SECURITIES

12 Months Ended

Dec. 31, 2016

SECURITIES

SECURITIES

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,
	2016									2015
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
U.S. GSE securities	$	64,993	$	—	$	(1,344	)	$	63,649	$	63,238	$	—	$	(564	)	$	62,674
State and municipal obligations		117,292		212		(1,339	)		116,165		87,830		427		(322	)		87,935
U.S. GSE residential mortgage-backed securities		160,446		16		(2,414	)		158,048		201,297		237		(1,270	)		200,264
U.S. GSE residential collateralized mortgage obligations		373,098		149		(5,736	)		367,511		321,253		513		(3,888	)		317,878
U.S. GSE commercial mortgage-backed securities		6,337		6		(36	)		6,307		12,491		7		(80	)		12,418
U.S. GSE commercial collateralized mortgage obligations		56,148		—		(956	)		55,192		64,809		9		(620	)		64,198
Other asset backed securities		24,250		—		(1,697	)		22,553		24,250		—		(1,879	)		22,371
Corporate bonds		32,000		—		(1,703	)		30,297		33,000		—		(535	)		32,465
Total available for sale		834,564		383		(15,225	)		819,722		808,168		1,193		(9,158	)		800,203
Held to maturity:
U.S. GSE securities		—		—		—			—		7,466		1		—			7,467
State and municipal obligations		66,666		1,085		(130	)		67,621		64,878		1,715		(113	)		66,480
U.S. GSE residential mortgage-backed securities		13,443		—		(287	)		13,156		7,609		—		(106	)		7,503
U.S. GSE residential collateralized mortgage obligations		61,639		352		(552	)		61,439		60,933		617		(498	)		61,052
U.S. GSE commercial mortgage-backed securities		28,772		136		(509	)		28,399		23,056		210		(313	)		22,953
U.S. GSE commercial collateralized mortgage obligations		41,717		93		(573	)		41,237		33,409		282		(185	)		33,506
Corporate bonds		11,000		26		—			11,026		11,000		42		—			11,042
Total held to maturity		223,237		1,692		(2,051	)		222,878		208,351		2,867		(1,215	)		210,003
Total securities	$	1,057,801	$	2,075	$	(17,276	)	$	1,042,600	$	1,016,519	$	4,060	$	(10,373	)	$	1,010,206

The following table summarizes securities with gross unrealized losses at December 31, 2016 and 2015, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31,
	2016										2015
	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. GSE securities	$	63,649	$	(1,344	)	$	—	$	—		$	37,759	$	(235	)	$	24,914	$	(329	)
State and municipal obligations		78,883		(1,338	)		240		(1	)		39,621		(298	)		5,118		(24	)
U.S. GSE residential mortgage-backed securities		140,514		(2,409	)		241		(5	)		136,025		(1,224	)		1,510		(46	)
U.S. GSE residential collateralized mortgage obligations		319,197		(5,221	)		15,627		(515	)		187,543		(1,781	)		66,830		(2,107	)
U.S. GSE commercial mortgage-backed securities		2,573		(36	)		—		—			8,594		(80	)		—		—
U.S. GSE commercial collateralized mortgage obligations		48,901		(886	)		6,292		(70	)		51,178		(503	)		10,034		(117	)
Other asset backed securities		—		—			22,552		(1,697	)		—		—			22,371		(1,879	)
Corporate bonds		17,834		(1,166	)		12,463		(537	)		27,640		(360	)		4,825		(175	)
Total available for sale		671,551		(12,400	)		57,415		(2,825	)		488,360		(4,481	)		135,602		(4,677	)
Held to maturity:
State and municipal obligations		21,867		(130	)		—		—			18,375		(113	)		—		—
U.S. GSE residential mortgage-backed securities		13,156		(287	)		—		—			7,503		(106	)		—		—
U.S. GSE residential collateralized mortgage obligations		31,297		(455	)		3,873		(97	)		15,918		(149	)		15,679		(349	)
U.S. GSE commercial mortgage-backed securities		12,860		(286	)		5,877		(223	)		13,982		(313	)		—		—
U.S. GSE commercial collateralized mortgage obligations		22,666		(372	)		3,790		(201	)		7,912		(8	)		3,813		(177	)
Corporate bonds		—		—			—		—			—		—			—		—
Total held to maturity	$	101,846	$	(1,530	)	$	13,540	$	(521	)	$	63,690	$	(689	)	$	19,492	$	(526	)

