10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number: 0-11487

LAKELAND FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana	35-1559596
(State or Other Jurisdiction	(IRS Employer
of Incorporation or Organization)	Identification No.)
202 East Center Street, Warsaw, Indiana	46580
(Address of principal executive offices)	(Zip Code)

(574) 267‑6144

(Registrant’s Telephone Number, Including Area Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, No par value	LKFN	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧   No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

Large accelerated filer ⌧   Accelerated filer ◻   Non-accelerated filer◻

Smaller reporting company ☐    Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at April 29, 2020:  25,701,115

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — March 31, 2020 and December 31, 2019	1
	Consolidated Statements of Income — three months ended March 31, 2020 and 2019	2
	Consolidated Statements of Comprehensive Income — three months ended March 31, 2020 and 2019	3
	Consolidated Statements of Changes in Stockholders’ Equity — three months ended March 31, 2020 and 2019	4
	Consolidated Statements of Cash Flows — three months ended March 31, 2020 and 2019	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
SIGNATURES		52

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

	March 31,		December 31,
	2020		2019
	(Unaudited)
ASSETS
Cash and due from banks	$	52,988	$	68,605
Short-term investments		79,593		30,776
Total cash and cash equivalents		132,581		99,381
Securities available-for-sale (carried at fair value)		624,325		608,233
Real estate mortgage loans held-for-sale		7,982		4,527
Loans, net of allowance for loan losses of $53,609 and $50,652		4,032,129		4,015,176
Land, premises and equipment, net		60,945		60,365
Bank owned life insurance		83,037		83,848
Federal Reserve and Federal Home Loan Bank stock		13,772		13,772
Accrued interest receivable		15,433		15,391
Goodwill		4,970		4,970
Other assets		54,904		41,082
Total assets	$	5,030,078	$	4,946,745
LIABILITIES
Noninterest bearing deposits	$	1,057,994	$	983,307
Interest bearing deposits		3,223,709		3,150,512
Total deposits		4,281,703		4,133,819
Borrowings
Federal Home Loan Bank advances		75,000		170,000
Miscellaneous borrowings		10,500		0
Total borrowings		85,500		170,000
Accrued interest payable		10,082		11,604
Other liabilities		46,221		33,222
Total liabilities		4,423,506		4,348,645
STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value 25,701,115 shares issued and 25,234,572 outstanding as of March 31, 2020 25,623,016 shares issued and 25,444,275 outstanding as of December 31, 2019		113,337		114,858
Retained earnings		484,857		475,247
Accumulated other comprehensive income		22,550		12,059
Treasury stock at cost (466,543 shares as of March 31, 2020, 178,741 shares as of December 31, 2019)		(14,261)		(4,153)
Total stockholders’ equity		606,483		598,011
Noncontrolling interest		89		89
Total equity		606,572		598,100
Total liabilities and equity	$	5,030,078	$	4,946,745

The accompanying notes are an integral part of these consolidated financial statements.

1

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)

	Three Months Ended
	March 31,
	2020		2019
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	46,054	$	48,866
Tax exempt		222		251
Interest and dividends on securities
Taxable		1,973		2,497
Tax exempt		2,006		1,642
Other interest income		184		238
Total interest income		50,439		53,494
Interest on deposits		11,199		13,883
Interest on borrowings
Short-term		362		950
Long-term		24		452
Total interest expense		11,585		15,285
NET INTEREST INCOME		38,854		38,209
Provision for loan losses		6,600		1,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		32,254		37,009
NONINTEREST INCOME
Wealth advisory fees		1,859		1,620
Investment brokerage fees		417		386
Service charges on deposit accounts		2,772		4,287
Loan and service fees		2,408		2,404
Merchant card fee income		669		622
Bank owned life insurance income (loss)		(292)		444
Mortgage banking income		586		222
Net securities gains		0		23
Other income		2,358		1,517
Total noninterest income		10,777		11,525
NONINTEREST EXPENSE
Salaries and employee benefits		11,566		12,207
Net occupancy expense		1,387		1,366
Equipment costs		1,417		1,349
Data processing fees and supplies		2,882		2,425
Corporate and business development		1,111		1,206
FDIC insurance and other regulatory fees		267		406
Professional fees		1,147		937
Other expense		2,312		2,577
Total noninterest expense		22,089		22,473
INCOME BEFORE INCOME TAX EXPENSE		20,942		26,061
Income tax expense		3,643		4,379
NET INCOME	$	17,299	$	21,682
BASIC WEIGHTED AVERAGE COMMON SHARES		25,622,988		25,491,750
BASIC EARNINGS PER COMMON SHARE	$	0.68	$	0.85
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,735,826		25,665,510
DILUTED EARNINGS PER COMMON SHARE	$	0.67	$	0.84

The accompanying notes are an integral part of these consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - in thousands)

	Three months ended March 31,
	2020		2019
Net income	$	17,299	$	21,682
Other comprehensive income
Change in securities available-for-sale:
Unrealized holding gain on securities available-for-sale arising during the period		13,219		10,960
Reclassification adjustment for gains included in net income		0		(23)
Net securities gain activity during the period		13,219		10,937
Tax effect		(2,775)		(2,297)
Net of tax amount		10,444		8,640
Defined benefit pension plans:
Amortization of net actuarial loss		63		50
Net gain activity during the period		63		50
Tax effect		(16)		(12)
Net of tax amount		47		38
Total other comprehensive income, net of tax		10,491		8,678
Comprehensive income	$	27,790	$	30,360

The accompanying notes are an integral part of these consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited - in thousands, except share and per share data)

						Accumulated
						Other				Total
	Common Stock			Retained		Comprehensive		Treasury		Stockholders’		Noncontrolling		Total
	Shares	Stock		Earnings		Income (Loss)		Stock		Equity		Interest		Equity
Balance at January 1, 2019	25,128,773	$	112,383	$	419,179	$	(6,191)	$	(3,756)	$	521,615	$	89	$	521,704
Adoption of ASU 2017-08					(1,327)						(1,327)				(1,327)
Comprehensive income:
Net income					21,682						21,682				21,682
Other comprehensive income, net of tax							8,678				8,678				8,678
Cash dividends declared and paid, $0.26 per share					(6,581)						(6,581)				(6,581)
Cashless exercise of warrants	224,066		0								0				0
Treasury shares purchased under deferred directors’ plan	(4,578)		195						(195)		0				0
Treasury shares sold and distributed under deferred directors' plan	5,699		(118)						118		0				0
Stock activity under equity compensation plans	88,867		(2,089)								(2,089)				(2,089)
Stock based compensation expense			1,200								1,200				1,200
Balance at March 31, 2019	25,442,827	$	111,571	$	432,953	$	2,487	$	(3,833)	$	543,178	$	89	$	543,267
Balance at January 1, 2020	25,444,275	$	114,858	$	475,247	$	12,059	$	(4,153)	$	598,011	$	89	$	598,100
Comprehensive income:
Net income					17,299						17,299				17,299
Other comprehensive income, net of tax							10,491				10,491				10,491
Cash dividends declared and paid, $0.30 per share					(7,689)						(7,689)				(7,689)
Treasury shares purchased under share repurchase plan	(289,101)								(10,012)		(10,012)				(10,012)
Treasury shares purchased under deferred directors’ plan	(4,449)		215						(215)		0				0
Treasury shares sold and distributed under deferred directors' plan	5,748		(119)						119		0				0
Stock activity under equity compensation plans	78,099		(2,030)								(2,030)				(2,030)
Stock based compensation expense			413								413				413
Balance at March 31, 2020	25,234,572	$	113,337	$	484,857	$	22,550	$	(14,261)	$	606,483	$	89	$	606,572

The accompanying notes are an integral part of these consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)

Three Months Ended March 31	2020		2019
Cash flows from operating activities:
Net income	$	17,299	$	21,682
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		1,514		1,417
Provision for loan losses		6,600		1,200
Amortization of loan servicing rights		167		122
Net change in loan servicing rights valuation allowance		246		0
Loans originated for sale, including participations		(16,801)		(7,454)
Net gain on sales of loans		(420)		(258)
Proceeds from sale of loans, including participations		13,601		6,835
Net loss on sales of premises and equipment		21		1
Net gain on sales and calls of securities available-for-sale		0		(23)
Net securities amortization		946		817
Stock based compensation expense		413		1,200
Losses (earnings) on life insurance		292		(444)
Gain on life insurance		(570)		(841)
Tax benefit of stock award issuances		(71)		(529)
Net change:
Interest receivable and other assets		(1,175)		(1,342)
Interest payable and other liabilities		(2,547)		1,276
Total adjustments		2,216		1,977
Net cash from operating activities		19,515		23,659
Cash flows from investing activities:
Proceeds from sale of securities available for sale		0		13,693
Proceeds from maturities, calls and principal paydowns of securities available-for-sale		16,393		16,026
Purchases of securities available-for-sale		(20,211)		(22,183)
Purchase of life insurance		(232)		(5,362)
Net increase in total loans		(23,588)		(24,356)
Proceeds from sales of land, premises and equipment		18		10
Purchases of land, premises and equipment		(2,133)		(2,091)
Proceeds from life insurance		0		1,483
Net cash from investing activities		(29,753)		(22,780)
Cash flows from financing activities:
Net increase in total deposits		147,884		103,372
Net increase in short-term borrowings		10,500		46,445
Payments on short-term FHLB borrowings		(170,000)		(170,000)
Proceeds from long-term FHLB borrowings		75,000		0
Common dividends paid		(7,689)		(6,581)
Payments related to equity incentive plans		(2,030)		(2,089)
Purchase of treasury stock		(10,227)		(195)
Net cash from financing activities		43,438		(29,048)
Net change in cash and cash equivalents		33,200		(28,169)
Cash and cash equivalents at beginning of the period		99,381		216,922
Cash and cash equivalents at end of the period	$	132,581	$	188,753
Cash paid during the period for:
Interest	$	13,107	$	13,896
Supplemental non-cash disclosures:
Loans transferred to other real estate owned		35		0
Securities purchases payable		0		8,725
Right-of-use assets obtained in exchange for lease liabilities		0		5,483

The accompanying notes are an integral part of these consolidated financial statements.

5

NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the "Company"), which has two wholly owned subsidiaries, Lake City Bank (the "Bank") and LCB Risk Management, a captive insurance company. Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three-months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2020. The Company’s 2019 Annual Report on Form 10-K should be read in conjunction with these statements.

Adoption of New Accounting Standards

In January 2017, the FASB issued ASU No. 2017-04 "Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment." These amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted this new accounting standard on January 1, 2020.

Adopting this standard did not have an impact on the Company's financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." These amendments modify the disclosure requirements in Topic 820 as follows:

Removals: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements.

Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of

liquidation of an investee's assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

6

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The guidance is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-15 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued guidance related to credit losses on financial instruments. This update, commonly referred to as the current expected credit losses methodology (“CECL”), will change the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. For loans, this measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model previously required, but still permitted, under GAAP, which delays recognition until it is probable a loss has been incurred. In addition, the guidance will modify the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which will allow for reversal of credit impairments in future periods. This guidance is effective, subject to optional delay discussed below, for the Company for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years.

Under a provision provided by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Company elected to delay the adoption of FASB’s new rule covering the CECL standard until the earlier of the termination date of the national emergency declared by President Trump under the National Emergencies Act on March 13, 2020, related to the outbreak of COVID-19, and December 31, 2020. Once the delay provision has been terminated, adoption will be retroactive to January 1, 2020. During 2019, the Company implemented the CECL methodology and ran it concurrently with the historical incurred method. While the Company has not finalized the impact of implementing CECL, the Company expects to recognize a one-time cumulative effect adjustment to the allowance and beginning retained earnings, net of tax, upon adoption. Once final, the calculation will require approval by the loan review committee and governance in accordance with the Company’s internal controls over financial reporting. Additionally, the Company has evaluated the need to recognize an allowance for credit impairment for available-for-sale debt securities. The impact on available-for-sale debt securities is subject to a limitation, which is based on the fair value of the debt securities. When evaluating the credit quality of our existing portfolio, the Company does not expect the allowance for credit impairment for available-for-sale securities to be significant. The future impact of CECL on the Company’s allowance for credit losses and provision expense subsequent to the initial adoption will depend on changes in the loan portfolio, economic conditions and refinements to key assumptions including forecasting and qualitative factors.

In August 2018, the FASB issued ASU 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." The ASU updates the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans by adding, clarifying and removing certain disclosures. These amendments are effective for fiscal years ending after December 15, 2020, for public business entities, and are to be applied on a retrospective basis to all periods presented. Management does not anticipate ASU 2018-14 will have a material impact on its financial statements.

In December 2019, the FASB issued ASU 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." These amendments remove specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences where there are ownership changes in foreign investments; and exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. It also improves financial statement preparers' application of income tax- related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacts changes in tax laws in interim periods. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is assessing ASU 2019-12 and its impact on its financial statements.

7

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform ("ASC 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of the Secured Overnight Financial Rate (“SOFR”). The Company has identified loans that will renew prior to 2021 and will obtain updated reference rate language at the time of renewal. Loans maturing after 2021 will need loan modifications and fallback language has been implemented for newly originated loans. The guidance under ASC-848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard.

Reclassifications

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders’ equity as previously reported.

NOTE 2. SECURITIES

Information related to the fair value and amortized cost of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gain		Losses		Value
March 31, 2020
Mortgage-backed securities: residential	$	280,674	$	12,766	$	(170)	$	293,270
Mortgage-backed securities: commercial		41,003		811		0		41,814
State and municipal securities		272,205		17,068		(32)		289,241
Total	$	593,882	$	30,645	$	(202)	$	624,325
December 31, 2019
Mortgage-backed securities: residential	$	283,817	$	4,751	$	(387)	$	288,181
Mortgage-backed securities: commercial		36,712		262		(2)		36,972
State and municipal securities		270,480		12,828		(228)		283,080
Total	$	591,009	$	17,841	$	(617)	$	608,233

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2020 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	3,924	$	3,946
Due after one year through five years		15,371		15,741
Due after five years through ten years		27,257		28,584
Due after ten years		225,653		240,970
		272,205		289,241
Mortgage-backed securities		321,677		335,084
Total debt securities	$	593,882	$	624,325

8

Securities proceeds, gross gains and gross losses are presented below.

	Three months ended March 31,
(dollars in thousands)	2020		2019
Sales of securities available-for-sale
Proceeds	$	0	$	13,693
Gross gains		0		70
Gross losses		0		(47)
Number of securities		0		17

In accordance with ASU No. 2017-08, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $214.9 million and $59.3 million were pledged as of March 31, 2020 and December 31, 2019, respectively, as collateral for borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Mortgage-backed securities: residential	$	3,021	$	69	$	5,134	$	101	$	8,155	$	170
Mortgage-backed securities: commercial		2,214		0		0		0		2,214		0
State and municipal securities		4,509		32		0		0		4,509		32
Total temporarily impaired	$	9,744	$	101	$	5,134	$	101	$	14,878	$	202
December 31, 2019
Mortgage-backed securities: residential	$	23,436	$	112	$	14,174	$	275	$	37,610	$	387
Mortgage-backed securities: commercial		4,591		2		0		0		4,591		2
State and municipal securities		14,188		228		0		0		14,188		228
Total temporarily impaired	$	42,215	$	342	$	14,174	$	275	$	56,389	$	617

The total number of securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below.

	Less than	12 months
	12 months	or more	Total
March 31, 2020
Mortgage-backed securities: residential	1	2	3
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	4	0	4
Total temporarily impaired	6	2	8
December 31, 2019
Mortgage-backed securities: residential	7	6	13
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	11	0	11
Total temporarily impaired	19	6	25

9

The following factors are considered in determining whether or not the impairment of these securities is other-than-temporary. In making this determination, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer, as well as the underlying fundamentals of the relevant market and the outlook for such market in the near future. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. Credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. As of March 31, 2020 and December 31, 2019, all of the securities in the Company’s portfolio were backed by the U.S. government, government agencies, government sponsored entities or were A-rated or better, except for certain non-local or local municipal securities, which are not rated. For the government, government agency, government-sponsored entity and municipal securities, management did not believe that there would be credit losses or that full principal would not be received. Management considers the unrealized losses on these securities to be primarily interest rate driven and does not expect material losses given current market conditions unless the securities are sold. However, at this time management does not have the intent to sell, and it is more likely than not that the Company will not be required to sell these securities before the recovery of their amortized cost basis.

NOTE 3. LOANS

	March 31,				December 31,
(dollars in thousands)	2020				2019
Commercial and industrial loans:
Working capital lines of credit loans	$	730,767	17.9	%	$	709,849	17.5	%
Non-working capital loans		697,952	17.1			717,019	17.6
Total commercial and industrial loans		1,428,719	35.0			1,426,868	35.1
Commercial real estate and multi-family residential loans:
Construction and land development loans		334,524	8.2			287,641	7.1
Owner occupied loans		572,057	14.0			573,665	14.1
Nonowner occupied loans		584,418	14.3			571,364	14.0
Multifamily loans		269,479	6.6			240,652	5.9
Total commercial real estate and multi-family residential loans		1,760,478	43.1			1,673,322	41.1
Agri-business and agricultural loans:
Loans secured by farmland		145,542	3.5			174,380	4.3
Loans for agricultural production		183,855	4.5			205,151	5.0
Total agri-business and agricultural loans		329,397	8.0			379,531	9.3
Other commercial loans		104,286	2.5			112,302	2.8
Total commercial loans		3,622,880	88.6			3,592,023	88.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		173,431	4.3			177,227	4.4
Open end and junior lien loans		181,541	4.4			186,552	4.6
Residential construction and land development loans		12,146	0.3			12,966	0.3
Total consumer 1-4 family mortgage loans		367,118	9.0			376,745	9.3
Other consumer loans		97,096	2.4			98,617	2.4
Total consumer loans		464,214	11.4			475,362	11.7
Subtotal		4,087,094	100.0	%		4,067,385	100.0	%
Less: Allowance for loan losses		(53,609)				(50,652)
Net deferred loan fees		(1,356)				(1,557)
Loans, net	$	4,032,129			$	4,015,176

The recorded investment in loans does not include accrued interest.

The Company had $1.5 million in residential real estate loans in the process of foreclosure as of March 31, 2020, compared to $1.6 million as of December 31, 2019.

