2.	SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities available for sale, with gross unrealized gains and losses, follows:

 

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(In thousands)
December 31, 2013
Debt securities:
Corporate bonds:
Financial services		$	58,166			$	1,148			$	(66	)		$	59,248
Industry and manufacturing			13,893				264				(16	)			14,141
Consumer products and services			7,234				32				—				7,266
Technology			2,503				18				—				2,521
Healthcare			9,009				149				—				9,158
Other			1,011				43				—				1,054
Total corporate bonds			91,816				1,654				(82	)			93,388
Government-sponsored enterprises			34,562				3				(1,417	)			33,148
Municipal bonds			5,721				137				—				5,858
Residential mortgage-backed securities:
Government-sponsored enterprises			11,138				592				—				11,730
Private label			1,578				86				—				1,664
Total debt securities			144,815				2,472				(1,499	)			145,788
Marketable equity securities:
Common stocks:
Financial services			6,909				614				—				7,523
Industry and manufacturing			18,092				2,413				(58	)			20,447
Consumer products and services			9,909				1,530				(3	)			11,436
Technology			3,442				132				(66	)			3,508
Healthcare			5,048				1,115				—				6,163
Other			3,441				807				—				4,248
Total common stocks			46,841				6,611				(127	)			53,325
Money market mutual funds			2,065				—				(41	)			2,024
Total marketable equity securities			48,906				6,611				(168	)			55,349
Total securities available for sale		$	193,721			$	9,083			$	(1,667	)		$	201,137

 

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(In thousands)
December 31, 2012
Debt securities:
Corporate bonds:
Financial services		$	76,044			$	2,480			$	(71	)		$	78,453
Industry and manufacturing			14,846				449				—				15,295
Consumer products and services			12,259				355				—				12,614
Technology			2,506				—				(29	)			2,477
Healthcare			11,041				461				—				11,502
Other			1,018				61				—				1,079
Total corporate bonds			117,714				3,806				(100	)			121,420
Government-sponsored enterprises			53,084				94				(29	)			53,149
Municipal bonds			7,236				225				—				7,461
Residential mortgage-backed securities:
Government-sponsored enterprises			16,280				1,019				(1	)			17,298
Private label			3,169				140				—				3,309
Total debt securities			197,483				5,284				(130	)			202,637
Marketable equity securities:
Common stocks:
Financial services			11,354				622				(67	)			11,909
Industry and manufacturing			10,922				1,329				(157	)			12,094
Consumer products and services			11,849				1,284				(59	)			13,074
Technology			1,847				11				(8	)			1,850
Healthcare			3,757				560				(9	)			4,308
Other			2,677				422				—				3,099
Total common stocks			42,406				4,228				(300	)			46,334
Money market mutual funds			13,833				—				(19	)			13,814
Total marketable equity securities			56,239				4,228				(319	)			60,148
Total securities available for sale		$	253,722			$	9,512			$	(449	)		$	262,785

At December 31, 2013, securities with an amortized cost of $24.5 million and $2.3 million, respectively, were pledged as collateral for Federal Home Loan Bank of Boston borrowings and Federal Reserve Bank discount window borrowings.

The amortized cost and fair value of debt securities by contractual maturity at December 31, 2013 are as follows. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties.

 

										After One Year
		One Year or Less								Through Five Years								After Five Years								Total
		Amortized				Fair				Amortized				Fair				Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value				Cost				Value				Cost				Value
		(In thousands)
Corporate bonds:
Financial services		$	18,396			$	18,590			$	39,770			$	40,658			$	—			$	—			$	58,166			$	59,248
Industry and manufacturing			7,992				8,101				5,901				6,040				—				—				13,893				14,141
Consumer products and services			7,234				7,266				—				—				—				—				7,234				7,266
Technology			2,503				2,521				—				—				—				—				2,503				2,521
Healthcare			5,003				5,030				4,006				4,128				—				—				9,009				9,158
Other			—				—				1,011				1,054				—				—				1,011				1,054
Total corporate bonds			41,128				41,508				50,688				51,880				—				—				91,816				93,388
Government-sponsored enterprises			—				—				62				65				34,500				33,083				34,562				33,148
Municipal bonds			250				251				5,471				5,607				—				—				5,721				5,858
Residential mortgage-backed securities:
Government-sponsored enterprises			—				—				2				2				11,136				11,728				11,138				11,730
Private label			—				—				—				—				1,578				1,664				1,578				1,664
Total		$	41,378			$	41,759			$	56,223			$	57,554			$	47,214			$	46,475			$	144,815			$	145,788

For the years ended December 31, 2013, 2012 and 2011, proceeds from sales of securities available for sale amounted to $60.8 million, $38.7 million and $43.4 million, respectively. Gross gains of $9.6 million, $5.7 million and $5.0 million and gross losses of $10,000, $100,000 and $486,000, respectively, were realized on those sales.

