NOTE 5.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, 2014
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	127,014	$	6,859	$	(174	)	$	133,699
Government guaranteed residential mortgage-backed securities	68,972		702		(206		)	69,468
Government-sponsored residential mortgage-backed securities	755,893		7,421		(3,130		)	760,184
Corporate bonds	55,134		120		(1,103		)	54,151
Trust preferred securities	16,607		820		(1,212		)	16,215
Other bonds and obligations	3,211		—		(52		)	3,159
Total debt securities	1,026,831		15,922		(5,877		)	1,036,876
Marketable equity securities	48,993		7,322		(1,373		)	54,942
Total securities available for sale	1,075,824		23,244		(7,250		)	1,091,818

Securities held to maturity
Municipal bonds and obligations	4,997		—		—			4,997
Government-sponsored residential mortgage-backed securities	70		4		—			74
Tax advantaged economic development bonds	37,948		1,680		(34		)	39,594
Other bonds and obligations	332		—		—			332
Total securities held to maturity	43,347		1,684		(34		)	44,997

Total	$	1,119,171	$	24,928	$	(7,284	)	$	1,136,815

December 31, 2013
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	77,852	$	1,789	$	(1,970	)	$	77,671
Government guaranteed residential mortgage-backed securities	78,885		544		(658		)	78,771
Government-sponsored residential mortgage-backed securities	531,441		2,000		(10,783		)	522,658
Corporate bonds	40,945		157		(1,822		)	39,280
Trust preferred securities	16,927		1,249		(1,565		)	16,611
Other bonds and obligations	3,250		—		(166		)	3,084
Total debt securities	749,300		5,739		(16,964		)	738,075
Marketable equity securities	20,042		2,266		(335		)	21,973
Total securities available for sale	769,342		8,005		(17,299		)	760,048

Securities held to maturity
Municipal bonds and obligations	4,244		—		—			4,244
Government-sponsored residential mortgage-backed securities	73		2		—			75
Tax advantaged economic development bonds	40,260		1,255		(414		)	41,101
Other bonds and obligations	344		—		—			344
Total securities held to maturity	44,921		1,257		(414		)	45,764

Total	$	814,263	$	9,262	$	(17,713	)	$	805,812

At year-end 2014 and 2013, accumulated net unrealized gains/(losses) on AFS securities included in accumulated other comprehensive income were $16.0 million and $(9.3) million, respectively. The year-end 2014 and 2013 related income tax liability/(benefit) of $6.1 million and $(3.5) 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 2014 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
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value

Within 1 year	$	30,732	$	29,738	$	1,047	$	1,047
Over 1 year to 5 years	1,257		1,271		17,248		18,139
Over 5 years to 10 years	17,687		17,944		12,360		12,524
Over 10 years	152,290		158,271		12,622		13,213
Total bonds and obligations	201,966		207,224		43,277		44,923

Marketable equity securities	48,993		54,942		—		—
Residential mortgage-backed securities	824,865		829,652		70		74

Total	$	1,075,824	$	1,091,818	$	43,347	$	44,997

At year-end 2014 and 2013, 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.

	2014				2013
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value

Securities pledged to swap counterparties	$	25,875	$	26,083	$	26,227	$	26,442
Securities pledged for municipal deposits	41,281		42,098		44,777		44,438

Total	$	67,156	$	68,181	$	71,004	$	70,880

Proceeds from the sale of AFS securities in 2014, 2013, and 2012 were $143.5 million, $19.4 million, and $85.5 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)	2014			2013		2012

Gross realized gains	$	2,601		$	4,758	$	820
Gross realized losses	(2,119		)	—		(520		)

Net realized gain/(losses)	$	482		$	4,758	$	300

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
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2014

Securities available for sale
Debt securities:
Municipal bonds and obligations	$	8	$	1,001	$	166	$	7,206	$	174	$	8,207
Government guaranteed residential mortgage-backed securities	46		7,122		160		16,727		206		23,849
Government-sponsored residential mortgage-backed securities	236		30,672		2,894		167,473		3,130		198,145
Corporate bonds	1,103		39,571		—		—		1,103		39,571
Trust preferred securities	65		935		1,147		2,408		1,212		3,343
Other bonds and obligations	—		—		52		3,035		52		3,035
Total debt securities	1,458		79,301		4,419		196,849		5,877		276,150

