FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2017

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


			Fair Value Measurements at June 30, 2017 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	$	117	$	—	$	117	$	—
States and municipal		386,429		—		376,757		9,672
Mortgage-backed securities — residential — Government Sponsored Entity		463,940		—		463,940		—
Collateralized mortgage obligations — Government Sponsored Entity		219,390		—		219,390		—
Equity securities		4,670		4,670		—		—
Other securities		5,009		—		—		5,009
Total investment securities available-for-sale	$	1,079,555	$	4,670	$	1,060,204	$	14,681

Mortgage banking derivative	$	1,018		—	$	1,018		—

Interest rate swap asset	$	3,605		—	$	3,605		—
Interest rate swap liability	$	(3,605)		—	$	(3,605)		—


			Fair Value Measurements at December 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	$	955	$	—	$	955	$	—
States and municipal		369,286		—		359,166		10,120
Mortgage-backed securities — residential — Government Sponsored Entity		446,630		—		446,630		—
Collateralized mortgage obligations — Government Sponsored Entity		179,401		—		179,401		—
Equity securities		4,670		4,670		—		—
Other securities		6,598		—		—		6,598
Total investment securities available-for-sale	$	1,007,540	$	4,670	$	986,152	$	16,718

Mortgage banking derivative	$	648		—	$	648		—

Interest rate swap asset	$	3,003		—	$	3,003		—
Interest rate swap liability	$	(3,003)		—	$	(3,003)		—

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 June 30:


States and municipal	2017		2016
Beginning balance, April 1	$	9,674	$	10,429
Total gains or losses (realized / unrealized)
Included in other comprehensive income		(2)		1
Settlements		—		—
Ending balance, June 30	$	9,672	$	10,430


Other securities	2017		2016
Beginning balance, April 1	$	6,603	$	6,523
Total gains or losses (realized / unrealized)
Settlement through acquisition		(1,590)		—
Included in other comprehensive income		(4)		78
Ending balance, June 30	$	5,009	$	6,601

The table below presents a 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) for the six month periods ended June 30, 2017 and 2016:


States and municipal	2017		2016
Beginning balance, January 1	$	10,120	$	10,858
Total gains or losses (realized / unrealized)
Included in other comprehensive income		(5)		2
Settlements		(443)		(430)
Ending balance, June 30	$	9,672	$	10,430


Other securities	2017		2016
Beginning balance, January 1	$	6,598	$	6,524
Total gains or losses (realized / unrealized)
Settlement through acquisition		(1,590)		—
Included in other comprehensive income		1		77
Ending balance, June 30	$	5,009	$	6,601

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


			Fair Value Measurements at June 30, 2017 Using:
			Quoted Prices in	Significant	Significant
			Active Markets for	Other Observable	Unobservable
	June 30,		Identical Assets	Inputs	Inputs
	2017		(Level 1)	(Level 2)	(Level 3)
Assets:
Impaired loans
Commercial and industrial	$	74			$	74
Agricultural		787				787
Hotel		2,749				2,749
Farm real estate		795				795
Other real estate		613				613
Total impaired loans	$	5,018			$	5,018

Impaired servicing rights	$	974			$	974


			Fair Value Measurements at December 31, 2016 Using:
			Quoted Prices in	Significant	Significant
			Active Markets for	Other Observable	Unobservable
	December 31,		Identical Assets	Inputs	Inputs
	2016		(Level 1)	(Level 2)	(Level 3)
Assets:
Impaired loans
Commercial and industrial	$	260			$	260
Agricultural		972				972
Farm real estate		745				745
Other real estate		560				560
Total impaired loans	$	2,537			$	2,537

Impaired servicing rights	$	1,083			$	1,083

Schedule of breakdown of impaired loans by portfolio class


	Gross		Valuation
	Balance		Allowance		Net
Commercial and industrial	$	142	$	68	$	74
Agricultural		1,488		701		787
Hotel		2,950		201		2,749
Farm real estate		1,345		550		795
Other real estate		1,055		442		613
Ending Balance	$	6,980	$	1,962	$	5,018

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/

June 30, 2017

(in thousands)

Technique(s)

Input(s)

Average

Impaired Loans:

Commercial and industrial

Sales comparison approach

Adjustment for differences between comparable sales

19% - 30%

24% Avg

Agricultural

787

Sales comparison approach

Adjustment for differences between comparable sales

16%-25%

24% Avg

Hotel

2,749

Sales comparison approach

Adjustment for differences between comparable sales

40%

40% Avg

Farm real estate

795

Sales comparison approach

Adjustment for differences between comparable sales

16%-25%

22% Avg

Other real estate

613

Sales comparison approach

Adjustment for differences between comparable sales, type of property, current status of property

19% - 40%

27% Avg

5,017

Mortgage servicing rights

974

Cash flow analysis

Discount rate

10%

Fair Value

Valuation

Unobservable

Range/

December 31, 2016

(in thousands)

Technique(s)

Input(s)

Average

Impaired Loans:

Commercial and industrial

260

Sales comparison approach

Adjustment for differences between comparable sales

10% - 30%

18% Avg

Agricultural

972

Sales comparison approach

Adjustment for differences between comparable sales

10%

10% Avg

Farm real estate

745

Sales comparison approach

Adjustment for differences between comparable sales

10%

10% Avg

Other real estate

560

Sales comparison approach

Adjustment for differences between comparable sales, type of property, current status of property

16% - 31%

27% Avg

2,537

Mortgage servicing rights

1,083

Cash flow analysis

Discount rate

10%

Schedule of carrying amounts and estimated fair values of financial instruments


	Carrying
June 30, 2017	Amount		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	82,728	$	79,390	$	3,338	$		$	82,728
Interest bearing time deposits		1,915				1,915				1,915
Loans including loans held for sale, net		3,008,143				6,953		3,050,269		3,057,222
FHLB and other stock		27,331								N/A
Interest receivable		13,747				5,687		8,060		13,747
Liabilities
Deposits		(3,522,343)		(849,470)		(2,669,390)				(3,518,860)
Other borrowings		(210,338)				(137,197)				(137,197)
FHLB advances		(270,977)				(269,945)				(269,945)
Interest payable		(1,008)				(1,008)				(1,008)
Subordinated debentures		(47,149)				(39,994)				(39,994)


	Carrying
December 31, 2016	Amount		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	86,552	$	75,778	$	10,774	$		$	86,552
Interest bearing time deposits		1,960				1,960				1,960
Loans including loans held for sale, net		2,639,046				12,598		2,662,431		2,675,029
FHLB and other stock		21,693								N/A
Interest receivable		12,576				5,234		7,342		12,576
Liabilities
Deposits		(3,110,871)		(767,159)		(2,340,824)				(3,107,983)
Other borrowings		(209,672)				(209,686)				(209,686)
FHLB advances		(249,658)				(248,944)				(248,944)
Interest payable		(642)				(642)				(642)
Subordinated debentures		(41,239)				(34,084)				(34,084)