Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at March 31, 2017:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	295,424,000	$	1,407,000	$	(3,204,000	)	$	293,627,000
State and political subdivisions	15,407,000		474,000		(176,000		)	15,705,000
Other equity securities	3,229,000		67,000		(4,000		)	3,292,000
	$	314,060,000	$	1,948,000	$	(3,384,000	)	$	312,624,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	12,050,000	$	—	$	(317,000	)	$	11,733,000
Mortgage-backed securities	29,093,000		880,000		(135,000		)	29,838,000
State and political subdivisions	195,386,000		2,079,000		(3,958,000		)	193,507,000
Corporate securities	4,300,000		—		—			4,300,000
	$	240,829,000	$	2,959,000	$	(4,410,000	)	$	239,378,000
Restricted equity securities
Federal Home Loan Bank Stock	$	12,326,000	$	—	$	—		$	12,326,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	13,363,000	$	—	$	—		$	13,363,000

The following table summarizes the amortized cost and estimated fair value of investment securities at December 31, 2016:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	282,397,000	$	1,334,000	$	(3,127,000	)	$	280,604,000
State and political subdivisions	16,183,000		475,000		(176,000		)	16,482,000
Other equity securities	3,274,000		63,000		(7,000		)	3,330,000
	$	301,854,000	$	1,872,000	$	(3,310,000	)	$	300,416,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,943,000	$	35,000	$	(233,000	)	$	11,745,000
Mortgage-backed securities	31,201,000		967,000		(147,000		)	32,021,000
State and political subdivisions	179,384,000		1,971,000		(3,884,000		)	177,471,000
Corporate securities	4,300,000		—		—			4,300,000
	$	226,828,000	$	2,973,000	$	(4,264,000	)	$	225,537,000
Restricted equity securities
Federal Home Loan Bank Stock	$	10,893,000	$	—	$	—		$	10,893,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	11,930,000	$	—	$	—		$	11,930,000

The following table summarizes the amortized cost and estimated fair value of investment securities at March 31, 2016:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	190,025,000	$	3,837,000	$	(205,000	)	$	193,657,000
State and political subdivisions	18,975,000		948,000		(19,000		)	19,904,000
Other equity securities	3,148,000		39,000		(23,000		)	3,164,000
	$	212,148,000	$	4,824,000	$	(247,000	)	$	216,725,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	68,009,000	$	37,000	$	(107,000	)	$	67,939,000
Mortgage-backed securities	39,828,000		1,675,000		(35,000		)	41,468,000
State and political subdivisions	124,474,000		5,156,000		—			129,630,000
Corporate securities	4,300,000		—		—			4,300,000
	$	236,611,000	$	6,868,000	$	(142,000	)	$	243,337,000
Restricted equity securities
Federal Home Loan Bank Stock	$	12,838,000	$	—	$	—		$	12,838,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	13,875,000	$	—	$	—		$	13,875,000

The following table summarizes the contractual maturities of investment securities at March 31, 2017:



	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	$	43,000	$	43,000	$	903,000	$	908,000
Due in 1 to 5 years	1,909,000		1,953,000		12,213,000		12,477,000
Due in 5 to 10 years	31,835,000		32,471,000		42,819,000		43,562,000
Due after 10 years	277,044,000		274,865,000		184,894,000		182,431,000
Equity securities	3,229,000		3,292,000		—		—
	$	314,060,000	$	312,624,000	$	240,829,000	$	239,378,000

The following table summarizes the contractual maturities of investment securities at December 31, 2016:



	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	$	253,000	$	253,000	$	906,000	$	913,000
Due in 1 to 5 years	2,251,000		2,298,000		13,451,000		13,714,000
Due in 5 to 10 years	21,043,000		21,505,000		41,588,000		42,448,000
Due after 10 years	275,033,000		273,030,000		170,883,000		168,462,000
Equity securities	3,274,000		3,330,000		—		—
	$	301,854,000	$	300,416,000	$	226,828,000	$	225,537,000

The following table summarizes the contractual maturities of investment securities at March 31, 2016:



