FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2013

FAIR VALUE

Schedule of assets and liabilities measured at fair value on a recurring basis

			Fair Value Measurements at March 31, 2013 Using:
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(Dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Investment securities available-for sale
U. S. government agency	$	1,390			$	1,390
States and municipals	338,409				323,417		14,992
Mortgage-backed securities — residential —Government Sponsored Entity	217,160				217,160
Collateralized mortgage obligations — Government Sponsored Entity	340,959				340,959
Equity securities	4,939		4,689				250
Other securities	3,539				990		2,549
Total investment securities available-for-sale	$	906,396	$	4,689	$	883,916	$	17,791
Mortgage banking derivative	$	1,375			$	1,375

			Fair Value Measurements at December 31, 2012 Using:
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(Dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Investment securities available-for sale
U. S. government agency	$	1,638			$	1,638
States and municipals	337,939				322,469		15,470
Mortgage-backed securities — residential —Government Sponsored Entity	227,055				227,055
Collateralized mortgage obligations — Government Sponsored Entity	327,223				327,223
Equity securities	4,939		4,689				250
Other securities	3,547				990		2,557
Total investment securities available-for-sale	$	902,341	$	4,689	$	879,375	$	18,277
Mortgage banking derivative	$	2,200			$	2,200

Schedule of reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

States and municipal	2013			2012
Beginning balance, January 1	$	15,470		$	23,556
Total gains or losses (realized / unrealized)
Included in other comprehensive income	(11		)	(8		)
Sales	—			(6,907		)
Settlements	(467		)	(374		)
Ending balance, March 31	$	14,992		$	16,267

Equity securities	2012		2011
Beginning balance, January 1	$	250	$	750
Total gains or losses (realized / unrealized)
Included in earnings
Other than temporary impairment	—		(500		)
Ending balance, March 31	$	250	$	250

Other securities	2012			2011
Beginning balance, January 1	$	2,557		$	2,587
Total gains or losses (realized / unrealized)
Included in other comprehensive income	(8		)	(8		)
Ending balance, March 31	$	2,549		$	2,579

Schedule of assets and liabilities measured at fair value on a non-recurring basis

			Fair Value Measurements at March 31, 2013 Using
	March 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
Commercial and industrial	$	140			$	140
Farm	421				421
Construction and development	291				291
Other	8,119				8,119
1-4 Family	233				233
Total impaired loans	$	9,204			$	9,204
Impaired servicing rights	$	2,763			$	2,763
Other real estate owned/assets held for sale
Construction and development	$	1,095			$	1,095
Other	348				348
1-4 family	140				140
Total other real estate owned/assets held for sale	$	1,583			$	1,583

			Fair Value Measurements at December 31, 2012 Using
	December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
Commercial and industrial	$	155			$	155
Farm	480				480
Construction and development	404				404
Other	4,936				4,936
Total impaired loans	$	5,975			$	5,975
Impaired servicing rights	$	2,942			$	2,942
Other real estate owned/assets held for sale
Construction and development	$	1,764			$	1,764
Other	803				803
1-4 family	95				95
Total other real estate owned/assets held for sale	$	2,662			$	2,662

Schedule of breakdown of impaired loans by portfolio class

	Gross Balance		Valuation Allowance		Net
Commercial and industrial	$	496	$	356	$	140
Farm	625		204		421
Construction and development	543		252		291
Other commercial real estate	10,690		2,571		8,119
1-4 Family	244		11		233
Ending Balance	$	12,598	$	3,394	$	9,204

Schedule of properties by portfolio class, net

	Gross Balance		Valuation Allowance		Net
Construction and development	$	1,621	$	526	$	1,095
Other commercial real estate	483		135		348
1-4 Family	213		73		140
Ending Balance	$	2,317	$	734	$	1,583

Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis

March 31, 2013	Fair Value (in thousands)		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired Loans:
Commercial & industrial	$	140	Liquidation value of inventory	Management adjustment	15% 15% Avg
Farm real estate	421		Sales comparison approach	Adjustment for differences between comparable sales	40% 40% Avg
Construction and development	291		Sales comparison approach	Adjustment for differences between comparable sales	10%-35% 33% Avg
Other	8,352		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	0%-65% 26% Avg
	$	9,204
Other real estate owned:
Construction and development	$	1,095	Sales comparison approach	Adjustment for differences between comparable sales.	10%-49% 18% Avg
Other and 1-4 family	488		Sales comparison approach	Adjustment for differences between comparable sales.	10%-65% 29% Avg
	$	1,583
Mortgage servicing rights	$	2,763	Cash flow analysis	Discount rate	10%
December 31, 2012	Fair Value (in thousands)		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired Loans:
Commercial & industrial	$	155	Liquidation value of inventory	Management adjustment	15% 15% Avg
Farm real estate	480		Sales comparison approach	Adjustment for differences between comparable sales	35-40% 37% Avg
Construction and development	404		Sales comparison approach	Adjustment for differences between comparable sales	10%-50% 41% Avg
Other	4,936		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	0%-60% 32% Avg
	$	5,975
Other real estate owned:
Construction and development	$	1,764	Sales comparison approach	Adjustment for differences between comparable sales.	10%-26% 15% Avg
Other and 1-4 family	898		Sales comparison approach	Adjustment for differences between comparable sales.	2%-35% 17% Avg
	$	2,662
Mortgage servicing rights	$	2,942	Cash flow analysis	Discount rate	10%

Schedule of carrying amounts and estimated fair values of financial instruments

March 31, 1013	Carrying Amount			Level 1		Level 2		Level 3	Total
Financial assets:
Cash and cash equivalents	$	35,897		31,385		4,512			35,897
Loans including loans held for sale, net	1,549,210					5,094		1,538,992	1,544,086
Restricted stock	15,637								N/A
Interest receivable	9,620					4,390		5,230	9,620
Financial liabilities
Deposits	(2,182,697		)	(418,916	)	(1,765,306	)		(2,184,222	)
Other borrowings	(39,479		)			(39,479	)		(39,479	)
FHLB advances	(104,404		)			(112,380	)		(112,380	)
Interest payable	(954		)			(954	)		(954	)
Subordinated debentures	(50,455		)			(31,786	)		(31,786	)

December 31,2012	Carrying Amount			Level 1			Level 2			Level 3	Total
Financial assets:
Cash and cash equivalents	$	65,650		$	58,100		$	7,550			$	65,650
Loans including loans held for sale, net	1,564,433						17,025			1,538,489	1,555,514
Restricted stock	15,639										N/A
Interest receivable	9,827						4,621			5,206	9,827
Financial liabilities
Deposits	(2,185,054		)	(405,167		)	(1,780,511		)		(2,185,678		)
Other borrowings	(34,519		)				(34,519		)		(34,519		)
FHLB advances	(141,052		)				(152,018		)		(152,018		)
Interest payable	(1,195		)				(1,195		)		(1,195		)
Subordinated debentures	(50,418		)				(31,763		)		(31,763		)