Securities

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Securities

4.  Securities

Available-for-Sale Securities

The following table summarizes available-for-sale securities held by the Company at March 31, 2014:

			Available-for-Sale Securities
March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	543,889	$	7,114	$	4,605	$	546,398
Obligations of U.S. states and political subdivisions		69,066		1,149		849		69,366
Mortgage-backed securities – residential, issued by
U.S. Government agencies		140,583		2,631		2,244		140,970
U.S. Government sponsored entities		626,994		7,531		15,500		619,025
Non-U.S. Government agencies or sponsored entities		297		5		0		302
U.S. corporate debt securities		2,500		0		375		2,125
Total debt securities		1,383,329		18,430		23,573		1,378,186
Equity securities		1,475		0		61		1,414
Total available-for-sale securities	$	1,384,804	$	18,430	$	23,634	$	1,379,600

The following table summarizes available-for-sale securities held by the Company at December 31, 2013:

			Available-for-Sale Securities
December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	558,130	$	7,720	$	9,505	$	556,345
Obligations of U.S. states and political subdivisions		68,216		1,193		1,447		67,962
Mortgage-backed securities – residential, issued by
U.S. Government agencies		147,766		2,554		3,642		146,678
U.S. Government sponsored entities		587,843		8,122		18,493		577,472
Non-U.S. Government agencies or sponsored entities		306		5		0		311
U.S. corporate debt securities		5,000		8		375		4,633
Total debt securities		1,367,261		19,602		33,462		1,353,401
Equity securities		1,475		0		65		1,410
Total available-for-sale securities	$	1,368,736	$	19,602	$	33,527	$	1,354,811

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at March 31, 2014:

	Held-to-Maturity Securities
March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. states and political subdivisions	$	18,820	$	614	$	0	$	19,434
Total held-to-maturity debt securities	$	18,820	$	614	$	0	$	19,434

The following table summarizes held-to-maturity securities held by the Company at December 31, 2013:

	Held-to-Maturity Securities
December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. states and political subdivisions	$	18,980	$	645	$	0	$	19,625
Total held-to-maturity debt securities	$	18,980	$	645	$	0	$	19,625

The Company may from time to time sell investment securities from its available-for-sale portfolio.

Realized gains on available-for-sale securities were $172,000 and $367,000 in the quarters ending March 31, 2014 and 2013, respectively. Realized losses on available-for-sale securities were $78,000 and $0 in the quarters ending March 31, 2014 and 2013, respectively. The sales from available-for-sale investment securities were the result of the general investment portfolio and interest rate risk management.

The following table summarizes available-for-sale securities that had unrealized losses at March 31, 2014:

	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	$	279,989	$	4,557	$	3,227	$	48	$	283,216	$	4,605
Obligations of U.S. states and political
subdivisions		18,004		373		8,275		476		26,279		849
Mortgage-backed securities – issued by
U.S. Government agencies		64,054		1,552		12,670		692		76,724		2,244
U.S. Government sponsored entities		304,382		9,490		121,686		6,010		426,068		15,500
U.S. corporate debt securities		0		0		2,125		375		2,125		375
Equity securities		0		0		939		61		939		61
Total available-for-sale securities	$	666,429	$	15,972	$	148,922	$	7,662	$	815,351	$	23,634

There were no unrealized losses on held-to-maturity securities at March 31, 2014.

The following table summarizes available-for-sale securities that had unrealized losses at December 31, 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	$	337,967	$	9,467	$	1,761	$	38	$	339,728	$	9,505
Obligations of U.S. states and political subdivisions		21,821		821		6,173		626		27,994		1,447
Mortgage-backed securities – residential, issued by
U.S. Government agencies		70,052		2,701		14,874		941		84,926		3,642
U.S. Government sponsored entities		293,945		14,061		76,070		4,432		370,015		18,493
U.S. corporate debt securities		0		0		2,125		375		2,125		375
Equity securities		0		0		935		65		935		65
Total available-for-sale securities	$	723,785	$	27,050	$	101,938	$	6,477	$	825,723	$	33,527

There were no unrealized losses on held-to-maturity securities at December 31, 2013.

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 and Federal Home Loan Mortgage Corporation, 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 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, 2014, and December 31, 2013, 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. 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, 2014 to be other-than-temporarily impaired.

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
(in thousands)	03/31/2014		03/31/2013
Credit losses at beginning of the period	$	0	$	441
Sales of securities for which an other-than-temporary impairment was previously recognized		0		(441	)
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	$	0

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, 2014
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	42,922	$	43,758
Due after one year through five years		326,600		333,219
Due after five years through ten years		217,791		213,881
Due after ten years		28,142		27,031
Total		615,455		617,889
Mortgage-backed securities		767,874		760,297
Total available-for-sale debt securities	$	1,383,329	$	1,378,186

December 31, 2013
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	25,596	$	26,017
Due after one year through five years		263,553		271,303
Due after five years through ten years		313,245		304,414
Due after ten years		28,952		27,206
Total		631,346		628,940
Mortgage-backed securities		735,915		724,461
Total available-for-sale debt securities	$	1,367,261	$	1,353,401

March 31, 2014
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	10,959	$	11,019
Due after one year through five years		5,621		5,981
Due after five years through ten years		1,726		1,885
Due after ten years		514		549
Total held-to-maturity debt securities	$	18,820	$	19,434

December 31, 2013
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	10,952	$	11,021
Due after one year through five years		5,636		6,004
Due after five years through ten years		1,878		2,051
Due after ten years		514		549
Total held-to-maturity debt securities	$	18,980	$	19,625

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 Central 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 $11.4 million, $6.8 million and $95,000 at March 31, 2014, 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. 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)	03/31/2014		12/31/2013
Obligations of U.S. Government sponsored entities	$	8,104	$	8,275
Mortgage-backed securities – residential, issued by
U.S. Government sponsored entities		2,394		2,716
Total	$	10,498	$	10,991

The decrease in trading securities reflects principal repayments and maturities received during the quarter ended March 31, 2014. The pre-tax mark-to-market losses on trading securities during the three months ended March 31, 2014 were $59,000 compared to $115,000 for the three months ended March 31, 2013.

The Company pledges securities as collateral for public deposits and other borrowings, and sells securities under agreements to repurchase. Securities carried of $1.2 billion and $1.0 billion at March 31, 2014, and December 31, 2013, respectively, were either pledged or sold under agreements to repurchase.