	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	$	2,599,000	$	2,633,000	$	1,825,000	$	1,847,000
Due in 1 to 5 years	3,321,000		3,390,000		6,709,000		6,925,000
Due in 5 to 10 years	19,222,000		19,946,000		56,874,000		58,932,000
Due after 10 years	183,858,000		187,592,000		171,203,000		175,633,000
Equity securities	3,148,000		3,164,000		—		—
	$	212,148,000	$	216,725,000	$	236,611,000	$	243,337,000

At March 31, 2017, securities with a fair value of $227,683,000 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 $222,328,000 as of December 31, 2016 and $202,296,000 at March 31, 2016, 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 three months ended March 31, 2017 and 2016:



	For the three months ended March 31,
	2017		2016
Proceeds from sales of securities	$	3,000	$	8,868,000
Gross realized gains	3,000		536,000
Gross realized losses	—		—
Net gain	$	3,000	$	536,000
Related income taxes	$	1,000	$	188,000

Management reviews securities with unrealized losses for other than temporary impairment. As of March 31, 2017, there were 311 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 13 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 March 31, 2017 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	$	10,824,000	$	(317,000	)	$	—	$	—		$	10,824,000	$	(317,000	)
Mortgage-backed securities	198,068,000		(3,193,000		)	2,432,000		(146,000		)	200,500,000		(3,339,000		)
State and political subdivisions	78,516,000		(4,134,000		)	—		—			78,516,000		(4,134,000		)
Other equity securities	—		—			62,000		(4,000		)	62,000		(4,000		)
	$	287,408,000	$	(7,644,000	)	$	2,494,000	$	(150,000	)	$	289,902,000	$	(7,794,000	)

As of December 31, 2016, there were 299 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 15 had been temporarily impaired for 12 months or more. Information regarding securities temporarily impaired as of December 31, 2016 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	$	6,642,000	$	(233,000	)	$	—	$	—		$	6,642,000	$	(233,000	)
Mortgage-backed securities	197,528,000		(3,090,000		)	2,905,000		(184,000		)	200,433,000		(3,274,000		)
State and political subdivisions	72,348,000		(4,060,000		)	—		—			72,348,000		(4,060,000		)
Other equity securities	—		—			128,000		(7,000		)	128,000		(7,000		)
	$	276,518,000	$	(7,383,000	)	$	3,033,000	$	(191,000	)	$	279,551,000	$	(7,574,000	)

As of March 31, 2016, there were 34 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 12 had been temporarily impaired for 12 months or more. Information regarding securities temporarily impaired as of March 31, 2016 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	$	—	$	—		$	4,893,000	$	(107,000	)	$	4,893,000	$	(107,000	)
Mortgage-backed securities	17,125,000		(170,000		)	1,866,000		(70,000		)	18,991,000		(240,000		)
State and political subdivisions	522,000		—			1,417,000		(19,000		)	1,939,000		(19,000		)
Other equity securities	235,000		(6,000		)	106,000		(17,000		)	341,000		(23,000		)
	$	17,882,000	$	(176,000	)	$	8,282,000	$	(213,000	)	$	26,164,000	$	(389,000	)

During the third quarter of 2014, the Company transferred securities with a total amortized cost of $89,780,000 with a corresponding fair value of $89,757,000 from available for sale to held to maturity. The net unrealized loss, net of taxes, on these securities at the date of the transfer was $15,000. The net unrealized holding loss at the time of transfer continues to be reported in accumulated other comprehensive income (loss), net of tax and is amortized over the remaining lives of the

securities as an adjustment of the yield. The amortization of the net unrealized loss reported in accumulated other comprehensive income (loss) will offset the effect on interest income of the discount for the transferred securities. The remaining unamortized balance of the net unrealized losses for the securities transferred from available for sale to held to maturity was $133,000 at March 31, 2017. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

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 March 31, 2017 and 2016, and December 31, 2016, the Bank's investment in FHLB stock totaled $12,326,000, $12,838,000 and $10,893,000, respectively. FHLB stock is a non-marketable equity security and therefore is reported at cost, which equals par value. The Company periodically evaluates its investment in FHLB stock for impairment based on, among other factors, the capital adequacy of the FHLB and its overall financial condition. No impairment losses have been recorded through March 31, 2017. The Bank will continue to monitor its investment in FHLB stock.