Quarterly Report (10-q)

Fecha : 08/11/2019 @ 09:21
Fuente : Edgar (US Regulatory)
Emisora : NBT Bancorp Inc (NBTB)
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Quarterly Report (10-q)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.

COMMISSION FILE NUMBER 0-14703

NBT BANCORP INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
16-1268674
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

52 South Broad Street, Norwich, New York 13815
(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (607) 337-2265

None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act: 

Title of class
 
Trading Symbol(s)
 
Name of exchange on which registered
Common Stock, par value $0.01 per share
 
NBTB
 
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer 
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

As of October 31, 2019, there were 43,791,695 shares outstanding of the Registrant’s common stock, $0.01 par value per share.





NBT BANCORP INC.
FORM 10-Q-Quarter Ended September 30, 2019

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1
Financial Statements
 
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
9
     
Item 2
37
     
Item 3
50
     
Item 4
50
     
PART II
OTHER INFORMATION
 
     
Item 1
51
Item 1A
51
Item 2
51
Item 3
51
Item 4
51
Item 5
51
Item 6
52
     
 
53



Item 1 – FINANCIAL STATEMENTS

NBT Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)

 
September 30,
   
December 31,
 
   
2019
   
2018
 
(In thousands, except share and per share data)
           
Assets
           
Cash and due from banks
 
$
217,639
   
$
175,550
 
Short-term interest bearing accounts
   
56,457
     
5,405
 
Equity securities, at fair value
   
26,818
     
23,053
 
Securities available for sale, at fair value
   
932,173
     
998,496
 
Securities held to maturity (fair value $691,189 and $778,675, respectively)
   
678,435
     
783,599
 
Federal Reserve and Federal Home Loan Bank stock
   
37,490
     
53,229
 
Loans held for sale
   
17,986
     
6,943
 
Loans
   
7,013,809
     
6,887,709
 
Less allowance for loan losses
   
72,365
     
72,505
 
Net loans
 
$
6,941,444
   
$
6,815,204
 
Premises and equipment, net
   
75,708
     
78,970
 
Goodwill
   
274,769
     
274,769
 
Intangible assets, net
   
12,864
     
15,599
 
Bank owned life insurance
   
180,513
     
177,479
 
Other assets
   
209,090
     
148,067
 
Total assets
 
$
9,661,386
   
$
9,556,363
 
Liabilities
               
Demand (noninterest bearing)
 
$
2,477,657
   
$
2,361,099
 
Savings, NOW and money market
   
4,405,218
     
4,076,434
 
Time
   
860,291
     
930,678
 
Total deposits
 
$
7,743,166
   
$
7,368,211
 
Short-term borrowings
   
443,266
     
871,696
 
Long-term debt
   
84,239
     
73,724
 
Junior subordinated debt
   
101,196
     
101,196
 
Other liabilities
   
190,918
     
123,627
 
Total liabilities
 
$
8,562,785
   
$
8,538,454
 
Stockholders’ equity
               
Preferred stock, $0.01 par value. Authorized 2,500,000 shares at September 30, 2019 and December 31, 2018
 
$
-
   
$
-
 
Common stock, $0.01 par value. Authorized 100,000,000 shares at September 30, 2019 and December 31, 2018; issued 49,651,493 at September 30, 2019 and December 31, 2018
   
497
     
497
 
Additional paid-in-capital
   
576,146
     
575,466
 
Retained earnings
   
679,090
     
621,203
 
Accumulated other comprehensive loss
   
(22,924
)
   
(43,174
)
Common stock in treasury, at cost, 5,864,848 and 5,978,527 shares at September 30, 2019 and December 31, 2018, respectively
   
(134,208
)
   
(136,083
)
Total stockholders’ equity
 
$
1,098,601
   
$
1,017,909
 
Total liabilities and stockholders’ equity
 
$
9,661,386
   
$
9,556,363
 

See accompanying notes to unaudited interim consolidated financial statements.


NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
(In thousands, except per share data)
                       
Interest, fee and dividend income
                       
Interest and fees on loans
 
$
81,082
   
$
77,249
   
$
241,674
   
$
221,864
 
Securities available for sale
   
5,711
     
6,659
     
17,664
     
20,588
 
Securities held to maturity
   
4,586
     
3,462
     
14,892
     
8,898
 
Other
   
1,002
     
834
     
2,728
     
2,381
 
Total interest, fee and dividend income
 
$
92,381
   
$
88,204
   
$
276,958
   
$
253,731
 
Interest expense
                               
Deposits
 
$
10,745
   
$
6,157
   
$
29,805
   
$
15,167
 
Short-term borrowings
   
1,989
     
3,000
     
7,986
     
7,421
 
Long-term debt
   
498
     
431
     
1,391
     
1,359
 
Junior subordinated debt
   
1,095
     
1,089
     
3,404
     
3,030
 
Total interest expense
 
$
14,327
   
$
10,677
   
$
42,586
   
$
26,977
 
Net interest income
 
$
78,054
   
$
77,527
   
$
234,372
   
$
226,754
 
Provision for loan losses
   
6,324
     
6,026
     
19,408
     
22,300
 
Net interest income after provision for loan losses
 
$
71,730
   
$
71,501
   
$
214,964
   
$
204,454
 
Noninterest income
                               
Insurance and other financial services revenue
 
$
6,421
   
$
6,172
   
$
19,115
   
$
18,502
 
Service charges on deposit accounts
   
4,330
     
4,503
     
12,790
     
12,721
 
ATM and debit card fees
   
6,277
     
5,906
     
17,958
     
16,995
 
Retirement plan administration fees
   
7,600
     
7,244
     
23,170
     
19,879
 
Trust
   
5,209
     
4,808
     
14,491
     
14,951
 
Bank owned life insurance
   
1,556
     
1,288
     
4,119
     
3,852
 
Net securities gains
   
4,036
     
412
     
4,024
     
575
 
Other
   
4,291
     
3,048
     
12,115
     
11,341
 
Total noninterest income
 
$
39,720
   
$
33,381
   
$
107,782
   
$
98,816
 
Noninterest expense
                               
Salaries and employee benefits
 
$
39,352
   
$
38,394
   
$
117,275
   
$
112,687
 
Occupancy
   
5,335
     
5,380
     
17,053
     
17,034
 
Data processing and communications
   
4,492
     
4,434
     
13,599
     
13,221
 
Professional fees and outside services
   
3,535
     
3,580
     
10,562
     
10,408
 
Equipment
   
4,487
     
4,319
     
13,762
     
12,508
 
Office supplies and postage
   
1,667
     
1,563
     
4,835
     
4,640
 
FDIC (credit) expense
   
(20
)
   
1,223
     
1,946
     
3,516
 
Advertising
   
677
     
739
     
1,821
     
1,776
 
Amortization of intangible assets
   
874
     
1,054
     
2,735
     
3,064
 
Loan collection and other real estate owned, net
   
976
     
1,234
     
2,722
     
3,479
 
Other
   
8,374
     
4,577
     
18,130
     
13,324
 
Total noninterest expense
 
$
69,749
   
$
66,497
   
$
204,440
   
$
195,657
 
Income before income tax expense
 
$
41,701
   
$
38,385
   
$
118,306
   
$
107,613
 
Income tax expense
   
9,322
     
8,578
     
26,245
     
23,699
 
Net income
 
$
32,379
   
$
29,807
   
$
92,061
   
$
83,914
 
Earnings per share
                               
Basic
 
$
0.74
   
$
0.68
   
$
2.10
   
$
1.92
 
Diluted
 
$
0.73
   
$
0.68
   
$
2.09
   
$
1.91
 

See accompanying notes to unaudited interim consolidated financial statements.


NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (unaudited)

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2019
   
2018
   
2019
   
2018
 
(In thousands)
                       
Net income
 
$
32,379
   
$
29,807
   
$
92,061
   
$
83,914
 
Other comprehensive income (loss), net of tax:
                               
                                 
Securities available for sale:
                               
Unrealized net holding gains (losses) arising during the period, gross
 
$
2,360
   
$
(5,798
)
 
$
26,787
   
$
(26,605
)
Tax effect
   
(590
)
   
1,449
     
(6,697
)
   
6,651
 
Unrealized net holding gains (losses) arising during the period, net
 
$
1,770
   
$
(4,349
)
 
$
20,090
   
$
(19,954
)
                                 
Reclassification adjustment for net (gains) losses in net income, gross
 
$
(20
)
 
$
-
   
$
79
   
$
-
 
Tax effect
   
5
     
-
     
(20
)
   
-
 
Reclassification adjustment for net (gains) losses in net income, net
 
$
(15
)
 
$
-
   
$
59
   
$
-
 
                                 
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, gross
 
$
190
   
$
168
   
$
556
   
$
533
 
Tax effect
   
(47
)
   
(42
)
   
(139
)
   
(133
)
Amortization of unrealized net gains for the reclassification of available for sale securities to held to maturity, net
 
$
143
   
$
126
   
$
417
   
$
400
 
                                 
Total securities available for sale, net
 
$
1,898
   
$
(4,223
)
 
$
20,566
   
$
(19,554
)
                                 
Cash flow hedges:
                               
Unrealized gains (losses) on derivatives (cash flow hedges), gross
 
$
9
   
$
175
   
$
(475
)
 
$
1,647
 
Tax effect
   
(2
)
   
(44
)
   
119
     
(412
)
Unrealized gains (losses) on derivatives (cash flow hedges), net
 
$
7
   
$
131
   
$
(356
)
 
$
1,235
 
                                 
Reclassification of net unrealized (gains) on cash flow hedges to interest (income), gross
 
$
(395
)
 
$
(638
)
 
$
(1,932
)
 
$
(1,537
)
Tax effect
   
98
     
159
     
483
     
384
 
Reclassification of net unrealized (gains) on cash flow hedges to interest (income), net
 
$
(297
)
 
$
(479
)
 
$
(1,449
)
 
$
(1,153
)
                                 
Total cash flow hedges, net
 
$
(290
)
 
$
(348
)
 
$
(1,805
)
 
$
82
 
                                 
Pension and other benefits:
                               
Amortization of prior service cost and actuarial losses, gross
 
$
672
   
$
286
   
$
1,985
   
$
876
 
Tax effect
   
(168
)
   
(71
)
   
(496
)
   
(219
)
Amortization of prior service cost and actuarial losses, net
 
$
504
   
$
215
   
$
1,489
   
$
657
 
                                 
Total pension and other benefits, net
 
$
504
   
$
215
   
$
1,489
   
$
657
 
                                 
Total other comprehensive income (loss)
 
$
2,112
   
$
(4,356
)
 
$
20,250
   
$
(18,815
)
Comprehensive income
 
$
34,491
   
$
25,451
   
$
112,311
   
$
65,099
 

See accompanying notes to unaudited interim consolidated financial statements.



NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (unaudited)

 
Common
Stock
   
Additional
Paid-in-
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
(Loss) Income
   
Common
Stock in
Treasury
   
Total
 
(In thousands, except share and per share data)
                                   
Balance at June 30, 2019
 
$
497
   
$
575,794
   
$
658,107
   
$
(25,036
)
 
$
(134,539
)
 
$
1,074,823
 
Net income
   
-
     
-
     
32,379
     
-
     
-
     
32,379
 
Cash dividends - $0.26 per share
   
-
     
-
     
(11,396
)
   
-
     
-
     
(11,396
)
Net issuance of 17,234 shares to employee and other stock plans
   
-
     
(104
)
   