10

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended March 31, 2020 and 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2020
Beginning balance, January 1	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Provision for credit losses		2,628		2,750		(167)		74		395		175		745		6,600
Loans charged-off		(3,735)		0		0		0		(13)		(101)		0		(3,849)
Recoveries		57		112		2		0		7		28		0		206
Net loans charged-off		(3,678)		112		2		0		(6)		(73)		0		(3,643)
Ending balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		1,493		18		(161)		5		45		85		(285)		1,200
Loans charged-off		(83)		0		0		0		(82)		(119)		0		(284)
Recoveries		102		36		2		0		11		42		0		193
Net loans charged-off		19		36		2		0		(71)		(77)		0		(91)
Ending balance	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562

11

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31, 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
March 31, 2020
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	6,676	$	502	$	57	$	0	$	427	$	0	$	0	$	7,662
Collectively evaluated for impairment		18,063		18,156		3,647		521		2,048		447		3,065		45,947
Total ending allowance balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609
Loans:
Loans individually evaluated for impairment	$	15,726	$	4,127	$	430	$	0	$	2,695	$	0	$	0	$	22,978
Loans collectively evaluated for impairment		1,412,920		1,754,085		329,067		104,163		365,666		96,859		0		4,062,760
Total ending loans balance	$	1,428,646	$	1,758,212	$	329,497	$	104,163	$	368,361	$	96,859	$	0	$	4,085,738

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated			Total
December 31, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,324	$	538	$	90	$	0	$	426	$	6	$	0	$	10,384
Collectively evaluated for impairment		16,465		15,258		3,779		447		1,660		339		2,320		40,268
Total ending allowance balance	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Loans:
Loans individually evaluated for impairment	$	19,580	$	4,998	$	445	$	0	$	2,789	$	17	$	0	$	27,829
Loans collectively evaluated for impairment		1,407,246		1,665,842		379,186		112,166		375,210		98,349		0		4,037,999
Total ending loans balance	$	1,426,826	$	1,670,840	$	379,631	$	112,166	$	377,999	$	98,366	$	0	$	4,065,828

12

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2020:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	1,097	$	1,097	$	—
Non-working capital loans		2,012		619		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,284		2,103		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		403		322		—
Open end and junior lien loans		49		49		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,140		3,433		1,431
Non-working capital loans		13,211		10,577		5,245
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,024		2,024		502
Agri-business and agricultural loans:
Loans secured by farmland		147		147		57
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,635		1,638		371
Open end and junior lien loans		635		634		46
Residential construction loans		51		52		10
Other consumer loans		0		0		0
Total	$	29,291	$	22,978	$	7,662

13

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2019:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	22	$	—
Non-working capital loans		2,130		735		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		3,189		3,010		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Loans for ag production		15		15		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		411		330		—
Open end and junior lien loans		121		121		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,214		6,214		3,089
Non-working capital loans		13,230		12,609		6,235
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,988		1,988		538
Agri-business and agricultural loans:
Loans secured by farmland		147		147		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,643		1,646		363
Open end and junior lien loans		641		640		53
Residential construction loans		51		52		10
Other consumer loans		17		17		6
Total	$	30,422	$	27,829	$	10,384

14

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2020:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	380	$	0	$	0
Non-working capital loans		558		1		1
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,144		5		4
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		325		1		1
Open end and junior lien loans		85		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,287		0		0
Non-working capital loans		11,719		90		90
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,999		30		30
Agri-business and agricultural loans:
Loans secured by farmland		147		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,641		21		20
Open end and junior lien loans		638		0		0
Residential construction loans		52		0		0
Total	$	25,258	$	148	$	146

15

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2019:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	155	$	1	$	0
Non-working capital loans		1,549		29		24
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,621		11		8
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		380		1		1
Open end and junior lien loans		193		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,487		72		59
Non-working capital loans		11,416		132		128
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,080		13		12
Agri-business and agricultural loans:
Loans secured by farmland		147		2		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,598		12		12
Other consumer loans		43		1		1
Total	$	25,952	$	274	$	246

The following table presents the aging of the recorded investment in past due loans as of March 31, 2020 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	725,870	$	449	$	0	$	4,529	$	4,978	$	730,848
Non-working capital loans		693,515		99		0		4,184		4,283		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		568,122		430		0		3,186		3,616		571,738
Nonowner occupied loans		583,709		0		0		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		145,124		0		0		430		430		145,554
Loans for agricultural production		183,943		0		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		171,452		785		19		819		1,623		173,075
Open end and junior lien loans		182,388		66		43		683		792		183,180
Residential construction loans		12,052		2		0		52		54		12,106
Other consumer loans		96,736		114		9		0		123		96,859
Total	$	4,069,839	$	1,945	$	71	$	13,883	$	15,899	$	4,085,738

16

The following table presents the aging of the recorded investment in past due loans as of December 31, 2019 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	703,737	$	10	$	0	$	6,236	$	6,246	$	709,983
Non-working capital loans		710,557		4		0		6,282		6,286		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		569,303		0		0		4,056		4,056		573,359
Nonowner occupied loans		570,687		0		0		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		173,959		0		0		430		430		174,389
Loans for agricultural production		205,228		0		0		14		14		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		174,902		1,099		45		827		1,971		176,873
Open end and junior lien loans		187,255		188		0		761		949		188,204
Residential construction loans		12,870		0		0		52		52		12,922
Other consumer loans		98,176		173		0		17		190		98,366
Total	$	4,045,634	$	1,474	$	45	$	18,675	$	20,194	$	4,065,828

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $2.6 million and $2.5 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2020 and December 31, 2019, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	March 31,		December 31,
(dollars in thousands)	2020		2019
Accruing troubled debt restructured loans	$	5,852	$	5,909
Nonaccrual troubled debt restructured loans		2,311		3,188
Total troubled debt restructured loans	$	8,163	$	9,097

During the three months ended March 31, 2020, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

17

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2020:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	1		788		122	1	0
Total	1	$	788	$	122	1	0

For the three month period ended March 31, 2020, the troubled debt restructurings described above increased the allowance for loan losses by $122,000, and charge-offs of $666,000 were recorded.

As of March 31, 2020, total deferrals attributed to COVID-19 were $99.8 million representing 77 borrowers. This represented 2% of the total loan portfolio. Of that total 50 were commercial loan borrowers representing $99.3 million in loans, or 3% of commercial loans and 27 were retail loan borrowers representing $528,000, or less than 1% of total retail loans. Of the total deferrals, 95% are for three-month deferrals of principal only. In accordance with the March 22, 2020 Joint Interagency Regulatory Guidance, these were not considered to be troubled debt restructurings and were excluded from the table above.

During the three months ended March 31, 2019, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the period. One of the loans is for a commercial real estate building where the cash flow does not support the loan with a recorded investment of $533,000. The other loan is for commercial and industrial non-working capital purposes and this borrower had a recorded investment of $70,000 that was subsequently paid off prior to March 31, 2019. These concessions are not included in the table on the next page.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2019:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1		35		35	1	0
Total	1	$	35	$	35	1	0

For the three-month period ended March 31, 2019, the troubled debt restructuring described above did not impact the allowance for loan losses and no charge-off was recorded.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

18

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with Not Rated loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

As of March 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	651,403	$	54,559	$	24,527	$	0	$	359	$	730,848
Non-working capital loans		653,230		17,834		21,406		0		5,328		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		527,818		33,555		10,365		0		0		571,738
Nonowner occupied loans		582,374		758		577		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		138,247		5,879		1,428		0		0		145,554
Loans for agricultural production		172,730		11,213		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		44,863		0		1,960		0		126,252		173,075
Open end and junior lien loans		11,016		0		683		0		171,481		183,180
Residential construction loans		0		0		52		0		12,054		12,106
Other consumer loans		27,439		0		0		0		69,420		96,859
Total	$	3,516,048	$	123,798	$	60,998	$	0	$	384,894	$	4,085,738

19

As of December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	631,728	$	40,551	$	37,278	$	0	$	426	$	709,983
Non-working capital loans		673,370		18,782		19,381		0		5,310		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		535,496		14,804		23,059		0		0		573,359
Nonowner occupied loans		569,315		781		591		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		165,005		7,952		1,432		0		0		174,389
Loans for agricultural production		191,489		13,738		15		0		0		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		47,405		0		1,976		0		127,492		176,873
Open end and junior lien loans		10,845		0		762		0		176,597		188,204
Residential construction loans		0		0		51		0		12,871		12,922
Other consumer loans		27,250		0		17		0		71,099		98,366
Total	$	3,490,863	$	96,608	$	84,562	$	0	$	393,795	$	4,065,828

NOTE 5. BORROWINGS

For the periods ended March 31, 2020 and December 31, 2019, the Company had advances outstanding from the Federal Home Loan Bank (“FHLB”) in the amount of $75.0 million and $170.0 million, respectively. The outstanding FHLB advance at March 31, 2020 is a ten-year fixed-rate putable advance with a rate of 0.39% and is due on March 4, 2030. The outstanding FHLB advance at December 31, 2019 was a short-term fixed rate advance with a rate of 1.61% and was due on January 7, 2020. All FHLB notes require monthly interest payments and are secured by residential real estate loans and securities.

On August 2, 2019 the Company entered into an unsecured revolving credit agreement with another financial institution allowing the Company to borrow up to $30.0 million. Funds provided under the agreement may be used to repurchase shares of the Company’s common stock under the share repurchase program, which was authorized by the Company’s board of directors on January 14, 2020. The Company had drawn $10.5 million on this line at a rate of Prime minus 150 basis points, or 1.75%, as of March 31, 2020. There were no amounts drawn against this line as of December 31, 2019.

NOTE 6. FAIR VALUE DISCLOSURES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1  Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2  Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs).

The Company’s Finance Department, which is responsible for all accounting and SEC compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are new assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained on securities from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector:  municipal securities +/- 5%, government mbs/cmo +/- 3% and U.S. treasuries +/-1%. If any securities fall outside the tolerance threshold and have a variance of $100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material differences are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

Mortgage banking derivative:  The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Impaired loans:  Impaired loans with specific allocations of the allowance for loan losses are generally based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of impaired loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods (b) finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope

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of use of the finished good (c) work in process inventory is typically discounted by 50-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are discounted by 10-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights:  As of March 31, 2020, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $3.8 million, carried at amortized cost less $246,000 in a valuation reserve, or $3.6 million. These residential mortgage loans have a weighted average interest rate of 3.90%, a weighted average maturity of 20 years and are secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A valuation model is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees, and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At March 31, 2020, the constant prepayment speed (“PSA”) used was 166 and discount rate used was 9.4%. At December 31, 2019, the PSA used was 118 and the discount rate used was 9.4%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held for sale: Real estate mortgage loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification.

The table below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	293,270	$	0	$	293,270
Mortgage-backed securities: commercial		0		41,814		0		41,814
State and municipal securities		0		289,096		145		289,241
Total Securities		0		624,180		145		624,325
Mortgage banking derivative		0		1,307		0		1,307
Interest rate swap derivative		0		21,565		0		21,565
Total assets	$	0	$	647,052	$	145	$	647,197
Liabilities:
Mortgage banking derivative		0		544		0		544
Interest rate swap derivative		0		21,599		0		21,599
Total liabilities	$	0	$	22,143	$	0	$	22,143

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	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	288,181	$	0	$	288,181
Mortgage-backed securities: commercial		0		36,972		0		36,972
State and municipal securities		0		282,935		145		283,080
Total Securities		0		608,088		145		608,233
Mortgage banking derivative		0		198		0		198
Interest rate swap derivative		0		7,263		0		7,263
Total assets	$	0	$	615,549	$	145	$	615,694
Liabilities:
Mortgage banking derivative		0		14		0		14
Interest rate swap derivative		0		7,860		0		7,860
Total liabilities	$	0	$	7,874	$	0	$	7,874

The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	2,002	$	2,002
Non-working capital loans		0		0		5,332		5,332
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		1,527		1,527
Agri-business and agricultural loans:
Loans secured by farmland		0		0		90		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		459		459
Open end and junior lien loans		0		0		587		587
Residential construction loans		0		0		42		42
Total impaired loans	$	0	$	0	$	10,039	$	10,039
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	10,039	$	10,039

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	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	3,126	$	3,126
Non-working capital loans		0		0		6,374		6,374
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		43		43
Owner occupied loans		0		0		1,449		1,449
Agri-business and agricultural loans:
Loans secured by farmland		0		0		57		57
Other commercial loans		0		0		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		474		474
Open end and junior lien loans		0		0		587		587
Other consumer loans		0		0		11		11
Total impaired loans	$	0	$	0	$	12,121	$	12,121
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	12,121	$	12,121

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2020:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,334	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	7%-100%
Impaired loans:
Commercial real estate		1,527	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	25	%	7%-52%
Impaired loans:
Agribusiness and agricultural		90	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	39	%
Impaired loans:
Consumer 1‑4 family mortgage		1,088	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%

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The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,500	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	1%-100%
Impaired loans:
Commercial real estate		1,492	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	27	%	7%-61%
Impaired loans:
Agribusiness and agricultural		57	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	61	%
Impaired loans:
Consumer 1‑4 family mortgage		1,061	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%
Impaired loans:
Other consumer		11	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $17.4 million, with a valuation allowance of $7.4 million at March 31, 2020. The change in the fair value of impaired loans resulted in increases in the provision for loan losses of $142,000 over the three months ended March 31, 2020. The decreases was primarily due to a $3.7 million charge-off taken on an impaired commercial relationship. At March 31, 2019, impaired loans had a gross carrying amount of $19.1 million, with a valuation allowance of $9.3 million. The change in the fair value of impaired loans resulted in a reduction in the provision for loan losses of $200,000 over the three months ended March 31, 2019.

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2020
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	132,581	$	129,750	$	2,831	$	0	$	132,581
Securities available-for-sale		624,325		0		624,180		145		624,325
Real estate mortgages held-for-sale		7,982		0		8,141		0		8,141
Loans, net		4,032,129		0		0		4,036,193		4,036,193
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,433		0		3,575		11,858		15,433
Financial Liabilities:
Certificates of deposit		(1,273,413)		0		(1,289,272)		0		(1,289,272)
All other deposits		(3,008,290)		(3,008,290)		0		0		(3,008,290)
Other short-term borrowings		(10,500)		0		(10,500)		0		(10,500)
Federal Home Loan Bank advances		(75,000)		0		(64,166)		0		(64,166)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(10,082)		(61)		(10,021)		0		(10,082)

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	December 31, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	99,381	$	96,603	$	2,778	$	0	$	99,381
Securities available-for-sale		608,233		0		608,088		145		608,233
Real estate mortgages held-for-sale		4,527		0		4,614		0		4,614
Loans, net		4,015,176		0		0		3,979,006		3,979,006
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,391		0		3,729		11,662		15,391
Financial Liabilities:
Certificates of deposit		(1,192,067)		0		(1,202,060)		0		(1,202,060)
All other deposits		(2,941,752)		(2,941,752)		0		0		(2,941,752)
Federal Home Loan Bank advances		(170,000)		0		(169,998)		0		(169,998)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(11,604)		(102)		(11,502)		0		(11,604)

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2020 and December 31, 2019.

	March 31, 2020
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Total Assets	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Liabilities
Interest Rate Swap Derivatives	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229
Total Liabilities	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229

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	December 31, 2019
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Total Assets	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Liabilities
Interest Rate Swap Derivatives	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300
Total Liabilities	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

NOTE 8. EARNINGS PER SHARE

Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period, including shares held in treasury on behalf of participants in the Company’s Directors Fee Deferral Plan and share repurchases. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

	Three Months Ended March 31,
	2020		2019
Weighted average shares outstanding for basic earnings per common share		25,622,988		25,491,750
Dilutive effect of stock based awards and warrants		112,838		173,760
Weighted average shares outstanding for diluted earnings per common share		25,735,826		25,665,510
Basic earnings per common share	$	0.68	$	0.85
Diluted earnings per common share	$	0.67	$	0.84

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the three months ended March 31, 2020 and 2019:

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2020	$	13,607	$	(1,548)	$	12,059
Other comprehensive income before reclassification		10,444		0		10,444
Amounts reclassified from accumulated other comprehensive income		0		47		47
Net current period other comprehensive income		10,444		47		10,491
Balance at March 31, 2020	$	24,051	$	(1,501)	$	22,550

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	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		8,663		0		8,663
Amounts reclassified from accumulated other comprehensive income		(23)		38		15
Net current period other comprehensive income		8,640		38		8,678
Balance at March 31, 2019	$	3,844	$	(1,357)	$	2,487

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2020 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(63)	Other expense
Tax effect		16	Income tax expense
		(47)	Net of tax
Total reclassifications for the period	$	(47)	Net income

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2019 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	23	Net securities gains
Tax effect		0	Income tax expense
		23	Net of tax
Amortization of defined benefit pension items		(50)	Other expense
Tax effect		12	Income tax expense
		(38)	Net of tax
Total reclassifications for the period	$	(15)	Net income

NOTE 10. LEASES

The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2029 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

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Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard. The following is a maturity analysis of the operating lease liabilities as of March 31, 2020:

	Operating lease
Years ending December 31, (in thousands)	Obligation
2020	$	425
2021		581
2022		595
2023		606
2024		622
2025 and thereafter		2,873
Total undiscounted lease payments		5,702
Less imputed interest		(703)
Lease liability	$	4,999
Right-of-use asset	$	4,999

	Three months ended			Three months ended
	March 31, 2020			March 31, 2019
Lease cost
Operating lease cost	$	128		$	119
Short-term lease cost		6			6
Total lease cost	$	134		$	125
Other information
Operating cash outflows from operating leases	$	128
Weighted-average remaining lease term - operating leases		9.6 years
Weighted average discount rate - operating leases		2.8	%

NOTE 11. COVID-19 AND CURRENT ECONOMIC CONDITIONS

On March 11, 2020, the World Health Organization announced that the COVID-19 outbreak was deemed a pandemic, and on March 13, 2020, the President declared the ongoing COVID-19 pandemic of sufficient magnitude to warrant an emergency declaration. The extent of COVID-19’s effect on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, and when state and local economies will return to operational norms, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. In addition, we rely upon our third-party vendors to conduct business and to process, record and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. Furthermore, the outbreak could negatively impact our employees and customers’ ability to engage in banking and other financial transactions. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of a COVID-19 outbreak in our market areas. The fair value of certain assets could be impacted by the effects of COVID-19. The carrying value of goodwill, right-of-use lease assets, other real estate owned and mortgage servicing rights could decrease resulting in future impairment losses. Management will continue to evaluate current economic conditions to determine if a triggering event would impact the current valuations for these assets. As a result, it not currently possible to ascertain the overall impact of COVID-19 on the Company’s business. However, if the pandemic continues to evolve into a prolonged worldwide health crisis, the disease could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

As of April 22, 2020, total COVID-19 related deferrals had increased to $467.1 million, representing 404 borrowers or 11% of the total loan portfolio. Of that total, 267 were commercial loan borrowers representing $459.8 million in loans, or 13% of total commercial loans. 137 were retail loan borrowers representing $7.3 million, or 2% of total retail loans. 85% of these loan deferrals are for three-month deferrals of principal only.

