SECURITIES

3 Months Ended

Mar. 31, 2012

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, 2012 and December 31, 2011 and the corresponding amounts of unrealized gains and losses therein:

	March 31, 2012
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	148,460	$	812	$	(444	)	$	148,828
State and municipal obligations	62,583		1,478		(140		)	63,921
U.S. GSE residential mortgage-backed securities	59,581		3,270		—			62,851
U.S. GSE residential collateralized mortgage obligations	217,201		3,930		(129		)	221,002
U.S. GSE commercial collateralized mortgage obligations (1)	5,159		80		—			5,239
Non Agency commercial mortgage-backed securities	5,225		—		(55		)	5,170
Total available for sale	498,209		9,570		(768		)	507,011
Held to maturity:
U.S. GSE securities	4,991		—		(46		)	4,945
State and municipal obligations	102,795		1,869		(29		)	104,635
U.S. GSE residential mortgage-backed securities	5,975		81		—			6,056
U.S. GSE residential collateralized mortgage obligations	41,766		977		(44		)	42,699
Corporate Bonds	22,774		118		(981		)	21,911
Total held to maturity	178,301		3,045		(1,100		)	180,246
Total securities	$	676,510	$	12,615	$	(1,868	)	$	687,257

	December 31, 2011
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	130,708	$	968	$	(2	)	$	131,674
State and municipal obligations	52,861		1,366		(8		)	54,219
U.S. GSE residential mortgage-backed securities	67,317		3,667		—			70,984
U.S. GSE residential collateralized mortgage obligations	175,878		3,493		(46		)	179,325
U.S. GSE commercial collateralized mortgage obligations (1)	5,167		70		—			5,237
Total available for sale	431,931		9,564		(56		)	441,439
Held to maturity:
State and municipal obligations	104,314		2,048		(5		)	106,357
U.S. GSE residential collateralized mortgage obligations	42,081		1,104		(21		)	43,164
Corporate Bonds	22,758		3		(1,330		)	21,431
Total held to maturity	169,153		3,155		(1,356		)	170,952
Total securities	$	601,084	$	12,719	$	(1,412	)	$	612,391

(1)        U.S. GSE commercial collateralized mortgage obligations represent securities with multi-family mortgage loans as the collateral.

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, 2012. 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, 2012
	Amortized		Fair
(In thousands)	Cost		Value
Maturity
Available for sale:
Within one year	$	14,303	$	14,484
One to five years	78,383		79,473
Five to ten years	139,663		141,011
Beyond ten years	265,860		272,043
Total	$	498,209	$	507,011
Held to maturity:
Within one year	$	60,776	$	60,777
One to five years	34,481		34,648
Five to ten years	21,756		21,519
Beyond ten years	61,288		63,302
Total	$	178,301	$	180,246

Securities with unrealized losses at March 31, 2012 and December 31, 2011, 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, 2012			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	77,807	$	444	$	—	$	—
State and municipal obligations	9,304		140		—		—
U.S. GSE residential collateralized mortgage obligations	26,348		129		—		—
Non Agency commercial mortgage-backed securities	5,170		55
Total available for sale	$	118,629	$	768	$	—	$	—
Held to maturity:
U.S. GSE securities	4,945		46		—		—
State and municipal obligations	9,519		29		—		—
U.S. GSE residential collateralized mortgage obligations	4,965		44		—		—
Corporate Bonds	4,748		253		12,272		728
Total held to maturity	$	24,177	$	372	$	12,272	$	728

	Less than 12 months				Greater than 12 months
December 31, 2011			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	7,196	$	2	$	—	$	—
State and municipal obligations	4,283		8		—		—
U.S. GSE residential collateralized mortgage obligations	7,672		46		—		—
Total available for sale	$	19,151	$	56	$	—	$	—
Held to maturity:
State and municipal obligations	7,011		5		—		—
U.S. GSE residential collateralized mortgage obligations	4,810		21		—		—
Corporate Bonds	4,664		336		12,006		994
Total held to maturity	$	16,485	$	362	$	12,006	$	994

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, 2012, the majority of unrealized losses on available for sale securities are related to the Company’s U.S. GSE securities and the majority of unrealized losses on held to maturity securities are related to corporate bonds.  The decrease in fair value of the U.S. GSE securities and the corporate bond portfolio is attributable to changes in interest rates and not credit quality.  Each issuer of corporate bonds has maintained their well capitalized status and continues to be reviewed periodically.  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, 2012.

Proceeds from sales of securities available for sale were $3.3 million for the three months ended March 31, 2012 and there were no proceed from sales of securities available for sale for the three months ended March 31, 2011. Gross gains of $0.3 million were realized on these sales during the three months ended March 31, 2012.  Proceeds from calls of securities available for sale were $42.3 million and $5.0 million for the three months ended March 31, 2012 and 2011, respectively.

Securities having a fair value of approximately $300.0 million and $287.8 million at March 31, 2012 and December 31, 2011, respectively, were pledged to secure public deposits and Federal Home Loan Bank and Federal Reserve Bank overnight borrowings.  The Bank did not hold any trading securities during the three months ended March 31, 2012 or the year ended December 31, 2011.

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 $2.0 million in FHLB, ACBB and FRB stock at March 31, 2012 and approximately $1.7 million at December 31, 2011.  These amounts were reported as restricted securities in the consolidated balance sheets.