-
     
-
     
331
     
227
 
Stock-based compensation
   
-
     
456
     
-
     
-
     
-
     
456
 
Other comprehensive income
   
-
     
-
     
-
     
2,112
     
-
     
2,112
 
Balance at September 30, 2019
 
$
497
   
$
576,146
   
$
679,090
   
$
(22,924
)
 
$
(134,208
)
 
$
1,098,601
 
                                                 
Balance at June 30, 2018
 
$
497
   
$
574,741
   
$
585,044
   
$
(44,756
)
 
$
(136,597
)
 
$
978,929
 
Net income
   
-
     
-
     
29,807
     
-
     
-
     
29,807
 
Cash dividends - $0.25 per share
   
-
     
-
     
(10,930
)
   
-
     
-
     
(10,930
)
Net issuance of 14,120 shares to employee and other stock plans
   
-
     
(89
)
   
-
     
-
     
291
     
202
 
Stock-based compensation
   
-
     
503
     
-
     
-
     
-
     
503
 
Other comprehensive (loss)
   
-
     
-
     
-
     
(4,356
)
   
-
     
(4,356
)
Balance at September 30, 2018
 
$
497
   
$
575,155
   
$
603,921
   
$
(49,112
)
 
$
(136,306
)
 
$
994,155
 

 
Common
Stock
   
Additional
Paid-in-
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
(Loss) Income
   
Common
Stock in
Treasury
   
Total
 
(In thousands, except share and per share data)
                                   
Balance at December 31, 2018
 
$
497
   
$
575,466
   
$
621,203
   
$
(43,174
)
 
$
(136,083
)
 
$
1,017,909
 
Net income
   
-
     
-
     
92,061
     
-
     
-
     
92,061
 
Cash dividends - $0.78 per share
   
-
     
-
     
(34,174
)
   
-
     
-
     
(34,174
)
Net issuance of 113,679 shares to employee and other stock plans
   
-
     
(2,916
)
   
-
     
-
     
1,875
     
(1,041
)
Stock-based compensation
   
-
     
3,596
     
-
     
-
     
-
     
3,596
 
Other comprehensive income
   
-
     
-
     
-
     
20,250
     
-
     
20,250
 
Balance at September 30, 2019
 
$
497
   
$
576,146
   
$
679,090
   
$
(22,924
)
 
$
(134,208
)
 
$
1,098,601
 
                                                 
Balance at December 31, 2017
 
$
497
   
$
574,209
   
$
543,713
   
$
(22,077
)
 
$
(138,165
)
 
$
958,177
 
Net income
   
-
     
-
     
83,914
     
-
     
-
     
83,914
 
Cumulative effect adjustment for ASU 2016-01 implementation
   
-
     
-
     
2,618
     
(2,645
)
   
-
     
(27
)
Cumulative effect adjustment for ASU 2018-02 implementation
   
-
     
-
     
5,575
     
(5,575
)
   
-
     
-
 
Cash dividends - $0.73 per share
   
-
     
-
     
(31,899
)
   
-
     
-
     
(31,899
)
Net issuance of 118,510 shares to employee and other stock plans
   
-
     
(2,511
)
   
-
     
-
     
1,859
     
(652
)
Stock-based compensation
   
-
     
3,457
     
-
     
-
     
-
     
3,457
 
Other comprehensive (loss)
   
-
     
-
     
-
     
(18,815
)
   
-
     
(18,815
)
Balance at September 30, 2018
 
$
497
   
$
575,155
   
$
603,921
   
$
(49,112
)
 
$
(136,306
)
 
$
994,155
 

See accompanying notes to unaudited interim consolidated financial statements.


