7. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The Company adopted ASU 2016-01 on January 1, 2018. As a result of adoption all registered mutual funds and trading securities were reclassified as marketable equity securities on the Consolidated Statement of Financial Conditions and are recorded at fair value with changes in fair value recorded through the income statement. Additionally, $153 of unrealized gains, net of taxes, was reclassified from accumulated other comprehensive income to beginning retained earnings during the three-month period ended March 31, 2018. Marketable equity securities are excluded from the tables for the period ended March 31, 2018.

The following tables summarize the major categories of securities owned by the Company as of the dates indicated:

	At March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities available-for-sale:
Pass-through MBS issued by Government-sponsored Enterprises (“GSEs”)	$	239,232	$	22	$	(1,889	)	$	237,365
Agency Collateralized Mortgage Obligation (“CMO”)		117,541		470		(966	)		117,045
Total debt securities available-for-sale	$	356,773	$	492	$	(2,855	)	$	354,410

	At December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investment securities available-for-sale:
Registered Mutual Funds	$	3,779	$	311	$	(84	)	$	4,006
Pass-through MBS issued by GSEs		72,938		16		(325	)		72,629
CMO		278,251		669		(165	)		278,755
Total investment securities available-for-sale	$	354,968	$	996	$	(574	)	$	355,390

The carrying amount of securities pledged as collateral for the Bank’s first loss guarantee was $27,084 and $28,738 at March 31, 2018 and December 31, 2017, respectively (see Note 10).

At March 31, 2018, available-for-sale pass-through MBS issued by GSEs possessed a weighted average contractual maturity of 14.6 years and a weighted average estimated duration of 4.2 years. As of March 31, 2018, the available-for-sale agency CMO securities had a weighted average term to maturity of 10.7 years.

During the three-month period ended September 30, 2017, the Company sold its entire portfolio of investment securities held-to-maturity consisting of six TRUP CDO securities, of which five were deemed to be OTTI. The TRUP CDO portfolio was sold as part of the Company’s strategy to take advantage of investment opportunities. The Company does not intend to classify any securities as held-to-maturity for the foreseeable future. During the three-month period ended March 31, 2017, the Company recognized amortization of $25 of the unamortized portion of unrealized losses that were recognized in accumulated other comprehensive loss on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity), and $8 on the unamortized portion of previous credit losses recognized in accumulated other comprehensive loss.

There were no sales of available-for-sale pass-through MBS issued by GSEs during the three-month periods ended March 31, 2018 or 2017.

Proceeds from the sales of available-for-sale CMOs totaled $158,484 during the three-month period ended March 31, 2018. Gross gains of $1,370 were recognized on these sales. There were no sales of available-for-sale CMOs during the three-month period ended March 31, 2017. The tax expense related to the gain on sales of available for sale CMOs recognized during the quarter ended March 31, 2018 was $440.

The Company holds marketable equity securities (both investment securities available-for-sale and trading securities as of December 31, 2017) as the underlying mutual fund investments of the BMP, held in a rabbi trust. The Company may sell these securities on a periodic basis in order to pay retirement benefits to plan retirees. There are no gains or losses recognized from the sales of marketable equity securities. A summary of the sales of marketable equity securities is listed below for the periods indicated:

	For the Three Months Ended March 31,
	2018		2017
Proceeds:
Marketable equity securities	$	393	$	-
Investment securities available-for-sale		-		35
Trading securities		-		-

The remaining gain or loss on securities shown in the unaudited condensed consolidated statements of income was due to market valuation changes resulting in a loss of $4 on marketable equity securities and a gain of $75 on trading securities for the three-month period ended March 31, 2018 and 2017, respectively.

The following table summarizes the gross unrealized losses and fair value of investment securities aggregated by investment category and the length of time the securities were in a continuous unrealized loss position as of the dates indicated:

	March 31, 2018
	Less than 12 Consecutive Months				12 Consecutive Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Debt securities available-for-sale:
Pass through MBS issued by GSEs	$	215,028	$	1,889	$	-	$	-	$	215,028	$	1,889
Agency CMO		45,534		881		3,063		85		48,597		966

	December 31, 2017
	Less than 12 Consecutive Months				12 Consecutive Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Investment securities available-for-sale:
Registered Mutual Funds	$	-	$	-	$	2,591	$	84	$	2,591	$	84
Pass through MBS issued by GSEs		55,819		325		-		-		55,819		325
Agency CMO		86,746		96		3,168		69		89,914		165

The issuers of debt securities available-for-sale are U.S. government-sponsored entities or agencies. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. It is likely that the Company will not be required to sell the securities before their anticipated recovery, and as such, the Company does not consider these securities to be other-than-temporarily-impaired at March 31, 2018.