5. Securities

Available-for-Sale Securities
The following table summarizes available-for-sale securities held by the Company at June 30, 2013:

	Available-for-Sale Securities
June 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	585,539	$	9,625	$	6,853	$	588,311
Obligations of U.S. states and political subdivisions		73,769		1,417		1,235		73,951
Mortgage-backed securities – residential, issued by
U.S. Government agencies		143,418		3,223		2,348		144,293
U.S. Government sponsored entities		624,318		8,860		12,600		620,578
Non-U.S. Government agencies or sponsored entities		385		9		0		394
U.S. corporate debt securities		5,005		53		113		4,945
Total debt securities		1,432,434		23,187		23,149		1,432,472
Equity securities		2,034		0		52		1,982
Total available-for-sale securities	$	1,434,468	$	23,187	$	23,201	$	1,434,454

The following table summarizes available-for-sale securities held by the Company at December 31, 2012:

	Available-for-Sale Securities
December 31, 2012	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
U.S. Treasury securities	$	1,001	$	3	$	0	$	1,004
Obligations of U.S. Government sponsored entities		570,871		22,909		2		593,778
Obligations of U.S. states and political subdivisions		76,803		2,326		73		79,056
Mortgage-backed securities – residential, issued by
U.S. Government agencies		162,853		5,362		548		167,667
U.S. Government sponsored entities		526,364		15,759		1,768		540,355
Non-U.S. Government agencies or sponsored entities		4,457		40		143		4,354
U.S. corporate debt securities		5,009		87		13		5,083
Total debt securities		1,347,358		46,486		2,547		1,391,297
Equity securities		2,058		0		15		2,043
Total available-for-sale securities	$	1,349,416	$	46,486	$	2,562	$	1,393,340
1 Net of other-than-temporary impairment losses recognized in earnings.

Held-to-Maturity Securities
The following table summarizes held-to-maturity securities held by the Company at June 30, 2013:

	Held-to-Maturity Securities
June 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. states and political subdivisions	$	20,173	$	956	$	0	$	21,129
Total held-to-maturity debt securities	$	20,173	$	956	$	0	$	21,129

The following table summarizes held-to-maturity securities held by the Company at December 31, 2012:

	Held-to-Maturity Securities
December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. states and political subdivisions	$	24,062	$	1,101	$	0	$	25,163
Total held-to-maturity debt securities	$	24,062	$	1,101	$	0	$	25,163

Realized gains on available-for-sale securities were $138,000 and $505,000 in the second quarter and six months ending June 30, 2013, respectively, and $933,000 and $935,000 in the same periods of 2012. Realized losses on available-for-sale securities were $63,000 in the second quarter and six months ending June 30, 2013, respectively, and $0 in the same time periods of 2012.

The following table summarizes available-for-sale securities that had unrealized losses at June 30, 2013:

	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	$	316,509	$	6,853	$	0	$	0	$	316,509	$	6,853
Obligations of U.S. states and political subdivisions		30,641		1,235		0		0		30,641		1,235

Mortgage-backed securities – issued by
U.S. Government agencies		63,312		2,348		0		0		63,312		2,348
U.S. Government sponsored entities		372,386		12,600		0		0		372,386		12,600
U.S. corporate debt securities		2,387		113		0		0		2,387		113
Equity securities		948		52		0		0		948		52
Total available-for-sale securities	$	786,183	$	23,201	$	0	$	0	$	786,183	$	23,201

There were no unrealized losses on held-to-maturity securities at June 30, 2013.

The following table summarizes available-for-sale securities that had unrealized losses at December 31, 2012:

	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	$	1,147	$	2	$	0	$	0	$	1,147	$	2
Obligations of U.S. states and political subdivisions		10,307		73		0		0		10,307		73

Mortgage-backed securities – residential, issued by
U.S. Government agencies		40,022		548		0		0		40,022		548
U.S. Government sponsored entities		128,365		1,768		0		0		128,365		1,768
Non-U.S. Government agencies or sponsored entities		833		143		0		0		833		143
U.S. corporate debt securities		2,487		13		0		0		2,487		13
Equity securities		985		15		0		0		985		15
Total available-for-sale securities	$	184,146	$	2,562	$	0	$	0	$	184,146	$	2,562

There were no unrealized losses on held-to-maturity securities at December 31, 2012.

The gross unrealized losses reported at June 30, 2013 and December 31, 2012 for mortgage-backed securities-residential relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, and U.S. government agencies such as Government National Mortgage Association, and non-U.S. Government agencies or sponsored entities. The total gross unrealized losses shown in the table above were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and generally not due to the credit quality of the investment securities.

The Company does not intend to sell the securities that are in an unrealized loss position and it is not more-likely-than not that the Company will be required to sell these available-for-sale investment securities before recovery of their amortized cost basis, which may be at maturity. Accordingly, as of June 30, 2013, and December 31, 2012, management believes the unrealized losses detailed in the tables above are not other-than-temporary.

