SECURITIES

The following tables summarize the amortized cost and estimated fair values of AFS and HTM securities, as of the dates indicated:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2014
AFS Securities:
Obligations of U.S. government-sponsored enterprises	$	4,958	$	58	$	—		$	5,016
Obligations of states and political subdivisions	27,242		887		—			28,129
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	373,575		6,407		(2,809		)	377,173
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	361,617		1,160		(7,186		)	355,591
Private issue collateralized mortgage obligations	6,526		32		—			6,558
Total AFS securities	$	773,918	$	8,544	$	(9,995	)	$	772,467
HTM Securities:
Obligations of states and political subdivisions	$	9,798	$	121	$	(27	)	$	9,892
Total HTM securities	$	9,798	$	121	$	(27	)	$	9,892
December 31, 2013
AFS Securities:
Obligations of states and political subdivisions	$	30,143	$	1,075	$	(11	)	$	31,207
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	397,409		5,528		(7,034		)	395,903
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	385,847		912		(12,324		)	374,435
Private issue collateralized mortgage obligations	7,329		10		(407		)	6,932
Total AFS securities	$	820,728	$	7,525	$	(19,776	)	$	808,477

Net unrealized losses on AFS securities at June 30, 2014 and December 31, 2013 included in AOCI amounted to $943,000 and $8.0 million, net of a deferred tax benefit of $508,000 and $4.3 million, respectively.

During the first six months of 2014, the Company purchased investment securities totaling $38.9 million. The Company designated $29.1 million as AFS securities and $9.8 million as HTM securities. The Company did not carry any HTM securities at December 31, 2013.

Impaired Securities

Management periodically reviews the Company’s investment portfolio to determine the cause, magnitude and duration of declines in the fair value of each security. Thorough evaluations of the causes of the unrealized losses are performed to determine whether the impairment is temporary or other-than-temporary in nature. Considerations such as the ability of the securities to meet cash flow requirements, levels of credit enhancements, risk of curtailment, recoverability of invested amount over a reasonable period of time, and the length of time the security is in a loss position, for example, are applied in determining OTTI. Once a decline in value is determined to be other-than-temporary, the value of the security is permanently reduced and a corresponding charge to earnings is recognized.

The following table presents the estimated fair values and gross unrealized losses of investment securities that were in a continuous loss position at June 30, 2014 and December 31, 2013, by length of time that individual securities in each category have been in a continuous loss position:



	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2014
AFS Securities:
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	$	14,043	$	(11	)	$	132,457	$	(2,798	)	$	146,500	$	(2,809	)
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	4,984		(49		)	246,076		(7,137		)	251,060		(7,186		)
Total AFS securities	$	19,027	$	(60	)	$	378,533	$	(9,935	)	$	397,560	$	(9,995	)
HTM Securities:
Obligations of states and political subdivisions	$	3,664	$	(27	)	$	—	$	—		$	3,664	$	(27	)
Total HTM securities	$	3,664	$	(27	)	$	—	$	—		$	3,664	$	(27	)
December 31, 2013
AFS Securities:
Obligations of states and political subdivisions	$	2,143	$	(11	)	$	—	$	—		$	2,143	$	(11	)
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	145,424		(4,189		)	43,915		(2,845		)	189,339		(7,034		)
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	239,278		(7,738		)	73,376		(4,586		)	312,654		(12,324		)
Private issue collateralized mortgage obligations	122		(4		)	4,945		(403		)	5,067		(407		)
Total AFS securities	$	386,967	$	(11,942	)	$	122,236	$	(7,834	)	$	509,203	$	(19,776	)

At June 30, 2014, the Company held 64 investment securities with a fair value of $401.2 million with unrealized losses totaling $10.0 million that are considered temporary. Of these, the Company had 55 MBS and CMO investments with a fair value of $378.5 million that have been in an unrealized loss position for 12 months or more. The decline in the fair value of securities is reflective of current interest rates in excess of the yield received on investments and is not indicative of an overall credit deterioration or other factors with the Company's investment portfolio. At June 30, 2014, the Company had no Non-Agency investments in an unrealized loss position.

Stress tests are performed monthly on the Company's Non-Agency investments, which are higher risk bonds within the investment portfolio, using current statistical data to determine expected cash flows and forecast potential losses. The results of the stress tests during the first six months of 2014 indicated potential future credit losses that were lower than previously recorded OTTI and, as such, no additional OTTI was recorded during the first six months of 2014.

Sale of Securities

The following table details the Company’s sales of AFS securities for the period indicated below:



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Proceeds from sales of securities	$	16,258	$	—	$	25,695	$	4,875
Gross realized gains	285		—		451		138
Gross realized losses	—		—		—		—

For the three months ended June 30, 2014, the Company sold certain AFS securities with a total carrying value of $16.0 million. For the three months ended June 30, 2014, the Company recorded net gains on the sale of AFS securities of $285,000 within non-interest income in the consolidated statements of income. The Company had not previously recorded any OTTI on these securities sold. The Company did not sell any securities during the three months ended June 30, 2013.

For the six months ended June 30, 2014 and 2013, the Company sold certain AFS securities with a total carrying value of $25.2 million and $4.7 million, respectively. For the six months ended June 30, 2014 and 2013, the Company recorded net gains on the sale of AFS securities of $451,000 and $138,000, respectively, within non-interest income in the consolidated statements of income. The Company had not previously recorded any OTTI on these securities sold.

The cost basis of securities sold is measured on a specific identification basis.

Securities Pledged

At June 30, 2014 and December 31, 2013, securities with an amortized cost of $458.5 million and $479.2 million and estimated fair values of $458.4 million and $474.7 million, respectively, were pledged to secure FHLBB advances, public deposits, and securities sold under agreements to repurchase and for other purposes required or permitted by law.

Contractual Maturities

The amortized cost and estimated fair values of debt securities by contractual maturity at June 30, 2014, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Amortized Cost		Fair Value
AFS Securities
Due in one year or less	$	961	$	983
Due after one year through five years	61,077		61,665
Due after five years through ten years	116,946		118,558
Due after ten years	594,934		591,261
	$	773,918	$	772,467
HTM Securities
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	1,179		1,187
Due after ten years	8,619		8,705
	$	9,798	$	9,892