10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

_________________
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended      June 30, 2017                  

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from _____________ to _____________

Commission File No. 000-20827
________________
CASS INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Missouri	43-1265338
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)
12444 Powerscourt Drive, Suite 550
St. Louis, Missouri	63131
(Address of principal executive offices)	(Zip Code)

(314) 506-5500
(Registrant’s telephone number, including area code)
________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes           X                No       _____

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes           X                No       _____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer _____	Accelerated Filer     X
Non-Accelerated Filer _____ (Do not check if a smaller reporting company)	Smaller Reporting Company _____	Emerging Growth Company _____

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. _____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes      _____            No           X    

The number of shares outstanding of the registrant's only class of common stock as of July 28, 2017: Common stock, par value $.50 per share –11,203,801 shares outstanding.

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TABLE OF CONTENTS

PART I – Financial Information
	Item 1.	FINANCIAL STATEMENTS
		Consolidated Balance Sheets June 30, 2017 (unaudited) and December 31, 2016	3
		Consolidated Statements of Income Three and six months ended June 30, 2017 and 2016 (unaudited)	4
		Consolidated Statements of Comprehensive Income Three and six months ended June 30, 2017 and 2016 (unaudited)	5
		Consolidated Statements of Cash Flows Six months ended June 30, 2017 and 2016 (unaudited)	6
		Notes to Consolidated Financial Statements (unaudited)	7
	Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
	Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
	Item 4.	CONTROLS AND PROCEDURES	29
PART II – Other Information – Items 1. – 6.			29
	SIGNATURES		31

Forward-looking Statements - Factors That May Affect Future Results

This report may contain or incorporate by reference forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors beyond our control, which may cause future performance to be materially different from expected performance summarized in the forward-looking statements. These risks, uncertainties and other factors are discussed in Part I, Item 1A, “Risk Factors” of the Company’s 2016 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”), which may be updated from time to time in our future filings with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Share and Per Share Data)

		June 30,
		2017		December 31,
		(Unaudited)		2016
Assets
Cash and due from banks	$	14,538		$	11,814
Interest-bearing deposits in other financial institutions		99,984			136,852
Federal funds sold and other short-term investments		186,538			118,077
Cash and cash equivalents		301,060			266,743
Securities available-for-sale, at fair value		431,979			390,552
Loans		671,683			664,866
Less: Allowance for loan losses		10,196			10,175
Loans, net		661,487			654,691
Premises and equipment, net		21,259			21,086
Investment in bank-owned life insurance		16,692			16,445
Payments in excess of funding		111,435			105,347
Goodwill		12,569			11,590
Other intangible assets, net		2,217			1,997
Other assets		34,584			36,388
Total assets	$	1,593,282		$	1,504,839
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing	$	201,942		$	214,656
Interest-bearing		403,097			407,305
Total deposits		605,039			621,961
Accounts and drafts payable		729,403			642,287
Other liabilities		37,482			32,556
Total liabilities		1,371,924			1,296,804
Shareholders’ Equity:
Preferred stock, par value $.50 per share; 2,000,000 shares authorized and no shares issued		—			—
Common stock, par value $.50 per share; 40,000,000 shares authorized and 11,931,147 shares issued at June 30, 2017 and December 31, 2016		5,966			5,966
Additional paid-in capital		128,478			128,455
Retained earnings		126,032			118,363
Common shares in treasury, at cost (727,346 shares at June 30, 2017 and 742,681 shares at December 31, 2016)		(29,922	)		(30,206	)
Accumulated other comprehensive loss		(9,196	)		(14,543	)
Total shareholders’ equity		221,358			208,035
Total liabilities and shareholders’ equity	$	1,593,282		$	1,504,839

See accompanying notes to unaudited consolidated financial statements.

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CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands except Per Share Data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Fee Revenue and Other Income:
Information services payment and processing revenue	$	23,282	$	20,880	$	45,571	$	40,425
Bank service fees		389		289		671		647
Gains on sales of securities		—		79		—		387
Other		129		209		329		503
Total fee revenue and other income		23,800		21,457		46,571		41,962
Interest Income:
Interest and fees on loans		7,104		7,316		14,057		14,447
Interest and dividends on securities:
Taxable		84		21		161		33
Exempt from federal income taxes		2,659		2,437		5,260		4,831
Interest on federal funds sold and other short-term investments		485		236		853		476
Total interest income		10,332		10,010		20,331		19,787
Interest Expense:
Interest on deposits		470		504		950		1,017
Net interest income		9,862		9,506		19,381		18,770
Provision for loan losses		—		—		—		(1,000	)
Net interest income after provision for loan losses		9,862		9,506		19,381		19,770
Total net revenue		33,662		30,963		65,952		61,732
Operating Expense:
Personnel		19,162		18,102		37,961		35,948
Occupancy		889		866		1,731		1,700
Equipment		1,200		1,110		2,504		2,165
Amortization of intangible assets		108		102		207		204
Other operating expense		3,542		2,879		6,816		5,958
Total operating expense		24,901		23,059		49,219		45,975
Income before income tax expense		8,761		7,904		16,733		15,757
Income tax expense		2,248		2,035		3,913		4,055
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Basic earnings per share	$	.58	$	.53	$	1.15	$	1.05
Diluted earnings per share		.58		.52		1.13		1.03

See accompanying notes to unaudited consolidated financial statements.

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CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in Thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Comprehensive Income:
Net income	$	6,513		$	5,869		$	12,820		$	11,702
Other comprehensive income:
Net unrealized gain on securities available-for-sale		5,832			4,538			8,345			8,212
Tax effect		(2,167	)		(1,686	)		(3,100	)		(3,051	)
Reclassification adjustments for gains included in net income		—			(79	)		—			(387	)
Tax effect		—			29			—			143
Foreign currency translation adjustments		94			(35	)		102			11
Total comprehensive income	$	10,272		$	8,636		$	18,167		$	16,630

See accompanying notes to unaudited consolidated financial statements.

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CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)

	Six Months Ended
	June 30,
	2017			2016
Cash Flows From Operating Activities:
Net income	$	12,820		$	11,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,471			4,613
Net gains on sales of securities		—			(387	)
Stock-based compensation expense		1,097			985
Provision for loan losses		—			(1,000	)
Decrease in income tax benefit		—			16
Increase in income tax liability		748			1,325
Increase in pension liability		2,310			2,010
Other operating activities, net		(978	)		(1,512	)
Net cash provided by operating activities		21,468			17,752
Cash Flows From Investing Activities:
Proceeds from sales of securities available-for-sale		—			21,491
Proceeds from maturities of securities available-for-sale		25,694			19,609
Purchase of securities available-for-sale		(62,279	)		(28,053	)
Net increase in loans		(6,796	)		(39,042	)
Increase in payments in excess of funding		(6,088	)		(11,674	)
Purchases of premises and equipment, net		(1,935	)		(2,631	)
Net cash used in investing activities		(51,404	)		(40,300	)
Cash Flows From Financing Activities:
Net (decrease) increase in noninterest-bearing demand deposits		(12,714	)		13,813
Net decrease in interest-bearing demand and savings deposits		(1,077	)		(27,575	)
Net decrease in time deposits		(3,131	)		(1,728	)
Net increase in accounts and drafts payable		87,116			73,729
Cash dividends paid		(5,151	)		(4,947	)
Purchase of common shares for treasury		—			(9,217	)
Other financing activities, net		(790	)		(566	)
Net cash provided by financing activities		64,253			43,509
Net increase in cash and cash equivalents		34,317			20,961
Cash and cash equivalents at beginning of period		266,743			253,172
Cash and cash equivalents at end of period	$	301,060		$	274,133
Supplemental information:
Cash paid for interest	$	956		$	1,009
Cash paid for income taxes		3,152			2,787

See accompanying notes to unaudited consolidated financial statements.

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CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer to the audited consolidated financial statements and related footnotes included in Cass Information System, Inc.’s (the “Company” or “Cass”) Annual Report on Form 10-K for the year ended December 31, 2016.

Note 2 – Intangible Assets

The Company accounts for intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Goodwill and Other Intangible Assets,” (“FASB ASC 350”), which requires that intangibles with indefinite useful lives be tested annually for impairment and those with finite useful lives be amortized over their useful lives.

In March 2017, the Company completed an acquisition and recorded intangible assets of $1,406,000. Those intangible assets were valued as $980,000 for goodwill, $355,000 for the customer list and $71,000 for non-compete agreements.

Details of the Company’s intangible assets are as follows:

	June 30, 2017				December 31, 2016
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
(In thousands)	Amount		Amortization		Amount		Amortization
Assets eligible for amortization:
Customer lists	$	4,288	$	(2,517)	$	3,933	$	(2,342)
Patents		72		(10)		72		(8)
Non-compete agreements		332		(273)		261		(261)
Software		234		(234)		234		(234)
Other		500		(175)		500		(158)
Unamortized intangible assets:
Goodwill1		12,796		(227)		11,817		(227)
Total intangible assets	$	18,222	$	(3,436)	$	16,817	$	(3,230)
1 Amortization through December 31, 2001 prior to adoption of FASB ASC 350.

The customer lists are amortized over seven and ten years; the patents over 18 years; the non-compete agreements over two and five years; software over three years; and other intangible assets over fifteen years. Amortization of intangible assets amounted to $207,000 and $204,000 for the six-month periods ended June 30, 2017 and 2016, respectively. Estimated annual amortization of intangibles is as follows: $427,000 in 2017, $442,000 in 2018, $412,000 in 2019, and $406,000 in each of 2020 and 2021.

Note 3 – Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the sum of the weighted-average number of common shares outstanding and the weighted-average number of potential common shares outstanding. There were no anti-dilutive shares in the three and six months ended June 30, 2017 and 2016. The calculations of basic and diluted earnings per share are as follows:

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands except share and per share data)	2017		2016		2017		2016
Basic
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Basic earnings per share	$	.58	$	.53	$	1.15	$	1.05
Diluted
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Effect of dilutive restricted stock and stock appreciation rights		168,241		153,459		167,460		153,379
Weighted-average common shares outstanding assuming dilution		11,321,501		11,288,018		11,313,456		11,337,437
Diluted earnings per share	$	.58	$	.52	$	1.13	$	1.03

Note 4 – Stock Repurchases

The Company maintains a treasury stock buyback program pursuant to which the Board of Directors has authorized the repurchase of up to 500,000 shares of the Company’s common stock. As restored by the Board of Directors on October 17, 2016, the program provides that the Company may repurchase up to an aggregate of 500,000 shares of common stock and has no expiration date. The Company repurchased 0 and 111,241 shares during the three-month periods and 0 and 187,123 shares for the six-month periods ended June 30, 2017 and 2016, respectively. As of June 30, 2017, 500,000 shares remained available for repurchase under the program. Repurchases may be made in the open market or through negotiated transactions from time to time depending on market conditions.

Note 5 – Industry Segment Information

The services provided by the Company are classified into two reportable segments: Information Services and Banking Services. Each of these segments provides distinct services that are marketed through different channels. They are managed separately due to their unique service, processing and capital requirements.

The Information Services segment provides transportation, energy, telecommunication, and environmental invoice processing and payment services to large corporations. The Banking Services segment provides banking services primarily to privately held businesses and churches.

The Company’s accounting policies for segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Management evaluates segment performance based on net income after allocations for corporate expenses and income taxes. Transactions between segments are accounted for at what management believes to be fair value.

Substantially all revenue originates from, and all long-lived assets are located within, the United States, and no revenue from any customer of any segment exceeds 10% of the Company’s consolidated revenue.

Assets represent actual assets owned by Information Services and Banking Services and there is no allocation methodology used. Segment interest from customers is the actual interest earned on the loans owned by Information Services and Banking Services, respectively.

-8-

Summarized information about the Company’s operations in each industry segment is as follows:

					Corporate,
	Information		Banking		Eliminations
(In thousands)	Services		Services		and Other			Total
Three Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	26,749	$	6,913	$	—		$	33,662
Intersegment income (expense)		3,049		383		(3,432	)		—
Net income		3,932		2,581		—			6,513
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Three Months Ended June 30, 2016
Fee revenue and other income
Income from customers	$	24,436	$	6,527	$	—		$	30,963
Intersegment income (expense)		2,815		403		(3,218	)		—
Net income		3,478		2,391		—			5,869
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184
Six Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	52,395	$	13,557	$	—		$	65,952
Intersegment income (expense)		6,013		744		(6,757	)		—
Net income		7,755		5,065		—			12,820
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Six Months Ended June 30, 2016
Fee revenue and other income:
Income from customers	$	47,994	$	13,738	$	—		$	61,732
Intersegment income (expense)		6,073		779		(6,852	)		—
Net income		6,425		5,277		—			11,702
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184

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Note 6 – Loans by Type

A summary of loan categories is as follows:

	June 30,		December 31,
(In thousands)	2017		2016
Commercial and industrial	$	225,627	$	214,767
Real estate
Commercial:
Mortgage		94,367		104,779
Construction		8,482		6,325
Church, church-related:
Mortgage		325,906		321,168
Construction		12,214		11,152
Industrial revenue bonds		5,007		6,639
Other		80		36
Total loans	$	671,683	$	664,866

The following table presents the aging of loans by loan categories at June 30, 2017 and December 31, 2016:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non-		Total
(In thousands)	Current		Days		Days		Over		accrual		Loans
June 30, 2017
Commercial and industrial	$	225,627	$	—	$	—	$	—	$	—	$	225,627
Real estate
Commercial:
Mortgage		94,148		—		—		—		219		94,367
Construction		8,482		—		—		—		—		8,482
Church, church-related:
Mortgage		325,906		—		—		—		—		325,906
Construction		12,214		—		—		—		—		12,214
Industrial revenue bonds		5,007		—		—		—		—		5,007
Other		80		—		—		—		—		80
Total	$	671,464	$	—	$	—	$	—	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	214,767	$	—	$	—	$	—	$	—	$	214,767
Real estate
Commercial:
Mortgage		104,534		—		—		—		245		104,779
Construction		6,325		—		—		—		—		6,325
Church, church-related:
Mortgage		321,168		—		—		—		—		321,168
Construction		11,152		—		—		—		—		11,152
Industrial revenue bonds		6,639		—		—		—		—		6,639
Other		24		12		—		—		—		36
Total	$	664,609	$	12	$	—	$	—	$	245	$	664,866

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The following table presents the credit exposure of the loan portfolio by internally credit grade as of June 30, 2017 and December 31, 2016:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring1		Monitoring2		Monitoring2		Total Loans
June 30, 2017
Commercial and industrial	$	223,968	$	1,659	$	—	$	225,627
Real estate
Commercial:
Mortgage		93,422		726		219		94,367
Construction		8,482		—		—		8,482
Church, church-related:
Mortgage		325,822		84		—		325,906
Construction		12,214		—		—		12,214
Industrial Revenue Bonds		5,007		—		—		5,007
Other		80		—		—		80
Total	$	668,995	$	2,469	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	213,024	$	1,743	$	—	$	214,767
Real estate
Commercial:
Mortgage		103,778		756		245		104,779
Construction		6,325		—		—		6,325
Church, church-related:
Mortgage		318,030		3,138		—		321,168
Construction		11,152		—		—		11,152
Industrial revenue bonds		6,639		—		—		6,639
Other		36		—		—		36
Total	$	658,984	$	5,637	$	245	$	664,866

1	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligations.
2	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest and troubled debt restructurings, both performing and nonperforming. Troubled debt restructuring involves the granting of a concession to a borrower experiencing financial difficulty resulting in the modification of terms of the loan, such as changes in payment schedule or interest rate. Management measures impairment in accordance with FASB ASC 310, “Allowance for Credit Losses.” At June 30, 2017 and December 31, 2016, impaired loans were evaluated using the expected cash flow method. There were no loans delinquent 90 days or more and still accruing interest at June 30, 2017 and December 31, 2016. There were no loans classified as troubled debt restructuring at June 30, 2017 and December 31, 2016.

