Securities

3 Months Ended

Mar. 31, 2015

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, 2015:

	Available-for-Sale Securities
March 31, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	573,577	$	9,960	$	233	$	583,304
Obligations of U.S. states and political subdivisions		72,597		1,136		160		73,573
Mortgage-backed securities – residential, issued by
U.S. Government agencies		103,613		2,345		852		105,106
U.S. Government sponsored entities		682,573		7,586		5,595		684,564
Non-U.S. Government agencies or sponsored entities		258		4		0		262
U.S. corporate debt securities		2,500		0		338		2,162
Total debt securities		1,435,118		21,031		7,178		1,448,971
Equity securities		1,000		0		45		955
Total available-for-sale securities	$	1,436,118	$	21,031	$	7,223	$	1,449,926

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

	Available-for-Sale Securities
December 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	553,300	$	6,222	$	1,702	$	557,820
Obligations of U.S. states and political subdivisions		70,790		999		279		71,510
Mortgage-backed securities – residential, issued by
U.S. Government agencies		108,931		2,339		1,344		109,926
U.S. Government sponsored entities		660,195		7,309		8,384		659,120
Non-U.S. Government agencies or sponsored entities		267		4		0		271
U.S. corporate debt securities		2,500		0		338		2,162
Total debt securities		1,395,983		16,873		12,047		1,400,809
Equity securities		1,475		0		48		1,427
Total available-for-sale securities	$	1,397,458	$	16,873	$	12,095	$	1,402,236

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at March 31, 2015:

	Held-to-Maturity Securities
March 31, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	81,982	$	1,768	$	63	$	83,687
Obligations of U.S. states and political subdivisions	$	15,084	$	487	$	0	$	15,571
Total held-to-maturity debt securities	$	97,066	$	2,255	$	63	$	99,258

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

	Held-to-Maturity Securities
December 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(in thousands)
Obligations of U.S. Government sponsored entities	$	71,906	$	400	$	37	$	72,269
Obligations of U.S. states and political subdivisions		16,262		505		0		16,767
Total held-to-maturity debt securities	$	88,168	$	905	$	37	$	89,036

The Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on available-for-sale securities were $290,000 and $172,000 for the three month periods ending March 31, 2015 and 2014, respectively. Realized losses on available-for-sale securities were $0 and $78,000 for the three month periods ending March 31, 2015 and 2014, respectively. The sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management.

The following table summarizes available-for-sale securities that had unrealized losses at March 31, 2015:

	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	$	37,667	$	90	$	17,550	$	143	$	55,217	$	233
Obligations of U.S. states and political subdivisions		16,833		140		2,142		20		18,975		160
Mortgage-backed securities – issued by
U.S. Government agencies		2,455		4		36,556		848		39,011		852
U.S. Government sponsored entities		131,045		740		218,656		4,855		349,701		5,595
U.S. corporate debt securities		0		0		2,162		338		2,162		338
Equity securities		0		0		955		45		955		45
Total available-for-sale securities	$	188,000	$	974	$	278,021	$	6,249	$	466,021	$	7,223
The following table summarizes held-to-maturity securities that had unrealized losses at March 31, 2015.
	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	$	10,079	$	63	$	0	$	0	$	10,079	$	63
Total held-to-maturity securities	$	10,079	$	63	$	0	$	0	$	10,079	$	63

The following table summarizes available-for-sale securities that had unrealized losses at December 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	$	71,363	$	385	$	65,497	$	1,317	$	136,860	$	1,702
Obligations of U.S. states and political subdivisions		15,451		124		8,102		155		23,553		279
Mortgage-backed securities – residential, issued by
U.S. Government agencies		2,623		21		28,502		1,323		31,125		1,344
U.S. Government sponsored entities		162,377		719		271,503		7,665		433,880		8,384
U.S. corporate debt securities		0		0		2,163		338		2,163		338
Equity securities		0		0		952		48		952		48
Total available-for-sale securities	$	251,814	$	1,249	$	376,719	$	10,846	$	628,533	$	12,095
The following table summarizes held-to-maturity securities that had unrealized losses at December 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	$	15,095	$	37	$	0	$	0	$	15,095	$	37
Total held-to-maturity securities	$	15,095	$	37	$	0	$	0	$	15,095	$	37

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, 2015, and December 31, 2014, 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 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, 2015 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, 2015
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	68,446	$	69,829
Due after one year through five years		391,117		398,772
Due after five years through ten years		173,150		174,819
Due after ten years		15,961		15,619
Total		648,674		659,039
Mortgage-backed securities		786,444		789,932
Total available-for-sale debt securities	$	1,435,118	$	1,448,971

December 31, 2014
(in thousands)	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	67,281	$	68,350
Due after one year through five years		342,548		347,230
Due after five years through ten years		199,724		199,276
Due after ten years		17,037		16,636
Total		626,590		631,492
Mortgage-backed securities		769,393		769,317
Total available-for-sale debt securities	$	1,395,983	$	1,400,809

March 31, 2015
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	10,394	$	10,454
Due after one year through five years		3,358		3,616
Due after five years through ten years		83,006		84,835
Due after ten years		308		353
Total held-to-maturity debt securities	$	97,066	$	99,258

December 31, 2014
(in thousands)	Amortized Cost		Fair Value
Held-to-maturity securities:
Due in one year or less	$	11,400	$	11,471
Due after one year through five years		3,440		3,694
Due after five years through ten years		73,020		73,518
Due after ten years		308		353
Total held-to-maturity debt securities	$	88,168	$	89,036

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 $10.1 million, $10.9 million and $95,000 at March 31, 2015, 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, as of March 31, 2015, 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)	03/31/2015		12/31/2014
Obligations of U.S. Government sponsored entities	$	7,240	$	7,404
Mortgage-backed securities – residential, issued by
U.S. Government sponsored entities		1,365		1,588
Total	$	8,605	$	8,992

The decrease in trading securities reflects principal repayments and maturities received during the quarter ended March 31, 2105. The pre-tax mark-to-market losses on trading securities during the three months ended March 31, 2015 were $63,000 compared to $59,000 for the three months ended March 31, 2014.

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 $1.1 billion at March 31, 2015, and December 31, 2014, respectively, were either pledged or sold under agreements to repurchase.