FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2015

FAIR VALUE.

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

				Fair Value Measurements at March 31, 2015 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/Liabilities
Investment securities available-for sale
U. S. government agency	$	627				$	627
States and municipals	336,218					323,847			$	12,371
Mortgage-backed securities — residential —Government Sponsored Entity	195,753					195,753
Collateralized mortgage obligations — Government Sponsored Entity	331,255					331,255
Equity securities	4,689			$	4,689
Other securities	2,538								2,538
Total investment securities available-for-sale	$	871,080		$	4,689	$	851,482		$	14,909
Mortgage banking derivative	$	975				$	975
Interest rate swap asset	$	247				$	247
Interest rate swap liability	$	(247	)			$	(247	)

				Fair Value Measurements at December 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/Liabilities
Investment securities available-for sale
U. S. government agency	$	661				$	661
States and municipals	334,298					321,488			$	12,810
Mortgage-backed securities — residential —Government Sponsored Entity	182,172					182,172
Collateralized mortgage obligations — Government Sponsored Entity	343,437					343,437
Equity securities	4,689			$	4,689
Other securities	2,503								2,503
Total investment securities available-for-sale	$	867,760		$	4,689	$	847,758		$	15,313
Mortgage banking derivative	$	975				$	975
Interest rate swap asset	$	56				$	56
Interest rate swap liability	$	(56	)			$	(56	)

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	2015			2014
Beginning balance, January 1	$	12,810		$	14,420
Total gains or losses (realized / unrealized)
Included in other comprehensive income	—			14
Settlements	(439		)	(417		)
Ending balance, March 31	$	12,371		$	14,017

Equity securities	2015		2014
Beginning balance, January 1	$	—	$	250
Total gains or losses (realized / unrealized)
Included in earnings
Ending balance, March 31	$	—	$	250

Other securities	2015		2014
Beginning balance, January 1	$	2,503	$	2,526
Total gains or losses (realized / unrealized)
Included in other comprehensive income	35		(8		)
Ending balance, March 31	$	2,538	$	2,518

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

			Fair Value Measurements at March 31, 2015 Using
	March 31, 2015		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	$	167			$	167
Farm real estate	54				54
Other real estate	985				985
Total impaired loans	$	1,206			$	1,206
Impaired servicing rights	$	1,698			$	1,698

			Fair Value Measurements at December 31, 2014 Using
	December 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
Farm real estate	$	55			$	55
Other	1,235				1,235
Total impaired loans	$	1,290			$	1,290
Impaired servicing rights	$	1,854			$	1,854
Other real estate owned
Construction and development	$	21			$	21
Other real estate	291				291
1-4 Family	150				150
Total other real estate owned	$	462			$	462

Schedule of breakdown of impaired loans by portfolio class

A breakdown of these loans by portfolio class at March 31, 2015 is as follows:

	Gross Balance		Valuation Allowance		Net
Commercial and industrial	$	297	$	130	$	167
Farm real estate	76		22		54
Other commercial real estate	1,538		553		985
Ending Balance	$	1,911	$	705	$	1,206

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

March 31, 2015	Fair Value (in thousands)		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired Loans:
Commercial and industrial	$	167	Sales comparison approach	Adjustment for differences between comparable sales	15%-20% 16% Avg
Farm real estate	54		Sales comparison approach	Adjustment for differences between comparable sales	40% 40% Avg
Other	985		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	20%-45% 21% Avg
	$	1,206
Mortgage servicing rights	$	1,698	Cash flow analysis	Discount rate	10%

December 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	1,235		Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	20%-45% 36% Avg
	$	1,290
Other real estate owned:
Construction and development	$	21	Sales comparison approach	Adjustment for differences between comparable sales.	15% 15% Avg
Other and 1-4 family	441		Sales comparison approach	Adjustment for differences between comparable sales.	10%-19% 11% Avg
	$	462
Mortgage servicing rights	$	1,854	Cash flow analysis	Discount rate	10%

Schedule of carrying amounts and estimated fair values of financial instruments

March 31, 2015	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	69,550		$	59,451		$	10,099				$	69,550
Interest bearing time deposits	1,670						1,670					1,670
Loans including loans held for sale, net	1,966,325						21,616			$	1,970,843	1,992,459
FHLB and other stock	13,854											N/A
Interest receivable	10,099						4,261			5,838		10,099
Financial liabilities
Deposits	(2,475,234		)	(550,497		)	(1,924,851		)			(2,475,348		)
Other borrowings	(20,518		)				(20,518		)			(20,518		)
FHLB advances	(235,480		)				(238,867		)			(238,867		)
Interest payable	(554		)				(554		)			(554		)
Subordinated debentures	(41,239		)				(24,212		)			(24,212		)

December 31, 2014	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	62,485		$	60,662		$	1,823				$	62,485
Interest bearing time deposits	1,915						1,915					1,915
Loans including loans held for sale, net	1,941,507						8,514			$	1,946,843	1,955,357
FHLB and other stock	13,854											N/A
Interest receivable	10,064						4,459			5,605		10,064
Financial liabilities
Deposits	(2,468,321		)	(513,393		)	(1,952,833		)			(2,466,226		)
Other borrowings	(26,349		)				(26,349		)			(26,349		)
FHLB advances	(214,413		)				(219,050		)			(219,050		)
Interest payable	(599		)				(599		)			(599		)
Subordinated debentures	(41,239		)				(24,212		)			(24,212		)