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Net income in the first three months of 2020 was $17.3 million, down 20.2% from $21.7 million for the comparable period of 2019. Diluted income per common share was $0.67 in the first three months of 2020, down 20.2% from $0.84 in the comparable period of 2019. The decrease was primarily due to the Company recording a provision for loan losses of $6.6 million for the first quarter of 2020, an increase of $5.4 million, or 450% compared to $1.2 million for the first quarter of 2019. The provision increase was driven primarily by the economic impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic on the Company’s loan customers using the incurred model. Pretax pre-provision earnings in the first three months of 2020 was $27.5 million, an increase of $281,000, or 1.0%, compared to $27.3 million for the comparable period of 2019. Pretax pre-provision earnings is a non-GAAP measure calculated by adding net interest income to noninterest income and subtracting noninterest expense.

Annualized return on average total equity was 11.51% in the first three months of 2020 versus 16.59% in the comparable period of 2019. Annualized return on average total assets was 1.40% in the first three months of 2020 versus 1.80% in the comparable period of 2019. The average equity to average assets ratio was 12.17% in the first three months of 2020 versus 10.86% in the comparable period of 2019.

Total assets were $5.030 billion as of March 31, 2020 versus $4.947 billion as of December 31, 2019, an increase of $83.3 million, or 1.7%. This increase was primarily due to a $33.2 million increase in cash and cash equivalents, an increase of $17.0 million in net loans, a $16.1 million increase in securities available-for-sale and an increase of $13.8 million in other assets driven by higher valuations on the Company’s back-to-back interest rate swap portfolio. Balance sheet growth was primarily funded through growth in deposits during 2020. Core deposits increased $151.8 million while total borrowings decreased by $84.5 million since December 31, 2019. Total equity increased by $8.5 million due primarily to net income of $17.3 million, an increase in accumulated other comprehensive income of $10.5 million, offset by share repurchases of $10.0 million and dividends declared and paid of $0.30 per share totaling $7.7 million.

Impact of COVID-19. The progression of the COVID-19 pandemic in the United States has potentially had an adverse impact on our financial condition and results of operations as of and for the three months ended March 31, 2020, and may have a complex and significant adverse impact on the economy, the banking industry and our Company in future fiscal periods, all subject to a high degree of uncertainty.

Effects on Market Areas. The broad suspension of business activities in the state is likely to lead to a significant increase in the state’s unemployment rate, which was 3.6% in January 2020 according to the Indiana Department of Workforce Development. Because these developments commenced late in the first quarter, and because the public health effects of COVID-19 are generally expected to peak later this year in the communities in which we operate, we believe the economic consequences of the pandemic are difficult to quantify and are expected to continue to worsen.

Policy and Regulatory Developments. Federal, state and local governments and regulatory authorities have enacted and issued a range of policy responses to the COVID-19 pandemic, including the following:

● The Federal Reserve decreased the range for the Federal Funds Target Rate by 0.50% on March 3, 2020, and by another 1.0% on March 16, 2020, reaching a current range of 0.0 – 0.25%.

● On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, which established a $2.0 trillion economic stimulus package, including cash payments to individuals, supplemental unemployment insurance benefits and a $349 billion loan program administered through the U.S. Small Business Administration (SBA), referred to as the Paycheck Protection Program, or PPP program, which was subsequently increased by $320 billion on April 24, 2020. Under the PPP program, small businesses, sole proprietorships, independent contractors and self-employed individuals may apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. The Bank is participating as a lender in the PPP program. In addition, the CARES Act provides financial institutions the option to temporarily suspend certain requirements under GAAP related to loan modifications and classification as TDRs for a limited period of time to account for the effects of COVID-19.

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Additionally, the CARES Act allows for financial institutions to defer the application of FASB’s new rule covering the Current Expected Credit Losses standard.

● On April 7, 2020, federal banking regulators issued a revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions, which, among other things, encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, and stated that institutions generally do not need to categorize COVID-19-related modifications as TDRs, and that the agencies will not direct supervised institutions to automatically categorize all COVID-19 related loan modifications as TDRs. Loan modifications made through March 31, 2020 are disclosed within Note 4 – Allowance for Loan Losses and Credit Quality.

Effects on Our Business. The COVID-19 pandemic and the specific developments referred to above is expected to have a significant impact on our business. As a result, we anticipate that our financial condition, capital levels and results of operations could be significantly adversely affected, as described in further detail below.

COVID-19 Crisis Management. As an Essential Service Provider, Lake City Bank has continued to provide uninterrupted service to its clients throughout the COVID-19 crisis. On March 2, 2020 the Company’s Management Committee initiated plans in response to the emerging risk related to the pandemic.

From the beginning, our management of the crisis has focused on protecting the health and well-being of our employees and clients while continuing to provide our clients with full access to banking services. As the operational risk related to the COVID-19 crisis evolved, the Company took proactive measures to manage operational risk, including the following:

● Activated the Incident Response Team (IRT) pursuant to the Company’s Business Continuity/Disaster Recovery Plans on March 16, 2020;

● Initiated a proactive communication plan with our primary regulators;

● Initiated a proactive outreach to critical vendors and partners to ensure operational continuity; and

● Initiated actions to ensure that technology capacity was sufficient to maintain operational continuity.

In addition, the Company has taken the following actions to provide for uninterrupted service to clients:

● Activated three primary disaster recovery sites and one secondary disaster recovery site;

● Activated limited lobby access in each of the Company’s 50 offices on Saturday, March 21, 2020; and

● Distributed staff between the Company’s facilities and disaster recovery sites, and initiated work-from-home arrangements.

In order to ensure open and transparent communication with clients, the Company has expanded its communication strategy through email, social media, website updates and alerts and online and mobile banking alerts.

Transactions in the Company’s 50 offices are down approximately 30% since the start of the crisis. The Company has experienced nominal increase in its customers’ already strong adoption and activation rates of digital solutions offered through its mobile and online banking platforms. The Company has also experienced meaningful increases in certain digital applications from February 2020 to March 2020. Retail banking internet bill pay activities are up 11%, remote mobile deposit activities are up 19% and Zelle transactions are up 19% during this period.

Active Management of Credit Risk

On March 2, 2020, leadership in Commercial Banking and Credit Administration initiated a review of industries that the Company believed were most likely to be impacted by emerging COVID-19 events. The initial review identified approximately 19% of the total loan portfolio and included the following industries: recreational vehicle - 4%, nursing home and assisted living - 4%, hotel and accommodations - 2%, self-storage - 2%, automotive, boating, trailer and truck - 2%, transportation and trucking contractors - 1%, C&I building construction - 1%, restaurants - 2% and entertainment and recreation - 1%. The Company has no direct exposure

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to oil and gas and limited exposure to retail shopping centers. As the COVID-19 crisis impact evolved, the Company has taken the following actions to manage emerging credit risk:

● Expanded the universe of industries and clients under review to significantly broaden the scope;

● Accelerated planning related to the Company’s upcoming semi-annual Loan Portfolio Meetings; and

● Actively worked with borrowers on COVID-19 related loan deferral requests, as detailed below.

The Company’s commercial loan portfolio is highly diversified and no industry sector represents more than 8% of the bank’s loan portfolio as of March 31, 2020. Agri-business and agricultural loans represented the highest specific industry concentration at 8% of total loans. Commercial Banking and Credit Administration teams continue to actively work with customers to understand their business challenges and credit needs during this time.

COVID-19 Related Loan Deferrals

The Company’s active management of credit risk has historically provided for appropriate and fair deferral of payments for troubled borrowers. While the March 22, 2020 Joint Interagency Regulatory Guidance provides for a potential relaxation of regulatory definitions, it has not had a material impact on the Company’s decisions related to individual borrower circumstances.

As of March 31, 2020, total deferrals attributed to COVID-19 were $99.8 million, representing 77 borrowers or 2% of the total loan portfolio. Of that total, 50 were commercial loan borrowers representing $99.3 million in loans, or 3% of total commercial loans. 27 were retail loan borrowers representing $528,000, or 0.1% of total retail loans. 95% of the total loan deferrals were three-month deferrals of principal only.

As of April 22, 2020, total COVID-19 related deferrals had increased to $467.1 million, representing 404 borrowers or 11% of the total loan portfolio. Of that total, 267 were commercial loan borrowers representing $459.8 million in loans, or 13% of total commercial loans. 137 were retail loan borrowers representing $7.3 million, or 2% of total retail loans. 85% of these loan deferrals are for three-month deferrals of principal only.

The Company’s retail loan portfolio is comprised of 1-4 family mortgage loans, home equity lines of credit and other direct and indirect installment loans. A third party vendor manages the Company’s retail and commercial credit card program and the Company does not have any balance sheet exposure with respect to this program except for nominal recourse on limited commercial card accounts.

The Company expects that COVID-19 loan deferrals will increase at least through the second quarter of 2020.

Liquidity Preparedness

Throughout the COVID-19 crisis, the Company has been monitoring liquidity preparedness. Critical to this effort has been the monitoring of commercial and retail borrowers line of credit utilization. Our commercial and retail line of credit utilization at March 31, 2020 was 48% versus 46% at December 31, 2019. As of April 22, 2020, this line utilization had declined to 44%. We do not believe that we have experienced any unusual usage activity under these available credit facilities because of the COVID-19 crisis.

The Company has a long-standing liquidity plan in place that ensures that appropriate liquidity resources to fund the balance sheet. Nonetheless, given the uncertainties related to the effects of the COVID-19 crisis on liquidity, the Company has taken the following additional actions:

● Increased committed availability under the Federal Home Loan Bank of Indianapolis credit facility;

● Increased committed availability under the Federal Reserve Bank Discount Window;

● Completed actions required to activate participation in the Federal Reserve Bank PPP Lending Facility; and

● Confirmed availability of Federal Fund lines with correspondent bank partners.

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Deferment of Current Expected Credit Loss Standard Implementation

As permitted by the CARES Act, the Company elected to defer its application of FASB’s new rule covering CECL. During 2019, the Company implemented the CECL methodology and ran it concurrently with the historical incurred method. Based upon the Company’s informed experience with both methodologies, the Company elected to retain the incurred method for the time being for the following reasons:

● Management has more experience with the incurred method and believes that the incurred method is currently the more accurate methodology to ensure that the loan loss reserve is appropriately estimated pursuant to the Company’s historical approach;

● Management believes that the incurred methodology provides the Company the ability to leverage both objective data analysis and subjective analysis based upon management’s familiarity with its borrowers and the economic environment in its markets;

● Management believes that the incurred method provides for more informed loan-by-loan evaluation of non–impaired Watch List loans; and

● Management believes that the incurred methodology will provide investors in the Company with a more accurate ability to understand the appropriateness of the loan loss reserve compared to prior periods, particularly in a time of severe uncertainty such as the COVID-19 crisis.

The Company will continue to monitor developments related to CECL adoption and will manage the process accordingly.

The Paycheck Protection Program

The Small Business Administration (SBA) and the United States Treasury Department formally announced the Paycheck Protection Program (PPP) on March 31, 2020 as part of the CARES Act. The SBA began accepting applications under the program on Friday, April 3, 2020, and Lake City Bank filed its first application on behalf of a client that morning.

When the SBA first closed the window on the program on April 16, 2020, Lake City Bank had received approval on 1,677 client loans totaling $530 million under the Paycheck Protection Program. The bank completed funding of these commitments under the program on April 24, 2020. The Company received approval on more than 99% of its completed client applications prior to the SBA closing the window on applications and had a pipeline of less than 50 clients in process. 55% of the loans made by the Company under the PPP were for loans less than $100,000 and 87% of the loans made by the Company, were for loans less than $500,000. The Company intends to continue accepting and processing applications under the PPP for as long as any capacity remains available.

CRITICAL ACCOUNTING POLICIES

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Some of the facts and circumstances which could affect these judgments include changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses and the valuation and other-than-temporary impairment of investment securities.

Allowance for Loan Losses

The Company maintains an allowance for loan losses to provide for probable incurred credit losses. Loan losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for loan losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the loan loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of loan loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions

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and historical loss analysis. In addition, management gives consideration to changes in the allocation for specific watch list credits in determining the appropriate level of the loan loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for loan losses that generally includes consideration of the following factors: changes in the nature and volume of the loan portfolio, overall portfolio quality and current economic conditions that may affect the borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. With respect to specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, allocations are assigned based upon historical experience subject to a floor, unless the rate of loss is expected to be greater than historical losses as noted below. A detailed analysis is performed on loans that are classified but determined not to be impaired which incorporates different scenarios where the risk that the borrower will be unable or unwilling to repay its debt in full or on time is combined with an estimate of loss in the event the borrower cannot pay to develop non-specific allocations for such loan pools. These allocations may be adjusted based on the other factors cited above. An appropriate level of general allowance for pooled loans is determined by portfolio segment using historical loss percentages subject to a floor, supplemented with other environmental factors based on the risks present for each portfolio segment. These factors include consideration of the following: levels of, and trends in, delinquencies and impaired loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that the following could affect the overall process: social, political, economic and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for loan losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate the loan is impaired. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) does the customer’s cash flow or net worth appear insufficient to repay the loan; (b) is there adequate collateral to repay the loan; (c) has the loan been criticized in a regulatory examination; (d) is the loan impaired; (e) are there other reasons where the ultimate collectability of the loan is in question; or (f) are there unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually impaired, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. In addition, general allocations are made for other pools of loans, including non-classified loans. These general pooled loan allocations are performed for portfolio segments of commercial and industrial, commercial real estate and multi-family, agri-business and agricultural, other commercial, consumer 1-4 family mortgage and other consumer loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on a three-year historical average for loan losses for these portfolios, subject to a floor, and are adjusted for economic factors and portfolio trends.

Due to the imprecise nature of estimating the allowance for loan losses, the Company’s allowance for loan losses includes an unallocated component. The unallocated component of the allowance for loan losses incorporates the Company’s judgmental determination of inherent losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers.

Valuation and Other-Than-Temporary Impairment of Available-for-Sale Investment Securities

The fair values of securities available-for-sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges or pricing models, which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the

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specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Different judgments and assumptions used in pricing could result in different estimates of value. The fair value of certain securities is determined using unobservable inputs, primarily observable inputs of similar securities.

At the end of each reporting period, securities held in the investment portfolio are evaluated on an individual security level for other-than-temporary impairment in accordance with current accounting guidance. Impairment is other-than-temporary if the decline in the fair value of the security is below its amortized cost and it is probable that all amounts due according to the contractual terms of a debt security will not be received.

Significant judgments are required in determining impairment, which includes making assumptions regarding the estimated prepayments, loss assumptions and the change in interest rates.

We consider the following factors when determining other-than-temporary impairment for a security or investment:

● the length of time and the extent to which the market value has been less than amortized cost;

● the financial condition and near-term prospects of the issuer;

● the underlying fundamentals of the relevant market and the outlook for such market for the near future; and

● our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in market value.

The assessment of whether a decline exists that is other-than-temporary, involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. If, in management’s judgment, other-than-temporary impairment exists, the cost basis of the security will be written down to the computed net present value, and the unrealized loss will be transferred from accumulated other comprehensive loss as an immediate reduction of current earnings (as if the loss had been realized in the period of other-than-temporary impairment).

RESULTS OF OPERATIONS

Overview

Selected income statement information for the three months ended March 31, 2020 and 2019 is presented in the following table:

	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Income Statement Summary:
Net interest income	$	38,854		$	38,209
Provision for loan losses		6,600			1,200
Noninterest income		10,777			11,525
Noninterest expense		22,089			22,473
Other Data:
Efficiency ratio (1)		44.51	%		45.19	%
Dilutive EPS	$	0.67		$	0.84
Tangible capital ratio (2)		11.99	%		11.04	%
Net charge-offs to average loans		0.36	%		0.01	%
Net interest margin		3.35	%		3.45	%
Noninterest income to total revenue		21.71	%		23.17	%
Pretax Pre-Provision Earnings (2) (3)	$	27,542		$	27,261

(1) Noninterest expense/Net interest income plus Noninterest income.

(2) Non-GAAP financial measure. The Company believes that providing non-GAAP financial measures provides investors with information useful to understanding the company’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible common equity” which is

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“total equity” excluding intangible assets, net of deferred tax, and “tangible assets” which is “total assets” excluding intangible assets, net of deferred tax . See reconciliation on the next page.

(3) Non-GAAP financial measure. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense.

See reconciliation on the next page.

	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Total Equity	$	606,572		$	543,267
Less: Goodwill		(4,970)			(4,970)
Plus: Deferred tax assets related to goodwill		1,181			1,191
Tangible Common Equity		602,783			539,488
Total Assets	$	5,030,078		$	4,891,885
Less: Goodwill		(4,970)			(4,970)
Plus: Deferred tax assets related to goodwill		1,181			1,191
Tangible Assets		5,026,289			4,888,106
Tangible Common Equity/Tangible Assets		11.99	%		11.04	%
Net Interest Income	$	38,854		$	38,209
Noninterest Income		10,777			11,525
Noninterest Expense		(22,089)			(22,473)
Pretax Pre-Provision Earnings	$	27,542		$	27,261

Net Income

Net income was $17.3 million in the first three months of 2019, a decrease of $4.4 million, or 20.2%, versus net income of $21.7 million in the first three months of 2019. The decrease was primarily due to the Company recording a provision for loan losses of $6.6 million for the first quarter of 2020, an increase of $5.4 million, or 450% compared to $1.2 million for the first quarter of 2019. The provision increase was driven primarily by the economic impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic on the Company’s loan customers. In addition, noninterest income decreased by $748,000. These decreases were offset by an increase in net interest income of $645,000, a decrease in noninterest expense of $384,000 and a decrease in income tax expense of $736,000.

We anticipate that our net income for future fiscal periods will continue to be impacted as a result of the economic developments resulting from the COVID-19 pandemic. Specifically, while we are not yet able to measure the impact of COVID-19 crisis on our borrowers, we anticipate provision expense may remain elevated as the economic impact of COVID-19 may negatively affect them. In addition, due to the asset-sensitive nature of the Company’s balance sheet, declines in interest rates, including the Federal Reserve Bank’s recent reductions to the target Federal Funds Rate, will cause a reduction in our net interest income and resulting net interest margin. In addition, the Company anticipates that some of the lower-cost borrowings under the PPP loan program will be used to pay-down higher cost borrowings currently in the Company’s loan portfolio for a period of time. Net interest margin compression will benefit from loan fees arising from the PPP loan program. In addition, borrowers that meet the loan forgiveness requirements outlined in the program could result in loan balance paydowns for the Bank and an acceleration in fee income accretion. The timing and impact to net interest margin will be contingent on how quickly the PPP loans are forgiven and/or repaid over the course of the next two years. The Company also anticipates that customers may use fewer fee-based financial services due to the decline in economic activity as well as COVID-19 mitigation efforts such as stay-at-home orders.

