FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2016

FAIR VALUE.

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

			Fair Value Measurements at March 31, 2016 Using:
			Quoted Prices in		Significant		Significant
			Active Markets for		Other 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	$	486	$	—	$	486	$	—
States and municipal		349,405		—		338,976		10,429
Mortgage-backed securities — residential — Government Sponsored Entity		354,998		—		354,998		—
Collateralized mortgage obligations — Government Sponsored Entity		221,618		—		221,618		—
Equity securities		4,689		4,689		—		—
Other securities		6,523		—		—		6,523
Total investment securities available-for-sale	$	937,719	$	4,689	$	916,078	$	16,952
Mortgage banking derivatives	$	725		—	$	725		—
Interest rate swap asset	$	3,610		—	$	3,610		—
Interest rate swap liability	$	(3,610)		—	$	(3,610)		—

			Fair Value Measurements at December 31, 2015 Using:
			Quoted Prices in		Significant		Significant
			Active Markets for		Other 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	$	504	$	—	$	504	$	—
States and municipal		350,733		—		339,875		10,858
Mortgage-backed securities — residential — Government Sponsored Entity		334,080		—		334,080		—
Collateralized mortgage obligations — Government Sponsored Entity		228,749		—		228,749		—
Equity securities		4,689		4,689		—		—
Other securities		6,524		—		—		6,524
Total investment securities available-for-sale	$	925,279	$	4,689	$	903,208	$	17,382
Mortgage banking derivative	$	700		—	$	700		—
Interest rate swap asset	$	1,508		—	$	1,508		—
Interest rate swap liability	$	(1,508)		—	$	(1,508)		—

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	2016		2015
Beginning balance, January 1	$	10,858	$	12,810
Total gains or losses (realized / unrealized)
Included in other comprehensive income		1		—
Settlements		(430)		(439)
Ending balance, March 31	$	10,429	$	12,371

Other securities	2016		2015
Beginning balance, January 1	$	6,524	$	2,503
Total gains or losses (realized / unrealized)
Included in other comprehensive income		(1)		35
Ending balance, March 31	$	6,523	$	2,538

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

			Fair Value Measurements at March 31, 2016 Using:
			Quoted Prices in	Significant	Significant
			Active Markets for	Other Observable	Unobservable
	March 31,		Identical Assets	Inputs	Inputs
	2016		(Level 1)	(Level 2)	(Level 3)
Assets:
Impaired loans
Commercial and industrial	$	68			$	68
Other real estate		438				438
Total impaired loans	$	506			$	506
Impaired servicing rights	$	474			$	474

			Fair Value Measurements at December 31, 2015 Using:
			Quoted Prices in	Significant	Significant
			Active Markets for	Other Observable	Unobservable
	December 31,		Identical Assets	Inputs	Inputs
	2015		(Level 1)	(Level 2)	(Level 3)
Assets:
Impaired loans
Commercial and industrial	$	58			$	58
Other real estate		1,082				1,082
Total impaired loans	$	1,140			$	1,140
Impaired servicing rights	$	531			$	531

Schedule of breakdown of impaired loans by portfolio class

	Gross		Valuation
	Balance		Allowance		Net
Commercial and industrial	$	150	$	82	$	68
Other real estate		795		357		438
Ending Balance	$	945	$	439	$	506

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

	Fair Value		Valuation	Unobservable	Range/
March 31, 2016	(in thousands)		Technique(s)	Input(s)	Average
Impaired Loans:
Commercial and industrial	$	68	Sales comparison approach	Adjustment for differences between comparable sales	10	%
					10	%	Avg
Other real estate		438	Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	0	%	-	20	%
	$	506			10	%	Avg
Mortgage servicing rights	$	474	Cash flow analysis	Discount rate	10	%

	Fair Value		Valuation	Unobservable	Range/
December 31, 2015	(in thousands)		Technique(s)	Input(s)	Average
Impaired Loans:
Farm real estate	$	58	Sales comparison approach	Adjustment for differences between comparable sales	10	%
					10	%	Avg
Other		1,082	Sales comparison approach	Adjustment for differences between comparable sales, type of property, current status of property	0	%	-	20	%
	$	1,140			10	%	Avg
Mortgage servicing rights	$	531	Cash flow analysis	Discount rate	10	%

Schedule of carrying amounts and estimated fair values of financial instruments

	Carrying
March 31, 2016	Amount		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	72,002	$	56,906	$	15,096	$		$	72,002
Interest bearing time deposits		1,715				1,715				1,715
Loans including loans held for sale, net		2,143,926				5,712		2,202,575		2,208,287
FHLB and other stock		14,583								N/A
Interest receivable		11,076				4,848		6,228		11,076
Liabilities
Deposits		(2,644,844)		(647,187)		(1,996,667)				(2,643,854)
Other borrowings		(31,159)				(31,159)				(31,159)
FHLB advances		(285,557)				(290,171)				(290,171)
Interest payable		(566)				(566)				(566)
Subordinated debentures		(41,239)				(24,212)				(24,212)

	Carrying
December 31, 2015	Amount		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	67,578	$	56,104	$	11,474	$		$	67,578
Interest bearing time deposits		1,960				1,960				1,960
Loans including loans held for sale, net		2,139,765				7,726		2,187,366		2,195,092
FHLB and other stock		11,300								N/A
Interest receivable		10,779				4,901		5,878		10,779
Liabilities
Deposits		(2,650,775)		(641,439)		(2,007,405)				(2,648,844)
Other borrowings		(28,363)				(28,363)				(28,363)
FHLB advances		(269,488)				(270,977)				(270,977)
Interest payable		(560)				(560)				(560)
Subordinated debentures		(41,239)				(24,212)				(24,212)