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Securities
 9 Months Ended
Sep. 30, 2016
Marketable Securities [Abstract]  
Securities
Securities

This table provides the major components of AFS and HTM securities at amortized cost and estimated fair value at September 30, 2016 and December 31, 2015:
 
 
September 30, 2016
 
December 31, 2015
(In thousands)
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities
 
$
3,748

 
$
53

 
$
—

 
$
3,801

 
$
6,649

 
$
—

 
$
(68
)
 
$
6,581

State and political subdivisions
 
5,557

 
72

 
—

 
5,629

 
10,625

 
159

 
(2
)
 
10,782

Residential mortgage-backed securities
 
22,937

 
621

 
(99
)
 
23,459

 
26,191

 
449

 
(201
)
 
26,439

Corporate and other securities
 
11,588

 
80

 
(371
)
 
11,297

 
9,404

 
71

 
(412
)
 
9,063

Total securities available for sale
 
$
43,830

 
$
826

 
$
(470
)
 
$
44,186

 
$
52,869

 
$
679

 
$
(683
)
 
$
52,865

Held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities
 
$
3,773

 
$
6

 
$
—

 
$
3,779

 
$
3,988

 
$
—

 
$
(87
)
 
$
3,901

State and political subdivisions
 
2,307

 
267

 
—

 
2,574

 
2,364

 
187

 
(1
)
 
2,550

Residential mortgage-backed securities
 
5,181

 
170

 
(10
)
 
5,341

 
6,232

 
141

 
(28
)
 
6,345

Commercial mortgage-backed securities
 
3,823

 
90

 
—

 
3,913

 
3,902

 
—

 
(62
)
 
3,840

Corporate and other securities
 
13,090

 
141

 
—

 
13,231

 
1,985

 
—

 
(14
)
 
1,971

Total securities held to maturity
 
$
28,174

 
$
674

 
$
(10
)
 
$
28,838

 
$
18,471

 
$
328

 
$
(192
)
 
$
18,607



This table provides the remaining contractual maturities and yields of securities within the investment portfolios.  The carrying value of securities at September 30, 2016 is distributed by contractual maturity.  Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity.  Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls.
 
 
Within one year
 
After one through five years
 
After five through ten years
 
After ten years
 
Total carrying value
(In thousands, except percentages)
 
Amount
 
Yield
 
Amount
 
Yield
 
Amount
 
Yield
 
Amount
 
Yield
 
Amount
 
Yield
Available for sale at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities  
 
$
4

 
0.89
%
 
$
3,797

 
1.61
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
3,801

 
1.61
%
State and political subdivisions    
 
—

 
—

 
777

 
3.12

 
1,326

 
3.06

 
3,526

 
2.73

 
5,629

 
2.86

Residential mortgage-backed securities    
 
—

 
—

 
654

 
2.23

 
3,220

 
2.30

 
19,585

 
2.76

 
23,459

 
2.69

Corporate and other securities
 
2,405

 
1.56

 
158

 
1.62

 
6,339

 
2.68

 
2,395

 
0.56

 
11,297

 
1.98

Total securities available for sale
 
$
2,409

 
1.56
%
 
$
5,386

 
1.90
%
 
$
10,885

 
2.61
%
 
$
25,506

 
2.55
%
 
$
44,186

 
2.43
%
Held to maturity at cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities  
 
$
—

 
—
%
 
$
—

 
—
%
 
$
—

 
—
%
 
$
3,773

 
1.97
%
 
$
3,773

 
1.97
%
State and political subdivisions    
 
213

 
1.00

 
—

 
—

 
492

 
5.08

 
1,602

 
4.64

 
2,307

 
4.40

Residential mortgage-backed securities    
 
42

 
4.07

 
42

 
5.02

 
818

 
2.77

 
4,279

 
2.74

 
5,181

 
2.80

Commercial mortgage-backed securities    
 
—

 
—

 
—

 
—

 
—

 
—

 
3,823

 
2.76

 
3,823

 
2.76

Corporate and other securities
 
—

 
—

 
—

 
—

 
11,076

 
4.81

 
2,014

 
8.80

 
13,090

 
5.42

Total securities held to maturity
 
$
255

 
1.50
%
 
$
42

 
5.02
%
 
$
12,386

 
4.68
%
 
$
15,491

 
3.54
%
 
$
28,174

 
4.03
%


The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015 are as follows:
 
 
September 30, 2016
 
 
 
 
Less than 12 months
 
12 months and greater
 
Total
(In thousands, except number in a loss position)
 
Total number in a loss position
 
Estimated fair value
 
Unrealized loss
 
Estimated fair value
 
Unrealized loss
 
Estimated fair value
 
Unrealized loss
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities
 
4

 
$
—

 
$
—

 
$
3,338

 
$
(99
)
 
$
3,338

 
$
(99
)
Corporate and other securities
 
9

 
1,055

 
(45
)
 
5,313

 
(326
)
 
6,368

 
(371
)
Total temporarily impaired securities
 
13

 
$
1,055

 
$
(45
)
 
$
8,651

 
$
(425
)
 
$
9,706

 
$
(470
)
Held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities
 
3

 
$
913

 
$
(5
)
 
$
553

 
$
(5
)
 
$
1,466

 
$
(10
)
Total temporarily impaired securities
 
3

 
$
913

 
$
(5
)
 
$
553

 
$
(5
)
 
$
1,466

 
$
(10
)

 
 
December 31, 2015
 
 
 
 
Less than 12 months
 
12 months and greater
 
Total
(In thousands, except number in a loss position)
 
