March 31, 2018, 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 March 31, 2018, we have determined that no impairment write-downs are currently required.