FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2014

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

			Fair Value Measurements at March 31, 2014 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	$	712			$	712
States and municipals	326,854				312,837		14,017
Mortgage-backed securities — residential —Government Sponsored Entity	179,250				179,250
Collateralized mortgage obligations — Government Sponsored Entity	365,835				365,835
Equity securities	4,939		4,689				250
Other securities	3,514				996		2,518
Total investment securities available-for-sale	$	881,104	$	4,689	$	859,630	$	16,785

Mortgage banking derivative	$	625			$	625

			Fair Value Measurements at December 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	$	798			$	798
States and municipals	331,112				316,692		14,420
Mortgage-backed securities — residential —Government Sponsored Entity	185,429				185,429
Collateralized mortgage obligations — Government Sponsored Entity	365,309				365,309
Equity securities	4,939		4,689				250
Other securities	3,519				993		2,526
Total investment securities available-for-sale	$	891,106	$	4,689	$	869,221	$	17,196

Mortgage banking derivative	$	525			$	525

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)

Three months ended March 31:

States and municipal	2014			2013
Beginning balance, January 1	$	14,420		$	15,470
Total gains or losses (realized / unrealized)
Included in other comprehensive income	14			(11		)
Settlements	(417		)	(467		)
Ending balance, March 31	$	14,017		$	14,992

Equity securities	2014		2013
Beginning balance, January 1	$	250	$	250
Total gains or losses (realized / unrealized)
Included in earnings
Ending balance, March 31	$	250	$	250

Other securities	2014			2013
Beginning balance, January 1	$	2,526		$	2,557
Total gains or losses (realized / unrealized)
Included in other comprehensive income	(8		)	(8		)
Ending balance, March 31	$	2,518		$	2,549

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

			Fair Value Measurements at March 31, 2014 Using
	March 31, 2014		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	$	—			$	—
Farm real estate	55				55
Other	3,516				3,516
Total impaired loans	$	3,571			$	3,571
Impaired servicing rights	$	1,657			$	1,657
Other real estate owned/assets held for sale
Construction and development	$	1,254			$	1,254
Other	623				623
1-4 family	58				58
Home equity	71				71
Total other real estate owned/assets held for sale	$	2,006			$	2,006

			Fair Value Measurements at December 31, 2013 Using
	December 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	$	76			$	76
Farm estate	375				375
Construction and development	226				226
Other	5,112				5,112
Total impaired loans	$	5,789			$	5,789
Impaired servicing rights	$	1,794			$	1,794
Other real estate owned/assets held for sale
Construction and development	$	522			$	522
Home equity	67				67
Other	425				425
Total other real estate owned/assets held for sale	$	1,014			$	1,014

Schedule of breakdown of impaired loans by portfolio class

	Gross Balance		Valuation Allowance		Net
Commercial and industrial	$	12	$	12	$	—
Farm	76		21		55
Other commercial real estate	4,331		815		3,516
Ending Balance	$	4,419	$	848	$	3,571

Schedule of properties by portfolio class, net

	Gross Balance		Valuation Allowance		Net
Construction and development	$	2,388	$	1,134	$	1,254
Other commercial real estate	854		231		623
1-4 family	74		16		58
Home equity	122		51		71
Ending Balance	$	3,438	$	1,432	$	2,006

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

March 31, 2014	Fair Value (in thousands)		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired Loans:
Farm real estate	55		Sales comparison approach	Adjustment for differences between comparable sales	40% 40% Avg
Other	3,516		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	10%-40% 17% Avg
	$	3,571
Other real estate owned:
Construction and development	$	1,254	Sales comparison approach	Adjustment for differences between comparable sales.	10%-19% 15% Avg
Other, 1-4 family, and home equity	752		Sales comparison approach	Adjustment for differences between comparable sales.	10%-17% 10% Avg
	$	2,006

Mortgage servicing rights	$	1,657	Cash flow analysis	Discount rate	10%

December 31, 2013	Fair Value (in thousands)		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired Loans:
Commercial & industrial	$	76	Sales comparison approach	Adjustment for differences between comparable sales	0%-10% 10% Avg
Farm real estate	375		Sales comparison approach	Adjustment for differences between comparable sales	40% 40% Avg
Other/ 1-4 Family	5,338		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	0%-40% 25% Avg
	5,789
Other real estate owned:
Construction and development	$	522	Sales comparison approach	Adjustment for differences between comparable sales.	10% 10%Avg
Other & Home Equity	492		Sales comparison approach	Adjustment for differences between comparable sales.	10%-15% 10%Avg
	1,014
Mortgage servicing rights	1,794		Cash flow analysis	Discount rate	10%

Schedule of carrying amounts and estimated fair values of financial instruments

March 31, 2014	Carrying Amount			Level 1		Level 2		Level 3	Total
Financial assets:
Cash and cash equivalents	$	72,195		62,739		9,456			72,195
Interest bearing time deposits	980			980					980
Loans including loans held for sale, net	1,659,979					3,315		1,674,877	1,678,192
Restricted stock	15,628								N/A
Interest receivable	9,440					4,367		5,073	9,440
Financial liabilities
Deposits	(2,225,825		)	(459,541	)	(1,765,800	)		(2,225,341	)
Other borrowings	(39,864		)			(39,864	)		(39,864	)
FHLB advances	(224,424		)			(228,986	)		(228,986	)
Interest payable	(716		)			(716	)		(716	)
Subordinated debentures	(41,239		)			(20,560	)		(20,560	)

December 31, 2013	Carrying Amount			Level 1			Level 2			Level 3	Total
Financial assets:
Cash and cash equivalents	$	61,320		$	55,826		$	5,494			$	61,320
Loans including loans held for sale, net	1,644,527						6,158			1,657,199	1,663,357
Restricted stock	15,629										N/A
Interest receivable	9,706						4,573			5,133	9,706
Financial liabilities
Deposits	(2,200,628		)	(436,550		)	(1,764,719		)		(2,201,269		)
Other borrowings	(38,594		)				(38,594		)		(38,594		)
FHLB advances	(247,858		)				(252,402		)		(252,402		)
Interest payable	(799		)				(799		)		(799		)
Subordinated debentures	(46,394		)				(23,130		)		(23,130		)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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