Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at June 30, 2018:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	306,286,000	$	144,000	$	(9,052,000	)	$	297,378,000
State and political subdivisions	4,955,000		$	—	(263,000		)	4,692,000
Other equity securities	2,978,000		—		—			2,978,000
	$	314,219,000	$	144,000	$	(9,315,000	)	$	305,048,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,155,000	$	—	$	(584,000	)	$	10,571,000
Mortgage-backed securities	20,585,000		404,000		(365,000		)	20,624,000
State and political subdivisions	224,037,000		1,274,000		(4,490,000		)	220,821,000
Corporate securities	4,300,000		—		—			4,300,000
	$	260,077,000	$	1,678,000	$	(5,439,000	)	$	256,316,000
Restricted equity securities
Federal Home Loan Bank Stock	$	11,326,000	$	—	$	—		$	11,326,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	12,363,000	$	—	$	—		$	12,363,000

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 June 30, 2017:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value (Estimated)
Securities available for sale
Mortgage-backed securities	$	290,379,000	$	1,381,000	$	(2,769,000	)	$	288,991,000
State and political subdivisions	15,401,000		486,000		(59,000		)	15,828,000
Other equity securities	3,266,000		65,000		(4,000		)	3,327,000
	$	309,046,000	$	1,932,000	$	(2,832,000	)	$	308,146,000
Securities to be held to maturity
U.S. Government-sponsored agencies	$	11,152,000	$	—	$	(181,000	)	$	10,971,000
Mortgage-backed securities	27,224,000		820,000		(41,000		)	28,003,000
State and political subdivisions	201,447,000		3,573,000		(2,056,000		)	202,964,000
Corporate securities	4,300,000		—		—			4,300,000
	$	244,123,000	$	4,393,000	$	(2,278,000	)	$	246,238,000
Restricted equity securities
Federal Home Loan Bank Stock	$	11,274,000	$	—	$	—		$	11,274,000
Federal Reserve Bank Stock	1,037,000		—		—			1,037,000
	$	12,311,000	$	—	$	—		$	12,311,000

The following table summarizes the contractual maturities of investment securities at June 30, 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	$	34,000	$	34,000	$	1,327,000	$	1,329,000
Due in 1 to 5 years	9,349,000		9,341,000		23,621,000		23,698,000
Due in 5 to 10 years	71,309,000		69,745,000		155,096,000		153,240,000
Due after 10 years	230,549,000		222,950,000		80,033,000		78,049,000
Equity securities	2,978,000		2,978,000		—		—
	$	314,219,000	$	305,048,000	$	260,077,000	$	256,316,000

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 June 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	$	26,000	$	26,000	$	707,000	$	710,000
Due in 1 to 5 years	1,722,000		1,758,000		14,536,000		14,813,000
Due in 5 to 10 years	34,382,000		35,099,000		41,373,000		42,251,000
Due after 10 years	269,650,000		267,936,000		187,507,000		188,464,000
Equity securities	3,266,000		3,327,000		—		—
	$	309,046,000	$	308,146,000	$	244,123,000	$	246,238,000

At June 30, 2018, securities with a fair value of $203,196,000 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 $188,448,000 at June 30, 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 six months and quarters ended June 30, 2018 and 2017:



	For the six months ended June 30,				For the quarter ended June 30,
	2018		2017		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 June 30, 2018, there were 480 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 160 had been temporarily impaired for 12 months or more. At June 30, 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 June 30, 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	$	6,882,000	$	(373,000	)	$	3,689,000	$	(211,000	)	$	10,571,000	$	(584,000	)
Mortgage-backed securities	202,673,000		(5,660,000		)	91,977,000		(3,757,000		)	294,650,000		(9,417,000		)
State and political subdivisions	70,674,000		(1,728,000		)	36,909,000		(3,025,000		)	107,583,000		(4,753,000		)
	$	280,229,000	$	(7,761,000	)	$	132,575,000	$	(6,993,000	)	$	412,804,000	$	(14,754,000	)

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 June 30, 2017, there were 235 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 June 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	$	7,972,000	$	(181,000	)	$	—	$	—		$	7,972,000	$	(181,000	)
Mortgage-backed securities	170,966,000		(2,613,000		)	7,643,000		(197,000		)	178,609,000		(2,810,000		)
State and political subdivisions	55,952,000		(2,115,000		)	—		—			55,952,000		(2,115,000		)
Other equity securities	69,000		(1,000		)	9,000		(3,000		)	78,000		(4,000		)
	$	234,959,000	$	(4,910,000	)	$	7,652,000	$	(200,000	)	$	242,611,000	$	(5,110,000	)

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 $189,000 at June 30, 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 June 30, 2018 and 2017, and December 31, 2017, the Bank's investment in FHLB stock totaled $11,326,000, $11,274,000 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 June 30, 2018. The Company will continue to monitor its investment in FHLB stock.