NBT Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)

 
Nine Months Ended
September 30,
 
   
2019
   
2018
 
(In thousands)
           
Operating activities
           
Net income
 
$
92,061
   
$
83,914
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Provision for loan losses
   
19,408
     
22,300
 
Depreciation and amortization of premises and equipment
   
7,106
     
6,957
 
Net amortization on securities
   
2,495
     
3,108
 
Amortization of intangible assets
   
2,735
     
3,064
 
Amortization of operating lease right-of-use assets
   
5,396
     
-
 
Excess tax benefit on stock-based compensation
   
(371
)
   
(507
)
Stock-based compensation expense
   
3,596
     
3,457
 
Bank owned life insurance income
   
(4,119
)
   
(3,852
)
Proceeds from sale of loans held for sale
   
109,661
     
73,239
 
Originations of loans held for sale
   
(119,753
)
   
(76,959
)
Net gains on sale of loans held for sale
   
(475
)
   
(181
)
Net security (gains)
   
(4,024
)
   
(575
)
Net (gains) losses on sale of other real estate owned
   
(178
)
   
130
 
Net change in other assets and other liabilities
   
(9,579
)
   
(14,313
)
Net cash provided by operating activities
 
$
103,959
   
$
99,782
 
Investing activities
               
Net cash used in acquisitions
 
$
-
   
$
(7,884
)
Securities available for sale:
               
Proceeds from maturities, calls and principal paydowns
   
226,070
     
213,732
 
Proceeds from sales
   
26,203
     
-
 
Purchases
   
(160,781
)
   
(102,004
)
Securities held to maturity:
               
Proceeds from maturities, calls and principal paydowns
   
165,997
     
73,217
 
Purchases
   
(61,150
)
   
(249,300
)
Equity securities:
               
Proceeds from sales
   
3,966
     
3,318
 
Purchases
   
(93
)
   
(2
)
Other:
               
Net increase in loans
   
(146,778
)
   
(323,614
)
Proceeds from Federal Home Loan Bank stock redemption
   
147,200
     
186,869
 
Purchases of Federal Reserve and Federal Home Loan Bank stock
   
(131,461
)
   
(192,584
)
Proceeds from settlement of bank owned life insurance
   
1,085
     
-
 
Purchases of premises and equipment, net
   
(4,018
)
   
(4,256
)
Proceeds from sales of other real estate owned
   
1,129
     
2,124
 
Net cash provided by (used in) investing activities
 
$
67,369
   
$
(400,384
)
Financing activities
               
Net increase in deposits
 
$
374,955
   
$
270,654
 
Net (decrease) increase in short-term borrowings
   
(428,430
)
   
92,585
 
Proceeds from issuance of long-term debt
   
10,598
     
25,000
 
Repayments of long-term debt
   
(83
)
   
(40,117
)
Proceeds from the issuance of shares to employee and other stock plans
   
543
     
1,140
 
Cash paid by employer for tax-withholdings on stock issuance
   
(1,596
)
   
(1,792
)
Cash dividends
   
(34,174
)
   
(31,899
)
Net cash (used in) provided by financing activities
 
$
(78,187
)
 
$
315,571
 
Net increase in cash and cash equivalents
 
$
93,141
   
$
14,969
 
Cash and cash equivalents at beginning of period
   
180,955
     
159,664
 
Cash and cash equivalents at end of period
 
$
274,096
   
$
174,633
 


 
Nine Months Ended
September 30,
 
   
2019
   
2018
 
Supplemental disclosure of cash flow information
           
Cash paid during the period for:
           
Interest expense
 
$
42,709
   
$
26,002
 
Income taxes paid, net of refund
   
19,945
     
31,077
 
Noncash investing activities:
               
Loans transferred to other real estate owned
 
$
654
   
$
996
 
Acquisitions:
               
Fair value of assets acquired
 
$
-
   
$
6,274
 

See accompanying notes to unaudited interim consolidated financial statements.


