Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Available-for-Sale Debt Securities

The following table summarizes available-for-sale debt securities held by the Company at June 30, 2020:


	Available-for-Sale Debt Securities
June 30, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	400	$	0	$	0	$	400
Obligations of U.S. Government sponsored entities	268,024		11,495		20		279,499
Obligations of U.S. states and political subdivisions	119,703		2,743		60		122,386
Mortgage-backed securities – residential, issued by
U.S. Government agencies	206,017		3,271		941		208,347
U.S. Government sponsored entities	704,627		18,001		471		722,157

U.S. corporate debt securities	2,500		0		136		2,364
Total available-for-sale debt securities	$	1,301,271	$	35,510	$	1,628	$	1,335,153

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


	Available-for-Sale Debt Securities
December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	1,840	$	0	$	0	$	1,840
Obligations of U.S. Government sponsored entities	367,551		5,021		84		372,488
Obligations of U.S. states and political subdivisions	96,668		1,178		61		97,785
Mortgage-backed securities – residential, issued by
U.S. Government agencies	164,643		1,327		1,519		164,451
U.S. Government sponsored entities	660,037		2,940		3,387		659,590

U.S. corporate debt securities	2,500		0		67		2,433
Total available-for-sale debt securities	$	1,293,239	$	10,466	$	5,118	$	1,298,587

The available-for-sale portfolio also includes callable securities that may be called by the issuer prior to maturity. The Company may from time to time sell debt securities from its available-for-sale portfolio. Realized gains on available-for-sale debt securities were $0 and $429,000 for the three and six months ended June 30, 2020 and $866,000 for both the three and six month periods ended June 30, 2019. Realized losses on available-for-sale debt securities were $0 for the three and six months ended June 30, 2020 and $595,000 for both the three and six months ended June 30, 2019. Proceeds from the sale of available-for-sale debt securities were $0 and $42.6 million for the three and six months ended June 30, 2020, and $152.1 million for the three and six month periods ended June 30, 2019. Sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management. The Company also recognized net gains of $4,000 and $19,000 for the three and six months ended June 30, 2020, on equity securities, reflecting the change in fair value.

The following table summarizes available-for-sale debt securities that had unrealized losses at June 30, 2020:


	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	$	20,412	$	20	$	0	$	0	$	20,412	$	20
Obligations of U.S. states and political subdivisions	9,750		60		0		0		9,750		60

Mortgage-backed securities – residential, issued by
U.S. Government agencies	43,968		694		5,627		247		49,595		941
U.S. Government sponsored entities	32,328		403		7,159		68		39,487		471
U.S. corporate debt securities	0		0		2,364		136		2,364		136
Total available-for-sale debt securities	$	106,458	$	1,177	$	15,150	$	451	$	121,608	$	1,628

The following table summarizes available-for-sale debt securities that had unrealized losses at December 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	$	18,654	$	76	$	3,479	$	8	$	22,133	$	84
Obligations of U.S. states and political subdivisions	10,456		54		2,300		7		12,756		61

Mortgage-backed securities – residential, issued by
U.S. Government agencies	54,846		489		45,999		1,030		100,845		1,519
U.S. Government sponsored entities	157,801		752		233,999		2,635		391,800		3,387
U.S. corporate debt securities	0		0		2,433		67		2,433		67
Total available-for-sale debt securities	$	241,757	$	1,371	$	288,210	$	3,747	$	529,967	$	5,118

The Company evaluates available-for-sale debt securities in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an ACL on the Statement of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings via the provision for credit loss expense.

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

•The extent to which the fair value is 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, and 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 rating agencies.

At January 1, 2020 and June 30, 2020, the Company determined that all impaired available-for-sale debt securities experienced a decline in fair value below the amortized cost basis due to noncredit-related factors. In addition, 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. Therefore, the Company carried no ACL at those respective dates and there was no credit loss expense recognized by the Company during the three and six months ended June 30, 2020.

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.


June 30, 2020
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	49,817	$	50,422
Due after one year through five years	214,693		225,929
Due after five years through ten years	65,948		67,690
Due after ten years	60,169		60,608
Total	390,627		404,649
Mortgage-backed securities	910,644		930,504
Total available-for-sale debt securities	$	1,301,271	$	1,335,153


December 31, 2019
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	107,975	$	108,089
Due after one year through five years	270,477		274,798
Due after five years through ten years	77,710		79,165
Due after ten years	12,397		12,494
Total	468,559		474,546
Mortgage-backed securities	824,680		824,041
Total available-for-sale debt securities	$	1,293,239	$	1,298,587

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 ("ACBB") 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 $12.4 million, $6.6 million and $95,000 at June 30, 2020, 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 June 30, 2020, we have determined that no impairment write-downs are currently required.