There were no foreclosed loans recorded as other real estate owned as of June 30, 2017, and December 31, 2016.

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The following table presents the recorded investment and unpaid principal balance for impaired loans at June 30, 2017 and December 31, 2016:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
June 30, 2017
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		219		219		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	219	$	219	$	—
December 31, 2016
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		245		245		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	245	$	245	$	—

A summary of the activity in the allowance for loan losses from December 31, 2016 to June 30, 2017 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2016		Offs		Recoveries		Provision			2017
Commercial and industrial	$	3,261	$	—	$	21	$	144		$	3,426
Real estate
Commercial:
Mortgage		1,662		—		—		(164	)		1,498
Construction		47		—		—		16			63
Church, church-related:
Mortgage		4,027		—		—		61			4,088
Construction		85		—		—		8			93
Industrial Revenue Bonds		101		—		—		(25	)		76
Other		992		—		—		(40	)		952
Total	$	10,175	$	—	$	21	$	—		$	10,196

A summary of the activity in the allowance for loan losses from December 31, 2015 to June 30, 2016 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2015		Offs		Recoveries		Provision			2016
Commercial and industrial	$	3,083	$	—	$	37	$	497		$	3,617
Real estate
Commercial:
Mortgage		2,803		—		—		(1,113	)		1,690
Construction		9		—		—		96			105
Church, church-related:
Mortgage		4,082		—		—		34			4,116
Construction		217		—		—		(30	)		187
Industrial Revenue Bonds		320		—		—		(34	)		286
Other		1,121		—		—		(450	)		671
Total	$	11,635	$	—	$	37	$	(1,000	)	$	10,672

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Note 7 – Commitments and Contingencies

In the normal course of business, the Company is party to activities that contain credit, market and operational risks that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments and commitments under operating leases. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. The Company’s maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amounts of those instruments. At June 30, 2017 and December 31, 2016, no amounts have been accrued for any estimated losses for these instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commercial and standby letters of credit are conditional commitments issued by the Company or its subsidiaries to guarantee the performance of a customer to a third party. These off-balance sheet financial instruments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2017, the balance of unused loan commitments, standby and commercial letters of credit were $65,583,000, $13,977,000, and $2,759,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. Commitments to extend credit and letters of credit are subject to the same underwriting standards as those financial instruments included on the consolidated balance sheets. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of the credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but is generally accounts receivable, inventory, residential or income-producing commercial property or equipment. In the event of nonperformance, the Company or its subsidiaries may obtain and liquidate the collateral to recover amounts paid under guarantees on these financial instruments.

The following table summarizes contractual cash obligations of the Company related to operating lease commitments and time deposits at June 30, 2017:

	Amount of Commitment Expiration per Period
			Less than		1-3		3-5		Over 5
(In thousands)		Total	1 Year		Years		Years		Years
Operating lease commitments	$	5,589	$	1,448	$	2,036	$	1,656	$	449
Time deposits		52,653		47,759		2,319		2,575		—
Total	$	58,242	$	49,207	$	4,355	$	4,231	$	449

The Company and its subsidiaries are involved in various pending legal actions and proceedings in which claims for damages are asserted. Management, after discussion with legal counsel, believes the ultimate resolution of these legal actions and proceedings will not have a material effect upon the Company’s consolidated financial position or results of operations.

Note 8 – Stock-Based Compensation

The Amended and Restated Omnibus Stock and Performance Compensation Plan (the “Omnibus Plan”) permits the issuance of up to 1,500,000 shares of the Company’s common stock in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units and performance awards. The Company may issue shares out of treasury stock for these awards. During the six months ended June 30, 2017, 22,545 restricted shares, 23,038 performance-based restricted shares, and 0 SARs were granted under the Omnibus Plan.

Restricted Stock

Restricted shares granted prior to April 16, 2013 were amortized to expense over a three-year vesting period. Beginning on April 16, 2013, restricted shares granted to Company employees are amortized to expense over a three-year vesting period whereas restricted shares granted to members of the Board of Directors are amortized to expense over a one-year service period, with the exception of those shares granted in lieu of cash payments for retainer fees which are expensed in the period earned. As of June 30, 2017, the total unrecognized compensation expense related to non-vested restricted shares was $2,217,000, and the related weighted-average period over which it is expected to be recognized is approximately 1.0 year.

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Following is a summary of the activity of the restricted stock:

	Six Months Ended
	June 30, 2017
	Shares		Fair Value
Balance at December 31, 2016	73,840		$	51.03
Granted	22,545		$	65.42
Vested	(26,545	)	$	52.34
Balance at June 30, 2017	69,840		$	55.18

Performance-Based Restricted Stock

On February 2, 2017, the Company granted three-year performance based restricted stock (“PBRS”) awards which are contingent upon the achievement of pre-established financial goals over the period from January 1, 2017 through December 31, 2019. The PBRS awards cliff vest on the three-year anniversary of their grant date at levels ranging from 0% to 150% of the target opportunity based on the actual achievement of financial goals for the three-year performance period. The target number of PBRS shares granted was 23,038 with a grant date fair value of $65.12 per share. The 2017 expense related to this grant is currently estimated to be $458,000 and is based on the grant date fair value and the achievement of 100% of the target financial goals. The estimated expense for 2017 and each future period through the vesting date is subject to prospective adjustment based upon changes in the expected achievement of the financial goals.

SARs

SARs vest over a three-year period, with one-third of the shares vesting and becoming exercisable each year on the anniversary date of the grant, and they expire 10 years from the original grant date. As of June 30, 2017, all compensation expense has been recognized and all granted SARs are vested. Following is a summary of the activity of the Company’s SARs program for the six-month period ended June 30, 2017:

			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
			Exercise		Contractual	Value
	Shares		Price		Term Years	(In thousands)
Outstanding at December 31, 2016	237,468		$	38.22	5.73	$	3,201
Exercised	(15,547	)		40.60
Outstanding at June 30, 2017	221,921			38.05	4.71		6,122
Exercisable at June 30, 2017	221,921		$	38.05	4.71	$	6,122

Note 9 – Defined Pension Plans

The Company has a noncontributory defined-benefit pension plan, which covers most of its employees. Effective December 31, 2016, the Plan was closed to all new participants. The Company accrues and makes contributions designed to fund normal service costs on a current basis using the projected unit credit with service proration method to amortize prior service costs arising from improvements in pension benefits and qualifying service prior to the establishment of the plan over a period of approximately 30 years. Disclosure information is based on a measurement date of December 31 of the corresponding year. The following table represents the components of the net periodic pension costs:

	Estimated			Actual
(In thousands)	2017			2016
Service cost – benefits earned during the year	$	3,805		$	3,559
Interest cost on projected benefit obligations		3,587			3,505
Expected return on plan assets		(4,680	)		(4,734	)
Net amortization and deferral		1,328			1,259
Net periodic pension cost	$	4,040		$	3,589

Pension costs recorded to expense were $1,017,000 and $882,000 for the three-month periods ended June 30, 2017 and 2016, respectively and $2,037,000 and $1,759,000 for the six-month periods ended June 30, 2017 and 2016, respectively. Pension costs increased in 2017 due to a decrease in the discount rate and expected return on plan assets assumptions and the use of the updated mortality tables. The Company made no contribution to the plan during the six-month period ended June 30, 2017 and is evaluating the amount of additional contributions, if any, in the remainder of 2017.

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In addition to the above funded benefit plan, the Company has an unfunded supplemental executive retirement plan which covers key executives of the Company. This is a noncontributory plan in which the Company and its subsidiaries make accruals designed to fund normal service costs on a current basis using the same method and criteria as its defined benefit plan. The following table represents the components of the net periodic pension costs for 2016 and an estimate for 2017:

	Estimated		Actual
(In thousands)	2017		2016
Service cost – benefits earned during the year	$	143	$	133
Interest cost on projected benefit obligation		361		367
Net amortization		323		295
Net periodic pension cost	$	827	$	795

Pension costs recorded to expense were $209,000 and $202,000 for the three-month periods ended June 30, 2017 and 2016, respectively, and were $418,000 and $403,000 for the six-month periods ended June 30, 2017 and 2016, respectively.

Note 10 – Income Taxes

As of June 30, 2017, the Company’s unrecognized tax benefits were approximately $1,835,000, of which $1,416,000 would, if recognized, affect the Company’s effective tax rate. As of December 31, 2016, the Company’s unrecognized tax benefits were approximately $1,623,000, of which $1,225,000 would, if recognized, affect the Company’s effective tax rate. During the next 12 months, the Company may realize a reduction of its unrecognized tax benefits of approximately $253,000 due to the lapse of federal and state statutes of limitations.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company had $142,000 and $108,000 of gross interest accrued as of June 30, 2017 and December 31, 2016, respectively. There were no penalties for unrecognized tax benefits accrued at June 30, 2017 and December 31, 2016.

The Company is subject to income tax in the U.S. federal jurisdiction and numerous state jurisdictions. U.S. federal income tax returns for tax years 2013 through 2015 remain subject to examination by the Internal Revenue Service. In addition, the Company is subject to state tax examinations for the tax years 2012 through 2015.

On January 1, 2017, the Company adopted ASU No. 2016-09 – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The adoption of this new accounting pronouncement resulted in a $35,000 and $278,000 reduction in income tax expense for the three-month and six-month periods ending June 30, 2017, respectively.

Note 11 – Investment in Securities

Investment securities available-for-sale are recorded at fair value on a recurring basis. The Company’s investment securities available-for-sale are measured at fair value using Level 2 valuations. The market evaluation utilizes several sources which include “observable inputs” rather than “significant unobservable inputs” and therefore fall into the Level 2 category. The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investment securities are summarized as follows:

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	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	403,935	$	11,256	$	1,076	$	414,115
U.S. government agencies		12,446		—		328		12,118
Certificates of deposit		5,746		—		—		5,746
Total	$	422,127	$	11,256	$	1,404	$	431,979
	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	368,223	$	5,239	$	3,328	$	370,134
U.S. government agencies		13,075		—		403		12,672
Certificates of deposit		7,746		—		—		7,746
Total	$	389,044	$	5,239	$	3,731	$	390,552

The fair values of securities with unrealized losses are as follows:

	June 30, 2017
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	45,082	$	1,076	$	—	$	—	$	45,082	$	1,076
U.S. government agencies		12,118		328		—		—		12,118		328
Certificates of deposit		—		—		—		—		—		—
Total	$	57,200	$	1,404	$	—	$	—	$	57,200	$	1,404
	December 31, 2016
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	140,384	$	3,328	$	—	$	—	$	140,384	$	3,328
U.S. government agencies		12,672		403		—		—		12,672		403
Certificates of deposit		—		—		—		—		—		—
Total	$	153,056	$	3,731	$	—	$	—	$	153,056	$	3,731

There were 35 securities, or 11% of the total (none greater than 12 months) in an unrealized loss position as of June 30, 2017. There were 108 securities, 31% of the total (none greater than 12 months), in an unrealized loss position as of December 31, 2016. All unrealized losses were reviewed to determine whether the losses were other than temporary. Management believes that all unrealized losses are temporary since they were market driven, and it is more likely than not that the Company will not be required to sell prior to recovery of the amortized basis.

The amortized cost and fair value of investment securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

	June 30, 2017
(In thousands)	Amortized Cost		Fair Value
Due in 1 year or less	$	21,393	$	21,574
Due after 1 year through 5 years		58,167		59,364
Due after 5 years through 10 years		207,799		215,950
Due after 10 years		134,768		135,091
Total	$	422,127	$	431,979

Proceeds from sales of investment securities classified as available-for-sale were $0 and $2,452,000 for the three months ended June 30, 2017 and 2016, respectively, and were $0 and $21,491,000 for the six months ended June 30, 2017 and 2016, respectively. Gross realized gains were $0 and $79,000 for the three months ended June 30, 2017 and 2016, respectively, and were $0 and $387,000 for the six months ended June 30, 2017 and 2016, respectively. There was one security totaling $3,750,000 pledged to secure public deposits and for other purposes at June 30, 2017.

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Note 12 – Fair Value of Financial Instruments

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments:

	June 30, 2017				December 31, 2016
	Carrying				Carrying
(In thousands)	Amount		Fair Value		Amount		Fair Value
Balance sheet assets:
Cash and cash equivalents	$	301,060	$	301,060	$	266,743	$	266,743
Investment securities		431,979		431,979		390,552		390,552
Loans, net		661,487		658,280		654,691		652,028
Accrued interest receivable		7,037		7,037		6,543		6,543
Total	$	1,401,563	$	1,398,356	$	1,318,529	$	1,315,866
Balance sheet liabilities:
Deposits	$	605,039	$	605,382	$	621,961	$	622,173
Accounts and drafts payable		729,403		729,403		642,287		642,287
Accrued interest payable		41		41		46		46
Total	$	1,334,483	$	1,334,826	$	1,264,294	$	1,264,506

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents – The carrying amount approximates fair value.

Investment in Securities – The fair value is measured on a recurring basis using Level 2 valuations. Refer to Note 11, “Investment in Securities,” for fair value and unrealized gains and losses by investment type.

Loans – The fair value is estimated using present values of future cash flows discounted at risk-adjusted interest rates for each loan category designated by management and is therefore a Level 3 valuation. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses result in a fair valuation.

Impaired loans are valued using the expected cash flow method or fair value of the collateral which is based upon an observable market price or a current appraised value and therefore, the fair value is a nonrecurring Level 3 valuation.

Accrued Interest Receivable – The carrying amount approximates fair value.

Deposits – The fair value of demand deposits, savings deposits and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities and therefore, is a Level 2 valuation. The fair value estimates above do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market or the benefit derived from the customer relationship inherent in existing deposits.

Accounts and Drafts Payable – The carrying amount approximates fair value.

Accrued Interest – The carrying amount approximates fair value.

There were no transfers between Levels 1 and 2 of the fair value hierarchy for the six months ended June 30, 2017 and 2016. No financial instruments are measured using Level 3 inputs for the six months ended June 30, 2017 and 2016.

Note 13 – Subsequent Events

In accordance with FASB ASC 855, “Subsequent Events,” the Company has evaluated subsequent events after the consolidated balance sheet date of June 30, 2017, and there were no events identified that would require additional disclosures to prevent the Company’s unaudited consolidated financial statements from being misleading.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Cass provides payment and information processing services to large manufacturing, distribution and retail enterprises from its offices/locations in St. Louis, Missouri, Columbus, Ohio, Boston, Massachusetts, Greenville, South Carolina, Wellington, Kansas, Jacksonville, Florida, and Breda, Netherlands. The Company’s services include freight invoice rating, payment processing, auditing, and the generation of accounting and transportation information. Cass also processes and pays energy invoices, which include electricity and gas as well as environmental and telecommunications expense and is a provider of telecom expense management solutions. Cass extracts, stores, and presents information from transportation, energy, telecommunication and environmental invoices, assisting its customers’ transportation, energy, environmental and information technology managers in making decisions that will enable them to improve operating performance. The Company receives data from multiple sources, electronic and otherwise, and processes the data to accomplish the specific operating requirements of its customers. It then provides the data in a central repository for access and archiving. The data is finally transformed into information through the Company’s databases that allow client interaction as required and provide Internet-based tools for analytical processing. The Company also, through Cass Commercial Bank, its St. Louis, Missouri-based bank subsidiary provides banking services in the St. Louis metropolitan, Orange County, California, Colorado Springs, Colorado, and other selected cities in the United States. In addition to supporting the Company’s payment operations, the Bank provides banking services to its target markets, which include privately-owned businesses and churches and church-related ministries.