Information pertaining to securities available for sale as of December 31, 2013 and 2012, with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

 

		Less Than Twelve Months								Twelve Months or Longer
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(In thousands)
December 31, 2013
Debt securities:
Corporate bonds:
Financial services		$	19			$	6,981			$	47			$	1,453
Industry and manufacturing			16				984				—				—
Total corporate bonds			35				7,965				47				1,453
Government-sponsored enterprises			1,296				31,205				121				1,879
Total debt securities			1,331				39,170				168				3,332
Marketable equity securities:
Common stocks:
Industry and manufacturing			58				3,089				—				—
Consumer products and services			3				606				—				—
Technology			66				1,872				—				—
Total common stocks			127				5,567				—				—
Money market mutual funds			—				—				41				998
Total marketable equity securities			127				5,567				41				998
Total temporarily impaired securities		$	1,458			$	44,737			$	209			$	4,330

 

		Less Than Twelve Months								Twelve Months or Longer
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(In thousands)
December 31, 2012
Debt securities:
Corporate bonds:
Financial services		$	14			$	2,986			$	57			$	4,442
Technology			29				2,477				—				—
Total corporate bonds			43				5,463				57				4,442
Government-sponsored enterprises			29				8,962				—				—
Residential mortgage-backed securities:
Government-sponsored enterprises			1				8				—				—
Total debt securities			73				14,433				57				4,442
Marketable equity securities:
Common stocks:
Financial services			46				7,193				21				217
Industry and manufacturing			157				2,654				—				—
Consumer products and services			59				1,077				—				—
Technology			8				936				—				—
Healthcare			9				612				—				—
Total common stocks			279				12,472				21				217
Money market mutual funds			—				—				19				1,004
Total marketable equity securities			279				12,472				40				1,221
Total temporarily impaired securities		$	352			$	26,905			$	97			$	5,663

The Company determined no securities were other-than-temporarily impaired for the years ended December 31, 2013 and 2012. Management evaluates securities for other-than-temporary impairment on a quarterly basis, with more frequent evaluation for selected issuers or when economic or market concerns warrant such evaluations.

As of December 31, 2013, the net unrealized gain on the total debt securities portfolio was $973,000. At December 31, 2013, 30 debt securities had unrealized losses with aggregate depreciation of 3.4% from the Company’s amortized cost basis. In analyzing a debt issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts’ reports and, to a lesser extent given the relatively insignificant levels of depreciation in the Company’s debt portfolio, spread differentials between the effective rates on instruments in the portfolio compared to risk-free rates. The unrealized losses are primarily caused by (a) recent declines in profitability and near-term profit forecasts by industry analysts resulting from a decline in the level of business activity (b) recent downgrades by several industry analysts and (c) recent increases in interest rates. The contractual terms of these investments do not permit the companies to settle the security at a price less than the par value of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that the bonds would not be settled at a price less than the par value of the investment. Because (1) the Company does not intend to sell the securities; (2) the Company does not believe it is more likely than not that the Company will be required to sell the securities before recovery of its amortized cost basis; and (3) the present value of expected cash flows is sufficient to recover the entire amortized cost basis of the securities, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2013.

As of December 31, 2013, the net unrealized gain on the total marketable equity portfolio was $6.4 million. At December 31, 2013, 13 marketable equity securities have unrealized losses with aggregate depreciation of 2.5% from the Company’s cost basis. Although the issuers have shown declines in earnings as a result of the weakened economy, no credit issues have been identified that cause management to believe the decline in market value is other than temporary, and the Company has the ability and intent to hold these investments until a recovery of fair value. In analyzing an equity issuer’s financial condition, management considers industry analysts’ reports, financial performance and projected target prices of investment analysts within a one-year time frame. A decline of 10% or more in the value of an acquired equity security is generally the triggering event for management to review individual securities for liquidation and/or classification as other-than-temporarily impaired. Impairment losses are recognized when management concludes that declines in the value of equity securities are other than temporary, or when they can no longer assert that they have the intent and ability to hold depreciated equity securities for a period of time sufficient to allow for any anticipated recovery in fair value. Unrealized losses on marketable equity securities that are in excess of 25% of cost and that have been sustained for more than twelve months are generally considered-other-than temporary and charged to earnings as impairment losses, or realized through sale of the security.