
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value (Estimated)
Securities available for sale
U.S. Treasury & Agency securities	$	45,851,000	$	—	$	(7,599,000)	$	38,252,000
Mortgage-backed securities	263,775,000		1,000		(50,930,000)		212,846,000
State and political subdivisions	40,417,000		—		(9,637,000)		30,780,000
Asset-backed securities	3,097,000		1,000		(4,000)		3,094,000

	$	353,140,000	$	2,000	$	(68,170,000)	$	284,972,000
Securities to be held to maturity
U.S. Treasury & Agency securities	$	40,100,000	$	—	$	(11,996,000)	$	28,104,000
Mortgage-backed securities	57,224,000		4,000		(13,336,000)		43,892,000
State and political subdivisions	255,732,000		16,000		(46,807,000)		208,941,000

Corporate securities	34,750,000		—		(3,823,000)		30,927,000
	$	387,806,000	$	20,000	$	(75,962,000)	$	311,864,000
Less allowance for credit losses	(432,000)		—		—		—
Net securities to be held to maturity	$	387,374,000	$	—	$	—	$	—
Restricted equity securities
Federal Home Loan Bank Stock	$	2,823,000	$	—	$	—	$	2,823,000
Federal Reserve Bank Stock	1,037,000		—		—		1,037,000
	$	3,860,000	$	—	$	—	$	3,860,000

Allowance for Credit Losses: The Company adopted ASC 326, the CECL standard, in the first quarter of 2023. In conjunction with adoption, holdings of AFS and HTM securities were evaluated to determine the need to establish an allowance for credit losses, if any.

AFS securities, as shown in the table above, consist of securities issued by U.S. Government Agencies, U.S. Government Sponsored Entities, State or Local Municipal Governments, or are backed by collateral that is guaranteed by the U.S. Government. We monitor the credit quality of these investments through credit ratings issued by major rating providers and through substantial price changes not consistent with general market movements. Each of the AFS securities is deemed to be investment grade, and no ACL has been established for AFS securities.

Similarly, the agency and mortgage-backed securities in the HTM portfolio have been determined to all be investment grade with no ACL required. Municipal securities within HTM include two private activity bonds issued by well-known customers of the Bank with total balances of $19,734,000 as of September 30, 2023. These bonds carry similar risk characteristics to the commercial real estate - owner occupied segment of the Bank's loan portfolio described in Note 3; management has elected to apply a loss rate matching the loan segment to the balance of these bonds for purposes of establishing an ACL. Corporate securities in HTM consist of fourteen individual companies in the banking industry. Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, and other performance factors. Aggregate credit risk of the corporate securities is considered very low and an immaterial ACL has been established. The total ACL for HTM securities was $432,000 as of September 30, 2023; there was no reserve as of December 31, 2022 and September 30, 2022.

Changes in the allowance for credit losses are recorded as credit loss expense, or reversal. Losses would be charged against the allowance when management believes collection of the full contractual amount due on a security is unlikely.


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value (Estimated)
Securities available for sale
U.S. Treasury & Agency securities	$	26,025,000	$	—	$	(6,878,000)	$	19,147,000
Mortgage-backed securities	271,068,000		55,000		(42,447,000)		228,676,000
State and political subdivisions	40,472,000		2,000		(7,283,000)		33,191,000
Asset-backed securities	3,548,000		—		(53,000)		3,495,000

	$	341,113,000	$	57,000	$	(56,661,000)	$	284,509,000
Securities to be held to maturity
U.S. Treasury & Agency securities	$	40,100,000	$	4,000	$	(10,477,000)	$	29,627,000
Mortgage-backed securities	60,497,000		42,000		(11,392,000)		49,147,000
State and political subdivisions	258,549,000		154,000		(30,733,000)		227,970,000

Corporate securities	34,750,000		—		(2,483,000)		32,267,000
	$	393,896,000	$	200,000	$	(55,085,000)	$	339,011,000
Restricted equity securities
Federal Home Loan Bank Stock	$	2,846,000	$	—	$	—	$	2,846,000
Federal Reserve Bank Stock	1,037,000		—		—		1,037,000
	$	3,883,000	$	—	$	—	$	3,883,000