The specific payment and information processing services provided to each customer are developed individually to meet each customer’s requirements, which can vary greatly. In addition, the degree of automation such as electronic data interchange, imaging, work flow, and web-based solutions varies greatly among customers and industries. These factors combine so that pricing varies greatly among the customer base. In general, however, Cass is compensated for its processing services through service fees and investment of account balances generated during the payment process. The amount, type, and calculation of service fees vary greatly by service offering, but generally follow the volume of transactions processed. Interest income from the balances generated during the payment processing cycle is affected by the amount of time Cass holds the funds prior to payment and the dollar volume processed. Both the number of transactions processed and the dollar volume processed are therefore key metrics followed by management. Other factors will also influence revenue and profitability, such as changes in the general level of interest rates, which have a significant effect on net interest income. The funds generated by these processing activities are invested in overnight investments, investment grade securities, and loans generated by the Bank. The Bank earns most of its revenue from net interest income, or the difference between the interest earned on its loans and investments and the interest paid on its deposits and other borrowings. The Bank also assesses fees on other services such as cash management services.

Industry-wide factors that impact the Company include the willingness of large corporations to outsource key business functions such as freight, energy, telecommunication and environmental payment and audit. The benefits that can be achieved by outsourcing transaction processing, and the management information generated by Cass’ systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs, deregulation of energy costs, and consolidation of telecommunication providers. Economic factors that impact the Company include the general level of economic activity that can affect the volume and size of invoices processed, the ability to hire and retain qualified staff, and the growth and quality of the loan portfolio. The general level of interest rates also has a significant effect on the revenue of the Company. As discussed in greater detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in the Company’s 2016 Annual Report on Form 10-K, a decline in the general level of interest rates can have a negative impact on net interest income and conversely, a rise in the general level of interest rates can have a positive impact on net interest income.

Currently, management views Cass’ major opportunity as the continued expansion of its payment and information processing service offerings and customer base. Management intends to accomplish this by maintaining the Company’s leadership position in applied technology, which when combined with the security and processing controls of the Bank, makes Cass unique in the industry.

Critical Accounting Policies

The Company has prepared the consolidated financial statements in this report in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). In preparing the consolidated financial statements, management makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. These estimates have been generally accurate in the past, have been consistent and have not required any material changes. There can be no assurances that actual results will not differ from those estimates. Certain accounting policies that require significant management estimates and are deemed critical to the Company’s results of operations or financial position have been discussed with the Audit Committee of the Board of Directors and are described below.

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Allowance for Loan Losses. The Company performs periodic and systematic detailed reviews of its loan portfolio to assess overall collectability. The level of the allowance for loan losses reflects management’s estimate of the collectability of the loan portfolio. Although these estimates are based on established methodologies for determining allowance requirements, actual results can differ significantly from estimated results. These policies affect both segments of the Company. The impact and associated risks related to these policies on the Company’s business operations are discussed in the “Provision and Allowance for Loan Losses” section of this report. The Company’s estimates have been materially accurate in the past, and accordingly, the Company expects to continue to utilize the present processes.

Income Taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns. Judgment is required in addressing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns such as the realization of deferred tax assets or changes in tax laws or interpretations thereof. In addition, the Company is subject to the continuous examination of its income tax returns by the Internal Revenue Service and other taxing authorities. In accordance with FASB ASC 740, “Income Taxes,” the Company has unrecognized tax benefits related to tax positions taken or expected to be taken. See Note 10 to the unaudited consolidated financial statements contained herein.

Pension Plans. The amounts recognized in the unaudited consolidated financial statements related to pension plans are determined from actuarial valuations. Inherent in these valuations are assumptions, including expected return on plan assets, discount rates at which the liabilities could be settled at December 31, 2016, rate of increase in future compensation levels and mortality rates. These assumptions are updated annually and are disclosed in Item 8, Note 10 to the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Pursuant to FASB ASC 715, “Compensation – Retirement Benefits,” the Company has recognized the funded status of its defined benefit postretirement plan in its balance sheet and has recognized changes in that funded status through comprehensive income. The funded status is measured as the difference between the fair value of the plan assets and the projected benefit obligation as of the date of its fiscal year-end.

Results of Operations

The following paragraphs more fully discuss the results of operations and changes in financial condition for the three-month period ended June 30, 2017 (“Second Quarter of 2017”) compared to the three-month period ended June 30, 2016 (“Second Quarter of 2016”) and the six-month period ended June 30, 2017 (“First Half of 2017”) compared to the six-month period ended June 30, 2016 (“First Half of 2016”). The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes and with the statistical information and financial data appearing in this report, as well as in the Company’s 2016 Annual Report on Form 10-K. Results of operations for the Second Quarter and First Half of 2017 are not necessarily indicative of the results to be attained for any other period.

Net Income

The following table summarizes the Company’s operating results:

	Second Quarter of							First Half of
							%							%
(In thousands except per share data)	2017			2016			Change	2017			2016			Change
Net income	$	6,513		$	5,869		11.0	$	12,820		$	11,702		9.6
Diluted earnings per share	$	.58		$	.52		11.5	$	1.13		$	1.03		9.7
Return on average assets		1.70	%		1.59	%	—		1.70	%		1.60	%	—
Return on average equity		12.13	%		11.44	%	—		12.24	%		11.41	%	—

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Fee Revenue and Other Income

The Company’s fee revenue is derived mainly from transportation and facility payment and processing fees. As the Company provides its processing and payment services, it is compensated by service fees which are typically calculated on a per-item basis and by the accounts and drafts payable balances generated in the payment process which can be used to generate interest income. Processing volumes, fee revenue, and other income were as follows:

	Second Quarter of						First Half of
					%						%
(In thousands)	2017		2016		Change		2017		2016		Change
Transportation invoice volume		9,248		8,776	5.4	%		17,623		16,888	4.4	%
Transportation invoice dollar
volume	$	6,231,378	$	5,800,675	7.4	%	$	12,108,221	$	11,243,007	7.7	%
Expense management
transaction volume*		6,729		5,667	18.7	%		13,542		10,955	23.6	%
Expense management dollar
volume*	$	3,079,988	$	2,775,639	11.0	%	$	6,255,901	$	5,581,132	12.1	%
Payment and processing revenue	$	23,282	$	20,880	11.5	%	$	45,571	$	40,425	12.7	%
*Includes energy, telecom and waste

Second Quarter of 2017 compared to Second Quarter of 2016:

In the transportation sector, a growing roster of clients and an increase in base activity boosted invoice volume by 5.4% and dollar volume by 7.4%. The expense management group had growth of 18.7% in transaction volume. New customer wins, combined with increased volume from current accounts, fueled the increase. Expense management dollar volume was also up 11.0% for the period.

There were no gains on sales of securities in the Second Quarter of 2017, compared to $79,000 in the Second Quarter of 2016.

First Half of 2017 compared to First Half of 2016:

Transportation invoice and dollar volumes, as well as expense management transaction and dollar volumes, increased for the same reasons as the Second Quarter.

There were no gains on sales of securities in the First Half of 2017, compared to $387,000 in the First Half of 2016.

Net Interest Income

Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities. Net interest income is a significant source of the Company’s revenues. The following table summarizes the changes in tax-equivalent net interest income and related factors:

	Second Quarter of								First Half of
							%								%
(In thousands)	2017			2016			Change		2017			2016			Change
Average earnings assets	$	1,332,829		$	1,289,339		3.4	%	$	1,324,478		$	1,275,824		3.8	%
Average interest-bearing
liabilities		380,197			426,287		(10.8	)%		386,372			425,834		(9.3	)%
Net interest income*		11,312			10,896		3.8	%		22,252			21,528		3.4	%
Net interest margin*		3.40	%		3.40	%				3.39	%		3.39	%
Yield on earning assets*		3.55	%		3.56	%				3.53	%		3.55	%
Rate on interest-bearing
liabilities		.50	%		.48	%				.50	%		.48	%
*Presented on a tax-equivalent basis assuming a tax rate of 35%.

Second Quarter of 2017 compared to Second Quarter of 2016:

Second Quarter of 2017 average earning assets increased $43,490,000, or 3.4%, compared to the same period in the prior year.

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Average investment securities increased $73,864,000, or 21.4% and average federal funds sold and other short-term investments increased $32,348,000, or 27.1% for the Second Quarter of 2017 as compared to the Second Quarter of 2016. These increases were partially offset by interest-bearing cash deposits decreasing $36,535,000, or 29.5% and loans decreasing $24,708,000, or 3.6%. This net increase was the result of additional balances from funding sources.

Average accounts and drafts payable balances for the Second Quarter of 2017 increased $62,075,000, or 9.7%, as compared to the Second Quarter of 2016. This was partially offset by a decrease in total average interest-bearing deposits for the Second Quarter of 2017 of $46,090,000, or 10.8%, compared to the Second Quarter of 2016. Average interest-bearing demand deposits decreased $35,816,000, or 10.3% and time deposits decreased $5,911,000, or 9.7% for the Second Quarter of 2017.

Net interest margin and yield on earning assets remained stable in the Second Quarter of 2017 compared to the Second Quarter of 2016.

First Half of 2017 compared to First Half of 2016:

First Half of 2017 average earning assets increased $48,654,000, or 3.8%, compared to the same period in the prior year.

Average investment securities increased $69,107,000, or 20.1% and average federal funds sold and other short-term investments increased $29,578,000, or 25.8% for the First Half of 2017 as compared to the First Half of 2016. These increases were partially offset by interest-bearing cash deposits decreasing $32,858,000, or 25.2% and loans decreasing $16,412,000, or 2.4%. This net increase was the result of additional balances from funding sources.

Average accounts and drafts payable balances for the First Half of 2017 increased $59,421,000, or 9.5% as compared to the First Half of 2016. This was partially offset by a decrease in total average interest-bearing deposits for the First Half of 2017 of $39,462,000, or 9.3% compared to the First Half of 2016. For the First Half of 2017, average interest-bearing demand deposits decreased $34,846,000, or 10.1% and time deposits decreased $5,628,000, or 9.2%.

Net interest margin and yield on earning assets remained relatively stable in the First Half of 2017 compared to the First Half of 2016.

For more information on the changes in net interest income, please refer to the tables that follow.

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rate and Interest Differential

The following tables show the condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense on each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported.

-21-

	Second Quarter of 2017							Second Quarter of 2016
				Interest							Interest
	Average			Income/		Yield/		Average			Income/		Yield/
(In thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets1
Earning assets
Loans2, 3:
Taxable	$	662,763		$	7,071	4.28	%	$	674,227		$	7,173	4.28	%
Tax-exempt4		5,277			53	4.03			18,521			221	4.80
Investment securities5:
Taxable		13,819			72	2.09			1,196			10	3.36
Tax-exempt4		405,489			4,090	4.05			344,248			3,748	4.38
Certificates of deposit		6,139			12	.78			7,618			12	.63
Interest-bearing deposits in other financial institutions		87,510			205	.94			124,045			154	.50
Federal funds sold and other short-term investments		151,832			279	.74			119,484			82	.28
Total earning assets		1,332,829			11,782	3.55			1,289,339			11,400	3.56
Non-earning assets
Cash and due from banks		12,443							11,481
Premises and equipment, net		21,257							20,496
Bank-owned life insurance		16,615							16,110
Goodwill and other intangibles		14,518							13,851
Other assets		145,173							147,701
Allowance for loan losses		(10,193	)						(10,649	)
Total assets	$	1,532,642						$	1,488,329
Liabilities and Shareholders’ Equity1
Interest-bearing liabilities
Interest-bearing demand deposits	$	311,782		$	331	.43	%	$	347,598		$	345	.40	%
Savings deposits		13,271			15	.45			17,634			21	.48
Time deposits >= $100		23,508			66	1.13			21,676			66	1.22
Other time deposits		31,636			58	.74			39,379			72	.74
Total interest-bearing deposits		380,197			470	.50			426,287			504	.48
Non-interest bearing liabilities
Demand deposits		199,508							187,668
Accounts and drafts payable		703,088							641,013
Other liabilities		34,466							27,069
Total liabilities		1,317,259							1,282,037
Shareholders’ equity		215,383							206,292
Total liabilities and shareholders’ equity	$	1,532,642						$	1,488,329
Net interest income				$	11,312						$	10,896
Net interest margin						3.40	%						3.40	%
Interest spread						3.05							3.08

1.	Balances shown are daily averages.
2.	For purposes of these computations, nonaccrual loans are included in the average loan amounts outstanding. Interest on nonaccrual loans is recorded when received as discussed further in Note 1 to the Company’s 2016 consolidated financial statements, filed with the Company’s 2016 Annual Report on Form 10-K.
3.	Interest income on loans includes net loan fees of $91,000 and $93,000 for the Second Quarter of 2017 and 2016, respectively.
4.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustment was approximately $1,450,000 and $1,390,000 for the Second Quarter of 2017 and 2016, respectively.
5.	For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments.

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	First Half of 2017							First Half of 2016
				Interest							Interest
	Average			Income/		Yield/		Average			Income/		Yield/
(In thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets1
Earning assets
Loans2, 3:
Taxable	$	656,615		$	13,986	4.30	%	$	659,782		$	14,157	4.31	%
Tax-exempt4		5,684			111	3.94			18,929			447	4.75
Investment securities5:
Taxable		13,975			138	1.99			1,193			10	1.69
Tax-exempt4		399,755			8,092	4.08			343,430			7,432	4.35
Certificates of deposit		6,504			23	.71			7,265			23	.64
Interest-bearing deposits in other financial institutions		97,682			403	.83			130,540			323	.50
Federal funds sold and other short-term investments		144,263			449	.63			114,685			153	.27
Total earning assets		1,324,478			23,202	3.53			1,275,824			22,545	3.55
Non-earning assets
Cash and due from banks		12,741							11,523
Premises and equipment, net		21,210							20,167
Bank-owned life insurance		16,553							16,045
Goodwill and other intangibles		14,239							13,902
Other assets		141,453							141,804
Allowance for loan losses		(10,186	)						(11,137	)
Total assets	$	1,520,488						$	1,468,128
Liabilities and Shareholders’ Equity1
Interest-bearing liabilities
Interest-bearing demand deposits	$	311,480		$	657	.43	%	$	346,326		$	695	.40	%
Savings deposits		19,302			45	.47			18,290			44	.48
Time deposits >= $100		23,112			127	1.11			22,520			133	1.19
Other time deposits		32,478			121	.75			38,698			145	.75
Total interest-bearing deposits		386,372			950	.50			425,834			1,017	.48
Non-interest bearing liabilities
Demand deposits		203,451							184,129
Accounts and drafts payable		685,929							626,508
Other liabilities		33,550							25,468
Total liabilities		1,309,302							1,261,939
Shareholders’ equity		211,186							206,189
Total liabilities and shareholders’ equity	$	1,520,488						$	1,468,128
Net interest income				$	22,252						$	21,528
Net interest margin						3.39	%						3.39	%
Interest spread						3.03							3.07

1.	Balances shown are daily averages.
2.	For purposes of these computations, nonaccrual loans are included in the average loan amounts outstanding. Interest on nonaccrual loans is recorded when received as discussed further in Note 1 to the Company’s 2016 consolidated financial statements, filed with the Company’s 2016 Annual Report on Form 10-K.
3.	Interest income on loans includes net loan fees of $243,000 and $235,000 for the First Half of 2017 and 2016, respectively.
4.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustment was approximately $2,871,000 and $2,758,000 for the First Half of 2017 and 2016, respectively.
5.	For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments.

