Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at March 31, 2018:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	302,935,000	$	191,000	$	(7,798,000	)	$	295,328,000
State and political subdivisions	5,765,000		3,000		(257,000		)	5,511,000
Other equity securities	2,930,000		—		—			2,930,000
	$	311,630,000	$	194,000	$	(8,055,000	)	$	303,769,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,155,000	$	—	$	(515,000	)	$	10,640,000
Mortgage-backed securities	21,990,000		469,000		(289,000		)	22,170,000
State and political subdivisions	221,245,000		1,497,000		(4,001,000		)	218,741,000
Corporate securities	4,300,000		—		—			4,300,000
	$	258,690,000	$	1,966,000	$	(4,805,000	)	$	255,851,000
Restricted equity securities
Federal Home Loan Bank Stock	$	10,910,000	$	—	$	—		$	10,910,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	11,947,000	$	—	$	—		$	11,947,000

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



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	293,689,000	$	722,000	$	(4,422,000	)	$	289,989,000
State and political subdivisions	6,860,000		16,000		(107,000		)	6,769,000
Other equity securities	3,296,000		121,000		(3,000		)	3,414,000
	$	303,845,000	$	859,000	$	(4,532,000	)	$	300,172,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,155,000	$	—	$	(180,000	)	$	10,975,000
Mortgage-backed securities	23,284,000		568,000		(128,000		)	23,724,000
State and political subdivisions	217,828,000		3,931,000		(1,103,000		)	220,656,000
Corporate securities	4,300,000		—		—			4,300,000
	$	256,567,000	$	4,499,000	$	(1,411,000	)	$	259,655,000
Restricted equity securities
Federal Home Loan Bank Stock	$	9,321,000	$	—	$	—		$	9,321,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	10,358,000	$	—	$	—		$	10,358,000

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 contractual maturities of investment securities at March 31, 2018:



	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	$	61,000	$	61,000	$	634,000	$	635,000
Due in 1 to 5 years	6,502,000		6,492,000		25,692,000		25,796,000
Due in 5 to 10 years	66,434,000		65,234,000		145,297,000		144,211,000
Due after 10 years	235,703,000		229,052,000		87,067,000		85,209,000
Equity securities	2,930,000		2,930,000		—		—
	$	311,630,000	$	303,769,000	$	258,690,000	$	255,851,000

The following table summarizes the contractual maturities of investment securities at December 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	$	111,000	$	112,000	$	635,000	$	637,000
Due in 1 to 5 years	841,000		842,000		18,059,000		18,164,000
Due in 5 to 10 years	29,003,000		29,177,000		37,182,000		37,719,000
Due after 10 years	270,594,000		266,627,000		200,691,000		203,135,000
Equity securities	3,296,000		3,414,000		—		—
	$	303,845,000	$	300,172,000	$	256,567,000	$	259,655,000

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

At March 31, 2018, securities with a fair value of $197,349,000 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 $231,516,000 as of December 31, 2017 and $227,683,000 at March 31, 2017, 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, 2018 and 2017:



	For the three months ended March 31,
	2018		2017
Proceeds from sales of securities	$	459,000	$	3,000
Gross realized gains	136,000		3,000
Gross realized losses	—		—
Net gain	$	136,000	$	3,000
Related income taxes	$	29,000	$	1,000

Management reviews securities with unrealized losses for other than temporary impairment. As of March 31, 2018, there were 457 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 159 had been temporarily impaired for 12 months or more. At March 31, 2018, 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 March 31, 2018 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	$	6,946,000	$	(309,000	)	$	3,694,000	$	(206,000	)	$	10,640,000	$	(515,000	)
Mortgage-backed securities	183,335,000		(4,332,000		)	101,012,000		(3,755,000		)	284,347,000		(8,087,000		)
State and political subdivisions	64,594,000		(1,533,000		)	37,182,000		(2,725,000		)	101,776,000		(4,258,000		)
	$	254,875,000	$	(6,174,000	)	$	141,888,000	$	(6,686,000	)	$	396,763,000	$	(12,860,000	)

As of December 31, 2017, there were 241 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 157 had been temporarily impaired for 12 months or more. Information regarding securities temporarily impaired as of December 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	$	7,161,000	$	(94,000	)	$	3,814,000	$	(86,000	)	$	10,975,000	$	(180,000	)
Mortgage-backed securities	132,025,000		(1,857,000		)	101,707,000		(2,693,000		)	233,732,000		(4,550,000		)
State and political subdivisions	9,425,000		(149,000		)	38,864,000		(1,061,000		)	48,289,000		(1,210,000		)
Other equity securities	—		—			9,000		(3,000		)	9,000		(3,000		)
	$	148,611,000	$	(2,100,000	)	$	144,394,000	$	(3,843,000	)	$	293,005,000	$	(5,943,000	)

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. 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	)

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 $182,000 at March 31, 2018. 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 a portion of its wholesale funding needs. As of March 31, 2018 and 2017, and December 31, 2017, the Bank's investment in FHLB stock totaled $10,910,000, $12,326,000 and $9,321,000, 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, 2018. The Company will continue to monitor its investment in FHLB stock.