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 December 31, 2018
U.S. Government-sponsored agency securities	$	13,493	$	92	$	3	$	13,582
State and municipal	605,994		5,995		5,854		606,135
U.S. Government-sponsored mortgage-backed securities	530,209		634		8,396		522,447
Corporate obligations	31						31
Total available for sale	1,149,727		6,721		14,253		1,142,195
Held to maturity at December 31, 2018
U.S. Government-sponsored agency securities	22,618				545		22,073
State and municipal	197,909		2,858		872		199,895
U.S. Government-sponsored mortgage-backed securities	268,860		713		3,323		266,250
Foreign investment	1,000				1		999
Total held to maturity	490,387		3,571		4,741		489,217
Total Investment Securities	$	1,640,114	$	10,292	$	18,994	$	1,631,412

Available for sale at December 31, 2017
U.S. Government-sponsored agency securities
State and municipal	$	510,852	$	16,932	$	1,091	$	526,693
U.S. Government-sponsored mortgage-backed securities	473,325		964		3,423		470,866
Corporate obligations	31						31
Equity securities	2,357						2,357
Total available for sale	986,565		17,896		4,514		999,947
Held to maturity at December 31, 2017
U.S. Government-sponsored agency securities	22,618				435		22,183
State and municipal	235,594		6,295		244		241,645
U.S. Government-sponsored mortgage-backed securities	301,443		3,341		1,404		303,380
Foreign investment	1,000						1,000
Total held to maturity	560,655		9,636		2,083		568,208
Total Investment Securities	$	1,547,220	$	27,532	$	6,597	$	1,568,155

Certain investments in debt securities are reported in the financial statements at amounts less than their historical cost. The historical cost of these investments totaled $951,571,000 and $452,644,000 at December 31, 2018 and 2017, respectively. Total fair value of these investments was $932,577,000 and $446,047,000, which was approximately 57.1 and 28.6 percent of the Corporation's available for sale and held to maturity investment portfolio at December 31, 2018 and 2017, respectively.

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 other-than-temporary-impairment ("OTTI") is identified. The Corporation’s management has evaluated all securities with unrealized losses for OTTI as of December 31, 2018.

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 I and Level II 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 classified 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 loss resulting from the sale of certain securities has proven the data to be accurate over time. 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.

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 December 31, 2018. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $8,396,000 on one hundred five securities and $3,323,000 on seventy-six securities in the available for sale and held to maturity portfolios, respectively. All these securities are issued by a government-sponsored entity.

State and Municipal Securities, U.S. Government-Sponsored Agency Securities and Foreign Investment Securities

The unrealized losses on the Corporation's investments in securities of state and political subdivisions, U.S. Government-Sponsored Agency and foreign investment securities 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 December 31, 2018. As noted in the table above, the state and municipal securities portfolio contains unrealized losses of $5,854,000 on two hundred twenty-one securities and $872,000 on forty-one securities in the available for sale and held to maturity portfolios, respectively. The U.S. Government-Sponsored Agency securities portfolio contains unrealized losses of $3,000 on four securities in the available for sale portfolio, and $545,000 on five securities in the held to maturity portfolio. The foreign investment securities portfolio contains no unrealized losses in the available for sale portfolio, and $1,000 on one security in the held to maturity portfolio.

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 December 31, 2018 and 2017:



	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, 2018
U.S. Government-sponsored agency securities	$	1,490	$	3					$	1,490	$	3
State and municipal	234,431		3,958		$	38,028	$	1,896	272,459		5,854
U.S. Government-sponsored mortgage-backed securities	196,601		2,400		217,121		5,996		413,722		8,396
Total Temporarily Impaired Available for Sale Securities	432,522		6,361		255,149		7,892		687,671		14,253
Temporarily Impaired Held to Maturity Securities at December 31, 2018
U.S. Government-sponsored agency securities					22,073		545		22,073		545
State and municipal	14,952		369		16,786		503		31,738		872
U.S. Government-sponsored mortgage-backed securities	102,828		876		87,268		2,447		190,096		3,323
Foreign investment					999		1		999		1
Total Temporarily Impaired Held to Maturity Securities	117,780		1,245		127,126		3,496		$	244,906	4,741
Total Temporarily Impaired Investment Securities	$	550,302	$	7,606	$	382,275	$	11,388	$	932,577	$	18,994


	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, 2017
State and municipal	$	13,296	$	198	$	35,324	$	893	$	48,620	$	1,091
U.S. Government-sponsored mortgage-backed securities	182,755		1,520		68,667		1,903		251,422		3,423
Total Temporarily Impaired Available for Sale Securities	196,051		1,718		103,991		2,796		300,042		4,514
Temporarily Impaired Held to Maturity Securities at December 31, 2017
U.S. Government-sponsored agency securities	9,988		131		12,196		304		22,184		435
State and municipal	2,430		36		15,805		208		18,235		244
U.S. Government-sponsored mortgage-backed securities	62,508		485		43,078		919		105,586		1,404
Total Temporarily Impaired Held to Maturity Securities	74,926		652		71,079		1,431		146,005		2,083
Total Temporarily Impaired Investment Securities	$	270,977	$	2,370	$	175,070	$	4,227	$	446,047	$	6,597

The amortized cost and fair value of securities available for sale and held to maturity at December 31, 2018 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 December 31, 2018
Due in one year or less	$	13,092	$	13,144	$	4,732	$	4,730
Due after one through five years	5,311		5,378		49,054		48,473
Due after five through ten years	73,280		74,411		62,873		64,163
Due after ten years	527,835		526,815		104,868		105,601
	619,518		619,748		221,527		222,967
U.S. Government-sponsored mortgage-backed securities	530,209		522,447		268,860		266,250
Total Investment Securities	$	1,149,727	$	1,142,195	$	490,387	$	489,217

Securities with a carrying value of approximately $416,155,000, $475,999,000 and $572,896,000 were pledged at December 31, 2018, 2017 and 2016, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities sold under agreements to repurchase amounted to $116,691,000 at December 31, 2018, and $136,639,000 at

December 31, 2017.

Gross gains of $4,269,000, $2,681,000 and $3,389,000 were realized on sales of investment securities in 2018, 2017 and 2016, respectively. Gross losses of $50,000 were realized on sales of investment securities in 2017. There were no losses from the sales of investment securities in 2018 or 2016, respectively.