Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at June 30, 2014:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	165,978,000	$	2,417,000	$	(1,692,000	)	$	166,703,000
State and political subdivisions	133,327,000		3,951,000		(2,383,000		)	134,895,000
Other equity securities	2,196,000		87,000		(1,000		)	2,282,000
	$	301,501,000	$	6,455,000	$	(4,076,000	)	$	303,880,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	92,324,000	$	5,000	$	(6,343,000	)	$	85,986,000
Mortgage-backed securities	65,835,000		1,851,000		(526,000		)	67,160,000
State and political subdivisions	39,676,000		2,459,000		(31,000		)	42,104,000
Corporate securities	300,000		—		—			300,000
	$	198,135,000	$	4,315,000	$	(6,900,000	)	$	195,550,000
Restricted equity securities
Federal Home Loan Bank Stock	$	12,875,000	$	—	$	—		$	12,875,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	13,912,000	$	—	$	—		$	13,912,000

The following table summarizes the amortized cost and estimated fair value of investment securities at December 31, 2013:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	180,109,000	$	1,392,000	$	(3,772,000	)	$	177,729,000
State and political subdivisions	134,188,000		1,458,000		(9,331,000		)	126,315,000
Other equity securities	1,666,000		116,000		(2,000		)	1,780,000
	$	315,963,000	$	2,966,000	$	(13,105,000	)	$	305,824,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	92,280,000	$	1,000	$	(12,757,000	)	$	79,524,000
Mortgage-backed securities	35,712,000		1,440,000		(1,336,000		)	35,816,000
State and political subdivisions	40,985,000		1,823,000		(112,000		)	42,696,000
Corporate securities	300,000		—		—			300,000
	$	169,277,000	$	3,264,000	$	(14,205,000	)	$	158,336,000
Restricted equity securities
Federal Home Loan Bank Stock	$	12,875,000	$	—	$	—		$	12,875,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	13,912,000	$	—	$	—		$	13,912,000

The following table summarizes the amortized cost and estimated fair value of investment securities at June 30, 2013:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	157,023,000	$	2,014,000	$	(1,513,000	)	$	157,524,000
State and political subdivisions	134,376,000		1,955,000		(7,792,000		)	128,539,000
Other equity securities	1,617,000		63,000		(8,000		)	1,672,000
	$	293,016,000	$	4,032,000	$	(9,313,000	)	$	287,735,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	92,179,000	$	10,000	$	(5,944,000	)	$	86,245,000
Mortgage-backed securities	42,389,000		1,883,000		(625,000		)	43,647,000
State and political subdivisions	42,396,000		2,268,000		(66,000		)	44,598,000
Corporate securities	300,000		—		—			300,000
	$	177,264,000	$	4,161,000	$	(6,635,000	)	$	174,790,000
Restricted equity securities
Federal Home Loan Bank Stock	$	12,875,000	$	—	$	—		$	12,875,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	13,912,000	$	—	$	—		$	13,912,000

The following table summarizes the contractual maturities of investment securities at June 30, 2014:



	Securities available for sale				Securities to be held to maturity
	Amortized Cost		Fair Value (Estimated)		Amortized Cost		Fair Value (Estimated)
Due in 1 year or less	$	—	$	—	$	—	$	—
Due in 1 to 5 years	20,101,000		20,557,000		11,326,000		11,610,000
Due in 5 to 10 years	28,261,000		28,483,000		44,528,000		46,301,000
Due after 10 years	250,943,000		252,558,000		142,281,000		137,639,000
Equity securities	2,196,000		2,282,000		—		—
	$	301,501,000	$	303,880,000	$	198,135,000	$	195,550,000

The following table summarizes the contractual maturities of investment securities at December 31, 2013:



	Securities available for sale				Securities to be held to maturity
	Amortized Cost		Fair Value (Estimated)		Amortized Cost		Fair Value (Estimated)
Due in 1 year or less	$	717,000	$	721,000	$	268,000	$	273,000
Due in 1 to 5 years	20,547,000		20,636,000		6,420,000		6,790,000
Due in 5 to 10 years	16,114,000		16,267,000		33,442,000		33,828,000
Due after 10 years	276,919,000		266,420,000		129,147,000		117,445,000
Equity securities	1,666,000		1,780,000		—		—
	$	315,963,000	$	305,824,000	$	169,277,000	$	158,336,000

The following table summarizes the contractual maturities of investment securities at June 30, 2013:



	Securities available for sale				Securities to be held to maturity
	Amortized Cost		Fair Value (Estimated)		Amortized Cost		Fair Value (Estimated)
Due in 1 year or less	$	1,345,000	$	1,368,000	$	766,000	$	773,000
Due in 1 to 5 years	139,000		140,000		6,081,000		6,462,000
Due in 5 to 10 years	2,426,000		2,563,000		24,873,000		26,299,000
Due after 10 years	287,489,000		281,992,000		145,544,000		141,256,000
Equity securities	1,617,000		1,672,000		—		—
	$	293,016,000	$	287,735,000	$	177,264,000	$	174,790,000

At June 30, 2014, securities with a fair value of $131,869,000 were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law. This compares to securities with a fair value of $147,074,000 as of December 31, 2013 and $123,571,000 at June 30, 2013, pledged for the same purposes.

