Note

: Investment Securities

A summary of the amortized cost and market value of securities available for sale and securities held to maturity at

March

31,

2017

and

December

31,

2016

is as follows:

	At March 31, 201 7
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Collateralized mortgage obligations	$	222,278	$	99	$	(4,761	)	$	217,616
Agency mortgage-backed securities		37,273		24		(1,267	)		36,030
Municipal securities		27,727		255		(342	)		27,640
Corporate bonds		66,698		98		(2,515	)		64,281
Asset-backed securities		14,975		-		(175	)		14,800
Trust preferred securities		3,063		-		(1,102	)		1,961
Total securities available for sale	$	372,014	$	476	$	(10,162	)	$	362,328

U.S. Government agencies	$	97,177	$	31	$	(2,430	)	$	94,778
Collateralized mortgage obligations		196,461		644		(2,788	)		194,317
Agency mortgage-backed securities		127,192		-		(3,608	)		123,584
Other securities		1,020		-		-			1,020
Total securities held to maturity	$	421,850	$	675	$	(8,826	)	$	413,699

	At December 31, 201 6
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Collateralized mortgage obligations	$	230,252	$	145	$	(5,632	)	$	224,765
Agency mortgage-backed securities		37,973		32		(1,295	)		36,710
Municipal securities		26,825		151		(429	)		26,547
Corporate bonds		66,718		8		(1,978	)		64,748
Asset-backed securities		15,565		-		(416	)		15,149
Trust preferred securities		3,063		-		(1,243	)		1,820
Total securities available for sale	$	380,396	$	336	$	(10,993	)	$	369,739

U.S. Government agencies	$	98,538	$	8	$	(2,238	)	$	96,308
Collateralized mortgage obligations		202,990		793		(2,553	)		201,230
Agency mortgage-backed securities		129,951		1		(3,327	)		126,625
Other securities		1,020		-		-			1,020
Total securities held to maturity	$	432,499	$	802	$	(8,118	)	$	425,183

The following table presents investment securities by stated maturity at

March

31,

2017.

Collateralized mortgage obligations and agency mortgage-backed securities have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, these securities are classified separately with no specific maturity date.

	Available for Sale				Held to Maturity
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in 1 year or less	$	650	$	651	$	-	$	-
After 1 year to 5 years		13,088		13,247		4,408		4,376
After 5 years to 10 years		73,254		70,702		93,789		91,422
After 10 years		25,471		24,082		-		-
Collateralized mortgage obligations		222,278		217,616		196,461		194,317
Agency mortgage-backed securities		37,273		36,030		127,192		123,584
Total	$	372,014	$	362,328	$	421,850	$	413,699

Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without prepayment penalties.

The Company’s investment securities portfolio consists primarily of debt securities issued by U.S. government agencies, U.S. government-sponsored agencies, state governments, local municipalities and certain corporate entities. There were

private label mortgage-backed securities (“MBS”) or collateralized mortgage obligations (“CMO”) held in the investment securities portfolio as of

March

31,

2017

and

December

31,

2016.

There were also

MBS or CMO securities that were rated “Alt-A” or “sub-prime” as of those dates.

The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. Net unrealized gains and losses in the available for sale portfolio are included in shareholders’ equity as a component of accumulated other comprehensive income or loss, net of tax. Securities classified as held to maturity are carried at amortized cost. An unrealized loss exists when the current fair value of an individual security is less than the amortized cost basis.

The Company regularly evaluates investment securities that are in an unrealized loss position in order to determine if the decline in fair value is other than temporary. Factors considered in the evaluation include the current economic climate, the length of time and the extent to which the fair value has been below cost, the current interest rate environment and the rating of each security. An other-than-temporary impairment (“OTTI”) loss must be recognized for a debt security in an unrealized loss position if the Company intends to sell the security or it is more likely than not that it will be required to sell the security prior to recovery of the amortized cost basis. The amount of OTTI loss recognized is equal to the difference between the fair value and the amortized cost basis of the security that is attributed to credit deterioration. Accounting standards require the evaluation of the expected cash flows to be received to determine if a credit loss has occurred. In the event of a credit loss, that amount must be recognized against income in the current period. The portion of the unrealized loss related to other factors, such as liquidity conditions in the market or the current interest rate environment, is recorded in accumulated other comprehensive income (loss) for investment securities classified available for sale.

There were

impairment charges (credit losses) on trust preferred securities for the

three

months ended

March

31,

2017

and

$1,000

was recorded for the

three

months ended

March

31,

2016.

The following table presents a roll-forward of the balance of credit-related impairment losses on securities held at

March

31,

2017

and

2016

for which a portion of OTTI, as applicable, was recognized in other comprehensive income:

(dollars in thousands)	201 7		201 6

Beginning Balance, January 1 st	$	937	$	930
Additional credit-related impairment loss on securities for which an other-than-temporary impairment was previously recognized		-		1
Ending Balance, March 31 st	$	937	$	931

The following tables show the fair value and gross unrealized losses associated with the investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position in the available for sale and held to maturity section:

	At March 31, 2017
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Collateralized mortgage obligations	$	194,126	$	4,512	$	7,264	$	249	$	201,390	$	4,761
Agency mortgage-backed securities		32,174		1,231		2,973		36		35,147		1,267
Municipal securities		9,598		342		-		-		9,598		342
Corporate bonds		19,546		454		35,934		2,061		55,480		2,515
Asset backed securities		-		-		14,800		175		14,800		175
Trust preferred securities		-		-		1,961		1,102		1,961		1,102
Total Available for Sale	$	255,444	$	6,539	$	62,932	$	3,623	$	318,376	$	10,162

	At March 31, 2017
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

U.S. Government agencies	$	86,540	$	2,398	$	3,355	$	32	$	89,895	$	2,430
Collateralized mortgage obligations		124,180		2,356		20,325		432		144,505		2,788
Agency mortgage-backed securities		123,584		3,608		-		-		123,584		3,608
Total Held to Maturity	$	334,304	$	8,362	$	23,680	$	464	$	357,984	$	8,826

	At December 31 , 201 6
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Collateralized mortgage obligations	$	192,308	$	5,380	$	7,579	$	252	$	199,887	$	5,632
Agency mortgage-backed securities		29,916		1,260		3,199		35		33,115		1,295
Municipal securities		15,414		429		-		-		15,414		429
Corporate bonds		32,257		1,708		10,726		270		42,983		1,978
Asset backed securities		-		-		15,149		416		15,149		416
Trust preferred securities		-		-		1,820		1,243		1,820		1,243
Total Available for Sale	$	269,895	$	8,777	$	38,473	$	2,216	$	308,368	$	10,993

	At December 31 , 201 6
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

U.S. Government agencies	$	67,725	$	2,198	$	3,586	$	40	$	71,311	$	2,238
Collateralized mortgage obligations		108,974		2,469		8,572		84		117,546		2,553
Agency mortgage-backed securities		97,725		3,327		-		-		97,725		3,327
Total Held to Maturity	$	274,424	$	7,994	$	12,158	$	124	$	286,582	$	8,118

Unrealized losses on securities in the investment portfolio amounted to

$19.0

million with a total fair value of

$676.4

million as of

March

31,

2017

compared to unrealized losses of

$19.1

million with a total fair value of

$595.0

million as of

December

31,

2016.

The Company believes the unrealized losses presented in the tables above are temporary in nature and primarily related to market interest rates or limited trading activity in particular type of security rather than the underlying credit quality of the issuers. The Company does not believe that these losses are other than temporary and does not currently intend to sell or believe it will be required to sell securities in an unrealized loss position prior to maturity or recovery of the amortized cost bases.

The Company held

ten

U.S. Government agency securities,

fifty

five

collateralized mortgage obligations and

twenty

three

agency mortgage-backed securities that were in an unrealized loss position at

March

31,

2017.

Principal and interest payments of the underlying collateral for each of these securities are backed by U.S. Government sponsored agencies and carry minimal credit risk. Management found no evidence of OTTI on any of these securities and believes the unrealized losses are due to fluctuations in fair values resulting from changes in market interest rates and are considered temporary as of

March

31,

2017.

All municipal securities held in the investment portfolio are reviewed on least a quarterly basis for impairment. Each bond carries an investment grade rating by either Moody’s or Standard & Poor’s. In addition, the Company periodically conducts its own independent review on each issuer to ensure the financial stability of the municipal entity. The largest geographic concentration was in Pennsylvania and New Jersey and consisted of either general obligation or revenue bonds backed by the taxing power of the issuing municipality. At

March

31,

2017,

the investment portfolio included

fifteen

municipal securities that were in an unrealized loss position. Management believes the unrealized losses were the result of movements in long-term interest rates and are not reflective of credit deterioration.

March

31,

2017,

the investment portfolio included

two

asset-backed securities that were in an unrealized loss position. The asset-backed securities held in the investment securities portfolio consist solely of Sallie Mae bonds, collateralized by student loans which are guaranteed by the U.S. Department of Education. Management believes the unrealized losses on these securities were driven by changes in market interest rates and not a result of credit deterioration. At

March

31,

2017,

the investment portfolio included

seven

corporate bonds that were in an unrealized loss position. Management believes the unrealized losses on these securities were also driven by changes in market interest rates and not a result of credit deterioration.

The unrealized losses on the trust preferred securities are primarily the result of the

secondary

market for such securities becoming inactive and are also considered temporary at this time. The following table provides additional detail about the trust preferred securities held in the portfolio as of

March

31,

2017.

(dollars in thousands)	Class / Tranche	Amortized Cost		Fair Value		Unrealized Losses			Lowest Credit Rating Assigned	Number of Banks Currently Performing		Deferrals / Defaults as % of Current Balance			Conditional Default Rates for 2018 and beyond			Cumulative OTTI Life to Date
TPREF Funding II	Class B Notes	$	725	$	428	$	(297	)	C		19		29	%		0.41	%	$	274
TPREF Funding III	Class B2 Notes		1,518		956		(562	)	C		15		28			0.42			483
ALESCO Preferred Funding V	Class C1 Notes		820		577		(243	)	C		40		15			0.43			180
Total		$	3,063	$	1,961	$	(1,102	)			74		24	%				$	937

securities were sold during the

three

months ended

March

31,

2017.

During the

three

months ended

March

31,

2016,

the proceeds from the sale of investment securities were

$54.7

million. Gross gains of

$320,000

and gross losses of

$24,000

were realized on these sales. The tax provision applicable to the net gains for the

three

months ended

March

31,

2016

was

$106,000.