NBT Bancorp Inc. and Subsidiaries
Notes to Unaudited Interim Consolidated Financial Statements
September 30, 2019

1.
Description of Business

NBT Bancorp Inc. (the “Registrant” or the “Company”) is a registered financial holding company incorporated in the state of Delaware in 1986, with its principal headquarters located in Norwich, New York. The principal assets of the Registrant consist of all of the outstanding shares of common stock of its subsidiaries, including: NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”), NBT Holdings, Inc. (“NBT Holdings”), CNBF Capital Trust I, NBT Statutory Trust I, NBT Statutory Trust II, Alliance Financial Capital Trust I and Alliance Financial Capital Trust II (collectively, the “Trusts”). The Company’s principal sources of revenue are the management fees and dividends it receives from the Bank, NBT Financial and NBT Holdings.

The Company’s business, primarily conducted through the Bank, consists of providing commercial banking, retail banking and wealth management services primarily to customers in its market area, which includes central and upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont and the southern coastal Maine area. The Company has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. The Company’s business philosophy is to operate as a community bank with local decision-making, providing a broad array of banking and financial services to retail, commercial and municipal customers.

2.
Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of the Registrant and its wholly-owned subsidiaries, the Bank, NBT Financial and NBT Holdings. Collectively, the Registrant and its subsidiaries are referred to herein as “the Company.” The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. All material intercompany transactions have been eliminated in consolidation. The Company has evaluated subsequent events for potential recognition and/or disclosure and there were none identified.

3.
Securities

The amortized cost, estimated fair value and unrealized gains (losses) of available for sale (“AFS”) securities are as follows:

(In thousands)
 
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated
Fair Value
 
As of September 30, 2019
                       
Federal agency
 
$
29,998
   
$
-
   
$
167
   
$
29,831
 
State & municipal
   
9
     
-
     
-
     
9
 
Mortgage-backed:
                               
Government-sponsored enterprises
   
433,393
     
4,494
     
292
     
437,595
 
U.S. government agency securities
   
44,912
     
1,021
     
18
     
45,915
 
Collateralized mortgage obligations:
                               
Government-sponsored enterprises
   
343,682
     
2,484
     
456
     
345,710
 
U.S. government agency securities
   
72,443
     
887
     
217
     
73,113
 
Total AFS securities
 
$
924,437
   
$
8,886
   
$
1,150
   
$
932,173
 
As of December 31, 2018
                               
Federal agency
 
$
84,982
   
$
10
   
$
693
   
$
84,299
 
State & municipal
   
30,136
     
16
     
237
     
29,915
 
Mortgage-backed:
                               
Government-sponsored enterprises
   
493,225
     
439
     
10,354
     
483,310
 
U.S. government agency securities
   
29,190
     
270
     
475
     
28,985
 
Collateralized mortgage obligations:
                               
Government-sponsored enterprises
   
332,409
     
344
     
7,211
     
325,542
 
U.S. government agency securities
   
47,684
     
137
     
1,376
     
46,445
 
Total AFS securities
 
$
1,017,626
   
$
1,216
   
$
20,346
   
$
998,496
 

The components of net realized gains (losses) on AFS securities are as follows. These amounts were reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings.


 
Three Months Ended
September 30,
 
(In thousands)
 
2019
   
2018
 
Gross realized gains
 
$
20
   
$
-
 
Gross realized (losses)
   
-
     
-
 
Net AFS realized gains
 
$
20
   
$
-
 


 
Nine Months Ended
September 30,
 
(In thousands)
 
2019
   
2018
 
Gross realized gains
 
$
73
   
$
-
 
Gross realized (losses)
   
(152
)
   
-
 
Net AFS realized (losses)
 
$
(79
)
 
$
-
 

Included in net realized gains (losses) on AFS securities, the Company recorded gains from calls of approximately $20 thousand for the three months ended September 30, 2019 and $25 thousand for the nine months ended September 30, 2019. There were no recorded gains from calls on AFS securities included in net realized gains (losses) for the three and nine months ended September 30, 2018.

