2. SECURITIES

The following table summarizes the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio and the corresponding amounts of gross unrealized gains and losses therein:


	December 31,
	2019								2018
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
Available for sale:
U.S. Treasury securities	$	50,833	$	—	$	(11)	$	50,822	$	—	$	—	$	—	$	—
U.S. GSE securities		5,000		—		(5)		4,995		29,997		—		(947)		29,050
State and municipal obligations		34,303		704		(43)		34,964		40,980		105		(354)		40,731
U.S. GSE residential mortgage-backed securities		84,550		609		(468)		84,691		96,536		38		(3,036)		93,538
U.S. GSE residential collateralized mortgage obligations		278,149		1,166		(1,464)		277,851		362,905		826		(5,954)		357,777
U.S. GSE commercial mortgage-backed securities		13,656		23		(70)		13,609		3,536		—		(28)		3,508
U.S. GSE commercial collateralized mortgage obligations		102,722		1,723		(289)		104,156		93,177		—		(2,539)		90,638
Other asset-backed securities		24,250		—		(849)		23,401		24,250		—		(1,031)		23,219
Corporate bonds		46,000		—		(2,198)		43,802		46,000		—		(3,575)		42,425
Total available for sale		639,463		4,225		(5,397)		638,291		697,381		969		(17,464)		680,886

Held to maturity:
State and municipal obligations		41,008		809		—		41,817		53,540		290		(276)		53,554
U.S. GSE residential mortgage-backed securities		8,142		5		(54)		8,093		9,688		—		(336)		9,352
U.S. GSE residential collateralized mortgage obligations		39,936		624		(62)		40,498		48,244		163		(1,130)		47,277
U.S. GSE commercial mortgage-backed securities		17,215		102		(82)		17,235		19,098		4		(620)		18,482
U.S. GSE commercial collateralized mortgage obligations		27,337		191		(144)		27,384		29,593		—		(1,466)		28,127
Total held to maturity		133,638		1,731		(342)		135,027		160,163		457		(3,828)		156,792
Total securities	$	773,101	$	5,956	$	(5,739)	$	773,318	$	857,544	$	1,426	$	(21,292)	$	837,678

The following table summarizes securities with gross unrealized losses at December 31, 2019 and 2018, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:


	December 31,
	2019								2018
	Less than 12 months				Greater than 12 months				Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses		Value		Losses
Available for sale:
U.S. Treasury securities	$	50,822	$	(11)	$	—	$	—	$	—	$	—	$	—	$	—
U.S. GSE securities		—		—		4,995		(5)		—		—		29,050		(947)
State and municipal obligations		4,982		(42)		76		(1)		6,655		(15)		21,273		(339)
U.S. GSE residential mortgage-backed securities		2,935		(30)		39,617		(438)		—		—		88,762		(3,036)
U.S. GSE residential collateralized mortgage obligations		81,377		(480)		93,403		(984)		46,452		(141)		172,468		(5,813)
U.S. GSE commercial mortgage-backed securities		6,648		(70)		—		—		—		—		3,508		(28)
U.S. GSE commercial collateralized mortgage obligations		28,710		(145)		9,614		(144)		46,705		(623)		43,933		(1,916)
Other asset-backed securities		—		—		23,401		(849)		—		—		23,219		(1,031)
Corporate bonds		—		—		43,802		(2,198)		—		—		42,425		(3,575)
Total available for sale	$	175,474	$	(778)	$	214,908	$	(4,619)	$	99,812	$	(779)	$	424,638	$	(16,685)

Held to maturity:
State and municipal obligations	$	—	$	—	$	—	$	—	$	8,286	$	(26)	$	22,142	$	(250)
U.S. GSE residential mortgage-backed securities		—		—		7,268		(54)		—		—		9,352		(336)
U.S. GSE residential collateralized mortgage obligations		6,750		(17)		6,105		(45)		—		—		40,665		(1,130)
U.S. GSE commercial mortgage-backed securities		—		—		5,034		(82)		—		—		16,205		(620)
U.S. GSE commercial collateralized mortgage obligations		13,038		(57)		4,300		(87)		—		—		28,127		(1,466)
Total held to maturity	$	19,788	$	(74)	$	22,707	$	(268)	$	8,286	$	(26)	$	116,491	$	(3,802)

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, “Investments - Debt and Equity Securities” (“ASC 320”). 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 December 31, 2019, 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 were 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 December 31, 2019.