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Net Interest Income

The following table sets forth consolidated information regarding average balances and rates:

	Three Months Ended March 31,
	2020						2019
	Average		Interest		Yield (1)/		Average		Interest		Yield (1)/
(fully tax equivalent basis, dollars in thousands)	Balance		Income		Rate		Balance		Income		Rate
Earning Assets
Loans:
Taxable (2)(3)	$	4,036,147	$	46,054	4.59	%	$	3,893,035	$	48,866	5.09	%
Tax exempt (1)		23,027		277	4.84			24,989		314	5.10
Investments: (1)
Available-for-sale		618,876		4,513	2.93			587,026		4,575	3.16
Short-term investments		9,965		35	1.41			4,696		26	2.25
Interest bearing deposits		49,716		149	1.21			41,204		212	2.09
Total earning assets	$	4,737,731	$	51,028	4.33	%	$	4,550,950	$	53,993	4.81	%
Less: Allowance for loan losses		(55,782)						(48,768)
Nonearning Assets
Cash and due from banks		63,260						164,820
Premises and equipment		60,661						59,189
Other nonearning assets		161,268						155,381
Total assets	$	4,967,138					$	4,881,572
Interest Bearing Liabilities
Savings deposits	$	235,058	$	51	0.09	%	$	247,309	$	71	0.12	%
Interest bearing checking accounts		1,719,038		4,734	1.11			1,496,893		5,954	1.61
Time deposits:
In denominations under $100,000		280,233		1,370	1.97			276,006		1,232	1.81
In denominations over $100,000		978,114		5,044	2.07			1,184,996		6,626	2.27
Miscellaneous short-term borrowings		88,670		362	1.64			190,118		950	2.03
Long-term borrowings and subordinated debentures		23,901		24	0.40			30,928		452	5.93
Total interest bearing liabilities	$	3,325,014	$	11,585	1.40	%	$	3,426,250	$	15,285	1.81	%
Noninterest Bearing Liabilities
Demand deposits		991,651						885,126
Other liabilities		46,200						40,207
Stockholders’ Equity		604,273						529,989
Total liabilities and stockholders’ equity	$	4,967,138					$	4,881,572
Interest Margin Recap
Interest income/average earning assets				51,028	4.33					53,993	4.81
Interest expense/average earning assets				11,585	0.98					15,285	1.36
Net interest income and margin			$	39,443	3.35	%			$	38,708	3.45	%

(1) Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $589,000 and $499,000 in the three-month periods ended March 31, 2020 and 2019, respectively.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended March 31, 2020 and 2019, are included as taxable loan interest income.

(3) Nonaccrual loans are included in the average balance of taxable loans.

Net interest income increased $645,000, or 1.7%, for the three months ended March 31, 2020 compared with the first three months of 2019. The increased level of net interest income during the first three months of 2020 was largely driven by an increase in

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average earning assets of $186.8 million, due primarily to loan growth of $141.2 million and growth in investment securities of $31.9 million. Average loans outstanding increased $141.2 million to $4.059 billion during the three months ended March 31, 2020 compared to $3.918 billion during the same period of 2019, with most of the growth being in commercial loans. The earning asset growth was funded through an increase in deposits. Average deposits increased $113.8 million to $4.204 billion during the three months ended March 31, 2020 compared to $4.090 billion for the same period of 2019. During this same period average core deposits increased $179.0 million and average brokered deposits decreased $65.2 million. We define “core deposits” as total deposits (including all deposits by municipalities and other government agencies), excluding brokered deposits. Average borrowings decreased by $108.5 million to $112.6 million in the three months ended March 31, 2020, compared to $221.0 million during the same period of 2019.

The tax equivalent net interest margin was 3.35% for the first three months of 2020 compared to 3.45% during the first three months of 2019. The yield on earning assets totaled 4.33% during the three months ended March 31, 2020 compared to 4.81% in the same period of 2019. Cost of funds (expressed as a percentage of average earning assets) totaled 0.98% during the first three months of 2020 compared to 1.36% in the same period of 2019. The lower margin in the first quarter of 2020 was due to lower yields on loans and securities, partially offset by a lower cost of funds, driven by the Federal Reserve decreasing the target Federal Funds Rate in the second half of 2019, as well as two Federal Reserve emergency cuts to the target Federal Funds Rate during March 2020. The two emergency cuts reduced the target Federal Funds Rate by 150 basis points and brought the target Federal Funds Rate back to the zero bound range of 0% to 0.25%. The full impact of the March emergency cuts on net interest margin will be realized in the second quarter of 2020.

Provision for Loan Losses

The Company elected to delay the adoption of FASB’s new rule covering the Current Expected Credit Loss (“CECL”) standard as permitted by the CARES Act. The Company expects to adopt CECL on the earlier of the termination of the national emergency declaration, or December 31, 2020, whichever comes first, with an effective date of January 1, 2020.

Under the incurred loan loss methodology, the Company recorded a provision for loan loss expense of $6.6 million in the three-month period ended March 31, 2020, compared to a provision of $1.2 million during the comparable period of 2019. Net charge-offs were $3.6 million in the three month period ended March 31, 2020, compared to $91,000 during the comparable periods of 2019. This activity was driven primarily by one commercial manufacturing borrower that was on nonaccrual status and had a loan loss reserve allocation of $4.2 million as of December 31, 2019. The $3.7 million charge-off was due to the restructuring of this relationship during the first quarter of 2020. The primary factor impacting management’s decision to record a higher provision in the first three months of 2020 was the emerging economic impact of the COVID-19 pandemic on the Company’s loan customers. Some of the Company’s commercial loan customers have been forced to temporarily suspend or reduce operations and some of the Company’s retail customers are currently without a paycheck, which impairs their abilities to make debt payments. As a result, the Company has granted loan deferrals to customers which represent 11% of commercial loans and 1% of retail loans as of March 31, 2020. In accordance with provisions of the CARES Act as well as the interagency guidance, loan deferrals granted to our customers that have been made as a result of the impact of COVID-19 and who were not past due are not considered troubled debt restructurings and are therefore not included in the troubled debt restructurings totals as of March 31, 2020. See “Note 4 – Allowance for Loan Losses and Credit Quality.”

Additional factors considered by management included key loan quality metrics, including reserve coverage of nonperforming loans and economic conditions in the Company’s markets, and changes in the allocation for specific watch list credits. Management’s overall view on current credit quality was also a factor in the determination of the provision for loan losses. The Company’s management continues to monitor the adequacy of the provision based on loan levels, asset quality, economic conditions and other factors that may influence the assessment of the collectability of loans.

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Noninterest Income

Noninterest income categories for the three-month periods ended March 31, 2020 and 2019 are shown in the following tables:

	Three Months Ended
	March 31,
							Dollar		Percent
(dollars in thousands)	2020			2019			Change		Change
Wealth advisory fees	$	1,859		$	1,620		$	239	14.8	%
Investment brokerage fees		417			386			31	8.0
Service charges on deposit accounts		2,772			4,287			(1,515)	(35.3)
Loan and service fees		2,408			2,404			4	0.2
Merchant card fee income		669			622			47	7.6
Bank owned life insurance		(292)			444			(736)	(165.8)
Mortgage banking income		586			222			364	164.0
Net securities gains		—			23			(23)	NA
Other income		2,358			1,517			841	55.4
Total noninterest income	$	10,777		$	11,525		$	(748)	(6.5)	%
Noninterest income to total revenue		21.71	%		23.17	%

The Company’s noninterest income decreased $748,000, or 6.5%, to $10.8 million for the first quarter of 2020, compared to $11.5 million for the first quarter of 2019. Noninterest income was positively impacted by a $364,000 increase or 164.0% growth in mortgage banking income, a $266,000 increase, or 68.0% growth, in swap fee income generated from commercial lending transactions and a $239,000 increase, or 14.8% growth, in wealth management fees over the prior year first quarter. The credit valuation adjustments on interest rate swaps increased noninterest income by $735,000 in the first quarter 2020 compared to the first quarter of 2019. Offsetting these increases were decreases in service charges on deposit accounts driven by lower treasury management fees and decreases in bank owned life insurance income primarily due to a variable bank owned life insurance product that contains equity based investments. First quarter 2019 services charges on deposit accounts included $1.6 million in fees from a single commercial treasury management client. The treasury management client relationship was terminated in June 2019.

Future noninterest income may be impacted due to the effects of the COVID-19 pandemic. For example, reduced economic activity may result in lower merchant card fee income and lower interchange revenue that is reported in loan and service fees.

Noninterest Expense

Noninterest expense categories for the three-month periods ended March 31, 2020 and 2019 are shown in the following tables:

	Three Months Ended
	March 31,
					Dollar		Percent
(dollars in thousands)	2020		2019		Change		Change
Salaries and employee benefits	$	11,566	$	12,207	$	(641)	(5.3)	%
Net occupancy expense		1,387		1,366		21	1.5
Equipment costs		1,417		1,349		68	5.0
Data processing fees and supplies		2,882		2,425		457	18.8
Corporate and business development		1,111		1,206		(95)	(7.9)
FDIC insurance and other regulatory fees		267		406		(139)	(34.2)
Professional fees		1,147		937		210	22.4
Other expense		2,312		2,577		(265)	(10.3)
Total noninterest expense	$	22,089	$	22,473	$	(384)	(1.7)	%

The Company’s noninterest expense decreased $384,000, or 1.7%, to $22.1 million in the first quarter of 2020, compared to $22.5 million in the first quarter of 2019. Salaries and employee benefits decreased on a year over year basis primarily due to lower

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incentive-based compensation expense. Offsetting the decreases were increases in data processing fees and supplies driven by the company’s continued investment in customer focused, technology-based solutions and ongoing cybersecurity and data management enhancements.

Future noninterest expense may be reduced due to the COVID-19 pandemic. For example, continued protracted economic activity may reduce balance sheet growth and resulting revenue growth which could decrease the amount the Company pays in incentive-based compensation. In addition, the COVID-19 mitigation efforts may lead to the postponement of certain of the Company’s growth initiatives.

The Company’s income tax expense decreased $736,000 in the three-month period ended March 31, 2020, compared to the same period in 2019. The effective tax rate was 17.4% in the three-month period ended March 31, 2020, compared to 16.8% in the comparable period of 2019, due primarily to reduced tax benefit associated with the vesting of employee long-term incentive stock awards.

FINANCIAL CONDITION

Overview

Total assets of the Company were $5.030 billion as of March 31, 2020, an increase of $83.3 million, or 1.7%, when compared to $4.947 billion as of December 31, 2019. Overall asset growth was primarily driven by a $33.2 million, or 33.4%, increase in cash and cash equivalents to $132.6 million at December 31, 2020 from $99.4 million at December 31, 2019, an increase of $17.0 million or 0.4% in net loans to $4.032 billion at March 31, 2020 from $4.015 billion at December 31, 2019, an increase of $16.1 million, or 2.6%, in securities available-for-sale to $624.3 million at March 31, 2020 from $608.2 million at December 31, 2019 and an increase of $13.8 million, or 33.6%, in other assets driven by higher valuations on the Company’s swap portfolio. Total deposits increased $147.9 million, or 3.6%, while total borrowings decreased by $84.5 million, or 49.7%. The increase is deposits was primarily driven by growth in core deposits of $151.8 million offset by a decrease in wholesale funding of $3.9 million. Core deposits were $4.172 billion as of March 31, 2020 compared to $4.020 billion as of December 31, 2019, an increase of $151.8 million, or 3.8%. Additionally, commercial deposits increased by $106.0 million, or 8.3%, to $1.382 billion at March 31, 2020 compared to $1.276 billion at December 31, 2019.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents increased by $33.2 million, or 33.4% to $132.6 million at March 31, 2020, from $99.4 million at December 31, 2019. Cash and cash equivalents at March 31, 2020 reflect larger items in the process of clearing such as public funds checks outstanding for matured certificates of deposit which were distributed in the form of checks. Short-term investments include cash on deposit that earn interest such as excess liquidity maintained at the Federal Reserve Bank. Cash and cash equivalents balances will vary depending on the cyclical nature of the bank’s liquidity position.

Investment Portfolio

The amortized cost and the fair value of securities as of March 31, 2020 and December 31, 2019 were as follows:

	March 31, 2020				December 31, 2019
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	Cost		Value		Cost		Value
Mortgage-backed securities: residential	$	280,674	$	293,270	$	283,817	$	288,181
Mortgage-backed securities: commercial		41,003		41,814		36,712		36,972
State and municipal securities		272,205		289,241		270,480		283,080
Total	$	593,882	$	624,325	$	591,009	$	608,233

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At March 31, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S. government, government agencies and government sponsored entities, in an amount greater than 10% of stockholders’ equity. Management is aware that, as interest rates rise, any unrealized loss in the investment portfolio will increase, and as interest rates fall the unrealized gain in the investment portfolio will rise. Since the majority of the bonds in the investment portfolio are fixed-rate, with only a few adjustable-rate bonds, we would expect our investment portfolio to follow this market value pattern. This is taken into consideration when evaluating the gain or loss of investment securities in the portfolio and the potential for other-than-temporary impairment.

Purchases of securities available for sale totaled $20.2 million in the first three months of 2020. The purchases consisted primarily of state and municipal securities and purchases of mortgage-backed securities issued by government sponsored entities. Paydowns from prepayments and scheduled payments of $13.4 million were received in the first three months of 2020, and the amortization of premiums, net of the accretion of discounts, was $946,000. The increase in net amortization expense from the prior year is being driven by increased prepayment speeds given the current rate environment. Maturities and calls of securities totaled $3.0 million in the first three months of 2020. No other-than-temporary impairment was recognized in the first three months of 2020.

Purchases of securities available for sale totaled $22.2 million in the first three months of 2019. The purchases consisted primarily of state and municipal securities and also purchases of mortgage-backed securities issued by government sponsored entities. Paydowns from prepayments and scheduled payments of $10.0 million were received in the first three months of 2019, and the amortization of premiums, net of the accretion of discounts, was $817,000. Sales of securities totaled $13.7 million in the first three months of 2019. Maturities and calls of securities totaled $6.0 million in the first three months of 2019. No other-than-temporary impairment was recognized in the first three months of 2019.

The investment portfolio is managed by a third-party firm to provide for an appropriate balance between liquidity, credit risk, interest rate risk management and investment return and to limit the Company’s exposure to credit risk in the investment securities portfolio to an acceptable level. The Company does not trade or invest in or sponsor certain unregistered investment companies defined as hedge funds and private equity funds under what is commonly referred to as the “Volcker Rule” of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Real Estate Mortgage Loans Held-for-Sale

Real estate mortgage loans held-for-sale increased by $3.5 million, or 76.3%, to $8.0 million at March 31, 2020, from $4.5 million at December 31, 2019. The balance of this asset category is subject to a high degree of variability depending on, among other things, recent mortgage loan rates and the timing of loan sales into the secondary market. The Company generally sells all of the qualifying mortgage loans it originates on the secondary market. Proceeds from sales of residential mortgages totaled $13.6 million in the first three months of 2020 compared to $6.8 million in the first three months of 2019. Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $336.1 million and $337.9 million, respectively, as of March 31, 2020 and December 31, 2019.

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Loan Portfolio

The loan portfolio by portfolio segment as of March 31, 2020 and December 31, 2019 is summarized as follows:

									Current
	March 31,				December 31,				Period
(dollars in thousands)	2020				2019				Change
Commercial and industrial loans	$	1,428,719	35.0	%	$	1,426,868	35.1	%	$	1,851
Commercial real estate and multi-family residential loans		1,760,478	43.1			1,673,322	41.1			87,156
Agri-business and agricultural loans		329,397	8.0			379,531	9.3			(50,134)
Other commercial loans		104,286	2.5			112,302	2.8			(8,016)
Consumer 1‑4 family mortgage loans		367,118	9.0			376,745	9.3			(9,627)
Other consumer loans		97,096	2.4			98,617	2.4			(1,521)
Subtotal, gross loans		4,087,094	100.0	%		4,067,385	100.0	%		19,709
Less:    Allowance for loan losses		(53,609)				(50,652)				(2,957)
Net deferred loan fees		(1,356)				(1,557)				201
Loans, net	$	4,032,129			$	4,015,176			$	16,953

Total loans, excluding real estate mortgage loans held-for-sale and deferred fees, increased by $19.7 million to $4.087 billion at March 31, 2020 from $4.067 billion at December 31, 2019. The increase was concentrated in the commercial real estate and commercial and industrial categories and reflects the Company’s long-standing strategic plan that is focused on expanding and growing the commercial lending business throughout our market areas. The increase was partially offset by loan repayments in agri-business and agricultural loans which have declined since year-end due to seasonal loan repayments as well as declines in volume due to the impact of the flattened yield curve and clients opting for long-term fixed rate financing from other financial services firms.

The following table summarizes the Company’s non-performing assets as of March 31, 2020 and December 31, 2019:

	March 31,			December 31,
(dollars in thousands)	2020			2019
Nonaccrual loans including nonaccrual troubled debt restructured loans	$	13,883		$	18,675
Loans past due over 90 days and still accruing		71			45
Total nonperforming loans	$	13,954		$	18,720
Other real estate owned		351			316
Repossessions		11			—
Total nonperforming assets	$	14,316		$	19,036
Impaired loans including troubled debt restructurings	$	22,932		$	27,763
Nonperforming loans to total loans		0.34	%		0.46	%
Nonperforming assets to total assets		0.28	%		0.38	%
Performing troubled debt restructured loans	$	5,852		$	5,909
Nonperforming troubled debt restructured loans (included in nonaccrual loans)		2,311			3,188
Total troubled debt restructured loans	$	8,163		$	9,097

Total nonperforming assets decreased by $4.7 million, or 24.8%, to $14.3 million during the three-month period ended March 31, 2020. The ratio of nonperforming assets to total assets at March 31, 2020 decreased from 0.38% at December 31, 2019 to 0.28% at March 31, 2020. The decrease in nonperforming assets was primarily due to a $3.7 million charge-off taken on a single commercial manufacturing borrower. The borrower was on nonaccrual status and had a loan loss reserve allocation of $4.2 million as of December 31, 2019.

A loan is impaired when full payment under the original loan terms is not expected. Impairment for smaller loans that are similar in nature and which are not in nonaccrual or troubled debt restructured status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans and impairment is determined on an individual loan basis for other loans. If

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a loan is impaired, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows or at the fair value of collateral if repayment is expected solely from the collateral.