The amortized cost, estimated fair value and unrealized gains (losses) of held to maturity (“HTM”) securities are as follows:

(In thousands)
 
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated
Fair Value
 
As of September 30, 2019
                       
Federal agency
 
$
10,000
   
$
6
   
$
-
   
$
10,006
 
Mortgage-backed:
                               
Government-sponsored enterprises
   
154,701
     
3,139
     
127
     
157,713
 
U.S. government agency securities
   
13,679
     
785
     
-
     
14,464
 
Collateralized mortgage obligations:
                               
Government-sponsored enterprises
   
213,409
     
2,849
     
365
     
215,893
 
    U.S. government agency securities
   
112,974
     
4,001
     
64
     
116,911
 
State & municipal
   
173,672
     
2,544
     
14
     
176,202
 
Total HTM securities
 
$
678,435
   
$
13,324
   
$
570
   
$
691,189
 
As of December 31, 2018
                               
Federal agency
 
$
19,995
   
$
52
   
$
-
   
$
20,047
 
Mortgage-backed:
                               
Government-sponsored enterprises
   
164,618
     
712
     
2,773
     
162,557
 
U.S. government agency securities
   
15,230
     
403
     
-
     
15,633
 
Collateralized mortgage obligations:
                               
Government-sponsored enterprises
   
257,475
     
1,097
     
3,897
     
254,675
 
   U.S. government agency securities
   
83,148
     
767
     
-
     
83,915
 
State & municipal
   
243,133
     
331
     
1,616
     
241,848
 
Total HTM securities
 
$
783,599
   
$
3,362
   
$
8,286
   
$
778,675
 

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $4 thousand for the three and nine months ended September 30, 2019. There were no recorded gains from calls on HTM securities included in net realized gains (losses) for the three and nine months ended September 30, 2018.

AFS and HTM securities with amortized costs totaling $1.4 billion at September 30, 2019 and $1.5 billion at December 31, 2018 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at September 30, 2019 and December 31, 2018, AFS and HTM securities with an amortized cost of $186.3 million and $215.3 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following table sets forth information with regard to investment securities with unrealized losses segregated according to the length of time the securities had been in a continuous unrealized loss position:


 
Less Than 12 Months
   
12 Months or Longer
   
Total
 
(In thousands)
 
Fair
Value
   
Unrealized
Losses
   
Number
of
Positions
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Positions
   
Fair
Value
   
Unrealized
Losses
   
Number
of
Positions
 
As of September 30, 2019
                                                     
AFS securities:
                                                     
Federal agency
 
$
19,965
   
$
(33
)
   
2
   
$
9,866
   
$
(134
)
   
1
   
$
29,831
   
$
(167
)
   
3
 
Mortgage-backed
   
36,017
     
(69
)
   
18
     
39,394
     
(241
)
   
16
     
75,411
     
(310
)
   
34
 
Collateralized mortgage obligations
   
60,272
     
(170
)
   
11
     
72,528
     
(503
)
   
23
     
132,800
     
(673
)
   
34
 
Total securities with unrealized losses
 
$
116,254
   
$
(272
)
   
31
   
$
121,788
   
$
(878
)
   
40
   
$
238,042
   
$
(1,150
)
   
71
 
                                                                         
HTM securities:
                                                                       
Mortgage-backed
 
$
-
   
$
-
     
-
   
$
26,836
   
$
(127
)
   
2
   
$
26,836
   
$
(127
)
   
2
 
Collateralized mortgage obligations
   
18,656
     
(129
)
   
3
     
23,708
     
(300
)
   
5
     
42,364
     
(429
)
   
8
 
State & municipal
   
5,447
     
(14
)
   
8
     
-
     
-
     
-
     
5,447
     
(14
)
   
8
 
Total securities with unrealized losses
 
$
24,103
   
$
(143
)
   
11
   
$
50,544
   
$
(427
)
   
7
   
$
74,647
   
$
(570
)
   
18
 
                                                                         
As of December 31, 2018
                                                                       
AFS securities:
                                                                       
Federal agency
 
$
-
   
$
-
     
-
   
$
64,294
   
$
(693
)
   
6
   
$
64,294
   
$
(693
)
   
