4. SECURITIES

The following tables summarize the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at September 30, 2018 and December 31, 2017 and the corresponding amounts of unrealized gains and losses therein:


	September 30, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	29,997	$	—	$	(1,453)	$	28,544
State and municipal obligations		35,772		40		(640)		35,172
U.S. GSE residential mortgage-backed securities		96,967		5		(4,242)		92,730
U.S. GSE residential collateralized mortgage obligations		356,644		—		(11,335)		345,309
U.S. GSE commercial mortgage-backed securities		3,560		—		(80)		3,480
U.S. GSE commercial collateralized mortgage obligations		93,875		—		(3,206)		90,669
Other asset backed securities		24,250		—		(728)		23,522
Corporate bonds		46,000		—		(3,564)		42,436
Total available for sale		687,065		45		(25,248)		661,862

Held to maturity:
State and municipal obligations		55,828		327		(664)		55,491
U.S. GSE residential mortgage-backed securities		10,042		—		(481)		9,561
U.S. GSE residential collateralized mortgage obligations		49,470		22		(1,766)		47,726
U.S. GSE commercial mortgage-backed securities		19,285		—		(973)		18,312
U.S. GSE commercial collateralized mortgage obligations		29,813		—		(1,659)		28,154
Total held to maturity		164,438		349		(5,543)		159,244
Total securities	$	851,503	$	394	$	(30,791)	$	821,106


	December 31, 2017
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	57,994	$	—	$	(1,180)	$	56,814
State and municipal obligations		87,582		259		(819)		87,022
U.S. GSE residential mortgage-backed securities		189,705		29		(2,833)		186,901
U.S. GSE residential collateralized mortgage obligations		314,390		16		(7,016)		307,390
U.S. GSE commercial mortgage-backed securities		6,017		2		(40)		5,979
U.S. GSE commercial collateralized mortgage obligations		49,965		—		(1,249)		48,716
Other asset backed securities		24,250		—		(849)		23,401
Corporate bonds		46,000		—		(2,307)		43,693
Total available for sale		775,903		306		(16,293)		759,916

Held to maturity:
State and municipal obligations		60,762		972		(64)		61,670
U.S. GSE residential mortgage-backed securities		11,424		—		(261)		11,163
U.S. GSE residential collateralized mortgage obligations		54,250		244		(666)		53,828
U.S. GSE commercial mortgage-backed securities		22,953		77		(438)		22,592
U.S. GSE commercial collateralized mortgage obligations		31,477		—		(845)		30,632
Total held to maturity		180,866		1,293		(2,274)		179,885
Total securities	$	956,769	$	1,599	$	(18,567)	$	939,801

The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at September 30, 2018. 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.


	September 30, 2018
			Estimated
(In thousands)	Amortized Cost		Fair Value
Maturity
Available for sale:
Within one year	$	8,494	$	8,460
One to five years		28,236		27,372
Five to ten years		83,273		78,442
Beyond ten years		567,062		547,588
Total	$	687,065	$	661,862

Held to maturity:
Within one year	$	1,941	$	1,937
One to five years		29,223		28,950
Five to ten years		50,267		49,105
Beyond ten years		83,007		79,252
Total	$	164,438	$	159,244

The following tables summarize securities with gross unrealized losses at September 30, 2018 and December 31, 2017, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:


	September 30, 2018
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	28,544	$	(1,453)
State and municipal obligations		16,037		(190)		15,948		(450)
U.S. GSE residential mortgage-backed securities		14,098		(640)		77,169		(3,602)
U.S. GSE residential collateralized mortgage obligations		192,703		(2,953)		152,607		(8,382)
U.S. GSE commercial mortgage-backed securities		3,480		(80)		—		—
U.S. GSE commercial collateralized mortgage obligations		46,569		(814)		44,099		(2,392)
Other asset backed securities		—		—		23,522		(728)
Corporate bonds		—		—		42,435		(3,564)
Total available for sale	$	272,887	$	(4,677)	$	384,324	$	(20,571)

Held to maturity:
State and municipal obligations	$	28,515	$	(564)	$	2,466	$	(100)
U.S. GSE residential mortgage-backed securities		—		—		9,561		(481)
U.S. GSE residential collateralized mortgage obligations		16,116		(527)		28,963		(1,239)
U.S. GSE commercial mortgage-backed securities		5,946		(138)		12,366		(835)
U.S. GSE commercial collateralized mortgage obligations		58		—		28,096		(1,659)
Total held to maturity	$	50,635	$	(1,229)	$	81,452	$	(4,314)


	December 31, 2017
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	56,815	$	(1,180)
State and municipal obligations		35,350		(301)		28,165		(518)
U.S. GSE residential mortgage-backed securities		107,408		(1,153)		69,571		(1,680)
U.S. GSE residential collateralized mortgage obligations		77,705		(759)		224,932		(6,257)
U.S. GSE commercial mortgage-backed securities		2,345		(40)		—		—
U.S. GSE commercial collateralized mortgage obligations		452		(1)		48,264		(1,248)
Other asset backed securities		—		—		23,401		(849)
Corporate bonds		13,588		(412)		30,105		(1,895)
Total available for sale	$	236,848	$	(2,666)	$	481,253	$	(13,627)

Held to maturity:
State and municipal obligations	$	7,709	$	(57)	$	1,009	$	(7)
U.S. GSE residential mortgage-backed securities		1,359		(16)		9,804		(245)
U.S. GSE residential collateralized mortgage obligations		21,329		(94)		21,112		(572)
U.S. GSE commercial mortgage-backed securities		8,789		(121)		8,303		(317)
U.S. GSE commercial collateralized mortgage obligations		10,341		(116)		20,290		(729)
Total held to maturity	$	49,527	$	(404)	$	60,518	$	(1,870)

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly 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 these criteria, the amount of impairment is split into two components: (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 September 30, 2018, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody's rating during the time the Bank has owned them. The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody's or Standard and Poor's. None of the unrealized losses is related to credit losses. 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 September 30, 2018.

Sales and Calls of Securities

There were no proceeds from sales of securities for the three months ended September 30, 2018. There were $230.4 million of proceeds from sales of securities with gross losses of $7.9 million realized for the nine months ended September 30, 2018. There were $26.7 million of proceeds from sales of securities with gross gains of approximately $0.3 million and gross losses of approximately $0.1 million for the three and nine months ended September 30, 2017. There were no proceeds from calls of securities for the three months ended September 30, 2018. There were $0.9 million of proceeds from calls of securities for the nine months ended September 30, 2018. There were no proceeds from calls of securities for the three and nine months ended September 30, 2017.

Pledged Securities

Securities having a fair value of $317.1 million and $513.5 million at September 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

Trading Securities

The Company did not hold any trading securities during the nine months ended September 30, 2018 or the year ended December 31, 2017.

Restricted Securities

The Bank is a member of the 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 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 $25.2 million and $35.3 million in FHLB, ACBB and FRB stock at September 30, 2018 and December 31, 2017, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.