SECURITIES

The following is a summary of securities available for sale (“AFS”) and securities held to maturity (“HTM”):



(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	117,910	$	2,955	$	(1,049	)	$	119,816
Agency collateralized mortgage obligations	652,680		2,522		(3,291		)	651,911
Agency mortgage-backed securities	230,308		557		(2,181		)	228,684
Agency commercial mortgage-backed securities	65,673		229		(1,368		)	64,534
Corporate bonds	56,320		408		(722		)	56,006
Trust preferred securities	11,578		368		(59		)	11,887
Other bonds and obligations	10,979		195		(16		)	11,158
Total debt securities	1,145,448		7,234		(8,686		)	1,143,996
Marketable equity securities	47,858		19,296		(1,613		)	65,541
Total securities available for sale	1,193,306		26,530		(10,299		)	1,209,537
Securities held to maturity
Municipal bonds and obligations	203,463		3,939		(2,416		)	204,986
Agency collateralized mortgage obligations	75,655		1,281		(411		)	76,525
Agency mortgage-backed securities	9,102		—		(243		)	8,859
Agency commercial mortgage-backed securities	10,545		—		(434		)	10,111
Tax advantaged economic development bonds	35,278		1,596		—			36,874
Other bonds and obligations	325		—		—			325
Total securities held to maturity	334,368		6,816		(3,504		)	337,680
Total	$	1,527,674	$	33,346	$	(13,803	)	$	1,547,217

December 31, 2015
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	99,922	$	4,763	$	(124	)	$	104,561
Agency collateralized mortgage obligations	833,633		4,957		(5,554		)	833,036
Agency mortgage-backed securities	127,274		542		(987		)	126,829
Agency commercial mortgage-backed securities	—		—		—			—
Corporate bonds	42,849		—		(1,826		)	41,023
Trust preferred securities	11,719		182		(1		)	11,900
Other bonds and obligations	3,175		—		(34		)	3,141
Total debt securities	1,118,572		10,444		(8,526		)	1,120,490
Marketable equity securities	30,522		5,331		(1,886		)	33,967
Total securities available for sale	1,149,094		15,775		(10,412		)	1,154,457
Securities held to maturity
Municipal bonds and obligations	94,642		3,359		(34		)	97,967
Agency collateralized mortgage-backed securities	68		3		—			71
Tax advantaged economic development bonds	36,613		1,924		—			38,537
Other bonds and obligations	329		—		—			329
Total securities held to maturity	131,652		5,286		(34		)	136,904
Total	$	1,280,746	$	21,061	$	(10,446	)	$	1,291,361

At year-end 2016 and 2015, accumulated net unrealized gains on AFS securities included in accumulated other comprehensive income were $16.2 million and $5.3 million, respectively. At year-end 2016 and 2015, accumulated net unrealized gains on HTM securities included in accumulated other comprehensive income were $9.0 million and $954 thousand respectively. The year-end 2016 and 2015 related income tax benefit of $9.6 million and $2.4 million, respectively, was also included in accumulated other comprehensive income.

The amortized cost and estimated fair value of available for sale (AFS) and held to maturity (HTM) securities, segregated by contractual maturity at year-end 2016 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable. Equity securities have no maturity and are also shown in total.



	Available for sale				Held to maturity
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year	$	—	$	—	$	1,803	$	1,806
Over 1 year to 5 years	25,697		26,042		19,674		20,494
Over 5 years to 10 years	48,637		49,397		17,502		17,968
Over 10 years	122,453		123,428		200,087		201,917
Total bonds and obligations	196,787		198,867		239,066		242,185

Marketable equity securities	47,858		65,541		—		—
Mortgage-backed securities	948,661		945,129		95,302		95,495
Total	$	1,193,306	$	1,209,537	$	334,368	$	337,680

At year-end 2016 and 2015, the Company had pledged securities as collateral for certain municipal deposits and for interest rate swaps with certain counterparties. The total amortized cost and fair values of these pledged securities follows. Additionally, there is a blanket lien on certain securities to collateralize borrowings from the FHLBB, as discussed further in Note 12 - Borrowed Funds.



	2016				2015
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities pledged to swap counterparties	$	51,292	$	51,290	$	27,687	$	27,626
Securities pledged for municipal deposits	147,950		148,435		134,865		135,755
Total	$	199,242	$	199,725	$	162,552	$	163,381

Proceeds from the sale of AFS securities in 2016, 2015, and 2014 were $421.8 million, $41.2 million, and $143.5 million, respectively. The components of net realized gains and losses on the sale of AFS securities are as follows. These amounts were reclassified out of accumulated other comprehensive loss and into earnings:



(In thousands)	2016			2015			2014
Gross realized gains	$	2,762		$	4,567		$	2,601
Gross realized losses	(3,313		)	(2,457		)	(2,119		)
Net realized (losses)/gains	$	(551	)	$	2,110		$	482

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:



	Less Than Twelve Months				Over Twelve Months				Total
(In thousands)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
December 31, 2016
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	1,049	$	13,839	$	—	$	—	$	1,049	$	13,839
Agency collateralized mortgage obligations	3,291		319,448		—		—		3,291		319,448
Agency mortgage-backed securities	2,153		130,766		28		2,061		2,181		132,827
Agency commercial mortgage-back securities	1,368		44,860		—		—		1,368		44,860
Corporate bonds	11		4,780		711		19,655		722		24,435
Trust preferred securities	—		—		59		1,204		59		1,204
Other bonds and obligations	15		3,014		1		27		16		3,041
Total debt securities	7,887		516,707		799		22,947		8,686		539,654
Marketable equity securities	157		6,600		1,456		5,927		1,613		12,527
Total securities available for sale	$	8,044	$	523,307	$	2,255	$	28,874	$	10,299	$	552,181