-23-

Analysis of Net Interest Income Changes

The following tables present the changes in interest income and expense between periods due to changes in volume and interest rates. That portion of the change in interest attributable to the combined rate/volume variance has been allocated to rate and volume changes in proportion to the absolute dollar amounts of the change in each.

	Second Quarter of 2017 Over
	Second Quarter of 2016
(In thousands)	Volume			Rate			Total
Increase (decrease) in interest income:
Loans1, 2:
Taxable	$	(103	)	$	1		$	(102	)
Tax-exempt3		(137	)		(31	)		(168	)
Investment securities:
Taxable		67			(5	)		62
Tax-exempt3		640			(298	)		342
Certificates of deposit		(3	)		3			—
Interest-bearing deposits in other financial institutions		(55	)		106			51
Federal funds sold and other short-term investments		27			170			197
Total interest income		436			(54	)		382
Interest expense on:
Interest-bearing demand deposits		(37	)		23			(14	)
Savings deposits		(5	)		(1	)		(6	)
Time deposits >=$100		5			(5	)		—
Other time deposits		(14	)		—			(14	)
Total interest expense		(51	)		17			(34	)
Net interest income	$	487		$	(71	)	$	416

1.	Average balances include nonaccrual loans.
2.	Interest income includes net loan fees.
3.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%.

	First Half of 2017 Over
	First Half of 2016
(In thousands)	Volume			Rate			Total
Increase (decrease) in interest income:
Loans1, 2:
Taxable	$	(88	)	$	(83	)	$	(171	)
Tax-exempt3		(270	)		(66	)		(336	)
Investment securities:
Taxable		126			2			128
Tax-exempt3		1,146			(486	)		660
Certificates of deposit		(3	)		3			—
Interest-bearing deposits in other financial institutions		(96	)		176			80
Federal funds sold and other short-term investments		48			248			296
Total interest income		863			(206	)		657
Interest expense on:
Interest-bearing demand deposits		(73	)		35			(38	)
Savings deposits		2			(1	)		1
Time deposits >=$100		3			(9	)		(6	)
Other time deposits		(24	)		—			(24	)
Total interest expense		(92	)		25			(67	)
Net interest income	$	955		$	(231	)	$	724

1.	Average balances include nonaccrual loans.
2.	Interest income includes net loan fees.
3.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%.

Provision and Allowance for Loan Losses (“ALLL”)

A significant determinant of the Company’s operating results can be the provision for loan losses. There was no provision for loan losses during the Second Quarter of 2017 or the Second Quarter of 2016. There was no loan loss provision recorded in the First Half of 2017 and a negative loan loss provision of $1,000,000 was recorded during the First Half of 2016. As discussed below, the Company continually analyzes the outstanding loan portfolio based on the performance, financial condition and collateralization of the credits. Net loan recoveries were $5,000 and  $35,000 during the Second Quarter of 2017 and the Second Quarter of 2016, respectively. Net loan recoveries were $21,000 in the First Half of 2017 and $37,000 during the First Half of 2016.

-24-

The ALLL at June 30, 2017 was $10,196,000 and at December 31, 2016 was $10,175,000. The ratio of ALLL to total loans outstanding was 1.52% and 1.53% at June 30, 2017 and December 31, 2016, respectively. Nonperforming loans were $219,000, or .03%, of total loans at June 30, 2017 compared to $245,000, or .04%, of total loans at December 31, 2016. This consists of one nonaccrual loan, which is also considered impaired, at June 30, 2017. Total nonaccrual loans decreased $26,000 from December 31, 2016 to June 30, 2017.

The ALLL has been established and is maintained to absorb reasonably estimated and probable losses in the loan portfolio. An ongoing assessment is performed to determine if the balance is adequate. Charges or credits are made to expense to cover any deficiency or reduce any excess, as required. The current methodology consists of two components: 1) estimated credit losses on individually evaluated loans that are determined to be impaired in accordance with FASB ASC 310 “Allowance for Credit Losses,” and 2) estimated credit losses inherent in the remainder of the loan portfolio in accordance with FASB ASC 450, “Contingencies.” Estimated credit losses is an estimate of the current amount of loans that is probable the Company will be unable to collect according to the original terms.

For loans that are individually evaluated, the Company uses two impairment measurement methods: 1) the present value of expected future cash flows and 2) collateral value. For the remainder of the portfolio, the Company groups loans with similar risk characteristics into eight segments and applies historical loss rates to each segment based on a five fiscal-year look-back period. In addition, qualitative factors including credit concentration risk, national and local economic conditions, nature and volume of loan portfolio, legal and regulatory factors, downturns in specific industries including losses in collateral value, trends in credit quality at the Company and in the banking industry and trends in risk-rating agencies are also considered.

The Company also utilizes ratio analysis to evaluate the overall reasonableness of the ALLL compared to its peers and required levels of regulatory capital. Federal and state agencies review the Company’s methodology for maintaining the ALLL. These agencies may require the Company to adjust the ALLL based on their judgments and interpretations about information available to them at the time of their examinations.

Summary of Asset Quality

The following table presents information on the Company’s provision for loan losses and analysis of the ALLL:

	Second Quarter of						First Half of
(In thousands)	2017			2016			2017			2016
Allowance at beginning of period	$	10,191		$	10,637		$	10,175		$	11,635
Provision charged to expense		—			—			—			(1,000	)
Loans charged off		—			—			—			—
Recoveries on loans previously charged off		5			35			21			37
Net recoveries		5			35			21			37
Allowance at end of period	$	10,196		$	10,672		$	10,196		$	10,672
Loans outstanding:
Average	$	668,040		$	692,748		$	662,299		$	678,711
June 30		671,683			698,134			671,683			698,134
Ratio of ALLL to loans outstanding:
Average		1.53	%		1.54	%		1.54	%		1.57	%
June 30		1.52	%		1.53	%		1.52	%		1.53	%
Impaired loans:
Nonaccrual loans	$	219		$	362		$	219		$	362
Loans past due 90 days or more		—			—			—			—
Troubled debt restructurings		—			—			—			—
Total impaired loans	$	219		$	362		$	219		$	362
Foreclosed assets	$	—		$	—		$	—		$	—
Impaired loans as percentage of average loans		.03	%		.05	%		.03	%		.05	%

The Bank had no property carried as other real estate owned as of June 30, 2017 or December 31, 2016.

-25-

Operating Expenses

Total operating expenses for the Second Quarter of 2017 were up 8.0%, or $1,842,000, compared to the Second Quarter of 2016 and were up $3,244,000 for the First Half of 2017 compared to the First Half of 2016.

Personnel expense for the Second Quarter of 2017 increased $1,060,000 compared to the Second Quarter of 2016 and increased $2,013,000 to $37,961,000 for the First Half of 2017 compared to the First Half of 2016 due to strategic investment in staff and technology to win and support new business, annual salary merit increases, and increased retirement plan costs.

Outside service expense for the Second Quarter of 2017 increased $492,000, or 35.6%, compared to the Second Quarter of 2016 and $1,047,000, or 42.4%, for the First Half of 2017 compared to the First Half of 2016. This increase was due to new strategic partnerships and professional costs associated with an acquisition.

Equipment expense for the Second Quarter of 2017 increased $90,000, or 8.1%, compared to the Second Quarter of 2016 and $339,000, or 15.7%, for the First Half of 2017 from the First Half of 2016. This increase was the result of the continued strategic investment in technology.

Income tax expense for the Second Quarter of 2017 increased $213,000 compared to the Second Quarter of 2016 and decreased $142,000 for the First Half of 2017 compared to the First Half of 2016. The effective tax rate was 25.7% for both the Second Quarters of 2017 and 2016 and was 23.4% and 25.7% for the First Halves of 2017 and 2016, respectively. The decrease in the First Half 2017 tax was the result of the adoption of ASU No. 2016-09 – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting along with credits for the continued strategic investment in technology.

Financial Condition

Total assets at June 30, 2017 were $1,593,282,000, an increase of $88,443,000, or 5.9%, from December 31, 2016. The most significant changes in asset balances during this period were an increase of $41,427,000 in investment securities and an increase of $34,317,000 in cash and cash equivalents. Changes in cash and cash equivalents reflect the Company’s daily liquidity position and are affected by the changes in the other asset balances and changes in deposit and accounts and drafts payable balances.

Total liabilities at June 30, 2017 were $1,371,924,000, an increase of $75,120,000, or 5.8%, from December 31, 2016. Accounts and drafts payable at June 30, 2017 were $729,403,000, an increase of $87,116,000, or 13.6%. Total deposits decreased $16,922,000, or 2.7%, from December 31, 2016. Total shareholders’ equity at June 30, 2017 was $221,358,000, a $13,323,000, or 6.4%, increase from December 31, 2016.

Accounts and drafts payable will fluctuate from period-end to period-end due to the payment processing cycle, which results in lower balances on days when payments clear and higher balances on days when payments are issued. For this reason, average balances are a more meaningful measure of accounts and drafts payable (for average balances refer to the tables under the “Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rate and Interest Differential” section of this report).

The increase in total shareholders’ equity of $13,323,000 resulted primarily from net income of $12,820,000 and a decrease of $5,347,000 in accumulated other comprehensive loss. These were offset by dividends paid of $5,151,000.

Liquidity and Capital Resources

The balance of liquid assets consists of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold and other short-term investments was $301,060,000 at June 30, 2017, an increase of $34,317,000, or 12.9%, from December 31, 2016. At June 30, 2017, these assets represented 18.9% of total assets. These funds are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable.

Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment in securities was $431,979,000 at June 30, 2017, an increase of $41,427,000 from December 31, 2016. These assets represented 27.1% of total assets at June 30, 2017. Of this total, 96% were state and political subdivision securities. Of the total portfolio, 4.0% mature in one year or less, 14.2% mature in one to five years, and 81.8% mature in five or more years. 

-26-

The Bank has unsecured lines of credit at correspondent banks to purchase federal funds up to a maximum of $68,000,000 at the following banks: US Bank, $20,000,000; Wells Fargo Bank, $15,000,000; Frost National Bank, $10,000,000; PNC Bank, $12,000,000; UMB Bank, $5,000,000; and JPM Chase Bank, $6,000,000. The Bank also has secured lines of credit with the Federal Home Loan Bank of $215,010,000 collateralized by commercial mortgage loans. The Company also has secured lines of credit with UMB Bank of $50,000,000 and First Tennessee Bank of $50,000,000 collateralized by state and political subdivision securities. There were no amounts outstanding under any line of credit as of June 30, 2017 or December 31, 2016.

The deposits of the Company’s banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize other commercial products of the Bank. The accounts and drafts payable generated by the Company has also historically been a stable source of funds. The Company is part of the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) deposit placement programs. Time deposits include $29,346,000 of CDARS deposits and interest-bearing demand deposits include $74,498,000 of ICS deposits. These programs offer the Bank’s customers the ability to maximize Federal Deposit Insurance Corporation (“FDIC”) insurance coverage. The Company uses these programs to retain or attract deposits from existing customers.

Net cash flows provided by operating activities were $21,468,000 for the First Half of 2017, compared with $17,752,000 for the First Half of 2016, an increase of $3,716,000. Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Other causes for the changes in these account balances are discussed earlier in this report. Due to the daily fluctuations in these account balances, the analysis of changes in average balances, also discussed earlier in this report, can be more indicative of underlying activity than the period-end balances used in the statements of cash flows. Management anticipates that cash and cash equivalents, maturing investments and cash from operations will continue to be sufficient to fund the Company’s operations and capital expenditures in 2017, which are estimated to range from $5 million to $7 million.

The Company faces market risk to the extent that its net interest income and fair market value of equity are affected by changes in market interest rates. For information regarding the market risk of the Company’s financial instruments, see Item 3, “Quantitative and Qualitative Disclosures about Market Risk.”

There are several trends and uncertainties that may impact the Company’s ability to generate revenues and income at the levels that it has in the past. In addition, these trends and uncertainties may impact available liquidity. Those that could significantly impact the Company include the general levels of interest rates, business activity, and energy costs as well as new business opportunities available to the Company.

As a financial institution, a significant source of the Company’s earnings is generated from net interest income. Therefore, the prevailing interest rate environment is important to the Company’s performance. A major portion of the Company’s funding sources are the non-interest bearing accounts and drafts payable generated from its payment and information processing services. Accordingly, higher levels of interest rates will generally allow the Company to earn more net interest income. Conversely, a lower interest rate environment will generally tend to depress net interest income. The Company actively manages its balance sheet in an effort to maximize net interest income as the interest rate environment changes. This balance sheet management impacts the mix of earning assets maintained by the Company at any point in time. For example, in a low interest rate environment, short-term relatively lower rate liquid investments may be reduced in favor of longer-term relatively higher yielding investments and loans. If the primary source of liquidity is reduced in a low interest rate environment, a greater reliance would be placed on secondary sources of liquidity including borrowing lines, the ability of the Bank to generate deposits, and the investment portfolio to ensure overall liquidity remains at acceptable levels.

The overall level of economic activity can have a significant impact on the Company’s ability to generate revenues and income, as the volume and size of customer invoices processed may increase or decrease. Higher levels of economic activity increase both fee income (as more invoices are processed) and balances of accounts and drafts payable.

The relative level of energy costs can impact the Company’s earnings and available liquidity. Lower levels of energy costs will tend to decrease transportation and energy invoice amounts resulting in a corresponding decrease in accounts and drafts payable. Decreases in accounts and drafts payable generate lower interest income and reduce liquidity.

New business opportunities are an important component of the Company’s strategy to grow earnings and improve performance. Generating new customers allows the Company to leverage existing systems and facilities and grow revenues faster than expenses.

-27-

The Basel III Capital Rules require FDIC insured depository institutions to meet and maintain several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8%, and a 4% Tier 1 capital to total assets leverage ratio.

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements. Also included in Tier 2 capital is the allowance for loan losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions like Cass, that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. The calculation of all types of regulatory capital is subject to deductions and adjustments specified in applicable regulations.

In addition to establishing the minimum regulatory capital requirements, the Basel III Capital Rules limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% on January 1, 2019.

The Company and the Bank continue to exceed all regulatory capital requirements, as evidenced by the following capital amounts and ratios:

	June 30, 2017				December 31, 2016
(Dollars in thousands)	Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)
Cass Information Systems, Inc.	$	226,291	22.98	%	$	219,747	22.75	%
Cass Commercial Bank		115,663	16.91	%		110,576	16.72	%
Common Equity Tier I Capital (to risk-weighted assets)
Cass Information Systems, Inc.	$	216,095	21.94	%	$	209,572	21.70	%
Cass Commercial Bank		107,835	15.77	%		102,769	15.54	%
Tier I capital (to risk-weighted assets)
Cass Information Systems, Inc.	$	216,095	21.94	%	$	209,572	21.70	%
Cass Commercial Bank		107,835	15.77	%		102,769	15.54	%
Tier I capital (to average assets)
Cass Information Systems, Inc.	$	216,095	14.23	%	$	209,572	13.83	%
Cass Commercial Bank		107,835	14.99	%		102,769	13.98	%

Inflation

The Company’s assets and liabilities are primarily monetary, consisting of cash, cash equivalents, securities, loans, payables and deposits. Monetary assets and liabilities are those that can be converted into a fixed number of dollars. The Company’s consolidated balance sheet reflects a net positive monetary position (monetary assets exceed monetary liabilities). During periods of inflation, the holding of a net positive monetary position will result in an overall decline in the purchasing power of a company. Management believes that replacement costs of equipment, furniture, and leasehold improvements will not materially affect operations. The rate of inflation does affect certain expenses, such as those for employee compensation, which may not be readily recoverable in the price of the Company’s services.

