SECURITIES

6 Months Ended

Jun. 30, 2015

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 June 30, 2015 and December 31, 2014 and the corresponding amounts of unrealized gains and losses therein:

	June 30, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	68,015	$	42	$	(821	)	$	67,236
State and municipal obligations		72,454		206		(313	)		72,347
U.S. GSE residential mortgage-backed securities		162,236		387		(619	)		162,004
U.S. GSE residential collateralized mortgage obligations		235,102		1,069		(2,454	)		233,717
U.S. GSE commercial mortgage-backed securities		12,607		20		(48	)		12,579
U.S. GSE commercial collateralized mortgage obligations		31,066		6		(158	)		30,914
Other Asset backed securities		24,247		-		(1,210	)		23,037
Corporate Bonds		17,956		10		(328	)		17,638
Total available for sale		623,683		1,740		(5,951	)		619,472
Held to maturity:
U.S. GSE securities		11,298		178		-			11,476
State and municipal obligations		62,255		1,760		(263	)		63,752
U.S. GSE residential mortgage-backed securities		8,413		-		(106	)		8,307
U.S. GSE residential collateralized mortgage obligations		60,031		573		(758	)		59,846
U.S. GSE commercial mortgage-backed securities		23,244		172		(329	)		23,087
U.S. GSE commercial collateralized mortgage obligations		33,536		314		(235	)		33,615
Corporate Bonds		22,979		94		(8	)		23,065
Total held to maturity		221,756		3,091		(1,699	)		223,148
Total securities	$	845,439	$	4,831	$	(7,650	)	$	842,620

	December 31, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available for sale:
U.S. GSE securities	$	97,560	$	4	$	(2,139	)	$	95,425
State and municipal obligations		63,583		318		(208	)		63,693
U.S. GSE residential mortgage-backed securities		100,931		534		(40	)		101,425
U.S. GSE residential collateralized mortgage obligations		261,256		310		(2,967	)		258,599
U.S. GSE commercial mortgage-backed securities		3,016		-		(71	)		2,945
U.S. GSE commercial collateralized mortgage obligations		24,179		44		(141	)		24,082
Other Asset backed securities		24,190		-		(1,153	)		23,037
Corporate Bonds		17,952		161		(135	)		17,978
Total available for sale		592,667		1,371		(6,854	)		587,184
Held to maturity:
U.S. GSE securities		11,283		135		(41	)		11,377
State and municipal obligations		64,864		1,658		(98	)		66,424
U.S. GSE residential mortgage-backed securities		6,667		-		(97	)		6,570
U.S. GSE residential collateralized mortgage obligations		59,539		507		(862	)		59,184
U.S. GSE commercial mortgage-backed securities		13,213		233		(26	)		13,420
U.S. GSE commercial collateralized mortgage obligations		36,413		267		(431	)		36,249
Corporate Bonds		22,948		139		(22	)		23,065
Total held to maturity		214,927		2,939		(1,577	)		216,289
Total securities	$	807,594	$	4,310	$	(8,431	)	$	803,473

The following table summarizes the amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio at June 30, 2015. 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.

	June 30, 2015
	Amortized		Fair
(In thousands)	Cost		Value
Maturity
Available for sale:
Within one year	$	6,643	$	6,660
One to five years		72,672		72,428
Five to ten years		100,252		99,298
Beyond ten years		444,116		441,086
Total	$	623,683	$	619,472
Held to maturity:
Within one year	$	18,314	$	18,347
One to five years		33,688		33,948
Five to ten years		62,646		63,953
Beyond ten years		107,108		106,900
Total	$	221,756	$	223,148