Marketable equity securities	1,039		9,902		334		4,755		1,373		14,657
Total securities available for sale	$	2,497	$	89,203	$	4,753	$	201,604	$	7,250	$	290,807

Securities held to maturity
Tax advantaged economic development bonds	—		—		34		7,972		34		7,972
Total securities held to maturity	—		—		34		7,972		34		7,972

Total	$	2,497	$	89,203	$	4,787	$	209,576	$	7,284	$	298,779

December 31, 2013

Securities available for sale
Debt securities:
Municipal bonds and obligations	$	1,657	$	17,776	$	313	$	1,854	$	1,970	$	19,630
Government guaranteed residential mortgage-backed securities	658		35,631		—		—		658		35,631
Government-sponsored residential mortgage-backed securities	10,783		423,203		—		—		10,783		423,203
Corporate bonds	1,822		29,124		—		—		1,822		29,124
Trust preferred securities	—		—		1,565		2,039		1,565		2,039
Other bonds and obligations	166		3,082		—		—		166		3,082
Total debt securities	15,086		508,816		1,878		3,893		16,964		512,709

Marketable equity securities	117		1,653		218		1,782		335		3,435
Total securities available for sale	$	15,203	$	510,469	$	2,096	$	5,675	$	17,299	$	516,144

Securities held to maturity
Tax advantaged economic development bonds	57		9,429		357		7,901		414		17,330
Total securities held to maturity	57		9,429		357		7,901		414		17,330

Total	$	15,260	$	519,898	$	2,453	$	13,576	$	17,713	$	533,474

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, 2014, 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 were not other-than-temporarily impaired at year-end 2014:

AFS municipal bonds and obligations

At year-end 2014, 14 of the 178 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 2% 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 2014. All securities are performing.

AFS residential mortgage-backed securities

At year-end 2014, 46 out of a total of 196 securities in the Company’s portfolio of AFS residential mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.5% 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 2014. All securities are performing.

AFS corporate bonds

At year-end 2014, 4 out of 6 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 2.7% of the amortized cost of bonds in unrealized loss positions. Of the 4 securities, 1 security is investment grade rated. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

At year-end 2014, $1.0 million of the total unrealized losses was attributable to a $30.7 million investment. The Company evaluated these securities, with a Level 2 fair value of $29.7 million, for potential other-than-temporary impairment (“OTTI”) at December 31, 2014 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 2014, 3 out of 6 securities in the Company’s portfolio of AFS trust preferred securities were in unrealized loss positions. Aggregate unrealized losses represented 27% of the amortized cost of securities in unrealized loss positions. The Company’s evaluation of the present value of expect cash flows on these securities supports its conclusions about the recoverability of the securities’ amortized cost basis. Of the 3 securities, 2 securities have investment grade ratings. 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.

At year-end 2014, $1.0 million of the total unrealized losses was attributable to a $2.6 million investment in a Mezzanine Class B tranche of a $360 million pooled trust preferred security collateralized by banking and insurance entities. The Company evaluated the security, with a Level 3 fair value of $1.5 million, for potential other-than-temporary impairment (“OTTI”) at December 31, 2014 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 and the protection from credit loss afforded by $50 million in excess subordination above current and projected losses. The security is performing.

AFS other bonds and obligations

At year-end 2014, 5 of the 8 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 1.7% 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 2014. All securities are performing.

HTM tax advantaged economic development bonds

At year-end 2014, 1 of the 7 securities in the Company’s portfolio of tax advantaged economic development bonds were in an unrealized loss position. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The Company has the ability and intent of maintaining these bonds to the recovery. These securities are performing. The Company expects to receive all future cash flows associated with these securities.

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 2014, 7 out of a total of 30 securities in the Company’s portfolio of marketable equity securities were in an unrealized loss position. The unrealized loss represented 9% 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 2014. 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.