Impact of New and Not Yet Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 – Revenue from Contracts with Customers. The ASU supersedes revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance in the FASB Accounting Standards Codification. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies specific steps that entities should apply in order to achieve this principle. Under the ASU, the amendments are effective for interim and annual periods beginning January 1, 2018 and must be applied retrospectively. The impact of the adoption of this ASU is currently being evaluated but is not expected to have a material impact on the Company’s consolidated financial statements or results of operations.

-28-

In February 2016, the FASB issued ASU No. 2016-02 – Leases (ASC Topic 842). The ASU improves financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. Consistent with current Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The impact of the adoption of this ASU is currently being evaluated but is not expected to have a material impact on the Company’s consolidated financial statements or results of operations.

In June 2016, the FASB issued ASU No. 2016-13 - Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires measurement and recognition of expected credit losses for financial assets held. Under this standard, it will be required to hold an allowance equal to the expected life-of-loan losses on the loan portfolio. The standard is effective for fiscal periods beginning after December 15, 2019. The impact of the adoption of this ASU is currently being evaluated.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company manages its interest rate risk through measurement techniques that include gap analysis and a simulation model. As part of the risk management process, asset/liability management policies are established and monitored by management. The policy objective is to limit the change in annualized net interest income to 15.0% from an immediate and sustained parallel change in interest rates of 200 basis points. Based on the Company’s most recent evaluation, management does not believe the Company’s risk position at June 30, 2017 has changed materially from that at December 31, 2016.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, under the supervision and with the participation of the principal executive officer and the principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15e and 15d-15e under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report and concluded that, as of such date, these controls and procedures were effective.

There were no changes in the Second Quarter of 2017 in the Company’s internal control over financial reporting identified by the Company’s principal executive officer and principal financial officer in connection with their evaluation that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended).

PART II.	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS The Company is the subject of various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of business. Management believes the outcome of all such proceedings will not have a material effect on the businesses or financial conditions of the Company or its subsidiaries.
ITEM 1A.	RISK FACTORS The Company has included in Part I, Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2016, a description of certain risks and uncertainties that could affect the Company’s business, future performance or financial condition (the “Risk Factors”). There are no material changes to the Risk Factors as disclosed in the Company’s 2016 Annual Report on Form 10-K.
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None.
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES None.

-29-

ITEM 4.	MINE SAFETY DISCLOSURES Not applicable.
ITEM 5.	OTHER INFORMATION
	(a)	None.
	(b)	There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors implemented in the Second Quarter of 2017.
ITEM 6.	EXHIBITS Exhibit 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 101.INS XBRL Instance Document. Exhibit 101.SCH XBRL Taxonomy Extension Schema Document. Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document. Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

-30-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CASS INFORMATION SYSTEMS, INC.
DATE:	August 4, 2017	By	/s/ Eric H. Brunngraber
			Eric H. Brunngraber
		Chairman, President and Chief Executive Officer
			(Principal Executive Officer)
DATE:	August 4, 2017	By	/s/ P. Stephen Appelbaum
			P. Stephen Appelbaum
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

-31-

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Eric H. Brunngraber, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cass Information Systems, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017
	/s/ Eric H. Brunngraber
	Eric H. Brunngraber
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, P. Stephen Appelbaum, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cass Information Systems, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017
	/s/ P. Stephen Appelbaum
	P. Stephen Appelbaum
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cass Information Systems, Inc. (“the Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric H. Brunngraber, Chairman, President, and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Eric H. Brunngraber

Eric H. Brunngraber

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

August 4, 2017

A signed original of this written statement required by Section 906 has been provided to Cass Information Systems, Inc. and will be retained by Cass Information Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cass Information Systems, Inc. (“the Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, P. Stephen Appelbaum, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ P. Stephen Appelbaum

P. Stephen Appelbaum

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

August 4, 2017

A signed original of this written statement required by Section 906 has been provided to Cass Information Systems, Inc. and will be retained by Cass Information Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 28, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Registrant Name	CASS INFORMATION SYSTEMS INC
Entity Central Index Key	0000708781
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,203,801

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 14,538	$ 11,814
Interest-bearing deposits in other financial institutions	99,984	136,852
Federal funds sold and other short-term investments	186,538	118,077
Cash and cash equivalents	301,060	266,743
Securities available-for-sale, at fair value	431,979	390,552
Loans	671,683	664,866
Less: Allowance for loan losses	10,196	10,175
Loans, net	661,487	654,691
Premises and equipment, net	21,259	21,086
Investment in bank-owned life insurance	16,692	16,445
Payments in excess of funding	111,435	105,347
Goodwill	12,569	11,590
Other intangible assets, net	2,217	1,997
Other assets	34,584	36,388
Total assets	1,593,282	1,504,839
Deposits:
Noninterest-bearing	201,942	214,656
Interest-bearing	403,097	407,305
Total deposits	605,039	621,961
Accounts and drafts payable	729,403	642,287
Other liabilities	37,482	32,556
Total liabilities	1,371,924	1,296,804
Shareholders' Equity:
Preferred stock, par value $.50 per share; 2,000,000 shares authorized and no shares issued
Common stock, par value $.50 per share; 40,000,000 shares authorized and 11,931,147 shares issued at June 30, 2017 and December 31, 2016	5,966	5,966
Additional paid-in capital	128,478	128,455
Retained earnings	126,032	118,363
Common shares in treasury, at cost (727,346 shares at June 30, 2017 and 742,681 shares at December 31, 2016)	(29,922)	(30,206)
Accumulated other comprehensive loss	(9,196)	(14,543)
Total shareholders' equity	221,358	208,035
Total liabilities and shareholders' equity	$ 1,593,282	$ 1,504,839

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value per share	$ 0.50	$ .50
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value per share	$ 0.50	$ .50
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	11,931,147	11,931,147
Treasury stock, shares	727,346	742,681

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fee Revenue and Other Income:
Information services payment and processing revenue	$ 23,282	$ 20,880	$ 45,571	$ 40,425
Bank service fees	389	289	671	647
Gains on sales of securities		79		387
Other	129	209	329	503
Total fee revenue and other income	23,800	21,457	46,571	41,962
Interest Income:
Interest and fees on loans	7,104	7,316	14,057	14,447
Interest and dividends on securities:
Taxable	84	21	161	33
Exempt from federal income taxes	2,659	2,437	5,260	4,831
Interest on federal funds sold and other short-term investments	485	236	853	476
Total interest income	10,332	10,010	20,331	19,787
Interest Expense:
Interest on deposits	470	504	950	1,017
Net interest income	9,862	9,506	19,381	18,770
Provision for loan losses				(1,000)
Net interest income after provision for loan losses	9,862	9,506	19,381	19,770
Total net revenue	33,662	30,963	65,952	61,732
Operating Expense:
Personnel	19,162	18,102	37,961	35,948
Occupancy	889	866	1,731	1,700
Equipment	1,200	1,110	2,504	2,165
Amortization of intangible assets	108	102	207	204
Other operating expense	3,542	2,879	6,816	5,958
Total operating expense	24,901	23,059	49,219	45,975
Income before income tax expense	8,761	7,904	16,733	15,757
Income tax expense	2,248	2,035	3,913	4,055
Net income	$ 6,513	$ 5,869	$ 12,820	$ 11,702
Basic earnings per share	$ 0.58	$ 0.53	$ 1.15	$ 1.05
Diluted earnings per share	$ 0.58	$ 0.52	$ 1.13	$ 1.03

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Comprehensive Income:
Net income	$ 6,513	$ 5,869	$ 12,820	$ 11,702
Other comprehensive income:
Net unrealized gain on securities available-for-sale	5,832	4,538	8,345	8,212
Tax effect	(2,167)	(1,686)	(3,100)	(3,051)
Reclassification adjustments for gains included in net income		(79)		(387)
Tax effect		29		143
Foreign currency translation adjustments	94	(35)	102	11
Total comprehensive income	$ 10,272	$ 8,636	$ 18,167	$ 16,630

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Flows From Operating Activities:
Net income	$ 12,820	$ 11,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,471	4,613
Net gains on sales of securities		(387)
Stock-based compensation expense	1,097	985
Provision for loan losses		(1,000)
Decrease in income tax benefit		16
Increase in income tax liability	748	1,325
Increase in pension liability	2,310	2,010
Other operating activities, net	(978)	(1,512)
Net cash provided by operating activities	21,468	17,752
Cash Flows From Investing Activities:
Proceeds from sales of securities available-for-sale	0	21,491
Proceeds from maturities of securities available-for-sale	25,694	19,609
Purchase of securities available-for-sale	(62,279)	(28,053)
Net increase in loans	(6,796)	(39,042)
Increase in payments in excess of funding	(6,088)	(11,674)
Purchases of premises and equipment, net	(1,935)	(2,631)
Net cash used in investing activities	(51,404)	(40,300)
Cash Flows From Financing Activities:
Net (decrease) increase in noninterest-bearing demand deposits	(12,714)	13,813
Net decrease in interest-bearing demand and savings deposits	(1,077)	(27,575)
Net decrease in time deposits	(3,131)	(1,728)
Net increase in accounts and drafts payable	87,116	73,729
Cash dividends paid	(5,151)	(4,947)
Purchase of common shares for treasury		(9,217)
Other financing activities, net	(790)	(566)
Net cash provided by financing activities	64,253	43,509
Net increase in cash and cash equivalents	34,317	20,961
Cash and cash equivalents at beginning of period	266,743	253,172
Cash and cash equivalents at end of period	301,060	274,133
Supplemental information:
Cash paid for interest	956	1,009
Cash paid for income taxes	$ 3,152	$ 2,787

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer to the audited consolidated financial statements and related footnotes included in Cass Information System, Inc.’s (the “Company” or “Cass”) Annual Report on Form 10-K for the year ended December 31, 2016.

XML

Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 2 – Intangible Assets

The Company accounts for intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Goodwill and Other Intangible Assets,” (“FASB ASC 350”), which requires that intangibles with indefinite useful lives be tested annually for impairment and those with finite useful lives be amortized over their useful lives.

In March 2017, the Company completed an acquisition and recorded intangible assets of $1,406,000. Those intangible assets were valued as $980,000 for goodwill, $355,000 for the customer list and $71,000 for non-compete agreements.

Details of the Company’s intangible assets are as follows:

	June 30, 2017				December 31, 2016
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
(In thousands)	Amount		Amortization		Amount		Amortization
Assets eligible for amortization:
Customer lists	$	4,288	$	(2,517)	$	3,933	$	(2,342)
Patents		72		(10)		72		(8)
Non-compete agreements		332		(273)		261		(261)
Software		234		(234)		234		(234)
Other		500		(175)		500		(158)
Unamortized intangible assets:
Goodwill1		12,796		(227)		11,817		(227)
Total intangible assets	$	18,222	$	(3,436)	$	16,817	$	(3,230)
1 Amortization through December 31, 2001 prior to adoption of FASB ASC 350.

The customer lists are amortized over seven and ten years; the patents over 18 years; the non-compete agreements over two and five years; software over three years; and other intangible assets over fifteen years. Amortization of intangible assets amounted to $207,000 and $204,000 for the six-month periods ended June 30, 2017 and 2016, respectively. Estimated annual amortization of intangibles is as follows: $427,000 in 2017, $442,000 in 2018, $412,000 in 2019, and $406,000 in each of 2020 and 2021.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note 3 – Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the sum of the weighted-average number of common shares outstanding and the weighted-average number of potential common shares outstanding. There were no anti-dilutive shares in the three and six months ended June 30, 2017 and 2016. The calculations of basic and diluted earnings per share are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands except share and per share data)	2017		2016		2017		2016
Basic
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Basic earnings per share	$	.58	$	.53	$	1.15	$	1.05
Diluted
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Effect of dilutive restricted stock and stock appreciation rights		168,241		153,459		167,460		153,379
Weighted-average common shares outstanding assuming dilution		11,321,501		11,288,018		11,313,456		11,337,437
Diluted earnings per share	$	.58	$	.52	$	1.13	$	1.03

XML

Stock Repurchases

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stock Repurchases

Note 4 – Stock Repurchases

The Company maintains a treasury stock buyback program pursuant to which the Board of Directors has authorized the repurchase of up to 500,000 shares of the Company’s common stock. As restored by the Board of Directors on October 17, 2016, the program provides that the Company may repurchase up to an aggregate of 500,000 shares of common stock and has no expiration date. The Company repurchased 0 and 111,241 shares during the three-month periods and 0 and 187,123 shares for the six-month periods ended June 30, 2017 and 2016, respectively. As of June 30, 2017, 500,000 shares remained available for repurchase under the program. Repurchases may be made in the open market or through negotiated transactions from time to time depending on market conditions.

XML

Industry Segment Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Industry Segment Information

Note 5 – Industry Segment Information

The services provided by the Company are classified into two reportable segments: Information Services and Banking Services. Each of these segments provides distinct services that are marketed through different channels. They are managed separately due to their unique service, processing and capital requirements.

The Information Services segment provides transportation, energy, telecommunication, and environmental invoice processing and payment services to large corporations. The Banking Services segment provides banking services primarily to privately held businesses and churches.

The Company’s accounting policies for segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Management evaluates segment performance based on net income after allocations for corporate expenses and income taxes. Transactions between segments are accounted for at what management believes to be fair value.

Substantially all revenue originates from, and all long-lived assets are located within, the United States, and no revenue from any customer of any segment exceeds 10% of the Company’s consolidated revenue.

Assets represent actual assets owned by Information Services and Banking Services and there is no allocation methodology used. Segment interest from customers is the actual interest earned on the loans owned by Information Services and Banking Services, respectively.