Securities with unrealized losses at June 30, 2015 and December 31, 2014, 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
June 30, 2015			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	32,667	$	331	$	29,748	$	490
State and municipal obligations		41,013		285		5,492		28
U.S. GSE residential mortgage-backed securities		73,581		565		1,520		54
U.S. GSE residential collateralized mortgage obligations		62,629		485		75,427		1,969
U.S. GSE commercial mortgage-backed securities		2,732		48		-		-
U.S. GSE commercial collateralized mortgage obligations		13,753		93		10,295		65
Other Asset backed securities		23,038		1,210		-		-
Corporate Bonds		9,697		303		4,975		25
Total available for sale		259,110		3,320		127,457		2,631
Held to maturity:
U.S. GSE securities		-		-		-		-
State and municipal obligations		15,488		263		-		-
U.S. GSE residential mortgage-backed securities		8,307		106		-		-
U.S. GSE residential collateralized mortgage obligations		14,844		159		19,821		599
U.S. GSE commercial mortgage-backed securities		14,035		329		-		-
U.S. GSE commercial collateralized mortgage obligations		4,946		36		3,790		199
Corporate Bonds		6,994		6		1,997		2
Total held to maturity	$	64,614	$	899	$	25,608	$	800

	Less than 12 months				Greater than 12 months
December 31, 2014			Unrealized				Unrealized
(In thousands)	Fair Value		losses		Fair Value		losses
Available for sale:
U.S. GSE securities	$	4,991	$	8	$	90,233	$	2,131
State and municipal obligations		12,330		79		14,592		129
U.S. GSE residential mortgage-backed securities		-		-		1,554		40
U.S. GSE residential collateralized mortgage obligations		60,126		349		122,179		2,618
U.S. GSE commercial mortgage-backed securities		-		-		2,944		71
U.S. GSE commercial collateralized mortgage obligations		13,830		108		4,636		33
Other Asset backed securities		23,038		1,153		-		-
Corporate Bonds		9,865		135		-		-
Total available for sale		124,180		1,832		236,138		5,022
Held to maturity:
U.S. GSE securities		-		-		7,414		41
State and municipal obligations		11,343		97		202		1
U.S. GSE residential mortgage-backed securities		-		-		6,569		97
U.S. GSE residential collateralized mortgage obligations		10,422		46		30,413		816
U.S. GSE commercial mortgage-backed securities		-		-		4,188		26
U.S. GSE commercial collateralized mortgage obligations		14,392		73		8,611		358
Corporate Bonds		3,978		22		-		-
Total held to maturity	$	40,135	$	238	$	57,397	$	1,339

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 June 30, 2015, the majority of unrealized losses on both the available for sale and held to maturity securities are related to the Company’s U.S. GSE securities and U.S. GSE residential collateralized mortgage obligations. The decrease in fair value of the U.S. GSE securities and U.S. GSE residential collateralized mortgage obligations is attributable to changes in interest rates and not credit quality. 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 June 30, 2015.

There were no proceeds from sales of securities with no gross gains or gross losses realized for the three months ended June 30, 2015. There were $73.8 million of proceeds from sales of securities with gross gains of approximately $0.5 million and gross losses of approximately $0.5 million realized for the six months ended June 30, 2015. There were $36.0 million of proceeds from sales of securities with gross gains of approximately $0.4 million and gross losses of approximately $0.4 million realized for the three months ended June 30, 2014. There were $234.7 million of proceeds from sales of securities with gross gains of approximately $0.7 million and gross losses of approximately $1.8 million realized for the six months ended June 30, 2014. Proceeds from calls of securities were $10.3 million and $2.2 million for the three months ended June 30, 2015 and 2014, respectively. Proceeds from calls of securities were $10.5 million and $2.5 million for the six months ended June 30, 2015 and 2014, respectively.

Securities having a fair value of approximately $520.2 million and $451.1 million at June 30, 2015 and December 31, 2014, 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 six months ended June 30, 2015 or the year ended December 31, 2014.

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 $15.1 million and $10.0 million in FHLB, ACBB and FRB stock at June 30, 2015 and December 31, 2014. These amounts were reported as restricted securities in the consolidated balance sheets.