INVESTMENT SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the Corporation's investment securities at the dates indicated were:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at March 31, 2017
U.S. Treasury	$	747					$	747
State and municipal	368,545		$	9,345	$	4,153	373,737
U.S. Government-sponsored mortgage-backed securities	323,912		1,736		2,949		322,699
Corporate obligations	31						31
Equity securities	21,820		11,754				33,574
Total available for sale	715,055		22,835		7,102		730,788
Held to maturity at March 31, 2017
U.S. Government-sponsored agency securities	22,618				458		22,160
State and municipal	231,129		4,096		1,386		233,839
U.S. Government-sponsored mortgage-backed securities	342,682		4,941		1,531		346,092
Total held to maturity	596,429		9,037		3,375		602,091
Total Investment Securities	$	1,311,484	$	31,872	$	10,477	$	1,332,879



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2016
U.S. Government-sponsored agency securities	$	100					$	100
State and municipal	360,779		$	8,443	$	5,564	363,658
U.S. Government-sponsored mortgage-backed securities	313,459		1,904		3,071		312,292
Corporate obligations	31						31
Equity securities	21,820				1,039		20,781
Total available for sale	696,189		10,347		9,674		696,862
Held to maturity at December 31, 2016
U.S. Government-sponsored agency securities	22,619				479		22,140
State and municipal	224,811		3,136		1,796		226,151
U.S. Government-sponsored mortgage-backed securities	360,213		4,956		1,527		363,642
Total held to maturity	607,643		8,092		3,802		611,933
Total Investment Securities	$	1,303,832	$	18,439	$	13,476	$	1,308,795

The amortized cost and fair value of available for sale and held to maturity securities at March 31, 2017 and December 31, 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at March 31, 2017:
Due in one year or less	$	3,604	$	3,643	$	4,771	$	4,825
Due after one through five years	10,687		11,260		70,442		71,687
Due after five through ten years	57,708		59,851		51,387		51,438
Due after ten years	297,324		299,761		127,147		128,049
	$	369,323	$	374,515	$	253,747	$	255,999
U.S. Government-sponsored mortgage-backed securities	323,912		322,699		342,682		346,092
Equity securities	21,820		33,574
Total Investment Securities	$	715,055	$	730,788	$	596,429	$	602,091



	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity Distribution at December 31, 2016
Due in one year or less	$	2,703	$	2,717	$	2,046	$	2,047
Due after one through five years	16,359		17,068		61,921		63,193
Due after five through ten years	60,614		62,241		61,606		61,145
Due after ten years	281,234		281,763		121,857		121,906
	$	360,910	$	363,789	$	247,430	$	248,291
U.S. Government-sponsored mortgage-backed securities	313,459		312,292		360,213		363,642
Equity securities	21,820		20,781
Total Investment Securities	$	696,189	$	696,862	$	607,643	$	611,933

The carrying value of securities pledged as collateral, to secure borrowings and for other purposes, was $551,860,000 at March 31, 2017, and $572,896,000 at December 31, 2016.

The book value of securities sold under agreements to repurchase amounted to $138,657,000 at March 31, 2017, and $145,936,000 at December 31, 2016.

Gross gains on the sales and redemptions of available for sale securities for the three months ended March 31, 2017 and 2016 are shown below.



	Three Months Ended March 31,
	2017		2016
Sales and Redemptions of Available for Sale Securities:
Gross gains	$	598	$	997
Gross losses

The following table shows the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at March 31, 2017, and December 31, 2016:



	Less than 12 Months				12 Months or Longer		Total
	Fair Value		Gross Unrealized Losses		Fair Value	Gross Unrealized Losses	Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at March 31, 2017
State and municipal	$	109,641	$	4,153			$	109,641	$	4,153
U.S. Government-sponsored mortgage-backed securities	183,878		2,949				183,878		2,949
Total Temporarily Impaired Available for Sale Securities	293,519		7,102				293,519		7,102
Temporarily Impaired Held to Maturity Securities at March 31, 2017
Federal agencies	22,160		458				22,160		458
State and municipal	36,582		1,386				36,582		1,386
U.S. Government-sponsored mortgage-backed securities	108,696		1,531				108,696		1,531
Total Temporarily Impaired Held to Maturity Securities	167,438		3,375				167,438		3,375
Total Temporarily Impaired Investment Securities	$	460,957	$	10,477			$	460,957	$	10,477



	Less than 12 Months				12 Months or Longer		Total
	Fair Value		Gross Unrealized Losses		Fair Value	Gross Unrealized Losses	Fair Value		Gross Unrealized Losses
Temporarily Impaired Available for Sale Securities at December 31, 2016
State and municipal	$	126,593	$	5,564			$	126,593	$	5,564
U.S. Government-sponsored mortgage-backed securities	185,544		3,071				185,544		3,071
Equity Securities	18,765		1,039				18,765		1,039
Total Temporarily Impaired Available for Sale Securities	330,902		9,674				330,902		9,674
Temporarily Impaired Held to Maturity Securities at December 31, 2016
U.S. Government-sponsored agency securities	19,121		479				19,121		479
State and municipal	50,897		1,796				50,897		1,796
U.S. Government-sponsored mortgage-backed securities	109,377		1,527				109,377		1,527
Total Temporarily Impaired Held to Maturity Securities	179,395		3,802				179,395		3,802
Total Temporarily Impaired Investment Securities	$	510,297	$	13,476			$	510,297	$	13,476

Certain investments in debt and equity securities are reported in the financial statements at an amount less than their historical cost as indicated in the table below.



	March 31, 2017			December 31, 2016
Investments reported at less than historical cost:
Historical cost	$	471,434		$	523,773
Fair value	$	460,957		$	510,297
Percent of the Corporation's available for sale and held to maturity portfolio	34.7		%	39.1		%

Except as discussed below, management believes the decline in fair value for these securities was temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income during the period the OTTI is identified.

The Corporation’s management has evaluated all securities with unrealized losses for other-than temporary impairment as of March 31, 2017. The evaluations are based on the nature of the securities, the extent and duration of the loss and the intent and ability of the Corporation to hold these securities either to maturity or through the expected recovery period.

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy. The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor was classifying these securities based upon these inputs. From these discussions, the Corporation’s management is comfortable that the classifications are proper. The Corporation has gained trust in the data for two reasons: (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis and (b) actual gains or losses resulting from the sale of certain securities has proven the data to be accurate over time. The fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

State and Municipal Securities

The unrealized losses on the Corporation's investments in securities of state and political subdivisions were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at March 31, 2017. The state and political subdivision securities portfolio contains unrealized losses of $4,153,000 on eighty-three securities and $1,386,000 on fifty-one securities in the available for sale and held to maturity portfolios, respectively.

U.S. Government-Sponsored Mortgage-Backed Securities

The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at March 31, 2017. The mortgage-backed securities portfolio contains unrealized losses of $2,949,000 on forty-five securities and $1,531,000 on thirty-one securities in the available for sale and held to maturity portfolios, respectively. All these securities are issued by a government-sponsored entity.

U.S. Government-Sponsored Agency Securities

The unrealized losses on the Corporation's investment in U.S. Government-Sponsored Agency securities were a result of interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at March 31, 2017. The U.S. Government-Sponsored Agency securities portfolio contains no unrealized losses in the available for sale portfolio, and $458,000 on five securities in the held to maturity portfolio.