Summarized information about the Company’s operations in each industry segment is as follows:

					Corporate,
	Information		Banking		Eliminations
(In thousands)	Services		Services		and Other			Total
Three Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	26,749	$	6,913	$	—		$	33,662
Intersegment income (expense)		3,049		383		(3,432	)		—
Net income		3,932		2,581		—			6,513
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Three Months Ended June 30, 2016
Fee revenue and other income
Income from customers	$	24,436	$	6,527	$	—		$	30,963
Intersegment income (expense)		2,815		403		(3,218	)		—
Net income		3,478		2,391		—			5,869
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184
Six Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	52,395	$	13,557	$	—		$	65,952
Intersegment income (expense)		6,013		744		(6,757	)		—
Net income		7,755		5,065		—			12,820
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Six Months Ended June 30, 2016
Fee revenue and other income:
Income from customers	$	47,994	$	13,738	$	—		$	61,732
Intersegment income (expense)		6,073		779		(6,852	)		—
Net income		6,425		5,277		—			11,702
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184

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Loans by Type

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Loans by Type

Note 6 – Loans by Type

A summary of loan categories is as follows:

	June 30,		December 31,
(In thousands)	2017		2016
Commercial and industrial	$	225,627	$	214,767
Real estate
Commercial:
Mortgage		94,367		104,779
Construction		8,482		6,325
Church, church-related:
Mortgage		325,906		321,168
Construction		12,214		11,152
Industrial revenue bonds		5,007		6,639
Other		80		36
Total loans	$	671,683	$	664,866

The following table presents the aging of loans by loan categories at June 30, 2017 and December 31, 2016:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non-		Total
(In thousands)	Current		Days		Days		Over		accrual		Loans
June 30, 2017
Commercial and industrial	$	225,627	$	—	$	—	$	—	$	—	$	225,627
Real estate
Commercial:
Mortgage		94,148		—		—		—		219		94,367
Construction		8,482		—		—		—		—		8,482
Church, church-related:
Mortgage		325,906		—		—		—		—		325,906
Construction		12,214		—		—		—		—		12,214
Industrial revenue bonds		5,007		—		—		—		—		5,007
Other		80		—		—		—		—		80
Total	$	671,464	$	—	$	—	$	—	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	214,767	$	—	$	—	$	—	$	—	$	214,767
Real estate
Commercial:
Mortgage		104,534		—		—		—		245		104,779
Construction		6,325		—		—		—		—		6,325
Church, church-related:
Mortgage		321,168		—		—		—		—		321,168
Construction		11,152		—		—		—		—		11,152
Industrial revenue bonds		6,639		—		—		—		—		6,639
Other		24		12		—		—		—		36
Total	$	664,609	$	12	$	—	$	—	$	245	$	664,866

The following table presents the credit exposure of the loan portfolio by internally credit grade as of June 30, 2017 and December 31, 2016:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring1		Monitoring2		Monitoring2		Total Loans
June 30, 2017
Commercial and industrial	$	223,968	$	1,659	$	—	$	225,627
Real estate
Commercial:
Mortgage		93,422		726		219		94,367
Construction		8,482		—		—		8,482
Church, church-related:
Mortgage		325,822		84		—		325,906
Construction		12,214		—		—		12,214
Industrial Revenue Bonds		5,007		—		—		5,007
Other		80		—		—		80
Total	$	668,995	$	2,469	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	213,024	$	1,743	$	—	$	214,767
Real estate
Commercial:
Mortgage		103,778		756		245		104,779
Construction		6,325		—		—		6,325
Church, church-related:
Mortgage		318,030		3,138		—		321,168
Construction		11,152		—		—		11,152
Industrial revenue bonds		6,639		—		—		6,639
Other		36		—		—		36
Total	$	658,984	$	5,637	$	245	$	664,866

1	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligations.
2	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest and troubled debt restructurings, both performing and nonperforming. Troubled debt restructuring involves the granting of a concession to a borrower experiencing financial difficulty resulting in the modification of terms of the loan, such as changes in payment schedule or interest rate. Management measures impairment in accordance with FASB ASC 310, “Allowance for Credit Losses.” At June 30, 2017 and December 31, 2016, impaired loans were evaluated using the expected cash flow method. There were no loans delinquent 90 days or more and still accruing interest at June 30, 2017 and December 31, 2016. There were no loans classified as troubled debt restructuring at June 30, 2017 and December 31, 2016.

There were no foreclosed loans recorded as other real estate owned as of June 30, 2017, and December 31, 2016.

The following table presents the recorded investment and unpaid principal balance for impaired loans at June 30, 2017 and December 31, 2016:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
June 30, 2017
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		219		219		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	219	$	219	$	—
December 31, 2016
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		245		245		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	245	$	245	$	—

A summary of the activity in the allowance for loan losses from December 31, 2016 to June 30, 2017 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2016		Offs		Recoveries		Provision			2017
Commercial and industrial	$	3,261	$	—	$	21	$	144		$	3,426
Real estate
Commercial:
Mortgage		1,662		—		—		(164	)		1,498
Construction		47		—		—		16			63
Church, church-related:
Mortgage		4,027		—		—		61			4,088
Construction		85		—		—		8			93
Industrial Revenue Bonds		101		—		—		(25	)		76
Other		992		—		—		(40	)		952
Total	$	10,175	$	—	$	21	$	—		$	10,196

A summary of the activity in the allowance for loan losses from December 31, 2015 to June 30, 2016 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2015		Offs		Recoveries		Provision			2016
Commercial and industrial	$	3,083	$	—	$	37	$	497		$	3,617
Real estate
Commercial:
Mortgage		2,803		—		—		(1,113	)		1,690
Construction		9		—		—		96			105
Church, church-related:
Mortgage		4,082		—		—		34			4,116
Construction		217		—		—		(30	)		187
Industrial Revenue Bonds		320		—		—		(34	)		286
Other		1,121		—		—		(450	)		671
Total	$	11,635	$	—	$	37	$	(1,000	)	$	10,672

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 7 – Commitments and Contingencies

In the normal course of business, the Company is party to activities that contain credit, market and operational risks that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments and commitments under operating leases. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. The Company’s maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amounts of those instruments. At June 30, 2017 and December 31, 2016, no amounts have been accrued for any estimated losses for these instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commercial and standby letters of credit are conditional commitments issued by the Company or its subsidiaries to guarantee the performance of a customer to a third party. These off-balance sheet financial instruments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2017, the balance of unused loan commitments, standby and commercial letters of credit were $65,583,000, $13,977,000, and $2,759,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. Commitments to extend credit and letters of credit are subject to the same underwriting standards as those financial instruments included on the consolidated balance sheets. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of the credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but is generally accounts receivable, inventory, residential or income-producing commercial property or equipment. In the event of nonperformance, the Company or its subsidiaries may obtain and liquidate the collateral to recover amounts paid under guarantees on these financial instruments.

The following table summarizes contractual cash obligations of the Company related to operating lease commitments and time deposits at June 30, 2017:

	Amount of Commitment Expiration per Period
			Less than		1-3		3-5		Over 5
(In thousands)		Total	1 Year		Years		Years		Years
Operating lease commitments	$	5,589	$	1,448	$	2,036	$	1,656	$	449
Time deposits		52,653		47,759		2,319		2,575		—
Total	$	58,242	$	49,207	$	4,355	$	4,231	$	449

The Company and its subsidiaries are involved in various pending legal actions and proceedings in which claims for damages are asserted. Management, after discussion with legal counsel, believes the ultimate resolution of these legal actions and proceedings will not have a material effect upon the Company’s consolidated financial position or results of operations.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 8 – Stock-Based Compensation

The Amended and Restated Omnibus Stock and Performance Compensation Plan (the “Omnibus Plan”) permits the issuance of up to 1,500,000 shares of the Company’s common stock in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units and performance awards. The Company may issue shares out of treasury stock for these awards. During the six months ended June 30, 2017, 22,545 restricted shares, 23,038 performance-based restricted shares, and 0 SARs were granted under the Omnibus Plan.

Restricted Stock

Restricted shares granted prior to April 16, 2013 were amortized to expense over a three-year vesting period. Beginning on April 16, 2013, restricted shares granted to Company employees are amortized to expense over a three-year vesting period whereas restricted shares granted to members of the Board of Directors are amortized to expense over a one-year service period, with the exception of those shares granted in lieu of cash payments for retainer fees which are expensed in the period earned. As of June 30, 2017, the total unrecognized compensation expense related to non-vested restricted shares was $2,217,000, and the related weighted-average period over which it is expected to be recognized is approximately 1.0 year.

Following is a summary of the activity of the restricted stock:

	Six Months Ended
	June 30, 2017
	Shares		Fair Value
Balance at December 31, 2016	73,840		$	51.03
Granted	22,545		$	65.42
Vested	(26,545	)	$	52.34
Balance at June 30, 2017	69,840		$	55.18

Performance-Based Restricted Stock

On February 2, 2017, the Company granted three-year performance based restricted stock (“PBRS”) awards which are contingent upon the achievement of pre-established financial goals over the period from January 1, 2017 through December 31, 2019. The PBRS awards cliff vest on the three-year anniversary of their grant date at levels ranging from 0% to 150% of the target opportunity based on the actual achievement of financial goals for the three-year performance period. The target number of PBRS shares granted was 23,038 with a grant date fair value of $65.12 per share. The 2017 expense related to this grant is currently estimated to be $458,000 and is based on the grant date fair value and the achievement of 100% of the target financial goals. The estimated expense for 2017 and each future period through the vesting date is subject to prospective adjustment based upon changes in the expected achievement of the financial goals.

SARs

SARs vest over a three-year period, with one-third of the shares vesting and becoming exercisable each year on the anniversary date of the grant, and they expire 10 years from the original grant date. As of June 30, 2017, all compensation expense has been recognized and all granted SARs are vested. Following is a summary of the activity of the Company’s SARs program for the six-month period ended June 30, 2017:

			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
			Exercise		Contractual	Value
	Shares		Price		Term Years	(In thousands)
Outstanding at December 31, 2016	237,468		$	38.22	5.73	$	3,201
Exercised	(15,547	)		40.60
Outstanding at June 30, 2017	221,921			38.05	4.71		6,122
Exercisable at June 30, 2017	221,921		$	38.05	4.71	$	6,122

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Defined Pension Plans

6 Months Ended

Jun. 30, 2017

Retirement Benefits [Abstract]

Defined Pension Plans

Note 9 – Defined Pension Plans

The Company has a noncontributory defined-benefit pension plan, which covers most of its employees. Effective December 31, 2016, the Plan was closed to all new participants. The Company accrues and makes contributions designed to fund normal service costs on a current basis using the projected unit credit with service proration method to amortize prior service costs arising from improvements in pension benefits and qualifying service prior to the establishment of the plan over a period of approximately 30 years. Disclosure information is based on a measurement date of December 31 of the corresponding year. The following table represents the components of the net periodic pension costs:

	Estimated			Actual
(In thousands)	2017			2016
Service cost – benefits earned during the year	$	3,805		$	3,559
Interest cost on projected benefit obligations		3,587			3,505
Expected return on plan assets		(4,680	)		(4,734	)
Net amortization and deferral		1,328			1,259
Net periodic pension cost	$	4,040		$	3,589

Pension costs recorded to expense were $1,017,000 and $882,000 for the three-month periods ended June 30, 2017 and 2016, respectively and $2,037,000 and $1,759,000 for the six-month periods ended June 30, 2017 and 2016, respectively. Pension costs increased in 2017 due to a decrease in the discount rate and expected return on plan assets assumptions and the use of the updated mortality tables. The Company made no contribution to the plan during the six-month period ended June 30, 2017 and is evaluating the amount of additional contributions, if any, in the remainder of 2017.

In addition to the above funded benefit plan, the Company has an unfunded supplemental executive retirement plan which covers key executives of the Company. This is a noncontributory plan in which the Company and its subsidiaries make accruals designed to fund normal service costs on a current basis using the same method and criteria as its defined benefit plan. The following table represents the components of the net periodic pension costs for 2016 and an estimate for 2017:

	Estimated		Actual
(In thousands)	2017		2016
Service cost – benefits earned during the year	$	143	$	133
Interest cost on projected benefit obligation		361		367
Net amortization		323		295
Net periodic pension cost	$	827	$	795

Pension costs recorded to expense were $209,000 and $202,000 for the three-month periods ended June 30, 2017 and 2016, respectively, and were $418,000 and $403,000 for the six-month periods ended June 30, 2017 and 2016, respectively.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

As of June 30, 2017, the Company’s unrecognized tax benefits were approximately $1,835,000, of which $1,416,000 would, if recognized, affect the Company’s effective tax rate. As of December 31, 2016, the Company’s unrecognized tax benefits were approximately $1,623,000, of which $1,225,000 would, if recognized, affect the Company’s effective tax rate. During the next 12 months, the Company may realize a reduction of its unrecognized tax benefits of approximately $253,000 due to the lapse of federal and state statutes of limitations.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company had $142,000 and $108,000 of gross interest accrued as of June 30, 2017 and December 31, 2016, respectively. There were no penalties for unrecognized tax benefits accrued at June 30, 2017 and December 31, 2016.

The Company is subject to income tax in the U.S. federal jurisdiction and numerous state jurisdictions. U.S. federal income tax returns for tax years 2013 through 2015 remain subject to examination by the Internal Revenue Service. In addition, the Company is subject to state tax examinations for the tax years 2012 through 2015.

On January 1, 2017, the Company adopted ASU No. 2016-09 – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The adoption of this new accounting pronouncement resulted in a $35,000 and $278,000 reduction in income tax expense for the three-month and six-month periods ending June 30, 2017, respectively.

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Investment in Securities

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investment in Securities

Note 11 – Investment in Securities

Investment securities available-for-sale are recorded at fair value on a recurring basis. The Company’s investment securities available-for-sale are measured at fair value using Level 2 valuations. The market evaluation utilizes several sources which include “observable inputs” rather than “significant unobservable inputs” and therefore fall into the Level 2 category. The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investment securities are summarized as follows:

	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	403,935	$	11,256	$	1,076	$	414,115
U.S. government agencies		12,446		—		328		12,118
Certificates of deposit		5,746		—		—		5,746
Total	$	422,127	$	11,256	$	1,404	$	431,979
	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	368,223	$	5,239	$	3,328	$	370,134
U.S. government agencies		13,075		—		403		12,672
Certificates of deposit		7,746		—		—		7,746
Total	$	389,044	$	5,239	$	3,731	$	390,552

The fair values of securities with unrealized losses are as follows:

	June 30, 2017
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	45,082	$	1,076	$	—	$	—	$	45,082	$	1,076
U.S. government agencies		12,118		328		—		—		12,118		328
Certificates of deposit		—		—		—		—		—		—
Total	$	57,200	$	1,404	$	—	$	—	$	57,200	$	1,404
	December 31, 2016
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	140,384	$	3,328	$	—	$	—	$	140,384	$	3,328
U.S. government agencies		12,672		403		—		—		12,672		403
Certificates of deposit		—		—		—		—		—		—
Total	$	153,056	$	3,731	$	—	$	—	$	153,056	$	3,731

There were 35 securities, or 11% of the total (none greater than 12 months) in an unrealized loss position as of June 30, 2017. There were 108 securities, 31% of the total (none greater than 12 months), in an unrealized loss position as of December 31, 2016. All unrealized losses were reviewed to determine whether the losses were other than temporary. Management believes that all unrealized losses are temporary since they were market driven, and it is more likely than not that the Company will not be required to sell prior to recovery of the amortized basis.

The amortized cost and fair value of investment securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

	June 30, 2017
(In thousands)	Amortized Cost		Fair Value
Due in 1 year or less	$	21,393	$	21,574
Due after 1 year through 5 years		58,167		59,364
Due after 5 years through 10 years		207,799		215,950
Due after 10 years		134,768		135,091
Total	$	422,127	$	431,979

Proceeds from sales of investment securities classified as available-for-sale were $0 and $2,452,000 for the three months ended June 30, 2017 and 2016, respectively, and were $0 and $21,491,000 for the six months ended June 30, 2017 and 2016, respectively. Gross realized gains were $0 and $79,000 for the three months ended June 30, 2017 and 2016, respectively, and were $0 and $387,000 for the six months ended June 30, 2017 and 2016, respectively. There was one security totaling $3,750,000 pledged to secure public deposits and for other purposes at June 30, 2017.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 12 – Fair Value of Financial Instruments

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments:

	June 30, 2017				December 31, 2016
	Carrying				Carrying
(In thousands)	Amount		Fair Value		Amount		Fair Value
Balance sheet assets:
Cash and cash equivalents	$	301,060	$	301,060	$	266,743	$	266,743
Investment securities		431,979		431,979		390,552		390,552
Loans, net		661,487		658,280		654,691		652,028
Accrued interest receivable		7,037		7,037		6,543		6,543
Total	$	1,401,563	$	1,398,356	$	1,318,529	$	1,315,866
Balance sheet liabilities:
Deposits	$	605,039	$	605,382	$	621,961	$	622,173
Accounts and drafts payable		729,403		729,403		642,287		642,287
Accrued interest payable		41		41		46		46
Total	$	1,334,483	$	1,334,826	$	1,264,294	$	1,264,506

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents – The carrying amount approximates fair value.

Investment in Securities – The fair value is measured on a recurring basis using Level 2 valuations. Refer to Note 11, “Investment in Securities,” for fair value and unrealized gains and losses by investment type.

Loans – The fair value is estimated using present values of future cash flows discounted at risk-adjusted interest rates for each loan category designated by management and is therefore a Level 3 valuation. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses result in a fair valuation.