Gains and losses on the sale of securities available for sale are computed by subtracting the amortized cost at the time of sale from the security's selling price, net of accrued interest to be received. The following table shows securities gains and losses for the six months and quarters ended June 30, 2014 and 2013:



	For the six months ended June 30,				For the quarters ended June 30,
	2014		2013		2014		2013
Proceeds from sales of securities	$	—	$	10,563,000	$	—	$	5,598,000
Gross realized gains	40,000		1,087,000		4,000		788,000
Gross realized losses	—		—		—		—
Net gain	$	40,000	$	1,087,000	$	4,000	$	788,000
Related income taxes	$	14,000	$	380,000	$	1,000	$	275,000

Management reviews securities with unrealized losses for other than temporary impairment. As of June 30, 2014, there were 197 securities with unrealized losses held in the Company's portfolio. These securities were temporarily impaired as a result of changes in interest rates reducing their fair value, of which 175 had been temporarily impaired for 12 months or more. At the present time, there have been no material changes in the credit quality of these securities resulting in other than temporary impairment, and in Management's opinion, no additional write-down for other-than-temporary impairment is warranted. Information regarding securities temporarily impaired as of June 30, 2014 is summarized below:



	Less than 12 months					12 months or more					Total
	Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses
U.S. Government-sponsored agencies	$	—	$	—		$	85,167,000	$	(6,343,000	)	$	85,167,000	$	(6,343,000	)
Mortgage-backed securities	39,436,000		(668,000		)	32,975,000		(1,550,000		)	72,411,000		(2,218,000		)
State and political subdivisions	8,122,000		(71,000		)	45,718,000		(2,343,000		)	53,840,000		(2,414,000		)
Other equity securities	—		—			52,000		(1,000		)	52,000		(1,000		)
	$	47,558,000	$	(739,000	)	$	163,912,000	$	(10,237,000	)	$	211,470,000	$	(10,976,000	)

As of December 31, 2013, there were 304 securities with unrealized losses held in the Company's portfolio. These securities were temporarily impaired as a result of changes in interest rates reducing their fair value, of which 32 had been temporarily impaired for 12 months or more. Information regarding securities temporarily impaired as of December 31, 2013 is summarized below:



	Less than 12 months					12 months or more					Total
	Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses
U.S. Government-sponsored agencies	$	78,724,000	$	(12,757,000	)	$	—	$	—		$	78,724,000	$	(12,757,000	)
Mortgage-backed securities	96,263,000		(4,977,000		)	5,451,000		(131,000		)	101,714,000		(5,108,000		)
State and political subdivisions	69,406,000		(7,895,000		)	7,150,000		(1,548,000		)	76,556,000		(9,443,000		)
Other equity securities	—		—			50,000		(2,000		)	50,000		(2,000		)
	$	244,393,000	$	(25,629,000	)	$	12,651,000	$	(1,681,000	)	$	257,044,000	$	(27,310,000	)

As of June 30, 2013, there were 280 securities with unrealized losses held in the Company's portfolio. These securities were temporarily impaired as a result of changes in interest rates reducing their fair value, of which six had been temporarily impaired for 12 months or more. Information regarding securities temporarily impaired as of June 30, 2013 is summarized below:



	Less than 12 months					12 months or more					Total
	Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses			Fair Value (Estimated)		Unrealized Losses
U.S. Government-sponsored agencies	$	85,453,000	$	(5,944,000	)	$	—	$	—		$	85,453,000	$	(5,944,000	)
Mortgage-backed securities	58,706,000		(2,039,000		)	1,585,000		(99,000		)	60,291,000		(2,138,000		)
State and political subdivisions	71,738,000		(7,858,000		)	—		—			71,738,000		(7,858,000		)
Other equity securities	—		—			110,000		(8,000		)	110,000		(8,000		)
	$	215,897,000	$	(15,841,000	)	$	1,695,000	$	(107,000	)	$	217,592,000	$	(15,948,000	)

The Bank is a member of the Federal Home Loan Bank ("FHLB") of Boston, a cooperatively owned wholesale bank for housing and finance in the six New England States. As a requirement of membership in the FHLB, the Bank must own a minimum required amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB. The Bank uses the FHLB for much of its wholesale funding needs. As of June 30, 2014, and 2013, and December 31, 2013, the Bank's investment in FHLB stock totaled $12,875,000. FHLB stock is a non-marketable equity security and therefore is reported at cost, which equals par value.