Securities

The following tables present the amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of securities by major security type and class of security:



(Dollars in thousands)
June 30, 2014	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises		$9,999		$13		$—			$10,012
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	217,767		10,531		(13		)	228,285
Obligations of states and political subdivisions	54,161		2,230		—			56,391
Individual name issuer trust preferred debt securities	30,734		—		(4,099		)	26,635
Corporate bonds	6,123		133		(1		)	6,255
Total securities available for sale		$318,784		$12,907		($4,113	)		$327,578
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises		$27,814		$804		$—			$28,618
Total securities held to maturity		$27,814		$804		$—			$28,618
Total securities		$346,598		$13,711		($4,113	)		$356,196



(Dollars in thousands)
December 31, 2013	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises		$54,474		$720		($79	)		$55,115
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	230,387		8,369		(401		)	238,355
Obligations of states and political subdivisions	60,659		2,200		—			62,859
Trust preferred securities:
Individual name issuers	30,715		—		(6,031		)	24,684
Collateralized debt obligations	547		—		—			547
Corporate bonds	11,128		231		(16		)	11,343
Total securities available for sale		$387,910		$11,520		($6,527	)		$392,903
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises		$29,905		$14		($54	)		$29,865
Total securities held to maturity		$29,905		$14		($54	)		$29,865
Total securities		$417,815		$11,534		($6,581	)		$422,768

At June 30, 2014 and December 31, 2013, securities available for sale and held to maturity with a fair value of $339.9 million and $397.5 million, respectively, were pledged as collateral for Federal Home Loan Bank of Boston (“FHLBB”) borrowings and letters of credit, potential borrowings with the FRB, certain public deposits and for other purposes.

The schedule of maturities of debt securities available for sale and held to maturity is presented below. Mortgage-backed securities are included based on weighted average maturities, adjusted for anticipated prepayments. All other debt securities are included based on contractual maturities. Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties. Yields on tax exempt obligations are not computed on a tax equivalent basis.



	June 30, 2014
(Dollars in thousands)	Within 1 Year			1-5 Years			5-10 Years			After 10 Years			Totals
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises:
Amortized cost		$9,999			$—			$—			$—			$9,999
Weighted average yield	2.87		%	—		%	—		%	—		%	2.87		%
Mortgage-backed securities issued by U.S. government-sponsored enterprises:
Amortized cost	38,199			100,451			53,538			25,579			217,767
Weighted average yield	3.98		%	3.61		%	2.85		%	2.12		%	3.31		%
Obligations of state and political subdivisions:
Amortized cost	18,072			36,089			—			—			54,161
Weighted average yield	3.85		%	3.93		%	—		%	—		%	3.90		%
Individual name issuer trust preferred debt securities:
Amortized cost	—			—			—			30,734			30,734
Weighted average yield	—		%	—		%	—		%	1.07		%	1.07		%
Corporate bonds:
Amortized cost	—			5,919			204			—			6,123
Weighted average yield	—		%	2.76		%	3.20		%	—		%	2.78		%
Total debt securities available for sale:
Amortized cost		$66,270			$142,459			$53,742			$56,313			$318,784
Weighted average yield	3.77		%	3.66		%	2.85		%	1.55		%	3.17		%
Fair value		$68,872			$144,962			$56,196			$57,548			$327,578
Securities Held to Maturity:
Mortgage-backed securities issued by U.S. government-sponsored enterprises:
Amortized cost		$3,400			$10,557			$8,373			$5,484			$27,814
Weighted average yield	3.10		%	3.03		%	2.83		%	1.08		%	2.59		%
Fair value		$3,498			$10,862			$8,615			$5,643			$28,618

Included in the above table were debt securities with an amortized cost balance of $85.1 million and a fair value of $82.8 million at June 30, 2014 that are callable at the discretion of the issuers. Final maturities of the callable securities range from fifteen months to twenty-three years, with call features ranging from one month to three years.

Other-Than-Temporary Impairment Assessment

The Corporation assesses whether the decline in fair value of investment securities is other-than-temporary on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates impairments in value both qualitatively and quantitatively to assess whether they are other-than-temporary.