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value (Estimated)
Securities available for sale
U.S. Treasury & Agency securities	$	26,023,000	$	—	$	(6,879,000)	$	19,144,000
Mortgage-backed securities	273,215,000		4,000		(44,041,000)		229,178,000
State and political subdivisions	40,489,000		—		(9,383,000)		31,106,000
Asset-backed securities	3,872,000		—		(32,000)		3,840,000

	$	343,599,000	$	4,000	$	(60,335,000)	$	283,268,000
Securities to be held to maturity
U.S. Treasury & Agency securities	$	38,100,000	$	—	$	(10,428,000)	$	27,672,000
Mortgage-backed securities	56,423,000		48,000		(11,784,000)		44,687,000
State and political subdivisions	257,633,000		38,000		(43,899,000)		213,772,000
Corporate securities	29,750,000		—		(2,085,000)		27,665,000
	$	381,906,000	$	86,000	$	(68,196,000)	$	313,796,000
Restricted equity securities
Federal Home Loan Bank Stock	$	3,477,000	$	—	$	—	$	3,477,000
Federal Reserve Bank Stock	1,037,000		—		—		1,037,000
	$	4,514,000	$	—	$	—	$	4,514,000


	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	$	19,819,000	$	19,819,000	$	2,158,000	$	2,151,000
Due in 1 to 5 years	3,640,000		3,468,000		15,780,000		14,771,000
Due in 5 to 10 years	28,082,000		23,360,000		92,565,000		81,812,000
Due after 10 years	301,599,000		238,325,000		277,303,000		213,130,000

	$	353,140,000	$	284,972,000	$	387,806,000	$	311,864,000


	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	$	—	$	—	$	1,787,000	$	1,782,000
Due in 1 to 5 years	3,609,000		3,409,000		14,998,000		14,480,000
Due in 5 to 10 years	18,591,000		15,203,000		86,833,000		81,443,000
Due after 10 years	318,913,000		265,897,000		290,278,000		241,306,000

	$	341,113,000	$	284,509,000	$	393,896,000	$	339,011,000


	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	$	4,000	$	4,000	$	1,346,000	$	1,343,000
Due in 1 to 5 years	3,640,000		3,427,000		15,235,000		14,644,000
Due in 5 to 10 years	18,064,000		14,436,000		75,492,000		68,704,000
Due after 10 years	321,891,000		265,401,000		289,833,000		229,105,000

	$	343,599,000	$	283,268,000	$	381,906,000	$	313,796,000

At September 30, 2023, securities with a carrying value of $383,946,000 were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law. This compares to securities with a carrying value of $350,411,000 as of December 31, 2022 and $343,677,000 at September 30, 2022, pledged for the same purposes.

Gains and losses on the sale of securities 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, 2023 and 2022:


	For the nine months ended September 30,				For the quarter ended September 30,
	2023		2022		2023		2022
Proceeds from sales of securities	$	—	$	1,301,000	$	—	$	1,301,000
Gross realized gains	—		8,000		—		6,000
Gross realized losses	—		(1,000)		—		(1,000)
Net gain (loss)	$	—	$	7,000	$	—	$	5,000
Related income taxes	$	—	$	1,000	$	—	$	1,000

As of September 30, 2023, there were 941 securities with unrealized losses held in the Company's portfolio. The Company has the ability and intent to hold its securities which are in an unrealized loss position until a recovery of their amortized cost, which may be at maturity.

The following table summarizes debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at September 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position:


	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. Treasury & Agency securities	$	11,842,000	$	(40,000)	$	44,577,000	$	(19,555,000)	$	56,419,000	$	(19,595,000)
Mortgage-backed securities	18,017,000		(441,000)		238,150,000		(63,825,000)		256,167,000		(64,266,000)
State and political subdivisions	66,583,000		(6,675,000)		147,818,000		(49,769,000)		214,401,000		(56,444,000)
Asset-backed securities	—		—		1,510,000		(4,000)		1,510,000		(4,000)
Corporate securities	—		—		21,677,000		(3,823,000)		21,677,000		(3,823,000)
	$	96,442,000	$	(7,156,000)	$	453,732,000	$	(136,976,000)	$	550,174,000	$	(144,132,000)

As of December 31, 2022, there were 869 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 300 had been temporarily impaired for 12 months or more.


