Securities
 6 Months Ended
Jun. 30, 2016
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 June 30, 2016:

 

    Available-for-Sale Securities
June 30, 2016   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Fair Value
(in thousands)                
Obligations of U.S. Government sponsored entities   $ 522,686     $ 16,061     $ 0     $ 538,747  
Obligations of U.S. states and political subdivisions     84,449       1,462       2       85,909  
Mortgage-backed securities – residential, issued by                                
U.S. Government agencies     135,157       2,114       267       137,004  
U.S. Government sponsored entities     642,180       6,877       1,579       647,478  
Non-U.S. Government agencies or sponsored entities     136       0       0       136  
U.S. corporate debt securities     2,500       0       338       2,162  
Total debt securities     1,387,108       26,514       2,186       1,411,436  
Equity securities     1,000       0       54       946  
Total available-for-sale securities   $ 1,388,108     $ 26,514     $ 2,240     $ 1,412,382  

 

The following table summarizes available-for-sale securities held by the Company at December 31, 2015:

 

    Available-for-Sale Securities
December 31, 2015   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Fair Value
(in thousands)                
Obligations of U.S. Government sponsored entities   $ 551,176     $ 3,512     $ 1,795     $ 552,893  
Obligations of U.S. states and political subdivisions     83,981       898       153       84,726  
Mortgage-backed securities – residential, issued by                                
U.S. Government agencies     94,459       1,535       1,316       94,678  
U.S. Government sponsored entities     656,947       3,599       10,449       650,097  
Non-U.S. Government agencies or sponsored entities     192       2       0       194  
U.S. corporate debt securities     2,500       0       338       2,162  
Total debt securities     1,389,255       9,546       14,051       1,384,750  
Equity securities     1,000       0       66       934  
Total available-for-sale securities   $ 1,390,255     $ 9,546     $ 14,117     $ 1,385,684  

 

Held-to-Maturity Securities

The following table summarizes held-to-maturity securities held by the Company at June 30, 2016:

 

    Held-to-Maturity Securities
June 30, 2016   Amortized Cost   Gross Unrealized Gains     Gross
Unrealized
Losses		     Fair Value
(in thousands)                
Obligations of U.S. Government sponsored entities   $ 132,291     $ 7,524     $ 0     $ 139,815  
Obligations of U.S. states and political subdivisions   $ 12,688     $ 398     $ 0     $ 13,086  
Total held-to-maturity debt securities   $ 144,979     $ 7,922     $ 0     $ 152,901  

 

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

 

    Held-to-Maturity Securities
December 31, 2015   Amortized Cost   Gross Unrealized Gains     Gross Unrealized Losses     Fair Value
(in thousands)                
Obligations of U.S. Government sponsored entities   $ 132,482     $ 649     $ 444     $ 132,687  
Obligations of U.S. states and political subdivisions     13,589       414       4       13,999  
Total held-to-maturity debt securities   $ 146,071     $ 1,063     $ 448     $ 146,686  

 

The Company may from time to time sell investment securities from its available-for-sale portfolio. Realized gains on available-for-sale securities were $239,000 and $472,000 for the three and six months ending June 30, 2016 and $725,000 and $1,015,000 in the same periods during 2015. Realized losses on available-for-sale securities were $0 for the three and six months ending June 30, 2016 and $2,000 for the three and six months ending June 30, 2015. 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 June 30, 2016:

 

    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   $ 503     $ 0     $ 0     $ 0     $ 503     $ 0  
Obligations of U.S. states and political subdivisions     1,408       1       759       1       2,167       2  
                                                 
Mortgage-backed securities – issued by                                                
U.S. Government agencies     553       3       24,541       264       25,094       267  
U.S. Government sponsored entities     15,832       98       145,587       1,481       161,419       1,579  
U.S. corporate debt securities     0       0       2,163       338       2,163       338  
Equity securities     0       0       946       54       946       54  
Total available-for-sale securities   $ 18,296     $ 102     $ 173,996     $ 2,138     $ 192,292     $ 2,240  

 

There were no unrealized losses on held-to-maturity securities for June 30, 2016.