Impaired loans are valued using the expected cash flow method or fair value of the collateral which is based upon an observable market price or a current appraised value and therefore, the fair value is a nonrecurring Level 3 valuation.

Accrued Interest Receivable – The carrying amount approximates fair value.

Deposits – The fair value of demand deposits, savings deposits and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities and therefore, is a Level 2 valuation. The fair value estimates above do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market or the benefit derived from the customer relationship inherent in existing deposits.

Accounts and Drafts Payable – The carrying amount approximates fair value.

Accrued Interest – The carrying amount approximates fair value.

There were no transfers between Levels 1 and 2 of the fair value hierarchy for the six months ended June 30, 2017 and 2016. No financial instruments are measured using Level 3 inputs for the six months ended June 30, 2017 and 2016.

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Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

Note 13 – Subsequent Events

In accordance with FASB ASC 855, “Subsequent Events,” the Company has evaluated subsequent events after the consolidated balance sheet date of June 30, 2017, and there were no events identified that would require additional disclosures to prevent the Company’s unaudited consolidated financial statements from being misleading.

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Company's Intangible Assets

Details of the Company’s intangible assets are as follows:

	June 30, 2017				December 31, 2016
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
(In thousands)	Amount		Amortization		Amount		Amortization
Assets eligible for amortization:
Customer lists	$	4,288	$	(2,517)	$	3,933	$	(2,342)
Patents		72		(10)		72		(8)
Non-compete agreements		332		(273)		261		(261)
Software		234		(234)		234		(234)
Other		500		(175)		500		(158)
Unamortized intangible assets:
Goodwill1		12,796		(227)		11,817		(227)
Total intangible assets	$	18,222	$	(3,436)	$	16,817	$	(3,230)
1 Amortization through December 31, 2001 prior to adoption of FASB ASC 350.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The calculations of basic and diluted earnings per share are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands except share and per share data)	2017		2016		2017		2016
Basic
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Basic earnings per share	$	.58	$	.53	$	1.15	$	1.05
Diluted
Net income	$	6,513	$	5,869	$	12,820	$	11,702
Weighted-average common shares outstanding		11,153,260		11,134,559		11,145,996		11,184,058
Effect of dilutive restricted stock and stock appreciation rights		168,241		153,459		167,460		153,379
Weighted-average common shares outstanding assuming dilution		11,321,501		11,288,018		11,313,456		11,337,437
Diluted earnings per share	$	.58	$	.52	$	1.13	$	1.03

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Industry Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Summary of Company's Operations in Each Segment

Summarized information about the Company’s operations in each industry segment is as follows:

					Corporate,
	Information		Banking		Eliminations
(In thousands)	Services		Services		and Other			Total
Three Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	26,749	$	6,913	$	—		$	33,662
Intersegment income (expense)		3,049		383		(3,432	)		—
Net income		3,932		2,581		—			6,513
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Three Months Ended June 30, 2016
Fee revenue and other income
Income from customers	$	24,436	$	6,527	$	—		$	30,963
Intersegment income (expense)		2,815		403		(3,218	)		—
Net income		3,478		2,391		—			5,869
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184
Six Months Ended June 30, 2017
Fee revenue and other income:
Income from customers	$	52,395	$	13,557	$	—		$	65,952
Intersegment income (expense)		6,013		744		(6,757	)		—
Net income		7,755		5,065		—			12,820
Goodwill		12,433		136		—			12,569
Other intangible assets, net		2,217		—		—			2,217
Total assets		863,562		742,659		(12,939	)		1,593,282
Six Months Ended June 30, 2016
Fee revenue and other income:
Income from customers	$	47,994	$	13,738	$	—		$	61,732
Intersegment income (expense)		6,073		779		(6,852	)		—
Net income		6,425		5,277		—			11,702
Goodwill		11,454		136		—			11,590
Other intangible assets, net		2,201		—		—			2,201
Total assets		777,312		753,333		(9,461	)		1,521,184

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Loans by Type (Tables)

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Summary of Loan Categories

A summary of loan categories is as follows:

	June 30,		December 31,
(In thousands)	2017		2016
Commercial and industrial	$	225,627	$	214,767
Real estate
Commercial:
Mortgage		94,367		104,779
Construction		8,482		6,325
Church, church-related:
Mortgage		325,906		321,168
Construction		12,214		11,152
Industrial revenue bonds		5,007		6,639
Other		80		36
Total loans	$	671,683	$	664,866

Schedule of the Aging Loans by Loan Categories

The following table presents the aging of loans by loan categories at June 30, 2017 and December 31, 2016:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non-		Total
(In thousands)	Current		Days		Days		Over		accrual		Loans
June 30, 2017
Commercial and industrial	$	225,627	$	—	$	—	$	—	$	—	$	225,627
Real estate
Commercial:
Mortgage		94,148		—		—		—		219		94,367
Construction		8,482		—		—		—		—		8,482
Church, church-related:
Mortgage		325,906		—		—		—		—		325,906
Construction		12,214		—		—		—		—		12,214
Industrial revenue bonds		5,007		—		—		—		—		5,007
Other		80		—		—		—		—		80
Total	$	671,464	$	—	$	—	$	—	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	214,767	$	—	$	—	$	—	$	—	$	214,767
Real estate
Commercial:
Mortgage		104,534		—		—		—		245		104,779
Construction		6,325		—		—		—		—		6,325
Church, church-related:
Mortgage		321,168		—		—		—		—		321,168
Construction		11,152		—		—		—		—		11,152
Industrial revenue bonds		6,639		—		—		—		—		6,639
Other		24		12		—		—		—		36
Total	$	664,609	$	12	$	—	$	—	$	245	$	664,866

Schedule of Credit Exposure of the Loan Portfolio

The following table presents the credit exposure of the loan portfolio by internally credit grade as of June 30, 2017 and December 31, 2016:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring1		Monitoring2		Monitoring2		Total Loans
June 30, 2017
Commercial and industrial	$	223,968	$	1,659	$	—	$	225,627
Real estate
Commercial:
Mortgage		93,422		726		219		94,367
Construction		8,482		—		—		8,482
Church, church-related:
Mortgage		325,822		84		—		325,906
Construction		12,214		—		—		12,214
Industrial Revenue Bonds		5,007		—		—		5,007
Other		80		—		—		80
Total	$	668,995	$	2,469	$	219	$	671,683
December 31, 2016
Commercial and industrial	$	213,024	$	1,743	$	—	$	214,767
Real estate
Commercial:
Mortgage		103,778		756		245		104,779
Construction		6,325		—		—		6,325
Church, church-related:
Mortgage		318,030		3,138		—		321,168
Construction		11,152		—		—		11,152
Industrial revenue bonds		6,639		—		—		6,639
Other		36		—		—		36
Total	$	658,984	$	5,637	$	245	$	664,866

1	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligations.
2	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

Schedule of Recorded Investment and Unpaid Principal Balance for Impaired Loans

The following table presents the recorded investment and unpaid principal balance for impaired loans at June 30, 2017 and December 31, 2016:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
June 30, 2017
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		219		219		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	219	$	219	$	—
December 31, 2016
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		245		245		—
Church – Mortgage:
Nonaccrual		—		—		—
Total impaired loans	$	245	$	245	$	—

Summary of the Allowance for Loan Losses

A summary of the activity in the allowance for loan losses from December 31, 2016 to June 30, 2017 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2016		Offs		Recoveries		Provision			2017
Commercial and industrial	$	3,261	$	—	$	21	$	144		$	3,426
Real estate
Commercial:
Mortgage		1,662		—		—		(164	)		1,498
Construction		47		—		—		16			63
Church, church-related:
Mortgage		4,027		—		—		61			4,088
Construction		85		—		—		8			93
Industrial Revenue Bonds		101		—		—		(25	)		76
Other		992		—		—		(40	)		952
Total	$	10,175	$	—	$	21	$	—		$	10,196

A summary of the activity in the allowance for loan losses from December 31, 2015 to June 30, 2016 is as follows:

	December 31,		Charge-							June 30,
(In thousands)	2015		Offs		Recoveries		Provision			2016
Commercial and industrial	$	3,083	$	—	$	37	$	497		$	3,617
Real estate
Commercial:
Mortgage		2,803		—		—		(1,113	)		1,690
Construction		9		—		—		96			105
Church, church-related:
Mortgage		4,082		—		—		34			4,116
Construction		217		—		—		(30	)		187
Industrial Revenue Bonds		320		—		—		(34	)		286
Other		1,121		—		—		(450	)		671
Total	$	11,635	$	—	$	37	$	(1,000	)	$	10,672

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Summary of Contractual Cash Obligation of Operating Lease Commitments

The following table summarizes contractual cash obligations of the Company related to operating lease commitments and time deposits at June 30, 2017:

	Amount of Commitment Expiration per Period
			Less than		1-3		3-5		Over 5
(In thousands)		Total	1 Year		Years		Years		Years
Operating lease commitments	$	5,589	$	1,448	$	2,036	$	1,656	$	449
Time deposits		52,653		47,759		2,319		2,575		—
Total	$	58,242	$	49,207	$	4,355	$	4,231	$	449

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Restricted Stock Activity

Following is a summary of the activity of the restricted stock:

	Six Months Ended
	June 30, 2017
	Shares		Fair Value
Balance at December 31, 2016	73,840		$	51.03
Granted	22,545		$	65.42
Vested	(26,545	)	$	52.34
Balance at June 30, 2017	69,840		$	55.18

Summary of SARs Activity

Following is a summary of the activity of the Company’s SARs program for the six-month period ended June 30, 2017:

			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
			Exercise		Contractual	Value
	Shares		Price		Term Years	(In thousands)
Outstanding at December 31, 2016	237,468		$	38.22	5.73	$	3,201
Exercised	(15,547	)		40.60
Outstanding at June 30, 2017	221,921			38.05	4.71		6,122
Exercisable at June 30, 2017	221,921		$	38.05	4.71	$	6,122

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Defined Pension Plans (Tables)

6 Months Ended

Jun. 30, 2017

Retirement Benefits [Abstract]

Schedule of Net Periodic Pension Costs

The following table represents the components of the net periodic pension costs:

	Estimated			Actual
(In thousands)	2017			2016
Service cost – benefits earned during the year	$	3,805		$	3,559
Interest cost on projected benefit obligations		3,587			3,505
Expected return on plan assets		(4,680	)		(4,734	)
Net amortization and deferral		1,328			1,259
Net periodic pension cost	$	4,040		$	3,589

Schedule of Unfunded Supplemental Executive Retirement Plan

The following table represents the components of the net periodic pension costs for 2016 and an estimate for 2017:

	Estimated		Actual
(In thousands)	2017		2016
Service cost – benefits earned during the year	$	143	$	133
Interest cost on projected benefit obligation		361		367
Net amortization		323		295
Net periodic pension cost	$	827	$	795

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Investment in Securities (Tables)

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investment securities are summarized as follows:

	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	403,935	$	11,256	$	1,076	$	414,115
U.S. government agencies		12,446		—		328		12,118
Certificates of deposit		5,746		—		—		5,746
Total	$	422,127	$	11,256	$	1,404	$	431,979
	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized
(In thousands)	Cost		Gains		Losses		Fair Value
State and political subdivisions	$	368,223	$	5,239	$	3,328	$	370,134
U.S. government agencies		13,075		—		403		12,672
Certificates of deposit		7,746		—		—		7,746
Total	$	389,044	$	5,239	$	3,731	$	390,552

Schedule of the Fair Value of Securities with Unrealized Losses

The fair values of securities with unrealized losses are as follows:

	June 30, 2017
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	45,082	$	1,076	$	—	$	—	$	45,082	$	1,076
U.S. government agencies		12,118		328		—		—		12,118		328
Certificates of deposit		—		—		—		—		—		—
Total	$	57,200	$	1,404	$	—	$	—	$	57,200	$	1,404
	December 31, 2016
	Less than 12 months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
State and political subdivisions	$	140,384	$	3,328	$	—	$	—	$	140,384	$	3,328
U.S. government agencies		12,672		403		—		—		12,672		403
Certificates of deposit		—		—		—		—		—		—
Total	$	153,056	$	3,731	$	—	$	—	$	153,056	$	3,731

Schedule of Amortized Cost and Fair Value of Investment

The amortized cost and fair value of investment securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

	June 30, 2017
(In thousands)	Amortized Cost		Fair Value
Due in 1 year or less	$	21,393	$	21,574
Due after 1 year through 5 years		58,167		59,364
Due after 5 years through 10 years		207,799		215,950
Due after 10 years		134,768		135,091
Total	$	422,127	$	431,979

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Summary of the Fair Value of Financial Instruments

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments:

	June 30, 2017				December 31, 2016
	Carrying				Carrying
(In thousands)	Amount		Fair Value		Amount		Fair Value
Balance sheet assets:
Cash and cash equivalents	$	301,060	$	301,060	$	266,743	$	266,743
Investment securities		431,979		431,979		390,552		390,552
Loans, net		661,487		658,280		654,691		652,028
Accrued interest receivable		7,037		7,037		6,543		6,543
Total	$	1,401,563	$	1,398,356	$	1,318,529	$	1,315,866
Balance sheet liabilities:
Deposits	$	605,039	$	605,382	$	621,961	$	622,173
Accounts and drafts payable		729,403		729,403		642,287		642,287
Accrued interest payable		41		41		46		46
Total	$	1,334,483	$	1,334,826	$	1,264,294	$	1,264,506

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Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 108	$ 102	$ 207	$ 204
2017	427		427
2018	442		442
2019	412		412
2020	406		406
2021	406		406
Recorded intangible assets	1,406		1,406
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Recorded intangible assets	355		$ 355
Customer Lists [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			7 years
Customer Lists [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			10 years
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			18 years
Non-compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Recorded intangible assets	71		$ 71
Non-compete Agreements [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			2 years
Non-compete Agreements [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			5 years
Software [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			3 years
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets amortization period			15 years
Goodwill [Member]
Finite-Lived Intangible Assets [Line Items]
Recorded intangible assets	$ 980		$ 980

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Intangible Assets (Schedule of Company's Intangible Assets) (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Dec. 31, 2016
Unamortized intangible assets:
Goodwill, Gross Carrying Amount	[1]	$ 12,796	$ 11,817
Goodwill, Accumulated Amortization	[1]	(227)	(227)
Total intangible assets		18,222	16,817
Accumulated Amortization		(3,436)	(3,230)
Customer Lists [Member]
Assets eligible for amortization:
Gross Carrying Amount		4,288	3,933
Accumulated Amortization		(2,517)	(2,342)
Patents [Member]
Assets eligible for amortization:
Gross Carrying Amount		72	72
Accumulated Amortization		(10)	(8)
Non-compete Agreements [Member]
Assets eligible for amortization:
Gross Carrying Amount		332	261
Accumulated Amortization		(273)	(261)
Software [Member]
Assets eligible for amortization:
Gross Carrying Amount		234	234
Accumulated Amortization		(234)	(234)
Other [Member]
Assets eligible for amortization:
Gross Carrying Amount		500	500
Accumulated Amortization		$ (175)	$ (158)

[1] 1 Amortization through December 31, 2001 prior to adoption of FASB ASC 350.