Total impaired loans decreased by $4.8 million, or 17.4%, to $22.9 million at March 31, 2020 from $27.8 million at December 31, 2019. The decrease in the impaired loans category was primarily due to the $3.7 million charge-off on the single commercial relationship that was on nonaccrual status as of December 31, 2019.

As a result of the COVID-19 pandemic, we anticipate that our commercial, commercial real estate, residential and consumer borrowers will continue to encounter economic difficulties, which could lead to increases in our levels of nonperforming assets, impaired loans and troubled debt restructurings.

Loans are charged against the allowance for loan losses when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb probable incurred credit losses relating to specifically identified loans based on an evaluation of the loans by management, as well as other probable incurred losses inherent in the loan portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect the borrower’s ability to repay. Management also considers trends in adversely classified loans based upon a monthly review of those credits. An appropriate level of general allowance is determined after considering the following factors: application of historical loss percentages, emerging market risk, commercial loan focus and large credit concentrations, new industry lending activity and current economic conditions. Federal regulations require insured institutions to classify their own assets on a regular basis. The regulations provide for three categories of classified loans: Substandard, Doubtful and Loss. The regulations also contain a Special Mention category. Special Mention applies to loans that do not currently expose an insured institution to a sufficient degree of risk to warrant classification as Substandard, Doubtful or Loss but do possess credit deficiencies or potential weaknesses deserving management’s close attention. The Company’s policy is to establish a specific allowance for loan losses for any assets where management has identified conditions or circumstances that indicate an asset is impaired. If an asset or portion thereof is classified as a loss, the Company’s policy is to either establish specified allowances for loan losses in the amount of 100% of the portion of the asset classified loss or charge-off such amount.

At March 31, 2020, the allowance for loan losses was 1.31% of total loans outstanding, versus 1.25% of total loans outstanding at December 31, 2019. At March 31, 2020, management believed the allowance for loan losses was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions continue to deteriorate due to the COVID-19 pandemic, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for loan losses. The process of identifying probable incurred credit losses is a subjective process. Therefore, the Company maintains a general allowance to cover probable credit losses within the entire portfolio. The methodology management uses to determine the adequacy of the loan loss reserve includes the considerations below.

The Company has a relatively high percentage of commercial and commercial real estate loans extended to businesses with a broad range of revenue and within a wide variety of industries. Traditionally, this type of lending may have more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by utilizing conservative credit structures, by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and market area.

As of March 31, 2020, based on management’s review of the loan portfolio, the Company had 97 credits totaling $183.8 million on the classified loan list versus 103 credits totaling $180.2 million on December 31, 2019. The increase in classified loans for the first three months of 2020 resulted primarily from one commercial borrower. As of March 31, 2020, the Company had $123.8 million of assets classified as Special Mention, $61.0 million classified as Substandard, $0 classified as Doubtful and $0 classified as Loss as compared to $96.6 million, $84.6 million, $0 and $0, respectively, at December 31, 2019.

Allowance estimates are developed by management after taking into account actual loss experience adjusted for current economic conditions. The Company has regular discussions regarding this methodology with regulatory authorities. Allowance estimates are considered a prudent measurement of the risk in the Company’s loan portfolio and are applied to individual loans based on loan type. In accordance with the incurred loan loss reserve accounting guidance, the allowance is provided for losses that have been incurred as of the balance sheet date and is based on past events and current economic conditions and does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions.

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For a more thorough discussion of the allowance for loan losses methodology see the Critical Accounting Policies section of this Item 2.

The allowance for loan losses increased 5.8%, or $3.0 million, from $50.7 million at December 31, 2019 to $53.6 million at March 31, 2020. Pooled loan allocations increased from $40.3 million at December 31, 2019 to $45.9 million at March 31, 2020, which was primarily due to management’s view of current credit quality, the current economic environment and loan growth. Impaired loan allocations were $7.7 million at March 31, 2020 and $10.4 million at December 31, 2019. The unallocated component of the allowance for loan losses was $3.1 million at March 31, 2020 and $2.3 million at December 31, 2019. Until the COVID-19 pandemic impacted the U.S. economy during the first quarter of 2020, general trends in the overall economy and credit quality had been stable. The Company believes that the unallocated component is appropriate given the high level of uncertainty that exists regarding near term economic conditions. The unallocated component of the allowance for loan losses incorporates the Company’s judgmental determination of inherent losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers.

Most of the Company’s recent loan growth has been concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits. Management has historically considered growth and portfolio composition when determining loan loss allocations. Management believes that it is prudent to continue to provide for loan losses in a manner consistent with its historical approach due to the loan growth described above and current economic conditions.

Loan growth for the first three months of 2020 has been moderate and prior to the COVID-19 pandemic, economic conditions in the Company’s markets had been stable. Watch list loans are stable at $183.8 million compared to $180.2 million at December 31, 2019, which represents 4.50% of total loans at March 31, 2020 compared to 4.43% at December 31, 2019. Prior to the impact of the COVID-19 pandemic, economic growth, concentrated in commercial real estate activity and manufacturing was occurring, but was not robust. The Company’s continued growth strategy promotes diversification among industries as well as continued focus on the enforcement of a disciplined credit culture and a conservative position in loan work-out situations. The Company believes that historical industry-specific issues in the Company’s markets have been stable prior to COVID-19.

Management is actively monitoring the loan portfolio for industry concentrations that we believe are most likely to be impacted by emerging COVID-19 events. Approximately 19% of the total loan portfolio contains industries that could be adversely impacted by the effects of COVID-19 and include the following: recreational vehicle - 4%, nursing home and assisted living - 4%, hotel and accommodations - 2%, self-storage - 2%, automotive, boating, trailer and truck - 2%, transportation and trucking contractors - 1%, C&I building construction - 1%, restaurants - 2% and entertainment and recreation - 1%. The Company has no direct exposure to oil and gas and limited exposure to retail shopping centers. Commercial bankers and credit officers are actively working with customers to understand their business challenges and credit needs during this time. We expect loan deferrals will increase during 2020 if the negative economic impact of COVID-19 is a prolonged event.

As of March 31, 2020, total deferrals attributed to COVID-19 were $99.8 million, representing 77 borrowers or 2% of the total loan portfolio. Of that total, 50 were commercial loan borrowers representing $99.3 million in loans, or 3% of total commercial loans. 27 were retail loan borrowers representing $528,000, or 0.1% of total retail loans. 95% of the total loan deferrals were three-month deferrals of principal only.

As of April 22, 2020, total COVID-19 related deferrals had increased to $467.1 million, representing 404 borrowers or 11% of the total loan portfolio. Of that total, 267 were commercial loan borrowers representing $459.8 million in loans, or 13% of total commercial loans. 137 were retail loan borrowers representing $7.3 million, or 2% of total retail loans. 85% of these loan deferrals are for three-month deferrals of principal only.

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Sources of Funds

The average daily deposits and borrowings together with average rates paid on those deposits and borrowings for the three months ended March 31, 2020 and 2019 are summarized in the following table:

	Three months ended March 31,
	2020				2019
(dollars in thousands)	Balance		Rate		Balance		Rate
Noninterest bearing demand deposits	$	991,651	0.00	%	$	885,126	0.00	%
Savings and transaction accounts:
Savings deposits		235,058	0.09			247,309	0.12
Interest bearing demand deposits		1,719,038	1.11			1,496,893	1.61
Time deposits:
Deposits of $100,000 or more		978,114	2.07			1,184,996	2.27
Other time deposits		280,233	1.97			276,006	1.81
Total deposits	$	4,204,094	1.07	%	$	4,090,330	1.38	%
FHLB advances and other borrowings		112,571	1.38			221,046	2.57
Total funding sources	$	4,316,665	1.08	%	$	4,311,376	1.44	%

Deposits and Borrowings

As of March 31, 2020, total deposits increased by $147.9 million, or 3.6%, from December 31, 2019. Core deposits increased by $151.8 million to $4.172 billion as of March 31, 2020 from $4.020 billion as of December 31, 2019. Total brokered deposits were $109.6 million at March 31, 2020 compared to $113.5 million at December 31, 2019 reflecting a $4.0 million decrease during the first three months of 2020.

Since December 31, 2019, the change in core deposits was comprised of increases in commercial deposits of $106.0 million, retail deposits of $40.5 million and public funds deposits of $5.3 million. Total public funds deposits, including public funds transaction accounts, were $1.132 billion at March 31, 2020 and $1.127 billion at December 31, 2019.

The following table summarizes deposit composition at March 31, 2020 and December 31, 2019:

					Current
	March 31,		December 31,		Period
(dollars in thousands)	2020		2019		Change
Retail	$	1,657,598	$	1,617,133	$	40,465
Commercial		1,382,091		1,276,048		106,043
Public funds		1,132,439		1,127,111		5,328
Core deposits	$	4,172,128	$	4,020,292	$	151,836
Brokered deposits		109,575		113,527		(3,952)
Total deposits	$	4,281,703	$	4,133,819	$	147,884

Total borrowings decreased by $84.56 million, or 49.7%, from December 31, 2019, primarily due to short-term FHLB advance repayments of $170.0 million and long-term FHLB fundings of $75.0 million. The Company also drew $10.5 million on its line of credit with a correspondent bank during the first quarter of 2020. The Company utilizes wholesale funding, including brokered deposits and Federal Home Loan Bank advances, to supplement funding of assets, which is primarily used for loan and investment securities growth. Additionally, management has completed the actions required to activate participation in the Federal Reserve Ban’s PPP Lending Facility. Management anticipates that the Company’s deposit balances may fluctuate more than usual during the remainder of 2020 due to the impact of PPP loan fundings, which are made to PPP loan recipient deposit accounts. In addition, there will be fluctuations due to IRS stimulus payments direct deposited into the accounts of retail customers. The timing and use of these funds in addition to draws on unfunded commitments could increase our need to borrow throughout the year.

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Capital

As of March 31, 2020, total stockholders’ equity was $606.5 million, an increase of $8.5 million, or 1.4%, from $598.0 million at December 31, 2019. In addition to net income of $17.3 million, other increases in equity during the first three months of 2020 included a $10.5 million change in accumulated other comprehensive income component of equity, which was primarily driven by a net increase in the fair value of available-for-sale securities. Offsetting the increases to stockholders’ equity were decreases due to the repurchase of 289,101 common shares for $10.0 million under the share repurchase plan reauthorized by the Company’s board of directors on January 14, 2020. Dividends declared and paid in the amount of $7.7 million as well as $2.0 million in stock activity under equity compensation plans. On March 10, 2020, the Company announced the activation of its share repurchase plan, which was reauthorized by the board of directors on January 14, 2020. During the first quarter of 2020, the Company repurchased 289,101 shares of its common stock for $10 million at a weighted average price per share of $34.63. Share repurchases under the repurchase plan were temporarily suspended, with $20 million of authorization remaining available under the plan .

The impact on equity by other comprehensive income (loss) is not included in regulatory capital. The banking regulators have established guidelines for leverage capital requirements, expressed in terms of Tier 1, or core capital, as a percentage of average assets, to measure the soundness of a financial institution. In addition, banking regulators have established risk-based capital guidelines for U.S. banking organizations. As of March 31, 2020, the Company's capital levels remained characterized as "well-capitalized" under the new rules.

The actual capital amounts and ratios of the Company and the Bank as of March 31, 2020 and December 31, 2019, are presented in the table below:

													Minimum Required to
					Minimum Required				For Capital Adequacy				Be Well Capitalized
					For Capital				Purposes Plus Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2020:
Total Capital (to Risk Weighted Assets)
Consolidated	$	632,663	14.23	%	$	356,225	8.00	%	$	467,546	N/A			N/A	N/A
Bank	$	627,291	14.11	%	$	355,739	8.00	%	$	466,907	10.50	%	$	444,674	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	578,963	13.02	%	$	267,169	6.00	%	$	378,489	N/A			N/A	N/A
Bank	$	573,591	12.90	%	$	266,804	6.00	%	$	377,973	8.50	%	$	355,739	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	578,963	13.02	%	$	200,377	4.50	%	$	311,697	N/A			N/A	N/A
Bank	$	573,591	12.90	%	$	200,103	4.50	%	$	311,272	7.00	%	$	289,038	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	578,962	11.67	%	$	198,507	4.00	%	$	198,507	N/A			N/A	N/A
Bank	$	573,591	11.65	%	$	196,997	4.00	%	$	196,997	4.00	%	$	246,247	5.00	%
As of December 31, 2019:
Total Capital (to Risk Weighted Assets)
Consolidated	$	631,723	14.36	%	$	351,894	8.00	%	$	461,862	N/A			N/A	N/A
Bank	$	616,386	14.04	%	$	351,227	8.00	%	$	460,985	10.500	%	$	439,034	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	580,982	13.21	%	$	263,921	6.00	%	$	373,887	N/A			N/A	N/A
Bank	$	565,645	12.88	%	$	263,420	6.00	%	$	373,179	8.500	%	$	351,227	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	580,982	13.21	%	$	197,941	4.50	%	$	307,908	N/A			N/A	N/A
Bank	$	565,645	12.88	%	$	197,565	4.50	%	$	307,324	7.000	%	$	285,372	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	580,982	11.67	%	$	199,099	4.00	%	$	199,099	N/A			N/A	N/A
Bank	$	565,645	11.43	%	$	197,923	4.00	%	$	197,923	4.00	%	$	247,404	5.00	%

46

FORWARD-LOOKING STATEMENTS

This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in the federal securities law. Forward-looking statements are not historical facts and are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “project,” “possible,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including, without limitation:

● the effects of the COVID-19 pandemic, including its effects on our customers, local economic conditions, our operations and vendors, and the responses of federal, state and local governmental authorities;

● the effects of future economic, business and market conditions and changes, both domestic and foreign, including the effects of federal trade policies;

● governmental monetary and fiscal policies;

● the timing and scope of any legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators;

● the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities;

● the phase out of LIBOR by the end of 2021 and establishment of a new reference rate

● changes in borrowers’ credit risks and payment behaviors;

● changes in the availability and cost of credit and capital in the financial markets;

● the effects of disruption and volatility in capital markets on the value of our investment portfolio;

● cyber-security risks and or cyber-security damage that could result from attacks on the Company’s or third-party service providers networks or data of the Company;

● changes in the prices, values and sales volumes of residential and commercial real estate;

● the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

● changes in technology or products that may be more difficult or costly, or less effective than anticipated;

● the effects of war or other conflicts, acts of terrorism or other catastrophic events, including storms, droughts, tornados and flooding, that may affect general economic conditions, including agricultural production and demand and prices for agricultural goods and land used for agricultural purposes, generally and in our markets;

● the risk of trade policy and tariffs could impact loan demand from the manufacturing sector

● the failure of assumptions and estimates used in our reviews of our loan portfolio, underlying the establishment of reserves for possible loan losses, our analysis of our capital position and other estimates;

● changes in the scope and cost of FDIC insurance, the state of Indiana’s Public Deposit Insurance Fund and other coverages;

● changes in accounting policies, rules and practices;

● the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; and

● the risks noted in the Risk Factors discussed under Item 1A of Part 1 of this Annual Report on Form 10-K, as well as other risks and uncertainties set forth from time to time in the Company’s other filings with the SEC.

47

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk represents the Company’s primary market risk exposure. The Company does not have a material exposure to foreign currency exchange risk, does not have any material amount of derivative financial instruments and does not maintain a trading portfolio. The Corporate Risk Committee of the Board of Directors annually reviews and approves the policy used to manage interest rate risk. The policy was last reviewed and approved in July 2019. The policy sets guidelines for balance sheet structure, which are designed to protect the Company from the impact that interest rate changes could have on net income but do not necessarily indicate the effect on future net interest income. The Company, through its Asset and Liability Committee, manages interest rate risk by monitoring the computer simulated earnings impact of various rate scenarios and general market conditions. The Company then modifies its long-term risk parameters by attempting to generate the types of loans, investments, and deposits that currently fit the Company’s needs, as determined by its Asset and Liability Committee. This computer simulation analysis measures the net interest income impact of various interest rate scenario changes during the next twelve months. The Company continually evaluates the assumptions used in the model. The current balance sheet structure is considered to be within acceptable risk levels.

Interest rate scenarios for the base, falling 25 basis points, rising 25 basis points, rising 50 basis points, rising 100 basis points, rising 200 basis points and rising 300 basis points are listed below based upon the Company’s rate sensitive assets and liabilities at March 31, 2020. The net interest income shown represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

The base scenario is an annual calculation that is highly dependent on numerous assumptions embedded in the model. While the base sensitivity analysis incorporates management’s best estimate of interest rate and balance sheet dynamics under various market rate movements, the actual behavior and resulting earnings impact will likely differ from that projected. For certain assets, the base simulation model captures the expected prepayment behavior under changing interest rate environments. Assumptions and methodologies regarding the interest rate or balance behavior of indeterminate maturity core deposit products, such as savings, money market, NOW and demand deposits reflect management’s best estimate of expected future behavior.

			Falling			Rising			Rising			Rising			Rising			Rising
			(25 Basis			(25 Basis			(50 Basis			(100 Basis			(200 Basis			(300 Basis
(dollars in thousands)	Base		Points)			Points)			Points)			Points)			Points)			Points)
Net interest income	$	156,048	$	152,637		$	157,972		$	159,752		$	163,560		$	171,478		$	179,428
Variance from Base			$	(3,411)		$	1,924		$	3,704		$	7,512		$	15,430		$	23,380
Percent of change from Base				(2.19)	%		1.23	%		2.37	%		4.81	%		9.89	%		14.98	%

ITEM 4 – CONTROLS AND PROCEDURES

As required by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of March 31, 2020. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended March 31, 2020, there were no changes to the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

48

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which the Company or its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses.

Item 1A. Risk Factors

The outbreak of Coronavirus Disease 2019 (“COVID-19”) is having an adverse impact on our business and results of operations, and could have an adverse impact on our financial condition and capital levels, any of which could be material. Further, the spread of the outbreak could lead to a prolonged economic recession or other severe disruptions in the U.S. economy, may disrupt banking and other financial activity in the areas in which we operate and could potentially create widespread business continuity issues for us.

The spread of COVID-19 has had a significant economic impact on the communities in which we operate, our borrowers and depositors, and the national economy generally, including a severe curtailment of business activity and widespread levels of unemployment in our Indiana markets. We expect this impact to worsen and last for a significant and indeterminate period. These developments have adversely affected our business and results of operations, and we believe they could adversely impact our financial condition and capital levels, the amounts of which cannot be determined and could be material. In particular, certain of our borrowers and depositors are in or have exposure to industries that have reduced or suspended operations, or are located in areas that have been subject to stay-at-home orders. A prolonged stay-at-home order, or any other continued decrease in economic activity as a result of COVID-19, would have a negative adverse impact on our borrowers and their financial condition, which could impact their ability to meet their financial obligations and could result in elevated levels of delinquencies, defaults, foreclosures and loan losses. See “Note 11 – COVID-19 and Current Economic Conditions” for additional information.