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. A debt security is considered impaired if the fair value is less than its amortized cost basis 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 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, 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 the rating agencies.

As of June 30, 2013, the Company owned one corporate (non-agency) collateralized mortgage obligation issue (“CMO”) in a senior tranche of which the aggregate historical cost basis for this non-agency CMO was less than its estimated fair value. At June 30, 2013, this non-agency CMO with an amortized cost basis of $385,000 was collateralized by residential real estate and is not currently deferring or in default of interest payments to the Company. As of December 31, 2012, the Company owned 5 corporate, non-U.S. Government agency collateralized mortgage obligation issues (“CMO’s”) in super senior or senior tranches of which the aggregate historical cost basis for 3 of these non-agency CMO’s was greater than their estimated fair value. At December 31, 2012, all 5 non-agency CMO’s with an amortized cost basis of $4.5 million were collateralized by residential real estate. None of the 5 non-agency CMO’s whose aggregate historical cost basis was greater than their estimated fair value were deferring or were in default of interest payments to the Company.

During the first quarter of 2013, the Company sold three non-agency CMO securities for a gain of approximately $94,000. Prior to the first quarter of 2013, these three non-agency CMO securities were determined to be other-than-temporarily impaired and the Company did recognize net credit impairment charges to earnings of $441,000 over the life of these three securities. Also during the first quarter of 2013, one non-agency CMO security was repaid in full. The Company did not recognize any net credit impairment charge to earnings on these securities in 2013. The Company did recognize $65,000 in net credit impairment charges to earnings on these securities in the second quarter and six months ending June 30, 2012.

The following table summarizes the roll-forward of credit losses on debt securities held by the Company for which a portion of an other-than-temporary impairment is recognized in other comprehensive income:

	Three Months Ended				Six Months Ended
(in thousands)	06/30/2013		06/30/2012		06/30/2013			06/30/2012
Credit losses at beginning of the period	$	0	$	245	$	441		$	245
Credit losses related to securities for which an other-than-temporary impairment was previously recognized		0		65		0			65
Sales of securities for which an other-than-temporary impairment was previously recognized		0		0		(441	)		0
Ending balance of credit losses on debt securities held for which a portion of an other-than-temporary impairment was recognized in other comprehensive income	$	0	$	310	$	0		$	310

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, 2013
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	21,957	$	22,249
Due after one year through five years		229,402		239,169
Due after five years through ten years		381,530		375,541
Due after ten years		31,424		30,248
Total		664,313		667,207
Mortgage-backed securities		768,121		765,265
Total available-for-sale debt securities	$	1,432,434	$	1,432,472

December 31, 2012
(in thousands)	Amortized Cost1		Fair Value
Available-for-sale securities:
Due in one year or less	$	39,552	$	39,990
Due after one year through five years		355,296		370,933
Due after five years through ten years		255,795		264,966
Due after ten years		3,041		3,032
Total		653,684		678,921
Mortgage-backed securities		693,674		712,376
Total available-for-sale debt securities	$	1,347,358	$	1,391,297
1 Net of other-than-temporary impairment losses recognized in earnings.

June 30, 2013
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	11,167	$	11,254
Due after one year through five years		6,336		6,815
Due after five years through ten years		2,080		2,370
Due after ten years		590		690
Total held-to-maturity debt securities	$	20,173	$	21,129

December 31, 2012
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	13,070	$	13,154
Due after one year through five years		7,974		8,535
Due after five years through ten years		2,283		2,619
Due after ten years		735		855
Total held-to-maturity debt securities	$	24,062	$	25,163

The Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home Loan Bank Pittsburgh (“FHLBPITT”) stock, non-marketable Atlantic Central Bankers Bank (“ACBB”) stock, and non-marketable Federal Reserve Bank (“FRB”) 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 each FHLB. Holdings of FHLBNY stock, FHLBPITT stock, ACBB stock, and FRB stock totaled $16.6 million, $7.4 million, $95,000, and $2.1 million at June 30, 2013, respectively, and $13.2 million, $4.1 million, $95,000 and $2.1 million at December 31, 2012, respectively. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. As such, the Company has not recognized any impairment on its holdings of FHLBNY and FHLBPITT stock. Federal law requires a member institution of the Federal Home Loan Bank (FHLB) system to hold stock of its district FHLB according to a predetermined formula. This stock is recorded at cost. 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, we have determined that no impairment write-downs are currently required.

Trading Securities
The following summarizes trading securities, at estimated fair value, as of:

(in thousands)	June 30, 2013		December 31, 2012

Obligations of U.S. Government sponsored entities	$	11,185	$	11,860
Mortgage-backed securities – residential, issued by
U.S. Government sponsored entities		3,503		4,590
Total	$	14,688	$	16,450

The Company pledges securities as collateral for public deposits and other borrowings, and sells securities under agreements to repurchase. Securities carried of $1.0 billion and $1.0 billion at June 30, 2013 and December 31, 2012, respectively, were either pledged or sold under agreements to repurchase.