	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. Treasury & Agency securities	$	4,804,000	$	(675,000)	$	41,965,000	$	(16,680,000)	$	46,769,000	$	(17,355,000)
Mortgage-backed securities	73,509,000		(6,486,000)		197,102,000		(47,353,000)		270,611,000		(53,839,000)
State and political subdivisions	149,517,000		(13,769,000)		67,932,000		(24,247,000)		217,449,000		(38,016,000)
Asset-backed securities	3,495,000		(53,000)		—		—		3,495,000		(53,000)
Corporate securities	19,857,000		(2,143,000)		3,160,000		(340,000)		23,017,000		(2,483,000)
	$	251,182,000	$	(23,126,000)	$	310,159,000	$	(88,620,000)	$	561,341,000	$	(111,746,000)

As of September 30, 2022, there were 912 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 138 had been temporarily impaired for 12 months or more.


	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. Treasury & Agency securities	$	7,364,000	$	(1,264,000)	$	39,452,000	$	(16,043,000)	$	46,816,000	$	(17,307,000)
Mortgage-backed securities	109,041,000		(13,868,000)		162,979,000		(41,957,000)		272,020,000		(55,825,000)
State and political subdivisions	197,145,000		(44,277,000)		17,902,000		(9,005,000)		215,047,000		(53,282,000)
Asset-backed securities	3,840,000		(32,000)		—		—		3,840,000		(32,000)
Corporate securities	20,186,000		(1,814,000)		3,229,000		(271,000)		23,415,000		(2,085,000)
	$	337,576,000	$	(61,255,000)	$	223,562,000	$	(67,276,000)	$	561,138,000	$	(128,531,000)

Credit Quality Indicators: Agency-backed and government-sponsored enterprise securities have a long history with no credit losses, including during times of severe stress. The principal and interest payments on agency-guaranteed debt is backed by the U.S. Government. Government-sponsored enterprises similarly guarantee principal and interest payments and carry an implicit

guarantee from the U.S. Department of the Treasury. Additionally, government-sponsored enterprise securities are exceptionally liquid, readily marketable, and provide a substantial amount of price transparency and price parity, indicating a perception of zero credit losses. HTM municipal debt holdings are comprised primarily of high credit quality (rated A- or higher) state and municipal obligations. High credit quality state and municipal obligations have a history of zero to near-zero credit loss. HTM municipal debt holdings also include two unrated private activity bonds issued by well known customers of the Bank. These securities are regularly monitored as part of an overall credit relationship with the issuers; both issuers were in good standing as of September 30, 2023. HTM corporate debt holdings consist of 14 individual companies in the banking industry. Management conducts periodic reviews of the collectability of these securities taking into consideration such factors as the financial condition of the issuers; each were in good standing as of September 30, 2023.


	State and Political Subdivisions		Corporate Securities		Total
Allowance for credit losses:
Beginning balance	$	—	$	—	$	—
Impact of adopting ASC 326	229,000		209,000		438,000
Credit loss expense (reduction)1	(17,000)		11,000		(6,000)
Securities charged-off	—		—		—
Recoveries	—		—		—
Total ending allowance balance	$	212,000	$	220,000	$	432,000

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 AOCI, 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 AOCI 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 $58,000, net of taxes, at September 30, 2023. This compares to $64,000 and $67,000, net of taxes, at December 31, 2022 and September 30, 2022, respectively. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

The Bank is a member of the FHLBB, a cooperatively owned wholesale bank for housing and finance in the six New England States. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on its level of borrowings from the FHLBB. The Bank uses the FHLBB for a portion of its wholesale funding needs. As of September 30, 2023 and 2022, and December 31, 2022, the Bank's investment in FHLBB stock totaled $2,823,000, $3,477,000 and $2,846,000, respectively. FHLBB stock is a non-marketable equity security and therefore is reported at cost, which equals par value.

The Bank is also a member of the FRBB. As a requirement for membership in the FRBB, the Bank must own a minimum required amount of FRBB stock. The Bank uses FRBB for certain correspondent banking services and maintains borrowing capacity at its discount window. The Bank's investment in FRBB stock totaled $1,037,000 at September 30, 2023 and 2022, and December 31, 2022.

The Company periodically evaluates its investment in FHLBB and FRBB stock for impairment based on, among other factors, the capital adequacy of the Banks and their overall financial condition. No impairment losses have been recorded through September 30, 2023. The Bank will continue to monitor its investment in these restricted equity securities.