In addition, the COVID-19 pandemic could have a material impact on our operations. We rely upon our third-party vendors to conduct business and to process, record and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. Furthermore, the outbreak could negatively impact our employees and customers’ ability to engage in banking and other financial transactions and could create widespread business continuity issues for us. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of a COVID-19 outbreak in our market areas.

We may experience increases to, and volatility in, the balance of the allowance for credit losses and related provision expense due to the adoption of the current expected credit losses (“CECL”) methodology.

We adopted CECL effective January 1, 2020, and, as permitted by the CARES Act, have delayed compliance until the earlier of the termination date of the national emergency declared by President Trump under the National Emergencies Act on March 31, 2020, related to the outbreak of COVID-19, and December 31, 2020. Relative to the incurred loss methodology that we currently use, the CECL methodology requires increased use of judgments and dependence on forward-looking information and forecasts, any of which may prove to be incorrect. For this reason, and due to the effects of the COVID-19 pandemic and the uncertain duration of the permitted delay referred to above, we are not able to estimate the amount of increase in our allowance for credit losses upon our compliance with this standard.

The CECL methodology differs substantially from the incurred loss methodology currently used in that it is forward looking, requiring measurement to occur when a financial asset is first added to the balance sheet and periodically thereafter. The measurements will require increased use of management judgments as well as forward-looking information and forecasts. Although every effort is made to ensure that the judgements are correct and the forecasts accurate, the future is uncertain, and there can be no guarantee that the judgments and forecasts will prove to be correct.

49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ISSUER PURCHASES OF EQUITY SECURITIES

On January 8, 2019, the Company's board of directors approved a share repurchase program, under which the Company is authorized to repurchase, from time to time as the Company deems appropriate, shares of the Company's common stock with an aggregate purchase price of up to $30 million. Repurchases may be made in the open market, through block trades or otherwise, and in privately negotiated transactions. The repurchase program expired on December 31, 2019, and it was reauthorized by the Company’s board of directors on January 14, 2020 through January 31, 2021, with an aggregate purchase price cap of $30 million. The repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended or discontinued at any time.

During the first quarter of 2020, the Company repurchased 289,101 shares of its common stock for $10 million at a weighted average price per share of $34.63. On March 24, 2020, the share repurchases were temporarily suspended and $20 million of authorization remains available and outstanding.

The following table provides information as of March 31, 2020 with respect to shares of common stock repurchased by the Company during the quarter then ended:

ISSUER PURCHASES OF EQUITY SECURITIES

					Maximum Number (or
				Total Number of	Appropriate Dollar
				Shares Purchased as	Value) of Shares that
				Part of Publicly	May Yet Be Purchased
	Total Number of	Average Price		Announced Plans or	Under the Plans or
Period	Shares Purchased	Paid per Share		Programs	Programs
January 1-31	3,352	$	48.49	0	$	30,000,000
February 1-29	1,097		48.21	0		30,000,000
March 1-31	289,101		34.63	289,101		19,988,273
Total	293,550	$	34.84	289,101	$	19,988,273

(a) The shares purchased during January and February were credited to the deferred share accounts of non-employee directors under the Company’s directors’ deferred compensation plan. These shares were purchased in the ordinary course of business and consistent with past practice.

The shares purchased during March were purchased under the share repurchase program described above.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None

50

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File
	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019; (ii) Consolidated Statements of Income for the three months ended March 31, 2020 and March 31, 2019; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and March 31, 2019; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2020 and March 31, 2019; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and March 31, 2019; and (vi) Notes to Unaudited Consolidated Financial Statements.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

51

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LAKELAND FINANCIAL CORPORATION

(Registrant)

Date: April 30, 2020	/s/ David M. Findlay
	David M. Findlay – President and
	Chief Executive Officer
Date: April 30, 2020	/s/ Lisa M. O’Neill
	Lisa M. O’Neill – Executive Vice President and
	Chief Financial Officer
	(principal financial officer)
Date: April 30, 2020	/s/ Brok A. Lahrman
	Brok A. Lahrman – Senior Vice President and Chief Accounting Officer
	(principal accounting officer)

52

EX-31.1

Exhibit 31.1

I, David M. Findlay,  Chief Executive Officer of Lakeland Financial Corporation,  certify that:

1.            I have reviewed this quarterly report on Form 10-Q of Lakeland Financial Corporation;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.            The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)             Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;

c)             Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

5.            The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)           All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 30, 2020	/s/ David M. Findlay
	David M. Findlay
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Lisa M. O’Neill, Chief Financial Officer of Lakeland Financial Corporation, certify that:

1.            I have reviewed this quarterly report on Form 10-Q of Lakeland Financial Corporation;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;

c)            Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

5.            The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)           All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  April 30, 2020	/s/ Lisa M. O’Neill
	Lisa M. O’Neill
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending  March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David M. Findlay, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ David M. Findlay

David M. Findlay

Chief Executive Officer

April 30, 2020

A signed original of this written statement required by Section 906 has been provided to Lakeland Financial Corporation and will be retained by Lakeland Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lisa M. O’Neill, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Lisa M. O’Neill

Lisa M. O’Neill

Chief Financial Officer

April 30, 2020

A signed original of this written statement required by Section 906 has been provided to Lakeland Financial Corporation and will be retained by Lakeland Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

Schedule of Weighted Average Number of Shares

	Three Months Ended March 31,
	2020		2019
Weighted average shares outstanding for basic earnings per common share		25,622,988		25,491,750
Dilutive effect of stock based awards and warrants		112,838		173,760
Weighted average shares outstanding for diluted earnings per common share		25,735,826		25,665,510
Basic earnings per common share	$	0.68	$	0.85
Diluted earnings per common share	$	0.67	$	0.84

XML

LOANS (Tables)

3 Months Ended

Mar. 31, 2020

LOANS

Schedule of Loans

	March 31,				December 31,
(dollars in thousands)	2020				2019
Commercial and industrial loans:
Working capital lines of credit loans	$	730,767	17.9	%	$	709,849	17.5	%
Non-working capital loans		697,952	17.1			717,019	17.6
Total commercial and industrial loans		1,428,719	35.0			1,426,868	35.1
Commercial real estate and multi-family residential loans:
Construction and land development loans		334,524	8.2			287,641	7.1
Owner occupied loans		572,057	14.0			573,665	14.1
Nonowner occupied loans		584,418	14.3			571,364	14.0
Multifamily loans		269,479	6.6			240,652	5.9
Total commercial real estate and multi-family residential loans		1,760,478	43.1			1,673,322	41.1
Agri-business and agricultural loans:
Loans secured by farmland		145,542	3.5			174,380	4.3
Loans for agricultural production		183,855	4.5			205,151	5.0
Total agri-business and agricultural loans		329,397	8.0			379,531	9.3
Other commercial loans		104,286	2.5			112,302	2.8
Total commercial loans		3,622,880	88.6			3,592,023	88.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		173,431	4.3			177,227	4.4
Open end and junior lien loans		181,541	4.4			186,552	4.6
Residential construction and land development loans		12,146	0.3			12,966	0.3
Total consumer 1-4 family mortgage loans		367,118	9.0			376,745	9.3
Other consumer loans		97,096	2.4			98,617	2.4
Total consumer loans		464,214	11.4			475,362	11.7
Subtotal		4,087,094	100.0	%		4,067,385	100.0	%
Less: Allowance for loan losses		(53,609)				(50,652)
Net deferred loan fees		(1,356)				(1,557)
Loans, net	$	4,032,129			$	4,015,176

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LEASES - Right-of-use Asset (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Assets and Liabilities, Lessee [Abstract]
Right-of-use asset	$ 4,999

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Loans By Class Modified As Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended				9 Months Ended
	Mar. 31, 2020 USD ($) loan	Sep. 30, 2019	Mar. 31, 2019 USD ($) loan	Sep. 30, 2018	Sep. 30, 2019
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment			$ 35
Post-Modification Outstanding Recorded Investment			$ 35
Extension period for modified repayment terms	0 months		0 months
Modified Repayment Terms
Financing Receivable, Modifications
Number of Loans | loan	1		1
Modified Repayment Terms | Minimum
Financing Receivable, Modifications
Extension period for modified repayment terms		0 months			0 months
All Modifications [Member]
Financing Receivable, Modifications
Number of Loans | loan	1		1
Non-working Capital Loans [Member]
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment			$ 35
Post-Modification Outstanding Recorded Investment			$ 35
Extension period for modified repayment terms			0 months
Non-working Capital Loans [Member] | Modified Repayment Terms
Financing Receivable, Modifications
Number of Loans | loan			1
Non-working Capital Loans [Member] | Modified Repayment Terms | Minimum
Financing Receivable, Modifications
Extension period for modified repayment terms				0 months
Non-working Capital Loans [Member] | All Modifications [Member]
Financing Receivable, Modifications
Number of Loans | loan			1
Commercial and Industrial Loans [Member]
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment	$ 788
Post-Modification Outstanding Recorded Investment	$ 122
Extension period for modified repayment terms	0 months
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Modified Repayment Terms
Financing Receivable, Modifications
Number of Loans | loan	1
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Modified Repayment Terms | Minimum
Financing Receivable, Modifications
Extension period for modified repayment terms		0 months
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | All Modifications [Member]
Financing Receivable, Modifications
Number of Loans | loan	1
Commercial and Industrial Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Modifications
Pre-Modification Outstanding Recorded Investment	$ 788
Post-Modification Outstanding Recorded Investment	$ 122

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BORROWINGS - Short-term Borrowings (Details) $ in Millions	Dec. 31, 2019 USD ($)
Short-term Debt [Line Items]
Federal Home Loan Bank, advances, maturities summary, due in next twelve months	$ 170.0
Federal Home Loan Bank Advances [Member] | Federal Home Loan Bank of Indianapolis Advance, 1.61%, Due January 7, 2020
Short-term Debt [Line Items]
Debt instrument, interest rate, stated percentage (as a percent)	1.61%

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance	$ 598,100	$ 521,704
Net current period other comprehensive income	10,491	8,678
Balance	606,572	543,267
Accumulated Other Comprehensive Income (Loss)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance	12,059	(6,191)
Other comprehensive income before reclassification	10,444	8,663
Amounts reclassified from accumulated other comprehensive income	47	15
Net current period other comprehensive income	10,491	8,678
Balance	22,550	2,487
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance	13,607	(4,796)
Other comprehensive income before reclassification	10,444	8,663
Amounts reclassified from accumulated other comprehensive income	0	(23)
Net current period other comprehensive income	10,444	8,640
Balance	24,051	3,844
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance	(1,548)	(1,395)
Other comprehensive income before reclassification	0	0
Amounts reclassified from accumulated other comprehensive income	47	38
Net current period other comprehensive income	47	38
Balance	$ (1,501)	$ (1,357)

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FAIR VALUE - Estimated Fair Values And The Related Carrying Values Of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial Assets:
Cash and cash equivalents	$ 132,581	$ 99,381
Securities available for sale	624,325	608,233
Financial Liabilities:
Other short-term borrowings	(10,500)
Federal Home Loan Bank advances	(64,166)
Carrying Value [Member]
Financial Assets:
Cash and cash equivalents	132,581	99,381
Securities available for sale	624,325	608,233
Real estate mortgages held for sale	7,982	4,527
Loans, net	4,032,129	4,015,176
Federal Reserve and Federal Home Loan Bank stock	13,772	13,772
Accrued interest receivable	15,433	15,391
Financial Liabilities:
Certificates of deposit	(1,273,413)	(1,192,067)
All other deposits	(3,008,290)	(2,941,752)
Other short-term borrowings	(10,500)
Federal Home Loan Bank advances	(75,000)	(170,000)
Standby letters of credit	(915)	(915)
Accrued interest payable	(10,082)	(11,604)
Estimate of Fair Value Measurement
Financial Assets:
Securities available for sale		608,233
Real estate mortgages held for sale	8,141	4,614
Loans, net	4,036,193	3,979,006
Accrued interest receivable	15,433	15,391
Financial Liabilities:
Certificates of deposit	(1,289,272)	(1,202,060)
All other deposits	(3,008,290)	(2,941,752)
Federal Home Loan Bank advances		(169,998)
Standby letters of credit	(915)	(915)
Accrued interest payable	(10,082)	(11,604)
Level 1
Financial Assets:
Accrued interest receivable	0
Financial Liabilities:
Certificates of deposit	0
Other short-term borrowings	0
Federal Home Loan Bank advances	0
Level 1 | Estimate of Fair Value Measurement
Financial Assets:
Cash and cash equivalents	129,750	96,603
Securities available for sale	0	0
Real estate mortgages held for sale	0	0
Loans, net	0	0
Accrued interest receivable		0
Financial Liabilities:
Certificates of deposit		0
All other deposits	(3,008,290)	(2,941,752)
Federal Home Loan Bank advances		0
Standby letters of credit	0	0
Accrued interest payable	(61)	(102)
Level 2
Financial Liabilities:
Other short-term borrowings	(10,500)
Federal Home Loan Bank advances	(64,166)
Level 2 | Estimate of Fair Value Measurement
Financial Assets:
Cash and cash equivalents	2,831	2,778
Securities available for sale	624,180	608,088
Real estate mortgages held for sale	8,141	4,614
Loans, net	0	0
Accrued interest receivable	3,575	3,729
Financial Liabilities:
Certificates of deposit	(1,289,272)	(1,202,060)
All other deposits	0	0
Federal Home Loan Bank advances		(169,998)
Standby letters of credit	0	0
Accrued interest payable	(10,021)	(11,502)
Level 3
Financial Liabilities:
Other short-term borrowings	0
Federal Home Loan Bank advances	0
Level 3 | Estimate of Fair Value Measurement
Financial Assets:
Cash and cash equivalents	0	0
Securities available for sale	145	145
Real estate mortgages held for sale	0	0
Loans, net	4,036,193	3,979,006
Accrued interest receivable	11,858	11,662
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	0	0
Federal Home Loan Bank advances		0
Standby letters of credit	(915)	(915)
Accrued interest payable	$ 0	$ 0

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SECURITIES - Schedule of Available For Sale of Securities Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	$ 9,744	$ 42,215
12 months or more, Fair value	5,134	14,174
Total Fair value	14,878	56,389
Less than 12 Months, Unrealized Losses	101	342
12 Months or more, Unrealized Losses	101	275
Total Unrealized Losses	202	617
Mortgage-backed securities residential [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	3,021	23,436
12 months or more, Fair value	5,134	14,174
Total Fair value	8,155	37,610
Less than 12 Months, Unrealized Losses	69	112
12 Months or more, Unrealized Losses	101	275
Total Unrealized Losses	170	387
Mortgage-backed securities commercial [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	2,214	4,591
12 months or more, Fair value	0	0
Total Fair value	2,214	4,591
Less than 12 Months, Unrealized Losses	0	2
12 Months or more, Unrealized Losses	0	0
Total Unrealized Losses	0	2
State and Municipal Securities [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	4,509	14,188
12 months or more, Fair value	0	0
Total Fair value	4,509	14,188
Less than 12 Months, Unrealized Losses	32	228
12 Months or more, Unrealized Losses	0	0
Total Unrealized Losses	$ 32	$ 228

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LOANS - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2020	Mar. 31, 2019
LOANS
Mortgage Loans in Process of Foreclosure, Amount	$ 1.5	$ 1.6

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FAIR VALUE DISCLOSURES

3 Months Ended

Mar. 31, 2020

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

NOTE 6. FAIR VALUE DISCLOSURES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1  Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2  Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available-for-sale are valued primarily by a third party pricing service. The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs).

The Company’s Finance Department, which is responsible for all accounting and SEC compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the Executive Vice President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are new assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained on securities from a third party pricing service and all security prices are tested annually against prices from another third party provider and reviewed with a market value price tolerance variance that varies by sector:  municipal securities +/- 5%, government mbs/cmo +/- 3% and U.S. treasuries +/-1%. If any securities fall outside the tolerance threshold and have a variance of $100,000 or more, a determination of materiality is made for the amount over the threshold. Any security that would have a material threshold difference would be further investigated to determine why the variance exists and if any action is needed concerning the security pricing for that individual security. Changes in market value are reviewed monthly in aggregate by security type and any material differences are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

Mortgage banking derivative:  The fair values of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Impaired loans:  Impaired loans with specific allocations of the allowance for loan losses are generally based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of impaired loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods (b) finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope

of use of the finished good (c) work in process inventory is typically discounted by 50-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base (d) equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons; and (e) marketable securities are discounted by 10-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights:  As of March 31, 2020, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $3.8 million, carried at amortized cost less $246,000 in a valuation reserve, or $3.6 million. These residential mortgage loans have a weighted average interest rate of 3.90%, a weighted average maturity of 20 years and are secured by homes generally within the Company’s market area of Northern Indiana and Indianapolis. A valuation model is used to estimate fair value by stratifying the portfolios on the basis of certain risk characteristics, including loan type and interest rate. Impairment is estimated based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees, and float income. The most significant assumption used to value MSRs is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At March 31, 2020, the constant prepayment speed (“PSA”) used was 166 and discount rate used was 9.4%. At December 31, 2019, the PSA used was 118 and the discount rate used was 9.4%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable properties used to determine value. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held for sale: Real estate mortgage loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and result in a Level 2 classification.

