Securities

Available-for-Sales Securities

The following table summarizes available-for-sale securities held by the Company at March 31, 2019:



	Available-for-Sale Securities
March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
U.S. Treasuries	$	280	$	0	$	0	$	280
Obligations of U.S. Government sponsored entities	478,819		360		3,434		475,745
Obligations of U.S. states and political subdivisions	87,459		488		169		87,778
Mortgage-backed securities – residential, issued by
U.S. Government agencies	147,971		684		2,645		146,010
U.S. Government sponsored entities	642,054		1,182		11,908		631,328
Non-U.S. Government agencies or sponsored entities	19		0		0		19
U.S. corporate debt securities	2,500		0		50		2,450
Total available-for-sale securities	$	1,359,102	$	2,714	$	18,206	$	1,343,610

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



	Available-for-Sale Securities
December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
U.S. Treasuries	$	289	$	0	$	0	$	289
Obligations of U.S. Government sponsored entities	493,371		80		7,553		485,898
Obligations of U.S. states and political subdivisions	86,260		113		933		85,440
Mortgage-backed securities – residential, issued by
U.S. Government agencies	131,831		168		3,732		128,267
U.S. Government sponsored entities	649,620		537		19,599		630,558
Non-U.S. Government agencies or sponsored entities	31		0		0		31
U.S. corporate debt securities	2,500		0		325		2,175
Total available-for-sale securities	$	1,363,902	$	898	$	32,142	$	1,332,658

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at March 31, 2019:



	Held-to-Maturity Securities
March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	131,205	$	929	$	149	$	131,985
Obligations of U.S. states and political subdivisions	8,437		19		19		8,437
Total held-to-maturity debt securities	$	139,642	$	948	$	168	$	140,422

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



	Held-to-Maturity Securities
December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	131,306	$	0	$	1,198	$	130,108
Obligations of U.S. states and political subdivisions	9,273		20		24		9,269
Total held-to-maturity debt securities	$	140,579	$	20	$	1,222	$	139,377

The Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on available-for-sale securities were $0 for the three months ended March 31, 2019 and $124,000 for the same period during 2018. Realized losses on available-for-sale securities were $0 for the three months ended March 31, 2019 and $0 for the same period during 2018. The sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management. The Company also recognized gains of $12,000 for the three months ended March 31, 2019, on equity securities, reflecting the change in fair value.

The following table summarizes available-for-sale securities that had unrealized losses at March 31, 2019:



	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	$	0	$	0	$	420,382	$	3,434	$	420,382	$	3,434
Obligations of U.S. states and political subdivisions	1,582		7		31,020		162		32,602		169
Mortgage-backed securities – residential, issued by
U.S. Government agencies	0		0		93,706		2,645		93,706		2,645
U.S. Government sponsored entities	5,572		33		529,595		11,875		535,167		11,908
U.S. corporate debt securities	0		0		2,450		50		2,450		50
Total available-for-sale securities	$	7,154	$	40	$	1,077,153	$	18,166	$	1,084,307	$	18,206

The following table summarizes available-for-sale securities that had unrealized losses at December 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	$	21,660	$	183	$	449,141	$	7,370	$	470,801	$	7,553
Obligations of U.S. states and political subdivisions	11,971		19		49,756		914		61,727		933
Mortgage-backed securities – residential, issued by
U.S. Government agencies	16,854		22		96,247		3,710		113,101		3,732
U.S. Government sponsored entities	61,163		662		512,216		18,937		573,379		19,599
U.S. corporate debt securities	0		0		2,175		325		2,175		325
Total available-for-sale securities	$	111,648	$	886	$	1,109,535	$	31,256	$	1,221,183	$	32,142

Beginning January 1, 2018, upon adoption of ASU 2016-01, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in the consolidated statement of income. For periods prior to adoption, equity securities were classified as available-for-sale and stated at fair value with unrealized gains and losses reported as a separate component of accumulated other comprehensive income, net of tax.

The following table summarizes held-to-maturity securities that had unrealized losses at March 31, 2019.



	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	$	0	$	0	$	35,130	$	149	$	35,130	$	149

Obligations of U.S. states and political subdivisions	4,885		19		0		0		4,885		19
Total held-to-maturity securities	$	4,885	$	19	$	35,130	$	149	$	40,015	$	168

The following table summarizes held-to-maturity securities that had unrealized losses at December 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	$	4,980	$	9	$	125,128	$	1,189	$	130,108	$	1,198

Obligations of U.S. states and political subdivisions	8,127		24		0		0		8,127		24
Total held-to-maturity securities	$	13,107	$	33	$	125,128	$	1,189	$	138,235	$	1,222

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, 2019, and December 31, 2018, 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 (loss) 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, 2019 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, 2019
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	117,858	$	117,495
Due after one year through five years	308,679		306,959
Due after five years through ten years	130,809		130,118
Due after ten years	11,712		11,681
Total	569,058		566,253
Mortgage-backed securities	790,044		777,357
Total available-for-sale debt securities	$	1,359,102	$	1,343,610



December 31, 2018
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	78,160	$	77,930
Due after one year through five years	355,499		350,470
Due after five years through ten years	139,560		136,734
Due after ten years	9,201		8,668
Total	582,420		573,802
Mortgage-backed securities	781,482		758,856
Total available-for-sale debt securities	$	1,363,902	$	1,332,658



March 31, 2019
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	8,105	$	8,093
Due after one year through five years	86,335		86,381
Due after five years through ten years	45,202		45,948
Total held-to-maturity debt securities	$	139,642	$	140,422



December 31, 2018
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	8,850	$	8,832
Due after one year through five years	86,520		85,645
Due after five years through ten years	45,209		44,900
Total held-to-maturity debt securities	$	140,579	$	139,377

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 $31.6 million, $13.4 million and $95,000 at March 31, 2019, 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, 2019, we have determined that no impairment write-downs are currently required.