 

The following table summarizes available-for-sale securities that had unrealized losses at December 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   $ 183,697     $ 1,618     $ 5,844     $ 177     $ 189,541     $ 1,795  
Obligations of U.S. states and political subdivisions     25,402       141       3,408       12       28,810       153  
                                                 
Mortgage-backed securities – residential, issued by                                                
U.S. Government agencies     32,636       350       30,244       966       62,880       1,316  
U.S. Government sponsored entities     364,420       4,102       176,325       6,347       540,745       10,449  
U.S. corporate debt securities     0       0       2,163       338       2,163       338  
Equity securities     0       0       934       66       934       66  
Total available-for-sale securities   $ 606,155     $ 6,211     $ 218,918     $ 7,906     $ 825,073     $ 14,117  

 

The following table summarizes held-to-maturity securities that had unrealized losses at December 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   $ 29,671     $ 444     $ 0     $ 0     $ 29,671     $ 444  
Obligations of U.S. sponsored entities     1,966       4       0       0       1,966       4  
Total held-to-maturity securities   $ 31,637     $ 448     $ 0     $ 0     $ 31,637     $ 448  

 

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 June 30, 2016, and December 31, 2015, 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-temporary impairment review process, the Company does not consider any investment security held at June 30, 2016 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.

 

June 30, 2016        
(in thousands)   Amortized Cost   Fair Value
Available-for-sale securities:        
Due in one year or less   $ 27,577     $ 27,854  
Due after one year through five years     346,074       355,429  
Due after five years through ten years     223,789       231,552  
Due after ten years     12,195       11,983  
Total     609,635       626,818  
Mortgage-backed securities     777,473       784,618  
Total available-for-sale debt securities   $ 1,387,108     $ 1,411,436  

 

December 31, 2015        
(in thousands)   Amortized Cost   Fair Value
Available-for-sale securities:        
Due in one year or less   $ 53,936     $ 54,735  
Due after one year through five years     351,462       353,736  
Due after five years through ten years     219,161       218,561  
Due after ten years     13,098       12,749  
Total     637,657       639,781  
Mortgage-backed securities     751,598       744,969  
Total available-for-sale debt securities   $ 1,389,255     $ 1,384,750  

 

June 30, 2016        
(in thousands)   Amortized Cost   Fair Value
Held-to-maturity securities:        
Due in one year or less   $ 8,781     $ 8,813  
Due after one year through five years     28,560       29,900  
Due after five years through ten years     107,535       114,061  
Due after ten years     103       127  
Total held-to-maturity debt securities   $ 144,979     $ 152,901  

 

December 31, 2015        
(in thousands)   Amortized Cost   Fair Value
Held-to-maturity securities:        
Due in one year or less   $ 9,249     $ 9,294  
Due after one year through five years     14,069       14,341  
Due after five years through ten years     122,585       122,853  
Due after ten years     168       198  
Total held-to-maturity debt securities   $ 146,071     $ 146,686  

 

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 Community 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 $21.7 million, $14.7 million and $95,000 at June 30, 2016, respectively. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase 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 June 30, 2016, 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)     06/30/2016       12/31/2015  
         
Obligations of U.S. Government sponsored entities   $ 6,249     $ 6,601  
Mortgage-backed securities – residential, issued by U.S. Government sponsored entities     470       767  
Total   $ 6,719     $ 7,368  

 

The decrease in the trading portfolio reflects maturities or payments during the three and six months ended June 30, 2016. For the three and six months ended June 30, 2016, net mark-to-market losses related to the securities trading portfolio were $60,000 and $106,000, respectively, compared to net mark-to-market losses for the three and six months ended June 30, 2015 of $74,000 and $137,000, respectively.

 

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 $1.2 billion at June 30, 2016, and December 31, 2015, respectively, were either pledged or sold under agreements to repurchase.