The table below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	293,270	$	0	$	293,270
Mortgage-backed securities: commercial		0		41,814		0		41,814
State and municipal securities		0		289,096		145		289,241
Total Securities		0		624,180		145		624,325
Mortgage banking derivative		0		1,307		0		1,307
Interest rate swap derivative		0		21,565		0		21,565
Total assets	$	0	$	647,052	$	145	$	647,197
Liabilities:
Mortgage banking derivative		0		544		0		544
Interest rate swap derivative		0		21,599		0		21,599
Total liabilities	$	0	$	22,143	$	0	$	22,143

	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	288,181	$	0	$	288,181
Mortgage-backed securities: commercial		0		36,972		0		36,972
State and municipal securities		0		282,935		145		283,080
Total Securities		0		608,088		145		608,233
Mortgage banking derivative		0		198		0		198
Interest rate swap derivative		0		7,263		0		7,263
Total assets	$	0	$	615,549	$	145	$	615,694
Liabilities:
Mortgage banking derivative		0		14		0		14
Interest rate swap derivative		0		7,860		0		7,860
Total liabilities	$	0	$	7,874	$	0	$	7,874

The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	2,002	$	2,002
Non-working capital loans		0		0		5,332		5,332
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		1,527		1,527
Agri-business and agricultural loans:
Loans secured by farmland		0		0		90		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		459		459
Open end and junior lien loans		0		0		587		587
Residential construction loans		0		0		42		42
Total impaired loans	$	0	$	0	$	10,039	$	10,039
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	10,039	$	10,039

	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	3,126	$	3,126
Non-working capital loans		0		0		6,374		6,374
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		43		43
Owner occupied loans		0		0		1,449		1,449
Agri-business and agricultural loans:
Loans secured by farmland		0		0		57		57
Other commercial loans		0		0		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		474		474
Open end and junior lien loans		0		0		587		587
Other consumer loans		0		0		11		11
Total impaired loans	$	0	$	0	$	12,121	$	12,121
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	12,121	$	12,121

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2020:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,334	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	7%-100%
Impaired loans:
Commercial real estate		1,527	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	25	%	7%-52%
Impaired loans:
Agribusiness and agricultural		90	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	39	%
Impaired loans:
Consumer 1‑4 family mortgage		1,088	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,500	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	1%-100%
Impaired loans:
Commercial real estate		1,492	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	27	%	7%-61%
Impaired loans:
Agribusiness and agricultural		57	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	61	%
Impaired loans:
Consumer 1‑4 family mortgage		1,061	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%
Impaired loans:
Other consumer		11	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $17.4 million, with a valuation allowance of $7.4 million at March 31, 2020. The change in the fair value of impaired loans resulted in increases in the provision for loan losses of $142,000 over the three months ended March 31, 2020. The decreases was primarily due to a $3.7 million charge-off taken on an impaired commercial relationship. At March 31, 2019, impaired loans had a gross carrying amount of $19.1 million, with a valuation allowance of $9.3 million. The change in the fair value of impaired loans resulted in a reduction in the provision for loan losses of $200,000 over the three months ended March 31, 2019.

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2020
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	132,581	$	129,750	$	2,831	$	0	$	132,581
Securities available-for-sale		624,325		0		624,180		145		624,325
Real estate mortgages held-for-sale		7,982		0		8,141		0		8,141
Loans, net		4,032,129		0		0		4,036,193		4,036,193
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,433		0		3,575		11,858		15,433
Financial Liabilities:
Certificates of deposit		(1,273,413)		0		(1,289,272)		0		(1,289,272)
All other deposits		(3,008,290)		(3,008,290)		0		0		(3,008,290)
Other short-term borrowings		(10,500)		0		(10,500)		0		(10,500)
Federal Home Loan Bank advances		(75,000)		0		(64,166)		0		(64,166)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(10,082)		(61)		(10,021)		0		(10,082)

	December 31, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	99,381	$	96,603	$	2,778	$	0	$	99,381
Securities available-for-sale		608,233		0		608,088		145		608,233
Real estate mortgages held-for-sale		4,527		0		4,614		0		4,614
Loans, net		4,015,176		0		0		3,979,006		3,979,006
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,391		0		3,729		11,662		15,391
Financial Liabilities:
Certificates of deposit		(1,192,067)		0		(1,202,060)		0		(1,202,060)
All other deposits		(2,941,752)		(2,941,752)		0		0		(2,941,752)
Federal Home Loan Bank advances		(170,000)		0		(169,998)		0		(169,998)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(11,604)		(102)		(11,502)		0		(11,604)

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SECURITIES

3 Months Ended

Mar. 31, 2020

SECURITIES

SECURITIES

NOTE 2. SECURITIES

Information related to the fair value and amortized cost of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gain		Losses		Value
March 31, 2020
Mortgage-backed securities: residential	$	280,674	$	12,766	$	(170)	$	293,270
Mortgage-backed securities: commercial		41,003		811		0		41,814
State and municipal securities		272,205		17,068		(32)		289,241
Total	$	593,882	$	30,645	$	(202)	$	624,325
December 31, 2019
Mortgage-backed securities: residential	$	283,817	$	4,751	$	(387)	$	288,181
Mortgage-backed securities: commercial		36,712		262		(2)		36,972
State and municipal securities		270,480		12,828		(228)		283,080
Total	$	591,009	$	17,841	$	(617)	$	608,233

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2020 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	3,924	$	3,946
Due after one year through five years		15,371		15,741
Due after five years through ten years		27,257		28,584
Due after ten years		225,653		240,970
		272,205		289,241
Mortgage-backed securities		321,677		335,084
Total debt securities	$	593,882	$	624,325

Securities proceeds, gross gains and gross losses are presented below.

	Three months ended March 31,
(dollars in thousands)	2020		2019
Sales of securities available-for-sale
Proceeds	$	0	$	13,693
Gross gains		0		70
Gross losses		0		(47)
Number of securities		0		17

In accordance with ASU No. 2017-08, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $214.9 million and $59.3 million were pledged as of March 31, 2020 and December 31, 2019, respectively, as collateral for borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Mortgage-backed securities: residential	$	3,021	$	69	$	5,134	$	101	$	8,155	$	170
Mortgage-backed securities: commercial		2,214		0		0		0		2,214		0
State and municipal securities		4,509		32		0		0		4,509		32
Total temporarily impaired	$	9,744	$	101	$	5,134	$	101	$	14,878	$	202
December 31, 2019
Mortgage-backed securities: residential	$	23,436	$	112	$	14,174	$	275	$	37,610	$	387
Mortgage-backed securities: commercial		4,591		2		0		0		4,591		2
State and municipal securities		14,188		228		0		0		14,188		228
Total temporarily impaired	$	42,215	$	342	$	14,174	$	275	$	56,389	$	617

The total number of securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below.

	Less than	12 months
	12 months	or more	Total
March 31, 2020
Mortgage-backed securities: residential	1	2	3
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	4	0	4
Total temporarily impaired	6	2	8
December 31, 2019
Mortgage-backed securities: residential	7	6	13
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	11	0	11
Total temporarily impaired	19	6	25

The following factors are considered in determining whether or not the impairment of these securities is other-than-temporary. In making this determination, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer, as well as the underlying fundamentals of the relevant market and the outlook for such market in the near future. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. Credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. As of March 31, 2020 and December 31, 2019, all of the securities in the Company’s portfolio were backed by the U.S. government, government agencies, government sponsored entities or were A-rated or better, except for certain non-local or local municipal securities, which are not rated. For the government, government agency, government-sponsored entity and municipal securities, management did not believe that there would be credit losses or that full principal would not be received. Management considers the unrealized losses on these securities to be primarily interest rate driven and does not expect material losses given current market conditions unless the securities are sold. However, at this time management does not have the intent to sell, and it is more likely than not that the Company will not be required to sell these securities before the recovery of their amortized cost basis.

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the "Company"), which has two wholly owned subsidiaries, Lake City Bank (the "Bank") and LCB Risk Management, a captive insurance company. Also included in this report are results for the Bank’s wholly owned subsidiary, LCB Investments II, Inc. ("LCB Investments"), which manages the Bank’s investment portfolio. LCB Investments owns LCB Funding, Inc. ("LCB Funding"), a real estate investment trust. All significant inter-company balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three-months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2020. The Company’s 2019 Annual Report on Form 10-K should be read in conjunction with these statements.

Adoption of New Accounting Standards

In January 2017, the FASB issued ASU No. 2017-04 "Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment." These amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted this new accounting standard on January 1, 2020.

Adopting this standard did not have an impact on the Company's financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." These amendments modify the disclosure requirements in Topic 820 as follows:

Removals: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements.

Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of

liquidation of an investee's assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The guidance is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-15 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued guidance related to credit losses on financial instruments. This update, commonly referred to as the current expected credit losses methodology (“CECL”), will change the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. For loans, this measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model previously required, but still permitted, under GAAP, which delays recognition until it is probable a loss has been incurred. In addition, the guidance will modify the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which will allow for reversal of credit impairments in future periods. This guidance is effective, subject to optional delay discussed below, for the Company for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years.

Under a provision provided by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Company elected to delay the adoption of FASB’s new rule covering the CECL standard until the earlier of the termination date of the national emergency declared by President Trump under the National Emergencies Act on March 13, 2020, related to the outbreak of COVID-19, and December 31, 2020. Once the delay provision has been terminated, adoption will be retroactive to January 1, 2020. During 2019, the Company implemented the CECL methodology and ran it concurrently with the historical incurred method. While the Company has not finalized the impact of implementing CECL, the Company expects to recognize a one-time cumulative effect adjustment to the allowance and beginning retained earnings, net of tax, upon adoption. Once final, the calculation will require approval by the loan review committee and governance in accordance with the Company’s internal controls over financial reporting. Additionally, the Company has evaluated the need to recognize an allowance for credit impairment for available-for-sale debt securities. The impact on available-for-sale debt securities is subject to a limitation, which is based on the fair value of the debt securities. When evaluating the credit quality of our existing portfolio, the Company does not expect the allowance for credit impairment for available-for-sale securities to be significant. The future impact of CECL on the Company’s allowance for credit losses and provision expense subsequent to the initial adoption will depend on changes in the loan portfolio, economic conditions and refinements to key assumptions including forecasting and qualitative factors.

In August 2018, the FASB issued ASU 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." The ASU updates the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans by adding, clarifying and removing certain disclosures. These amendments are effective for fiscal years ending after December 15, 2020, for public business entities, and are to be applied on a retrospective basis to all periods presented. Management does not anticipate ASU 2018-14 will have a material impact on its financial statements.

In December 2019, the FASB issued ASU 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." These amendments remove specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences where there are ownership changes in foreign investments; and exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. It also improves financial statement preparers' application of income tax- related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacts changes in tax laws in interim periods. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is assessing ASU 2019-12 and its impact on its financial statements.

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform ("ASC 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of the Secured Overnight Financial Rate (“SOFR”). The Company has identified loans that will renew prior to 2021 and will obtain updated reference rate language at the time of renewal. Loans maturing after 2021 will need loan modifications and fallback language has been implemented for newly originated loans. The guidance under ASC-848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard.

Reclassifications

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders’ equity as previously reported.

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Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 29, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	0-11487
Entity Registrant Name	LAKELAND FINANCIAL CORPORATION
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1559596
Entity Address, Address Line One	202 East Center Street,
Entity Address, City or Town	Warsaw
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46580
City Area Code	574
Local Phone Number	267‑6144
Title of 12(b) Security	Common stock, No par value
Trading Symbol	LKFN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,701,115
Entity Central Index Key	0000721994
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

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LEASES

3 Months Ended

Mar. 31, 2020

LEASES

LEASES

NOTE 10. LEASES

The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2029 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company's corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard. The following is a maturity analysis of the operating lease liabilities as of March 31, 2020:

	Operating lease
Years ending December 31, (in thousands)	Obligation
2020	$	425
2021		581
2022		595
2023		606
2024		622
2025 and thereafter		2,873
Total undiscounted lease payments		5,702
Less imputed interest		(703)
Lease liability	$	4,999
Right-of-use asset	$	4,999

	Three months ended			Three months ended
	March 31, 2020			March 31, 2019
Lease cost
Operating lease cost	$	128		$	119
Short-term lease cost		6			6
Total lease cost	$	134		$	125
Other information
Operating cash outflows from operating leases	$	128
Weighted-average remaining lease term - operating leases		9.6 years
Weighted average discount rate - operating leases		2.8	%

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 17,299	$ 21,682
Change in securities available-for-sale:
Unrealized holding gain on securities available-for-sale arising during the period	13,219	10,960
Reclassification adjustment for gains included in net income	0	(23)
Net securities gain activity during the period	13,219	10,937
Tax effect	(2,775)	(2,297)
Net of tax amount	10,444	8,640
Defined benefit pension plans:
Amortization of net actuarial loss	63	50
Net gain activity during the period	63	50
Tax effect	(16)	(12)
Net of tax amount	47	38
Total other comprehensive income, net of tax	10,491	8,678
Comprehensive income	$ 27,790	$ 30,360

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	$ 0	$ 23
Other expense	2,312	2,577
Income tax expense	3,643	4,379
Net income	17,299	21,682
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income	(47)	(15)
Reclassification out of Accumulated Other Comprehensive Income [Member] | AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains		23
Income tax expense		0
Net income		23
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other expense	63	50
Income tax expense	(16)	(12)
Net income	$ (47)	$ (38)

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FAIR VALUE - Additional Information (Details) - USD ($)			3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Assets Pledged As Collateral For Loans Receivable [Line Items]
Mortgage servicing rights	$ 3,800,000		$ 3,800,000
Servicing Asset at Fair Value, Amount	$ 3,800,000		$ 3,800,000
Percentage of discount from appraised value (in hundredths)			3.90%
Weighted average maturity of residential mortgages			20 years
Prepayment Speed used in unobservable assumptions			166		118
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Qualitative Information			166		118
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	9.40%	9.40%
Discount rate used to estimate fair value (in hundredths)	9.40%	9.40%
Subtotal	$ 4,087,094,000		$ 4,087,094,000		$ 4,067,385,000
Valuation allowance	53,609,000	$ 49,562,000	53,609,000	$ 49,562,000	50,652,000	$ 48,453,000
Provision for Loan and Lease Losses			6,600,000	1,200,000
Recoveries			206,000	193,000
Loans and Leases Receivable, Gross	4,087,094,000		4,087,094,000		4,067,385,000
Loans and Leases Receivable, Allowance	53,609,000	49,562,000	53,609,000	49,562,000	$ 50,652,000	$ 48,453,000
Mortgage servicing rights, fair value	3,800,000		3,800,000
Mortgage servicing rights, impairment			246,000
Mortgage servicing rights, at amortized cost	3,600,000		3,600,000
Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Amount of variance			$ 100,000
Commercial Real Estates | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			0.00%
Commercial Real Estates | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			50.00%
Inventory Finished Goods | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			35.00%
Inventory Finished Goods | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			65.00%
Finished Goods | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			30.00%
Finished Goods | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			60.00%
Inventory Work In Process | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			50.00%
Inventory Work In Process | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			100.00%
Equipment | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			30.00%
Equipment | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			70.00%
Marketable Securities | Minimum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			10.00%
Marketable Securities | Maximum | Level 3
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of discount from appraised value (in hundredths)			30.00%
Impaired Loans
Assets Pledged As Collateral For Loans Receivable [Line Items]
Subtotal	17,400,000	19,100,000	$ 17,400,000	19,100,000
Valuation allowance	7,400,000	9,300,000	7,400,000	9,300,000
Provision for Loan and Lease Losses			142,000
Recoveries				200,000
Charge Off			3,700,000
Loans and Leases Receivable, Gross	17,400,000	19,100,000	17,400,000	19,100,000
Loans and Leases Receivable, Allowance	$ 7,400,000	$ 9,300,000	$ 7,400,000	$ 9,300,000
Municipal Notes | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			(5.00%)
Municipal Notes | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			5.00%
US Government Agencies Short-term Debt Securities | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			(3.00%)
US Government Agencies Short-term Debt Securities | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			3.00%
US Treasury Securities | Minimum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			(1.00%)
US Treasury Securities | Maximum
Assets Pledged As Collateral For Loans Receivable [Line Items]
Percentage of Variance			1.00%

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SECURITIES - Schedule of Sales of Securities Available For Sale (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Sales of securities available-for-sale
Proceeds	$ 0	$ 13,693
Gross gains	0	70
Gross losses	$ 0	$ (47)
Number of securities	0	17

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LOANS - Total Loans Outstanding (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 4,087,094	$ 4,067,385
Percentage of Subtotal	100.00%	100.00%
Less: Allowance for loan losses	$ (53,609)	$ (50,652)	$ (49,562)	$ (48,453)
Net deferred loan fees	(1,356)	(1,557)
Loans, net	4,032,129	4,015,176
Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 3,622,880	$ 3,592,023
Percentage of Total commercial loans	88.60%	88.30%
Other consumer loans
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 97,096	$ 98,617
Consumer Loan
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 464,214	$ 475,362
Commercial Loan
Accounts, Notes, Loans and Financing Receivable
Percentage of Total consumer loans	11.40%	11.70%
Commercial and Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable
Less: Allowance for loan losses	$ (24,739)	$ (25,789)	(24,030)	(22,518)
Commercial and Industrial Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 1,428,719	$ 1,426,868
Percentage of Total commercial loans	35.00%	35.10%
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 730,767	$ 709,849
Percentage of Total commercial loans	17.90%	17.50%
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 697,952	$ 717,019
Percentage of Total commercial loans	17.10%	17.60%
Commercial Real Estate and Multi-family Residential Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 1,760,478	$ 1,673,322
Percentage of Total commercial loans	43.10%	41.10%
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 334,524	$ 287,641
Percentage of Total commercial loans	8.20%	7.10%
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 572,057	$ 573,665
Percentage of Total commercial loans	14.00%	14.10%
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 584,418	$ 571,364
Percentage of Total commercial loans	14.30%	14.00%
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 269,479	$ 240,652
Percentage of Total commercial loans	6.60%	5.90%
Agri-business and Agricultural Loans [Member]
Accounts, Notes, Loans and Financing Receivable
Less: Allowance for loan losses	$ (3,704)	$ (3,869)	$ (4,146)	$ (4,305)
Agri-business and Agricultural Loans [Member] | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 329,397	$ 379,531
Percentage of Total commercial loans	8.00%	9.30%
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 145,542	$ 174,380
Percentage of Total commercial loans	3.50%	4.30%
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 183,855	$ 205,151
Percentage of Total commercial loans	4.50%	5.00%
Other Commercial Loans
Accounts, Notes, Loans and Financing Receivable
Percentage of Total consumer loans	2.40%	2.40%
Other Commercial Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 104,286	$ 112,302
Percentage of Total commercial loans	2.50%	2.80%
Total Consumer 1 To 4 Family Mortgage Loans
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 367,118	$ 376,745
Percentage of Total commercial loans	9.00%	9.30%
Total Consumer 1 To 4 Family Mortgage Loans | Closed End First Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 173,431	$ 177,227
Percentage of Total commercial loans	4.30%	4.40%
Total Consumer 1 To 4 Family Mortgage Loans | Open End And Junior Lien Loans [Member]
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 181,541	$ 186,552
Percentage of Total commercial loans	4.40%	4.60%
Total Consumer 1 To 4 Family Mortgage Loans | Residential Construction and Land Development Loans
Accounts, Notes, Loans and Financing Receivable
Total Commercial And Consumer Loans	$ 12,146	$ 12,966
Percentage of Total commercial loans	0.30%	0.30%

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

COVID-19 AND CURRENT ECONOMIC CONDITIONS

COVID-19 AND CURRENT ECONOMIC CONDITIONS

NOTE 11. COVID-19 AND CURRENT ECONOMIC CONDITIONS

On March 11, 2020, the World Health Organization announced that the COVID-19 outbreak was deemed a pandemic, and on March 13, 2020, the President declared the ongoing COVID-19 pandemic of sufficient magnitude to warrant an emergency declaration. The extent of COVID-19’s effect on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, and when state and local economies will return to operational norms, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. In addition, we rely upon our third-party vendors to conduct business and to process, record and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. Furthermore, the outbreak could negatively impact our employees and customers’ ability to engage in banking and other financial transactions. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of a COVID-19 outbreak in our market areas. The fair value of certain assets could be impacted by the effects of COVID-19. The carrying value of goodwill, right-of-use lease assets, other real estate owned and mortgage servicing rights could decrease resulting in future impairment losses. Management will continue to evaluate current economic conditions to determine if a triggering event would impact the current valuations for these assets. As a result, it not currently possible to ascertain the overall impact of COVID-19 on the Company’s business. However, if the pandemic continues to evolve into a prolonged worldwide health crisis, the disease could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

As of April 22, 2020, total COVID-19 related deferrals had increased to $467.1 million, representing 404 borrowers or 11% of the total loan portfolio. Of that total, 267 were commercial loan borrowers representing $459.8 million in loans, or 13% of total commercial loans. 137 were retail loan borrowers representing $7.3 million, or 2% of total retail loans. 85% of these loan deferrals are for three-month deferrals of principal only.