Unrealized losses on securities have not been recognized into income, as the losses on these securities would be expected to dissipate as they approach their maturity dates. The Company evaluates securities for OTTI quarterly and more frequently when economic or market concerns warrant. Consideration is given to the length of time and extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, whether the market decline was affected by macroeconomic conditions, and 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. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its entities and whether downgrades by bond rating agencies have occurred.

At December 31, 2016, 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 Aaa Moody’s rating during the time the Bank has owned them. None of the unrealized losses are 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, 2016.

The following table sets forth the estimated fair value, amortized cost and contractual maturities of the securities portfolio at December 31, 2016. 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, 2016
	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. GSE securities	$	—	$	—	$	26,593	$	26,994	$	37,056	$	37,999	$	—	$	—	$	63,649	$	64,993
State and municipal obligations		14,635		14,638		50,964		51,473		42,921		43,461		7,645		7,720		116,165		117,292
U.S. GSE residential mortgage-backed securities		—		—		—		—		16,124		16,227		141,924		144,219		158,048		160,446
U.S. GSE residential collateralized mortgage obligations		—		—		—		—		9,263		9,361		358,248		363,737		367,511		373,098
U.S. GSE commercial mortgage-backed securities		—		—		—		—		6,307		6,337		—		—		6,307		6,337
U.S. GSE commercial collateralized mortgage obligations		—		—		—		—		—		—		55,192		56,148		55,192		56,148
Other asset backed securities		—		—		—		—		—		—		22,553		24,250		22,553		24,250
Corporate bonds		—		—		—		—		30,297		32,000		—		—		30,297		32,000
Total available for sale		14,635		14,638		77,557		78,467		141,968		145,385		585,562		596,074		819,722		834,564
Held to maturity:
State and municipal obligations		9,631		9,635		16,982		16,818		39,133		38,361		1,875		1,852		67,621		66,666
U.S. GSE residential mortgage-backed securities		—		—		—		—		1,688		1,701		11,468		11,742		13,156		13,443
U.S. GSE residential collateralized mortgage obligations		—		—		—		—		7,389		7,394		54,050		54,245		61,439		61,639
U.S. GSE commercial mortgage-backed securities		—		—		5,016		5,063		14,568		14,621		8,815		9,088		28,399		28,772
U.S. GSE commercial collateralized mortgage obligations		—		—		—		—		4,930		5,129		36,307		36,588		41,237		41,717
Corporate bonds		11,026		11,000		—		—		—		—		—		—		11,026		11,000
Total held to maturity		20,657		20,635		21,998		21,881		67,708		67,206		112,515		113,515		222,878		223,237
Total securities	$	35,292	$	35,273	$	99,555	$	100,348	$	209,676	$	212,591	$	698,077	$	709,589	$	1,042,600	$	1,057,801

There were $264.4 million of proceeds on sales of available for sale securities with gross gains of approximately $1.6 million and gross losses of approximately $1.2 million realized in 2016. There were $75.8 million of proceeds on sales of available for sale securities with gross gains of approximately $0.5 million and gross losses of approximately $0.5 million realized in 2015. There were $361.0 million of proceeds on sales of available for sale securities with gross gains of approximately $1.2 million and gross losses of approximately $2.3 million realized in 2014.

Securities having a fair value of $570.1 million and $611.0 million at December 31, 2016 and 2015, respectively, were pledged to secure public deposits and FHLB and FRB overnight borrowings. The Company did not hold any trading securities during the years ended December 31, 2016 and 2015.

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 $34.7 million and $24.8 million in FHLB, ACBB and FRB stock at December 31, 2016 and 2015, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

As of December 31, 2016 and 2015, 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.