The following tables summarize temporarily impaired securities, segregated by length of time the securities have been in a continuous unrealized loss position:



(Dollars in thousands)	Less than 12 Months					12 Months or Longer						Total
June 30, 2014	#	Fair Value		Unrealized Losses		#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	—		$—		$—	1		$935		($13	)	1		$935		($13	)
Individual name issuer trust preferred debt securities	—	—		—		11	26,635		(4,099		)	11	26,635		(4,099		)
Corporate bonds	—	—		—		1	201		(1		)	1	201		(1		)
Total temporarily impaired securities	—	—			$—	13		$27,771		($4,113	)	13		$27,771		($4,113	)



(Dollars in thousands)	Less than 12 Months						12 Months or Longer						Total
December 31, 2013	#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored enterprises	1		$9,909		($79	)	—		$—		$—		1		$9,909		($79	)
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	7	76,748		(455		)	—	—		—			7	76,748		(455		)
Individual name issuer trust preferred debt securities	—	—		—			11	24,684		(6,031		)	11	24,684		(6,031		)
Corporate bonds	2	407		(16		)	—	—		—			2	407		(16		)
Total temporarily impaired securities	10		$87,064		($550	)	11		$24,684		($6,031	)	21		$111,748		($6,581	)

Further deterioration in credit quality of the underlying issuers of the securities, further deterioration in the condition of the financial services industry, a continuation or worsening of the current economic environment, or additional declines in real estate values, among other things, may further affect the fair value of these securities and increase the potential that certain unrealized losses be designated as other-than-temporary in future periods, and the Corporation may incur additional write-downs.

Trust Preferred Debt Securities of Individual Name Issuers

Included in debt securities in an unrealized loss position at June 30, 2014 were eleven trust preferred security holdings issued by seven individual companies in the banking sector. Management believes the decline in fair value of these trust preferred securities primarily reflects investor concerns about global economic growth and how it will affect potential future losses in the financial services industry. These concerns resulted in increased risk premiums for securities in this sector. Based on the information available through the filing date of this report, all individual name issuer trust preferred debt securities held in our portfolio continue to accrue and make payments as expected with no payment deferrals or defaults on the part of the issuers. As of June 30, 2014, individual name issuer trust preferred debt securities with an amortized cost of $11.9 million and unrealized losses of $1.6 million were rated below investment grade by Standard & Poors, Inc. (“S&P”). Management reviewed the collectibility of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings including ratings in effect as of the reporting period date as well as credit rating changes between the reporting period date and the filing date of this report and other information. We noted no additional downgrades to below investment grade between the reporting period date and the filing date of this report. Based on these analyses, management concluded that it expects to recover the entire amortized cost basis of these securities. Furthermore, Washington Trust does not intend to sell these securities and it is not more-likely-than-not that Washington Trust will be required to sell these securities before recovery of their cost basis, which may be maturity. Therefore, management does not consider these investments to be other-than-temporarily impaired at June 30, 2014.

Credit-Related Impairment Losses Recognized on Debt Securities

The following table presents a rollforward of the cumulative credit-related impairment losses on debt securities held by the Corporation:



(Dollars in thousands)	Three months				Six months
Periods ended June 30,	2014		2013		2014		2013
Balance at beginning of period		$—		$1,229		$—		$3,325
Credit-related impairment loss on debt securities for which an other-than-temporary impairment was not previously recognized	—		—		—		—
Additional increases to the amount of credit-related impairment loss on debt securities for which an other-than-temporary impairment was previously recognized	—		—		—		2,772
Reductions for securities for which a liquidation notice was received during the period	—		—		—		(4,868		)
Balance at end of period		$—		$1,229		$—		$1,229

The January 1, 2014 beginning balance of the cumulative credit-related impairment losses was corrected from the $6.8 million reported in our Form 10-K for the fiscal year ended December 31, 2013 to reflect the impact of the notice of liquidation of a pooled trust preferred security that occurred during the first quarter of 2013 and management’s change in intent to no longer hold its other pooled trust preferred security, which was made in December 2013.