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Basic
Net income	$ 6,513	$ 5,869	$ 12,820	$ 11,702
Weighted-average common shares outstanding	11,153,260	11,134,559	11,145,996	11,184,058
Basic earnings per share	$ 0.58	$ 0.53	$ 1.15	$ 1.05
Diluted
Net Income	$ 6,513	$ 5,869	$ 12,820	$ 11,702
Weighted-average common shares outstanding	11,153,260	11,134,559	11,145,996	11,184,058
Effect of dilutive restricted stock and stock appreciation rights	168,241	153,459	167,460	153,379
Weighted-average common shares outstanding assuming dilution	11,321,501	11,288,018	11,313,456	11,337,437
Diluted earnings per share	$ 0.58	$ 0.52	$ 1.13	$ 1.03

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Stock Repurchases (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Equity [Abstract]
Number of shares authorized to be repurchased	500,000		500,000
Shares repurchased	0	111,241	0	187,123
Remaining number of shares available for repurchase	500,000		500,000

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Industry Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Fee revenue and other income:
Income from customers	$ 33,662	$ 30,963	$ 65,952	$ 61,732
Intersegment income (expense)
Net income	6,513	5,869	12,820	11,702
Goodwill	12,569	11,590	12,569	11,590	$ 11,590
Other intangible assets, net	2,217	2,201	2,217	2,201
Total assets	1,593,282	1,521,184	1,593,282	1,521,184	$ 1,504,839
Information Services [Member]
Fee revenue and other income:
Income from customers	26,749	24,436	52,395	47,994
Intersegment income (expense)	3,049	2,815	6,013	6,073
Net income	3,932	3,478	7,755	6,425
Goodwill	12,433	11,454	12,433	11,454
Other intangible assets, net	2,217	2,201	2,217	2,201
Total assets	863,562	777,312	863,562	777,312
Banking Services [Member]
Fee revenue and other income:
Income from customers	6,913	6,527	13,557	13,738
Intersegment income (expense)	383	403	744	779
Net income	2,581	2,391	5,065	5,277
Goodwill	136	136	136	136
Other intangible assets, net
Total assets	742,659	753,333	742,659	753,333
Corporate Eliminations and Other [Member]
Fee revenue and other income:
Income from customers
Intersegment income (expense)	(3,432)	(3,218)	(6,757)	(6,852)
Net income
Goodwill
Other intangible assets, net
Total assets	$ (12,939)	$ (9,461)	$ (12,939)	$ (9,461)

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Loans by Type (Summary of Loan Categories) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Participating Mortgage Loans [Line Items]
Loans	$ 671,683	$ 664,866
Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Loans	225,627	214,767
Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Loans	94,367	104,779
Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Loans	8,482	6,325
Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Loans	325,906	321,168
Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Loans	12,214	11,152
Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Loans	5,007	6,639
Other Loan [Member]
Participating Mortgage Loans [Line Items]
Loans	$ 80	$ 36

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Loans by Type (Schedule of the Aging of Loans by Loan Categories) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Participating Mortgage Loans [Line Items]
Nonaccrual	$ 219	$ 245
Loans	671,683	664,866
Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	225,627	214,767
Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Loans	94,367	104,779
Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	8,482	6,325
Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	325,906	321,168
Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	12,214	11,152
Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	5,007	6,639
Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Loans	80	36
Current [Member]
Participating Mortgage Loans [Line Items]
Current	671,464	664,609
Current [Member] | Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Current	225,627	214,767
Current [Member] | Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Current	94,148	104,534
Current [Member] | Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Current	8,482	6,325
Current [Member] | Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Current	325,906	321,168
Current [Member] | Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Current	12,214	11,152
Current [Member] | Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Current	5,007	6,639
Current [Member] | Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Current	80	24
30 to 59 Days Past Due [Member]
Participating Mortgage Loans [Line Items]
Past due		12
30 to 59 Days Past Due [Member] | Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Past due
30 to 59 Days Past Due [Member] | Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Past due		12
60 to 89 Days Past Due [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Past due
60 to 89 Days Past Due [Member] | Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Past due
90 Days and Over [Member] | Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Past due

XML

Loans by Type (Schedule of the Credit Exposure of the Loan Portfolio) (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Dec. 31, 2016
Participating Mortgage Loans [Line Items]
Loans		$ 671,683	$ 664,866
Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	668,995	658,984
Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	2,469	5,637
Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	219	245
Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Loans		225,627	214,767
Commercial and Industrial [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	223,968	213,024
Commercial and Industrial [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	1,659	1,743
Commercial and Industrial [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Loans		94,367	104,779
Real Estate Commercial Mortgage [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	93,422	103,778
Real Estate Commercial Mortgage [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	726	756
Real Estate Commercial Mortgage [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	219	245
Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Loans		8,482	6,325
Real Estate Commercial Construction [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	8,482	6,325
Real Estate Commercial Construction [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Real Estate Commercial Construction [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Loans		325,906	321,168
Real Estate Church Related Mortgage [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	325,822	318,030
Real Estate Church Related Mortgage [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]	84	3,138
Real Estate Church Related Mortgage [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Loans		12,214	11,152
Real Estate Church Related Construction [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	12,214	11,152
Real Estate Church Related Construction [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Real Estate Church Related Construction [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Loans		5,007	6,639
Industrial Revenue Bonds [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	5,007	6,639
Industrial Revenue Bonds [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Industrial Revenue Bonds [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Loans		80	36
Other Financing Receivable [Member] | Loans Subject To Normal Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[1]	80	36
Other Financing Receivable [Member] | Performing Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]
Other Financing Receivable [Member] | Nonperforming Loans Subject To Special Monitoring [Member]
Participating Mortgage Loans [Line Items]
Loans	[2]

[1] Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligations.

[2] Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

XML

Loans by Type (Schedule of Recorded Investment and Unpaid Principal for Impaired Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Participating Mortgage Loans [Line Items]
Nonaccrual	$ 219	$ 245
Recorded Investment [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Upaid Principal Balance [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Related Allowance for Loan Losses [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Commercial and Industrial [Member] | Recorded Investment [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Commercial and Industrial [Member] | Upaid Principal Balance [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Commercial and Industrial [Member] | Related Allowance for Loan Losses [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Real Estate Commercial Mortgage [Member] | Recorded Investment [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Real Estate Commercial Mortgage [Member] | Upaid Principal Balance [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual	219	245
Real Estate Commercial Mortgage [Member] | Related Allowance for Loan Losses [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Real Estate Church Related Mortgage [Member] | Recorded Investment [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Real Estate Church Related Mortgage [Member] | Upaid Principal Balance [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual
Real Estate Church Related Mortgage [Member] | Related Allowance for Loan Losses [Member]
Participating Mortgage Loans [Line Items]
Nonaccrual

XML

Loans by Type (Summary of Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Participating Mortgage Loans [Line Items]
Beginning Balance	$ 10,175	$ 11,635
Charge-Offs
Recoveries	21	37
Provision		(1,000)
Ending Balance	10,196	10,672
Commercial and Industrial [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	3,261	3,083
Charge-Offs
Recoveries	21	37
Provision	144	497
Ending Balance	3,426	3,617
Real Estate Commercial Mortgage [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	1,662	2,803
Charge-Offs
Recoveries
Provision	(164)	(1,113)
Ending Balance	1,498	1,690
Real Estate Commercial Construction [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	47	9
Charge-Offs
Recoveries
Provision	16	96
Ending Balance	63	105
Real Estate Church Related Mortgage [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	4,027	4,082
Charge-Offs
Recoveries
Provision	61	34
Ending Balance	4,088	4,116
Real Estate Church Related Construction [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	85	217
Charge-Offs
Recoveries
Provision	8	(30)
Ending Balance	93	187
Industrial Revenue Bonds [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	101	320
Charge-Offs
Recoveries
Provision	(25)	(34)
Ending Balance	76	286
Other Financing Receivable [Member]
Participating Mortgage Loans [Line Items]
Beginning Balance	992	1,121
Charge-Offs
Recoveries
Provision	(40)	(450)
Ending Balance	$ 952	$ 671

XML

Commitments and Contingencies (Narrative) (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Unused loan commitments	$ 65,583
Standby letters of credit	13,977
Commercial letters of credit	$ 2,759

XML

Commitments and Contingencies (Summary of Company's Contractual Cash Obligations) (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease commitments, Less than 1 Year	$ 1,448
Operating lease commitments, 1 to 3 Years	2,036
Operating lease commitments, 3 to 5 Years	1,656
Operating lease commitments, Over 5 Years	449
Operating lease commitments, Total	5,589
Time Deposits, Less than 1 Year	47,759
Time Deposits, 1 to 3 Years	2,319
Time Deposits, 3 to 5 Years	2,575
Time Deposits, over 5 Years
Time Deposits, Total	52,653
Commitments, Less than 1 Year	49,207
Commitments, 1 to 3 Years	4,355
Commitments, 3 to 5 Years	4,231
Commitments, Over 5 Years	449
Commitments, Total	$ 58,242

XML

Stock-Based Compensation (Narrative) (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plan, shares authorized	1,500,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost | $	$ 2,217
Remaining vesting period	1 year
Vesting period	3 years
Granted, Shares	22,545
Fair value of granted shares per share | $ / shares	$ 65.42
Performance-based restricted shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Granted, Shares	23,038
Expense incurred to grant shares | $	$ 458
Performance-based restricted shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target opportunity for awards to vest	0.00%
Performance-based restricted shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target opportunity for awards to vest	150.00%
SARs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Expiry period	10 years

XML

Stock-Based Compensation (Summary of Restricted Stock Activity) (Details) - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Shares
Beginning balance | shares	73,840
Granted | shares	22,545
Vested | shares	(26,545)
Ending balance | shares	69,840
Fair Value
Beginning balance | $ / shares	$ 51.03
Granted | $ / shares	65.42
Vested | $ / shares	52.34
Ending balance | $ / shares	$ 55.18

XML

Stock-Based Compensation (Summary of Company's SARs Activity) (Details) - SARs [Member] - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance	237,468
Exercised	(15,547)
Ending balance	221,921	237,468
Exercisable	221,921
Outstanding, Weighted Average Exercise Price	$ 38.22
Exercised, Weighted Average Exercise Price	40.60
Outstanding, Weighted Average Exercise Price	38.05	$ 38.22
Exercisable, Weighted Average Exercise Price	$ 38.05
Outstanding, Average Remaining Contractual Term Years	4 years 8 months 16 days	5 years 8 months 23 days
Exercisable, Average Remaining Contractual Term Years	4 years 8 months 16 days
Outstanding, Aggregate Intrinsic Value	$ 3,201
Outstanding, Aggregate Intrinsic Value	6,122	$ 3,201
Exercisable, Aggregate Intrinsic Value	$ 6,122

XML

Defined Pension Plans (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Defined Benefit Plan Disclosure [Line Items]
Pension period			30 years
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension costs	$ 1,017	$ 882	$ 2,037	$ 1,759
Unfunded Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension costs	$ 209	$ 202	$ 418	$ 403

XML

Defined Pension Plans (Schedule of Net Periodic Pension Costs) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Defined Benefit Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the year	$ 3,805	$ 3,559
Interest cost on projected benefit obligations	3,587	3,505
Expected return on plan assets	(4,680)	(4,734)
Net amortization and deferral	1,328	1,259
Net periodic pension cost	4,040	3,589
Unfunded Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the year	143	133
Interest cost on projected benefit obligations	361	367
Net amortization and deferral	323	295
Net periodic pension cost	$ 827	$ 795

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Income Tax Contingency [Line Items]
Unrecognized tax benefits	$ 1,835	$ 1,835	$ 1,623
Amounts of tax benefits that would affect effective tax rate if recognized	1,416	1,416	1,225
Income tax accrued interest	142	142	$ 108
Statute of limitations		253
Accounting Standards Update 2016-09 [Member]
Income Tax Contingency [Line Items]
Reduction in income tax expense from adoption of ASU No. 2016-09 – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting	$ 35	$ 278

XML

Investment in Securities (Narrative) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Number of securities that had an unrealized loss	35		35		108
Percentage of total securities	11.00%	100.00%	11.00%	100.00%	31.00%
Proceeds from sales of securities available-for-sale	$ 0	$ 2,452	$ 0	$ 21,491
Gross realized gains	0	$ 79	0	$ 387
Securities pledged as collateral	$ 3,750		$ 3,750

XML

Investment in Securities (Schedule of Investment Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investment [Line Items]
Fair Value	$ 431,979	$ 390,552
Gross Unrealized Gains	11,256	5,239
Gross Unrealized Losses	1,404	3,731
Amortized Cost	422,127	389,044
State and Political Subdivisions [Member]
Investment [Line Items]
Fair Value	414,115	370,134
Gross Unrealized Gains	11,256	5,239
Gross Unrealized Losses	1,076	3,328
Amortized Cost	403,935	368,223
U.S. government agencies [Member]
Investment [Line Items]
Fair Value	12,118	12,672
Gross Unrealized Gains
Gross Unrealized Losses	328	403
Amortized Cost	12,446	13,075
Certificates of Deposit [Member]
Investment [Line Items]
Fair Value	5,746	7,746
Gross Unrealized Gains
Gross Unrealized Losses
Amortized Cost	$ 5,746	$ 7,746

XML

Investment in Securities (Schedule of the Fair Values of Securities with Unrealized Losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investment [Line Items]
Estimated fair value, less than 12 months	$ 57,200	$ 153,056
Estimated fair value, 12 months or more
Estimated fair value, total	57,200	153,056
Unrealized losses, less than 12 months	1,404	3,731
Unrealized losses, 12 months or more
Unrealized losses, total	1,404	3,731
State and Political Subdivisions [Member]
Investment [Line Items]
Estimated fair value, less than 12 months	45,082	140,384
Estimated fair value, 12 months or more
Estimated fair value, total	45,082	140,384
Unrealized losses, less than 12 months	1,076	3,328
Unrealized losses, 12 months or more
Unrealized losses, total	1,076	3,328
U.S. government agencies [Member]
Investment [Line Items]
Estimated fair value, less than 12 months	12,118	12,672
Estimated fair value, 12 months or more
Estimated fair value, total	12,118	12,672
Unrealized losses, less than 12 months	328	403
Unrealized losses, 12 months or more
Unrealized losses, total	328	403
Certificates of Deposit [Member]
Investment [Line Items]
Estimated fair value, less than 12 months
Estimated fair value, 12 months or more
Estimated fair value, total
Unrealized losses, less than 12 months
Unrealized losses, 12 months or more
Unrealized losses, total

XML

Investment in Securities (Schedule of Amortized Cost and Fair Value of Investment Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Amortized Cost, Due in 1 year or less	$ 21,393
Amortized Cost, Due after 1 year through 5 years	58,167
Amortized Cost, Due after 5 years through 10 years	207,799
Amortized Cost, Due after 10 years	134,768
Amortized Cost, Total	422,127
Fair Value, Due in 1 year or less	21,574
Fair Value, Due after 1 year through 5 years	59,364
Fair Value, Due after 5 years through 10 years	215,950
Fair Value, Due after 10 years	135,091
Fair Value, Total	$ 431,979	$ 390,552

XML

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Cash and cash equivalents, Carrying Amount	$ 301,060	$ 266,743	$ 274,133	$ 253,172
Investment securities, Carrying Amount	431,979	390,552
Loans, net, Carrying Amount	661,487	654,691
Accrued interest receivable, Carrying Amount	7,037	6,543
Assets, Carrying Amount	1,401,563	1,318,529
Cash and cash equivalents, Fair Value	301,060	266,743
Investment securities, Fair Value	431,979	390,552
Loans, net, Fair Value	658,280	652,028
Accrued interest receivable, Fair Value	7,037	6,543
Assets, Fair Value	1,398,356	1,315,866
Deposits, Carrying Amount	605,039	621,961
Accounts and drafts payable, Carrying Amount	729,403	642,287
Accrued interest payable, Carrying Amount	41	46
Liabilities, Carrying Amount	1,334,483	1,264,294
Deposits, Fair Value	605,382	622,173
Accounts and drafts payable, Fair Value	729,403	642,287
Accrued interest payable, Fair Value	41	46
Liabilities, Fair Value	$ 1,334,826	$ 1,264,506