SECURITIES

3 Months Ended

Mar. 31, 2016

SECURITIES

SECURITIES

4. SECURITIES

The following table summarizes the amortized cost and fair value of the available for sale and held to maturity investment securities portfolio at March 31, 2016 and December 31, 2015 and the corresponding amounts of unrealized gains and losses therein:

	March 31, 2016
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	67,242	$	82	$	(18	)	$	67,306
State and municipal obligations		102,417		1,346		(84	)		103,679
U.S. GSE residential mortgage-backed securities		214,827		1,775		(78	)		216,524
U.S. GSE residential collateralized mortgage obligations		360,008		1,663		(808	)		360,863
U.S. GSE commercial mortgage-backed securities		12,432		224		-			12,656
U.S. GSE commercial collateralized mortgage obligations		68,741		449		(129	)		69,061
Other asset backed securities		24,250		-		(1,940	)		22,310
Corporate bonds		32,000		103		(876	)		31,227
Total available for sale		881,917		5,642		(3,933	)		883,626
Held to maturity:
U.S. GSE securities		-		-		-			-
State and municipal obligations		63,326		2,620		-			65,946
U.S. GSE residential mortgage-backed securities		12,393		34		(13	)		12,414
U.S. GSE residential collateralized mortgage obligations		63,969		1,544		(66	)		65,447
U.S. GSE commercial mortgage-backed securities		29,291		512		(81	)		29,722
U.S. GSE commercial collateralized mortgage obligations		38,299		821		(147	)		38,973
Corporate bonds		11,000		33		-			11,033
Total held to maturity		218,278		5,564		(307	)		223,535
Total securities	$	1,100,195	$	11,206	$	(4,240	)	$	1,107,161

	December 31, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	63,238	$	-	$	(564	)	$	62,674
State and municipal obligations		87,830		427		(322	)		87,935
U.S. GSE residential mortgage-backed securities		201,297		237		(1,270	)		200,264
U.S. GSE residential collateralized mortgage obligations		321,253		513		(3,888	)		317,878
U.S. GSE commercial mortgage-backed securities		12,491		7		(80	)		12,418
U.S. GSE commercial collateralized mortgage obligations		64,809		9		(620	)		64,198
Other asset backed securities		24,250		-		(1,879	)		22,371
Corporate bonds		33,000		-		(535	)		32,465
Total available for sale		808,168		1,193		(9,158	)		800,203
Held to maturity:
U.S. GSE securities		7,466		1		-			7,467
State and municipal obligations		64,878		1,715		(113	)		66,480
U.S. GSE residential mortgage-backed securities		7,609		-		(106	)		7,503
U.S. GSE residential collateralized mortgage obligations		60,933		617		(498	)		61,052
U.S. GSE commercial mortgage-backed securities		23,056		210		(313	)		22,953
U.S. GSE commercial collateralized mortgage obligations		33,409		282		(185	)		33,506
Corporate bonds		11,000		42		-			11,042
Total held to maturity		208,351		2,867		(1,215	)		210,003
Total securities	$	1,016,519	$	4,060	$	(10,373	)	$	1,010,206

The following table summarizes the amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio at March 31, 2016. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016
	Amortized		Fair
(In thousands)	Cost		Value
Maturity
Available for sale:
Within one year	$	10,507	$	10,521
One to five years		90,049		90,378
Five to ten years		128,043		128,594
Beyond ten years		653,318		654,133
Total	$	881,917	$	883,626
Held to maturity:
Within one year	$	4,910	$	4,926
One to five years		31,088		31,457
Five to ten years		62,414		65,077
Beyond ten years		119,866		122,075
Total	$	218,278	$	223,535

Securities with unrealized losses at March 31, 2016 and December 31, 2015, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	Less than 12 months				Greater than 12 months
March 31, 2016			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	29,231	$	18	$	-	$	-
State and municipal obligations		16,528		81		4,586		3
U.S. GSE residential mortgage-backed securities		26,843		53		10,494		25
U.S. GSE residential collateralized mortgage obligations		58,730		85		64,799		723
U.S. GSE commercial mortgage-backed securities		-		-		-		-
U.S. GSE commercial collateralized mortgage obligations		21,205		57		10,112		72
Other asset backed securities		-		-		22,310		1,940
Corporate bonds		17,249		751		4,875		125
Total available for sale		169,786		1,045		117,176		2,888
Held to maturity:
U.S. GSE securities		-		-		-		-
State and municipal obligations		586		-		-		-
U.S. GSE residential mortgage-backed securities		-		-		5,251		13
U.S. GSE residential collateralized mortgage obligations		2,472		4		4,737		62
U.S. GSE commercial mortgage-backed securities		6,260		70		5,094		11
U.S. GSE commercial collateralized mortgage obligations		4,846		80		3,923		67
Corporate bonds		-		-		-		-
Total held to maturity	$	14,164	$	154	$	19,005	$	153

	Less than 12 months				Greater than 12 months
December 31, 2015			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	37,759	$	235	$	24,914	$	329
State and municipal obligations		39,621		298		5,118		24
U.S. GSE residential mortgage-backed securities		136,025		1,224		1,510		46
U.S. GSE residential collateralized mortgage obligations		187,543		1,781		66,830		2,107
U.S. GSE commercial mortgage-backed securities		8,594		80		-		-
U.S. GSE commercial collateralized mortgage obligations		51,178		503		10,034		117
Other Asset backed securities		-		-		22,371		1,879
Corporate bonds		27,640		360		4,825		175
Total available for sale		488,360		4,481		135,602		4,677
Held to maturity:
U.S. GSE securities		-		-		-		-
State and municipal obligations		18,375		113		-		-
U.S. GSE residential mortgage-backed securities		7,503		106		-		-
U.S. GSE residential collateralized mortgage obligations		15,918		149		15,679		349
U.S. GSE commercial mortgage-backed securities		13,982		313		-		-
U.S. GSE commercial collateralized mortgage obligations		7,912		8		3,813		177
Corporate bonds		-		-		-		-
Total held to maturity	$	63,690	$	689	$	19,492	$	526

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320, Accounting for Certain Investments in Debt and Equity Securities. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At March 31, 2016, the majority of unrealized losses on the available for sale securities are related to the Company’s U.S. GSE residential collateralized mortgage obligations, other asset backed securities, and corporate bonds. The decrease in fair value of the U.S. GSE residential collateralized mortgage obligations, other asset backed securities, and corporate bonds is attributable to changes in interest rates and not credit quality. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2016.

There were $28.7 million of proceeds from sales of securities with gross gains of approximately $0.3 million and gross losses of approximately $0.2 million realized for the three months ended March 31, 2016. There were $73.8 million of proceeds from sales of securities with gross gains of approximately $0.5 million and gross losses of approximately $0.5 million realized for the three months ended March 31, 2015. Proceeds from calls of securities were $30.6 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively.

Securities having a fair value of approximately $793.2 million and $611.0 million at March 31, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and Federal Home Loan Bank and Federal Reserve Bank overnight borrowings. The Company did not hold any trading securities during the three months ended March 31, 2016 or the year ended December 31, 2015.

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the Federal Reserve Bank (“FRB”) system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned approximately $24.9 million and $24.8 million in FHLB, ACBB and FRB stock at March 31, 2016 and December 31, 2015, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.