Total number in a loss position
 
Estimated fair value
 
Unrealized loss
 
Estimated fair value
 
Unrealized loss
 
Estimated fair value
 
Unrealized loss
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities
 
9

 
$
4,165

 
$
(12
)
 
$
2,416

 
$
(56
)
 
$
6,581

 
$
(68
)
State and political subdivisions
 
3

 
1,584

 
(2
)
 
—

 
—

 
1,584

 
(2
)
Residential mortgage-backed securities
 
11

 
6,195

 
(36
)
 
4,508

 
(165
)
 
10,703

 
(201
)
Corporate and other securities
 
11

 
4,730

 
(174
)
 
3,756

 
(238
)
 
8,486

 
(412
)
Total temporarily impaired securities
 
34

 
$
16,674

 
$
(224
)
 
$
10,680

 
$
(459
)
 
$
27,354

 
$
(683
)
Held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government sponsored entities
 
2

 
$
—

 
$
—

 
$
3,901

 
$
(87
)
 
$
3,901

 
$
(87
)
State and political subdivisions
 
1

 
263

 
(1
)
 
—

 
—

 
263

 
(1
)
Residential mortgage-backed securities
 
3

 
—

 
—

 
1,853

 
(28
)
 
1,853

 
(28
)
Commercial mortgage-backed securities
 
2

 
3,840

 
(62
)
 
—

 
—

 
3,840

 
(62
)
Corporate and other securities
 
1

 
971

 
(14
)
 
—

 
—

 
971

 
(14
)
Total temporarily impaired securities
 
9

 
$
5,074

 
$
(77
)
 
$
5,754

 
$
(115
)
 
$
10,828

 
$
(192
)


Unrealized Losses

The unrealized losses in each of the categories presented in the tables above are discussed in the paragraphs that follow:

U.S. government sponsored entities and state and political subdivision securities: The unrealized losses on investments in these types of securities were caused by the increase in interest rate spreads or the increase in interest rates at the long end of the Treasury curve.  The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investments.  Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than temporarily impaired as of September 30, 2016.  There was no impairment on these securities at December 31, 2015.

Residential and commercial mortgage-backed securities:  The unrealized losses on investments in mortgage-backed securities were caused by increases in interest rate spreads or the increase in interest rates at the long end of the Treasury curve.  The majority of contractual cash flows of these securities are guaranteed by the FNMA, GNMA, and the FHLMC.  It is expected that the securities would not be settled at a price significantly less than the par value of the investment.  Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of September 30, 2016 or December 31, 2015.

Corporate and other securities: Included in this category are corporate debt securities, Community Reinvestment Act (“CRA”) investments, asset-backed securities, and trust preferred securities.  The unrealized losses on corporate debt securities were due to widening credit spreads or the increase in interest rates at the long end of the Treasury curve and the unrealized losses on CRA investments were caused by decreases in the market value of underlying bonds and rate changes.  The Company evaluated the prospects of the issuers and forecasted a recovery period; and as a result determined it did not consider these investments to be other-than-temporarily impaired as of September 30, 2016 or December 31, 2015.  The contractual terms do not allow the security to be settled at a price less than the par value.  Because the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity, the Company did not consider this security to be other-than-temporarily impaired as of September 30, 2016 or December 31, 2015.

Realized Gains and Losses

Gross realized gains on securities for the three and nine months ended September 30, 2016 and 2015 are detailed in the table below:

 
For the three months ended
September 30,
 
For the nine months ended
September 30,
(In thousands)
 
2016
 
2015
 
2016
 
2015
Available for sale:
 
 
 
 
 
 
 
 
Realized gains
 
$
12

 
$
—

 
$
187

 
$
28

Realized losses
 
(1
)
 
—

 
(1
)
 
—

Total securities available for sale
 
11

 
—

 
186

 
28

Held to maturity:
 
 
 
 
 
 
 
 
Realized gains
 
—

 
—

 
—

 
—

Realized losses
 
—

 
—

 
—

 
—

Total securities held to maturity
 
—

 
—

 
—

 
—

Net gains on sales of securities
 
$
11

 
$
—

 
$
186

 
$
28



The net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains.  There was a gross realized gain of $12 thousand for the three months ended September 30, 2016.  For the nine months ended September 30, 2016, there was a gross realized gain of $187 thousand.

•
For the nine months ended September 30, 2016, the net gains are attributed to the sale of fifteen municipal securities with a total book value of $6.4 million and resulting gains of $112 thousand, the sale of two SBA securities with a book value of $2.5 million and resulting gains of $12 thousand, and the sale of one equity security totaling $40 thousand in book value, resulting in pre-tax gains of approximately $63 thousand, partially offset by the sale of one SBA security with a book value of $753 thousand which resulted in a loss of $1 thousand.

There were no realized gains or losses for the three months ended September 30, 2015, and there were gross realized gains of $28 thousand for the nine months ended September 30, 2015. The net realized gains during 2015 were a result of the following:

•
For the nine months ended September 30, 2015, the Company sold one corporate bond totaling $500 thousand in book value, resulting in pre-tax gains of approximately $28 thousand.

Pledged Securities

Securities with a carrying value of $17.5 million and $18.5 million for September 30, 2016 and December 31, 2015, respectively, were pledged to secure Government deposits, secure other borrowings and for other purposes required or permitted by law.  In September 2016, the FHLB issued a letter of credit in the name of Unity Bank naming the NJ Dept. of Banking and Insurance as beneficiary.  The letter of credit took the place of securities previously pledged to the state as collateral for the Bank’s municipal deposits.  For additional information on amounts pledged to secure Government deposits at September 30, 2016, see section titled “Borrowed Funds and Subordinated Debentures” under Item 2. Management Discussion and Analysis.