6
 
State & municipal
   
1,715
     
(3
)
   
3
     
22,324
     
(234
)
   
35
     
24,039
     
(237
)
   
38
 
Mortgage-backed
   
18,462
     
(65
)
   
12
     
428,440
     
(10,764
)
   
101
     
446,902
     
(10,829
)
   
113
 
Collateralized mortgage obligations
   
12,118
     
(69
)
   
5
     
320,908
     
(8,518
)
   
62
     
333,026
     
(8,587
)
   
67
 
Total securities with unrealized losses
 
$
32,295
   
$
(137
)
   
20
   
$
835,966
   
$
(20,209
)
   
204
   
$
868,261
   
$
(20,346
)
   
224
 
                                                                         
HTM securities:
                                                                       
Mortgage-backed
 
$
-
   
$
-
     
-
   
$
82,579
   
$
(2,773
)
   
6
   
$
82,579
   
$
(2,773
)
   
6
 
Collateralized mortgage obligations
   
4,386
     
(7
)
   
2
     
145,396
     
(3,890
)
   
26
     
149,782
     
(3,897
)
   
28
 
State & municipal
   
18,907
     
(84
)
   
30
     
58,258
     
(1,532
)
   
86
     
77,165
     
(1,616
)
   
116
 
Total securities with unrealized losses
 
$
23,293
   
$
(91
)
   
32
   
$
286,233
   
$
(8,195
)
   
118
   
$
309,526
   
$
(8,286
)
   
150
 

Declines in the fair value of HTM securities below their amortized cost, less any current period credit loss, that are deemed to be other-than-temporary are reflected in earnings as realized losses or in other comprehensive income (“OCI”). The classification is dependent upon whether the Company intends to sell the security, or whether it is more likely than not, that the Company will be required to sell the security before recovery. The other-than-temporary impairment (“OTTI”) shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be separated into (i) the amount representing the credit loss and (ii) the amount related to all other factors. The amount of the total OTTI related to the credit loss shall be recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in OCI, net of applicable taxes.

In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the historical and implied volatility of the fair value of the security.

Management has the intent to hold the securities classified as HTM until they mature, at which time it is believed the Company will receive full value for the securities. The unrealized losses on HTM debt securities are due to increases in market interest rates over yields at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities. The fair value is expected to recover as the bond approaches its maturity date or repricing date or if market yields for such investments declines.

Management also has the intent to hold and will not be required to sell, the debt securities classified as AFS for a period of time sufficient for a recovery of cost, which may be until maturity. The unrealized losses on AFS debt securities are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. When necessary, the Company has performed a discounted cash flow analysis to determine whether or not it will receive the contractual principal and interest on certain securities. For AFS debt securities, OTTI losses are recognized in earnings if the Company intends to sell the security. In other cases the Company considers the relevant factors noted above, as well as the Company’s intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in market value and whether evidence exists to support a realizable value equal to or greater than the cost basis. Any impairment loss on an equity security is equal to the full difference between the cost basis and the fair value of the security.

As of September 30, 2019  and December 31, 2018, management believes the impairments detailed in the table above are temporary. There were no OTTI losses realized in the Company’s unaudited interim consolidated statements of income for the three and nine months ended September 30, 2019, or in the three and nine months ended September 30, 2018.

The following tables set forth information with regard to gains and losses on equity securities:


 
Three Months Ended September 30,
 
(In thousands)
 
2019
   
2018
 
Net gains and losses recognized on equity securities
 
$
4,012
   
$
412
 
Less: Net gains and losses recognized during the period on equity securities sold during the period
   
3,966
     
511
 
Unrealized gains and losses recognized on equity securities still held
 
$
46
   
$
(99
)


 
Nine Months Ended September 30,
 
(In thousands)
 
2019
   
2018
 
Net gains and losses recognized on equity securities
 
$
4,099
   
$
575
 
Less: Net gains and losses recognized during the period on equity securities sold during the period