Securities

The amortized cost and fair value of securities are summarized in the following tables:



	March 31, 2015
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	33,996	$	—	$	(455	)	$	33,541
Residential mortgage-backed securities	58,453		498		(222		)	58,729
Agency collateralized mortgage obligations	365,381		3,541		(5,403		)	363,519
Municipal securities	29,988		330		(82		)	30,236
Total	$	487,818	$	4,369	$	(6,162	)	$	486,025
Held to Maturity:
U.S. Government agency securities	$	149,117	$	321	$	(2,212	)	$	147,226
Residential mortgage-backed securities	12,281		312		—			12,593
Agency collateralized mortgage obligations	146,981		2,309		(948		)	148,342
Corporate debt securities	5,000		41		—			5,041
Municipal securities	9,703		151		—			9,854
Total	$	323,082	$	3,134	$	(3,160	)	$	323,056



	December 31, 2014
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	33,995	$	—	$	(1,207	)	$	32,788
Residential mortgage-backed securities	60,196		442		(489		)	60,149
Agency collateralized mortgage obligations	409,823		2,250		(7,064		)	405,009
Municipal securities	29,985		225		(118		)	30,092
Total	$	533,999	$	2,917	$	(8,878	)	$	528,038
Held to Maturity:
U.S. Government agency securities	$	149,112	$	—	$	(4,658	)	$	144,454
Residential mortgage-backed securities	14,226		480		—			14,706
Agency collateralized mortgage obligations	146,952		649		(1,711		)	145,890
Corporate debt securities	5,000		63		—			5,063
Municipal securities	9,704		107		(1		)	9,810
Total	$	324,994	$	1,299	$	(6,370	)	$	319,923

The amortized cost and fair value of debt securities by contractual maturity at March 31, 2015 are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations.



	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	5,000	$	5,041
Due after one year through five years	6,741		6,790		—		—
Due after five years through ten years	50,144		49,903		111,383		109,332
Due after ten years	7,099		7,084		47,437		47,748
	63,984		63,777		163,820		162,121
Residential mortgage-backed securities	58,453		58,729		12,281		12,593
Agency collateralized mortgage obligations	365,381		363,519		146,981		148,342
Total	$	487,818	$	486,025	$	323,082	$	323,056

During the first quarter of 2015, the Company sold four securities from the available for sale (AFS) portfolio with a total fair market value of $27.8 million and realized net losses of $166,000. One security with a fair market value of $1.4 million was sold by the Company from the held to maturity (HTM) portfolio with a realized gain of $138,000, however, it was an amortizing security that returned more than 85% of its principal and could be sold without tainting the remaining HTM portfolio. The Company had no securities that were called by their respective issuers.

During the first quarter of 2014, the Company sold one security with a fair market value of $614,000 and realized a gain of $11,000. The security was from the HTM portfolio, however, it was an amortizing security that had already returned more than 85% of its principal and could be sold without tainting the remaining HTM portfolio. The Company had no securities that were called by their respective issuers.

The following table summarizes the Company's gross realized gains and losses on the sales or calls of AFS debt securities:



(in thousands)	Gross Realized Gains		Gross Realized Losses			Net Gains (Losses)
Three Months Ended:
March 31, 2015	$	7	$	(173	)	$	(166	)
March 31, 2014	—		—			—

The Company does not maintain a trading portfolio and there were no transfers of securities between the AFS and HTM portfolios. The Company uses the specific identification method to record security sales.

In determining fair market values for its portfolio holdings, the Company receives information from a third party provider which management evaluates and corroborates using amounts from one of its securities brokers. Under the current guidance, these values are considered Level 2 inputs, based upon mathematically derived matrix pricing and observed data from similar assets. They are not Level 1 direct quotes, nor do they reflect Level 3 inputs that would be derived from internal analysis or judgment. As the Company does not manage a trading portfolio and typically only sells from its AFS portfolio in order to manage interest rate risk or credit exposure, direct quotes, or street bids, are warranted on an as-needed basis.

The following table shows the fair value and gross unrealized losses associated with the Company's investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:



	March 31, 2015
	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for Sale:
U.S. Government agency securities	$	24,566	$	(435	)	$	8,975	$	(20	)	$	33,541	$	(455	)
Residential mortgage-backed securities	15,475		(117		)	8,841		(105		)	24,316		(222		)
Agency collateralized mortgage obligations	45,320		(881		)	131,560		(4,522		)	176,880		(5,403		)
Municipal securities	1,962		(28		)	2,316		(54		)	4,278		(82		)
Total	$	87,323	$	(1,461	)	$	151,692	$	(4,701	)	$	239,015	$	(6,162	)
Held to Maturity:
U.S. Government agency securities	$	9,969	$	(19	)	$	100,751	$	(2,193	)	$	110,720	$	(2,212	)
Agency collateralized mortgage obligations	17,271		(10		)	16,383		(938		)	33,654		(948		)
Total	$	27,240	$	(29	)	$	117,134	$	(3,131	)	$	144,374	$	(3,160	)



	December 31, 2014
	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for Sale:
U.S. Government agency securities	$	—	$	—		$	32,788	$	(1,207	)	$	32,788	$	(1,207	)
Residential mortgage-backed securities	—		—			24,636		(489		)	24,636		(489		)
Agency collateralized mortgage obligations	21,687		(77		)	212,908		(6,987		)	234,595		(7,064		)
Municipal securities	—		—			5,021		(118		)	5,021		(118		)
Total	$	21,687	$	(77	)	$	275,353	$	(8,801	)	$	297,040	$	(8,878	)
Held to Maturity:
U.S. Government agency securities	$	—	$	—		$	144,454	$	(4,658	)	$	144,454	$	(4,658	)
Agency collateralized mortgage obligations	31,289		(255		)	27,282		(1,456		)	58,571		(1,711		)
Municipal securities	1,013		(1		)	—		—			1,013		(1		)
Total	$	32,302	$	(256	)	$	171,736	$	(6,114	)	$	204,038	$	(6,370	)

The Company's investment securities portfolio consists of U.S. Government agency debentures, U.S. Government-sponsored agency mortgage-backed securities (MBSs), agency collateralized mortgage obligations (CMOs), corporate bonds and municipal bonds. The Company considers securities of the U.S. Government sponsored agencies and the U.S. Government MBS/CMOs to have little credit risk because their principal and interest payments are backed by an agency of the U.S. Government.

The unrealized losses in the Company's investment portfolio at March 31, 2015 were associated with two distinct types of securities. The first type, those backed by the U.S. Government or one of its agencies, included 10 debentures, 19 CMOs and 4 MBSs. Management believes that the unrealized losses on these investments were primarily caused by the movement of interest rates from the date of purchase and notes the contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. The full and timely payment of all principal and interest is expected. The second type, municipal bonds, included three securities that were in an unrealized loss position as of March 31, 2015. In all cases, the bonds are general obligations of either a Pennsylvania municipality or school district and are backed by the ad valorem taxing power of the entity. The municipal bonds carry an investment grade rating of no lower than single-A by either Moody's or Standard & Poor's. The Company, however, conducts its own periodic, independent review and believes the unrealized losses in its municipal bond portfolio are the result of movements in long-term interest rates and are not reflective of any credit deterioration. The Company does not intend to sell these debt securities prior to recovery and it is more likely than not that the Company will not have to sell these debt securities prior to recovery.

The Company did not recognize any credit losses related to the OTTI of investments during either the first three months ended March 31, 2015 or 2014.

At March 31, 2015, securities with a carrying value of $646.3 million were pledged to secure public deposits and for other purposes as required or permitted by law.