Securities held to maturity
Municipal bonds and obligations	2,416		69,308		—		—		2,416		69,308
Agency collateralized mortgage obligations	411		14,724		—		—		411		14,724
Agency mortgage-backed securities	243		8,859		—		—		243		8,859
Agency commercial mortgage-back securities	434		10,111		—		—		434		10,111
Total securities held to maturity	3,504		103,002		—		—		3,504		103,002

Total	$	11,548	$	626,309	$	2,255	$	28,874	$	13,803	$	655,183

December 31, 2015
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	9	$	1,587	$	115	$	3,400	$	124	$	4,987
Agency collateralized mortgage obligations	2,958		304,907		2,596		136,988		5,554		441,895
Agency mortgage-backed securities	306		34,543		681		35,522		987		70,065
Corporate bonds	30		6,934		1,796		21,587		1,826		28,521
Trust preferred securities	1		1,269		—		—		1		1,269
Other bonds and obligations	—		108		34		3,032		34		3,140
Total debt securities	3,304		349,348		5,222		200,529		8,526		549,877
Marketable equity securities	534		2,908		1,352		5,729		1,886		8,637
Total securities available for sale	$	3,838	$	352,256	$	6,574	$	206,258	$	10,412	$	558,514

Securities held to maturity
Municipal bonds and obligations	—		—		34		2,143		34		2,143
Total securities held to maturity	—		—		34		2,143		34		2,143

Total	$	3,838	$	352,256	$	6,608	$	208,401	$	10,446	$	560,657

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of December 31, 2016, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historical low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios did not maintain other-than-temporary impairment ("OTTI") at year-end 2016:

AFS municipal bonds and obligations

At year-end 2016, 16 of the 271 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 7.1% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels that the bonds in this portfolio carry minimal risk of default and that the Company is appropriately compensated for that risk. The bonds are investment grade rated, and there were no material underlying credit downgrades during 2016. All securities are performing.

AFS collateralized mortgage obligations

At year-end 2016, 71 of the 218 securities in the Company’s portfolio of AFS collateralized mortgage obligations were in unrealized loss positions. Aggregate unrealized losses represented 1.0% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), and Government National Mortgage Association ("GNMA") guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during 2016. All securities are performing.

AFS mortgage-backed securities

At year-end 2016, 52 out of a total of 105 securities in the Company’s portfolio of AFS mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 2.0% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during 2016. All securities are performing.

AFS corporate bonds

At year-end 2016, 3 out of 11 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 2.9% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of these bonds and concluded that the amortized cost remains supported by the expected future cash flows of these securities.

At year-end 2016, $0.7 million of the total unrealized losses were attributable to a $17.5 million investment. The Company evaluated these securities, with a Level 2 fair value of $16.8 million, for potential OTTI at December 31, 2016 and determined that OTTI was not evident based on both the Company’s ability and intent to hold the security until the recovery of its remaining amortized cost.

AFS trust preferred securities

At year-end 2016, 1 out of the 3 securities in the Company’s portfolio of AFS trust preferred securities was in an unrealized loss position. Aggregate unrealized losses represented 4.6% of the amortized cost of the security in an unrealized loss position. The Company’s evaluation of the present value of expected cash flows on this security supports its conclusions about the recoverability of the securities’ amortized cost basis. This security is investment grade rated. The Company reviews the financial strength of all of the single issue trust issuers and has concluded that the amortized cost remains supported by the market value of these securities and they are performing.

AFS other bonds and obligations

At year-end 2016, 5 of the 9 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.5% of the amortized cost of securities in unrealized loss positions. The securities are all investment grade rated, and there were no material underlying credit downgrades during 2016. All securities are performing.

HTM Municipal bonds and obligations

At year-end 2016, 53 of the 199 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 3.4% of the amortized cost of securities in unrealized loss positions. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

HTM collateralized mortgage obligations

At year-end 2016, 1 of the 9 securities in the Company’s portfolio of HTM collateralized mortgage obligations was in an unrealized loss position. Aggregate unrealized losses represented 2.7% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association ("FNMA"). Federal Home Loan Mortgage Corporation ("FHLMC"), and Government National Mortgage Association ("GNMA") guarantee the contractual cash flows of all of the Company's collateralized residential mortgage obligations. The securities are investment grade rated, and there were no material underlying credit downgrades during 2016. All securities are performing.

HTM mortgage-backed securities

At year-end 2016, 2 out of a total of 2 securities in the Company’s portfolio of HTM mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 3.5% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during 2016. All securities are performing.

Marketable Equity Securities

In evaluating its marketable equity securities portfolio for OTTI, the Company considers its ability to more likely than not hold an equity security to recovery. The Company additionally considers other various factors including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI is recognized immediately through earnings. At year-end 2016, 7 out of a total of 27 securities in the Company’s portfolio of marketable equity securities were in an unrealized loss position. The unrealized loss represented 11.4% of the amortized cost of the securities. The Company has the ability and intent to hold the securities until a recovery of their cost basis and does not consider the securities other-than-temporarily impaired at year-end 2016. As new information becomes available in future periods, changes to the Company’s assumptions may be warranted and could lead to a different conclusion regarding the OTTI of these securities.