The following table sets forth the estimated fair value, amortized cost and contractual maturities of the securities portfolio at December 31, 2019. 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.


	December 31, 2019
	Within				After One but				After Five but				After
	One Year				Within Five Years				Within Ten Years				Ten Years				Total
	Estimated				Estimated				Estimated				Estimated				Estimated
	Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized
(In thousands)	Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost
Available for sale:
U.S. Treasury securities	$	50,822	$	50,833	$	—	$	—	$	—	$	—	$	—	$	—	$	50,822	$	50,833
U.S. GSE securities		—		—		4,995		5,000		—		—		—		—		4,995		5,000
State and municipal obligations		1,143		1,142		14,829		14,620		16,540		16,088		2,452		2,453		34,964		34,303
U.S. GSE residential mortgage-backed securities		—		—		—		—		—		—		84,691		84,550		84,691		84,550
U.S. GSE residential collateralized mortgage obligations		—		—		—		—		—		—		277,851		278,149		277,851		278,149
U.S. GSE commercial mortgage-backed securities		—		—		8,761		8,753		4,848		4,903		—		—		13,609		13,656
U.S. GSE commercial collateralized mortgage obligations		—		—		—		—		—		—		104,156		102,722		104,156		102,722
Other asset backed securities		—		—		—		—		—		—		23,401		24,250		23,401		24,250
Corporate bonds		—		—		14,538		15,000		29,264		31,000		—		—		43,802		46,000
Total available for sale		51,965		51,975		43,123		43,373		50,652		51,991		492,551		492,124		638,291		639,463

Held to maturity:
State and municipal obligations		8,838		8,827		23,382		22,902		9,444		9,129		153		150		41,817		41,008
U.S. GSE residential mortgage-backed securities		—		—		—		—		5,919		5,947		2,174		2,195		8,093		8,142
U.S. GSE residential collateralized mortgage obligations		—		—		—		—		3,865		3,871		36,633		36,065		40,498		39,936
U.S. GSE commercial mortgage-backed securities		—		—		4,824		4,776		4,835		4,805		7,576		7,634		17,235		17,215
U.S. GSE commercial collateralized mortgage obligations		—		—		387		392		—		—		26,997		26,945		27,384		27,337
Total held to maturity		8,838		8,827		28,593		28,070		24,063		23,752		73,533		72,989		135,027		133,638
Total securities	$	60,803	$	60,802	$	71,716	$	71,443	$	74,715	$	75,743	$	566,084	$	565,113	$	773,318	$	773,101

Sales and Calls of Securities

There were $46.5 million of proceeds on sales of available for sale securities with gross gains of approximately $0.2 million realized in 2019. There were $230.4 million of proceeds on sales of available for sale securities with gross losses of approximately $7.9 million realized in 2018. There were $52.4 million of proceeds on sales of available for sale securities with gross gains of approximately $0.3 million and gross losses of approximately $0.3 million realized in 2017. There were $20.3 million and $3.3 million of proceeds from calls of securities in 2019 and 2018, respectively.

Pledged Securities

Securities having a fair value of $402.2 million and $354.3 million at December 31, 2019 and 2018, respectively, were pledged to secure public deposits and FHLB and FRB overnight borrowings.

Trading Securities

The Company did not hold any trading securities during the years ended December 31, 2019 and 2018.

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 $32.9 million and $24.0 million in FHLB, ACBB and FRB stock at December 31, 2019 and 2018, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

As of December 31, 2019 and 2018, there was no issuer, other than the U.S. Government and its sponsored entities, where the Bank had invested holdings that exceeded 10% of consolidated stockholders’ equity.