Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at September 30, 2017:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	290,151,000	$	1,339,000	$	(2,701,000	)	$	288,789,000
State and political subdivisions	6,860,000		28,000		(46,000		)	6,842,000
Other equity securities	3,257,000		113,000		(2,000		)	3,368,000
	$	300,268,000	$	1,480,000	$	(2,749,000	)	$	298,999,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,154,000	$	—	$	(197,000	)	$	10,957,000
Mortgage-backed securities	24,993,000		731,000		(40,000		)	25,684,000
State and political subdivisions	202,232,000		3,640,000		(1,792,000		)	204,080,000
Corporate securities	4,300,000		—		—			4,300,000
	$	242,679,000	$	4,371,000	$	(2,029,000	)	$	245,021,000
Restricted equity securities
Federal Home Loan Bank Stock	$	9,761,000	$	—	$	—		$	9,761,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	10,798,000	$	—	$	—		$	10,798,000

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 September 30, 2016:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	258,179,000	$	3,848,000	$	(513,000	)	$	261,514,000
State and political subdivisions	16,689,000		795,000		—			17,484,000
Other equity securities	3,258,000		55,000		(18,000		)	3,295,000
	$	278,126,000	$	4,698,000	$	(531,000	)	$	282,293,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	891,000	$	15,000	$	—		$	906,000
Mortgage-backed securities	34,186,000		1,386,000		(34,000		)	35,538,000
State and political subdivisions	149,393,000		5,830,000		(170,000		)	155,053,000
Corporate securities	4,300,000		—		—			4,300,000
	$	188,770,000	$	7,231,000	$	(204,000	)	$	195,797,000
Restricted equity securities
Federal Home Loan Bank Stock	$	13,011,000	$	—	$	—		$	13,011,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	14,048,000	$	—	$	—		$	14,048,000

The following table summarizes the contractual maturities of investment securities at September 30, 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	$	176,000	$	179,000	$	552,000	$	559,000
Due in 1 to 5 years	856,000		859,000		17,241,000		17,485,000
Due in 5 to 10 years	33,550,000		33,987,000		37,218,000		37,963,000
Due after 10 years	262,429,000		260,606,000		187,668,000		189,014,000
Equity securities	3,257,000		3,368,000		—		—
	$	300,268,000	$	298,999,000	$	242,679,000	$	245,021,000

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 September 30, 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	$	973,000	$	974,000	$	1,772,000	$	1,783,000
Due in 1 to 5 years	3,020,000		3,106,000		13,428,000		13,782,000
Due in 5 to 10 years	22,843,000		23,503,000		39,832,000		41,423,000
Due after 10 years	248,032,000		251,415,000		133,738,000		138,809,000
Equity securities	3,258,000		3,295,000		—		—
	$	278,126,000	$	282,293,000	$	188,770,000	$	195,797,000

At September 30, 2017, securities with a fair value of $233,733,000 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 $249,162,000 at September 30, 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 nine months and quarters ended September 30, 2017 and 2016:



	For the nine months ended September 30,				For the quarter ended September 30,
	2017		2016		2017		2016
Proceeds from sales of securities	$	15,587,000	$	10,305,000	$	15,584,000	$	1,351,000
Gross realized gains	471,000		668,000		468,000		137,000
Gross realized losses	—		—		—		—
Net gain	$	471,000	$	668,000	$	468,000	$	137,000
Related income taxes	$	165,000	$	234,000	$	164,000	$	48,000

Management reviews securities with unrealized losses for other than temporary impairment. As of September 30, 2017, there were 229 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 61 had been temporarily impaired for 12 months or more. At September 30, 2017, there were 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 September 30, 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	$	7,958,000	$	(197,000	)	$	—	$	—		$	7,958,000	$	(197,000	)
Mortgage-backed securities	147,326,000		(1,635,000		)	48,015,000		(1,106,000		)	195,341,000		(2,741,000		)
State and political subdivisions	39,407,000		(1,186,000		)	12,583,000		(652,000		)	51,990,000		(1,838,000		)
Other equity securities	—		—			10,000		(2,000		)	10,000		(2,000		)
	$	194,691,000	$	(3,018,000	)	$	60,608,000	$	(1,760,000	)	$	255,299,000	$	(4,778,000	)

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 September 30, 2016, there were 71 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. Information regarding securities temporarily impaired as of September 30, 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
Mortgage-backed securities	$	79,118,000	$	(468,000	)	$	2,407,000	$	(79,000	)	$	81,525,000	(547,000		)
State and political subdivisions	13,666,000		(170,000		)	—		—			13,666,000		(170,000		)
Other equity securities	10,000		(2,000		)	107,000		(16,000		)	117,000		(18,000		)
	$	92,794,000	$	(640,000	)	$	2,514,000	$	(95,000	)	$	95,308,000	$	(735,000	)

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 $140,000 at September 30, 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 September 30, 2017 and 2016, and December 31, 2016, the Bank's investment in FHLB stock totaled $9,761,000, $13,011,000 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 September 30, 2017. The Bank will continue to monitor its investment in FHLB stock.