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Interest and fees on loans
Taxable	$ 46,054	$ 48,866
Tax exempt	222	251
Interest and dividends on securities
Taxable	1,973	2,497
Tax exempt	2,006	1,642
Other interest income	184	238
Total interest income	50,439	53,494
Interest on deposits	11,199	13,883
Interest on borrowings
Short-term	362	950
Long-term	24	452
Total interest expense	11,585	15,285
NET INTEREST INCOME	38,854	38,209
Provision for loan losses	6,600	1,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	32,254	37,009
NONINTEREST INCOME
Wealth advisory fees	1,859	1,620
Investment brokerage fees	417	386
Service charges on deposit accounts	2,772	4,287
Loan and service fees	2,408	2,404
Merchant card fee income	669	622
Bank owned life insurance income (loss)	(292)	444
Mortgage banking income	586	222
Net securities gains	0	23
Other income	2,358	1,517
Total noninterest income	10,777	11,525
NONINTEREST EXPENSE
Salaries and employee benefits	11,566	12,207
Net occupancy expense	1,387	1,366
Equipment costs	1,417	1,349
Data processing fees and supplies	2,882	2,425
Corporate and business development	1,111	1,206
FDIC insurance and other regulatory fees	267	406
Professional fees	1,147	937
Other expense	2,312	2,577
Total noninterest expense	22,089	22,473
INCOME BEFORE INCOME TAX EXPENSE	20,942	26,061
Income tax expense	3,643	4,379
NET INCOME	$ 17,299	$ 21,682
BASIC WEIGHTED AVERAGE COMMON SHARES	25,622,988	25,491,750
BASIC EARNINGS PER COMMON SHARE	$ 0.68	$ 0.85
DILUTED WEIGHTED AVERAGE COMMON SHARES	25,735,826	25,665,510
DILUTED EARNINGS PER COMMON SHARE	$ 0.67	$ 0.84

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OFFSETTING ASSETS AND LIABILITIES

3 Months Ended

Mar. 31, 2020

OFFSETTING ASSETS AND LIABILITIES

OFFSETTING ASSETS AND LIABILITIES

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2020 and December 31, 2019.

	March 31, 2020
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Total Assets	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Liabilities
Interest Rate Swap Derivatives	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229
Total Liabilities	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229

	December 31, 2019
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Total Assets	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Liabilities
Interest Rate Swap Derivatives	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300
Total Liabilities	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 17,299	$ 21,682
Net income	17,299	21,682
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	1,514	1,417
Provision for loan losses	6,600	1,200
Amortization of loan servicing rights	167	122
Net change in loan servicing rights valuation allowance	246	0
Loans originated for sale, including participations	(16,801)	(7,454)
Net gain on sales of loans	(420)	(258)
Proceeds from sale of loans, including participations	13,601	6,835
Net loss on sales of premises and equipment	21	1
Net gain on sales and calls of securities available-for-sale	0	(23)
Net securities amortization	946	817
Stock based compensation expense	413	1,200
Losses (earnings) on life insurance	292	(444)
Gain on life insurance	(570)	(841)
Tax benefit of stock award issuances	(71)	(529)
Net change:
Interest receivable and other assets	(1,175)	(1,342)
Interest payable and other liabilities	(2,547)	1,276
Total adjustments	2,216	1,977
Net cash from operating activities	19,515	23,659
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale	0	13,693
Proceeds from maturities, calls and principal paydowns of securities available-for-sale	16,393	16,026
Purchases of securities available-for-sale	(20,211)	(22,183)
Purchase of life insurance	(232)	(5,362)
Net increase in total loans	(23,588)	(24,356)
Proceeds from sales of land, premises and equipment	18	10
Purchases of land, premises and equipment	(2,133)	(2,091)
Proceeds from life insurance	0	1,483
Net cash from investing activities	(29,753)	(22,780)
Cash flows from financing activities:
Net increase in total deposits	147,884	103,372
Net increase in short-term borrowings	10,500	46,445
Payments on short-term FHLB borrowings	(170,000)	(170,000)
Proceeds from long-term FHLB borrowings	75,000	0
Common dividends paid	(7,689)	(6,581)
Payments related to equity incentive plans	(2,030)	(2,089)
Purchase of treasury stock	(10,227)	(195)
Net cash from financing activities	43,438	(29,048)
Net change in cash and cash equivalents	33,200	(28,169)
Cash and cash equivalents at beginning of the period	99,381	216,922
Cash and cash equivalents at end of the period	132,581	188,753
Cash paid during the period for:
Interest	13,107	13,896
Supplemental non-cash disclosures:
Loans transferred to other real estate owned	35	0
Securities purchases payable	0	8,725
Right-of-use assets obtained in exchange for lease liabilities	$ 0	$ 5,483

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LOANS

3 Months Ended

Mar. 31, 2020

LOANS

LOANS

NOTE 3. LOANS

	March 31,				December 31,
(dollars in thousands)	2020				2019
Commercial and industrial loans:
Working capital lines of credit loans	$	730,767	17.9	%	$	709,849	17.5	%
Non-working capital loans		697,952	17.1			717,019	17.6
Total commercial and industrial loans		1,428,719	35.0			1,426,868	35.1
Commercial real estate and multi-family residential loans:
Construction and land development loans		334,524	8.2			287,641	7.1
Owner occupied loans		572,057	14.0			573,665	14.1
Nonowner occupied loans		584,418	14.3			571,364	14.0
Multifamily loans		269,479	6.6			240,652	5.9
Total commercial real estate and multi-family residential loans		1,760,478	43.1			1,673,322	41.1
Agri-business and agricultural loans:
Loans secured by farmland		145,542	3.5			174,380	4.3
Loans for agricultural production		183,855	4.5			205,151	5.0
Total agri-business and agricultural loans		329,397	8.0			379,531	9.3
Other commercial loans		104,286	2.5			112,302	2.8
Total commercial loans		3,622,880	88.6			3,592,023	88.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		173,431	4.3			177,227	4.4
Open end and junior lien loans		181,541	4.4			186,552	4.6
Residential construction and land development loans		12,146	0.3			12,966	0.3
Total consumer 1-4 family mortgage loans		367,118	9.0			376,745	9.3
Other consumer loans		97,096	2.4			98,617	2.4
Total consumer loans		464,214	11.4			475,362	11.7
Subtotal		4,087,094	100.0	%		4,067,385	100.0	%
Less: Allowance for loan losses		(53,609)				(50,652)
Net deferred loan fees		(1,356)				(1,557)
Loans, net	$	4,032,129			$	4,015,176

The recorded investment in loans does not include accrued interest.

The Company had $1.5 million in residential real estate loans in the process of foreclosure as of March 31, 2020, compared to $1.6 million as of December 31, 2019.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Mar. 31, 2020

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Schedule of Changes in Accumulated Other Comprehensive Income

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the three months ended March 31, 2020 and 2019:

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2020	$	13,607	$	(1,548)	$	12,059
Other comprehensive income before reclassification		10,444		0		10,444
Amounts reclassified from accumulated other comprehensive income		0		47		47
Net current period other comprehensive income		10,444		47		10,491
Balance at March 31, 2020	$	24,051	$	(1,501)	$	22,550

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		8,663		0		8,663
Amounts reclassified from accumulated other comprehensive income		(23)		38		15
Net current period other comprehensive income		8,640		38		8,678
Balance at March 31, 2019	$	3,844	$	(1,357)	$	2,487

Reclassification Accumulated Other Comprehensive Income

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2020 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(63)	Other expense
Tax effect		16	Income tax expense
		(47)	Net of tax
Total reclassifications for the period	$	(47)	Net income

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2019 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	23	Net securities gains
Tax effect		0	Income tax expense
		23	Net of tax
Amortization of defined benefit pension items		(50)	Other expense
Tax effect		12	Income tax expense
		(38)	Net of tax
Total reclassifications for the period	$	(15)	Net income

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Tables)

3 Months Ended

Mar. 31, 2020

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

In Allowance For Loan Losses and Recorded Investment In Loans By Portfolio Segment

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended March 31, 2020 and 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2020
Beginning balance, January 1	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Provision for credit losses		2,628		2,750		(167)		74		395		175		745		6,600
Loans charged-off		(3,735)		0		0		0		(13)		(101)		0		(3,849)
Recoveries		57		112		2		0		7		28		0		206
Net loans charged-off		(3,678)		112		2		0		(6)		(73)		0		(3,643)
Ending balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		1,493		18		(161)		5		45		85		(285)		1,200
Loans charged-off		(83)		0		0		0		(82)		(119)		0		(284)
Recoveries		102		36		2		0		11		42		0		193
Net loans charged-off		19		36		2		0		(71)		(77)		0		(91)
Ending balance	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31, 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
March 31, 2020
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	6,676	$	502	$	57	$	0	$	427	$	0	$	0	$	7,662
Collectively evaluated for impairment		18,063		18,156		3,647		521		2,048		447		3,065		45,947
Total ending allowance balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609
Loans:
Loans individually evaluated for impairment	$	15,726	$	4,127	$	430	$	0	$	2,695	$	0	$	0	$	22,978
Loans collectively evaluated for impairment		1,412,920		1,754,085		329,067		104,163		365,666		96,859		0		4,062,760
Total ending loans balance	$	1,428,646	$	1,758,212	$	329,497	$	104,163	$	368,361	$	96,859	$	0	$	4,085,738

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated			Total
December 31, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,324	$	538	$	90	$	0	$	426	$	6	$	0	$	10,384
Collectively evaluated for impairment		16,465		15,258		3,779		447		1,660		339		2,320		40,268
Total ending allowance balance	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Loans:
Loans individually evaluated for impairment	$	19,580	$	4,998	$	445	$	0	$	2,789	$	17	$	0	$	27,829
Loans collectively evaluated for impairment		1,407,246		1,665,842		379,186		112,166		375,210		98,349		0		4,037,999
Total ending loans balance	$	1,426,826	$	1,670,840	$	379,631	$	112,166	$	377,999	$	98,366	$	0	$	4,065,828

Loans individually evaluated for impairment

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2020:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	1,097	$	1,097	$	—
Non-working capital loans		2,012		619		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,284		2,103		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		403		322		—
Open end and junior lien loans		49		49		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,140		3,433		1,431
Non-working capital loans		13,211		10,577		5,245
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,024		2,024		502
Agri-business and agricultural loans:
Loans secured by farmland		147		147		57
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,635		1,638		371
Open end and junior lien loans		635		634		46
Residential construction loans		51		52		10
Other consumer loans		0		0		0
Total	$	29,291	$	22,978	$	7,662

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2019:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	22	$	—
Non-working capital loans		2,130		735		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		3,189		3,010		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Loans for ag production		15		15		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		411		330		—
Open end and junior lien loans		121		121		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,214		6,214		3,089
Non-working capital loans		13,230		12,609		6,235
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,988		1,988		538
Agri-business and agricultural loans:
Loans secured by farmland		147		147		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,643		1,646		363
Open end and junior lien loans		641		640		53
Residential construction loans		51		52		10
Other consumer loans		17		17		6
Total	$	30,422	$	27,829	$	10,384

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2020:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	380	$	0	$	0
Non-working capital loans		558		1		1
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,144		5		4
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		325		1		1
Open end and junior lien loans		85		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,287		0		0
Non-working capital loans		11,719		90		90
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,999		30		30
Agri-business and agricultural loans:
Loans secured by farmland		147		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,641		21		20
Open end and junior lien loans		638		0		0
Residential construction loans		52		0		0
Total	$	25,258	$	148	$	146

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2019:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	155	$	1	$	0
Non-working capital loans		1,549		29		24
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,621		11		8
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		380		1		1
Open end and junior lien loans		193		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,487		72		59
Non-working capital loans		11,416		132		128
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,080		13		12
Agri-business and agricultural loans:
Loans secured by farmland		147		2		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,598		12		12
Other consumer loans		43		1		1
Total	$	25,952	$	274	$	246

Aging of the Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans as of March 31, 2020 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	725,870	$	449	$	0	$	4,529	$	4,978	$	730,848
Non-working capital loans		693,515		99		0		4,184		4,283		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		568,122		430		0		3,186		3,616		571,738
Nonowner occupied loans		583,709		0		0		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		145,124		0		0		430		430		145,554
Loans for agricultural production		183,943		0		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		171,452		785		19		819		1,623		173,075
Open end and junior lien loans		182,388		66		43		683		792		183,180
Residential construction loans		12,052		2		0		52		54		12,106
Other consumer loans		96,736		114		9		0		123		96,859
Total	$	4,069,839	$	1,945	$	71	$	13,883	$	15,899	$	4,085,738

The following table presents the aging of the recorded investment in past due loans as of December 31, 2019 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	703,737	$	10	$	0	$	6,236	$	6,246	$	709,983
Non-working capital loans		710,557		4		0		6,282		6,286		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		569,303		0		0		4,056		4,056		573,359
Nonowner occupied loans		570,687		0		0		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		173,959		0		0		430		430		174,389
Loans for agricultural production		205,228		0		0		14		14		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		174,902		1,099		45		827		1,971		176,873
Open end and junior lien loans		187,255		188		0		761		949		188,204
Residential construction loans		12,870		0		0		52		52		12,922
Other consumer loans		98,176		173		0		17		190		98,366
Total	$	4,045,634	$	1,474	$	45	$	18,675	$	20,194	$	4,065,828

Troubled Debt Restructuring

	March 31,		December 31,
(dollars in thousands)	2020		2019
Accruing troubled debt restructured loans	$	5,852	$	5,909
Nonaccrual troubled debt restructured loans		2,311		3,188
Total troubled debt restructured loans	$	8,163	$	9,097

Loans by Class Modified as Troubled Debt Restructurings

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2020:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	1		788		122	1	0
Total	1	$	788	$	122	1	0

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2019:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1		35		35	1	0
Total	1	$	35	$	35	1	0

Credit Quality Indicators

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	651,403	$	54,559	$	24,527	$	0	$	359	$	730,848
Non-working capital loans		653,230		17,834		21,406		0		5,328		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		527,818		33,555		10,365		0		0		571,738
Nonowner occupied loans		582,374		758		577		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		138,247		5,879		1,428		0		0		145,554
Loans for agricultural production		172,730		11,213		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		44,863		0		1,960		0		126,252		173,075
Open end and junior lien loans		11,016		0		683		0		171,481		183,180
Residential construction loans		0		0		52		0		12,054		12,106
Other consumer loans		27,439		0		0		0		69,420		96,859
Total	$	3,516,048	$	123,798	$	60,998	$	0	$	384,894	$	4,085,738

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	631,728	$	40,551	$	37,278	$	0	$	426	$	709,983
Non-working capital loans		673,370		18,782		19,381		0		5,310		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		535,496		14,804		23,059		0		0		573,359
Nonowner occupied loans		569,315		781		591		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		165,005		7,952		1,432		0		0		174,389
Loans for agricultural production		191,489		13,738		15		0		0		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		47,405		0		1,976		0		127,492		176,873
Open end and junior lien loans		10,845		0		762		0		176,597		188,204
Residential construction loans		0		0		51		0		12,871		12,922
Other consumer loans		27,250		0		17		0		71,099		98,366
Total	$	3,490,863	$	96,608	$	84,562	$	0	$	393,795	$	4,065,828

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Lease cost
Operating lease cost	$ 128	$ 119
Short-term lease cost	6	6
Total lease cost	$ 134	$ 125

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Troubled Debt Restructuring (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY
Accruing troubled debt restructured loans	$ 5,852	$ 5,909
Nonaccrual troubled debt restructured loans	2,311	3,188
Total troubled debt restructured loans	$ 8,163	$ 9,097

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BORROWINGS - Long-term Borrowings (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Long-term Federal Home Loan Bank advances	$ 75.0
Federal Home Loan Bank Advances [Member] | Federal Home Loan Bank Advance, ten-year, putable six-month Bermudan fixed-rate, Due March 4, 2030
Debt Instrument [Line Items]
Debt instrument, term	10 years
Debt instrument, interest rate, stated percentage (as a percent)	0.39%

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EARNINGS PER SHARE - Earnings Per Share Computations (Details) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
EARNINGS PER SHARE
Weighted average shares outstanding for basic earnings per common share	25,622,988	25,491,750
Dilutive effect of stock based awards and warrants	112,838	173,760
Weighted average shares outstanding for diluted earnings per common share	25,735,826	25,665,510
Basic earnings per common share	$ 0.68	$ 0.85
Diluted earnings per common share	$ 0.67	$ 0.84

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FAIR VALUE - Valuation Methodology and Unobservable Inputs for Level 3 Assets (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($) item
Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 10,039	$ 12,121
Commercial and Industrial Loans [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Valuation Methodology	Collateral based measurements
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 7,334	$ 9,500
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths)	7	1
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths) | item	48	53
Commercial Real Estate and Multi-family Residential Loans [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Valuation Methodology	Collateral based measurements
Commercial Real Estate and Multi-family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial Real Estate and Multi-family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 1,527	$ 1,492
Commercial Real Estate and Multi-family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths)	7	7
Commercial Real Estate and Multi-family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths) | item	25	27
Consumer 1-4 Family Mortgage Loans [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Valuation Methodology	Collateral based measurements
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 1,088	$ 1,061
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths)	5	5
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths) | item	14	14
Agribusiness and Agricultural
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Valuation Methodology	Collateral based measurements
Agribusiness and Agricultural | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Agribusiness and Agricultural | Fair Value, Measurements, Nonrecurring [Member] | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 90	$ 57
Agribusiness and Agricultural | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths) | item	39	61
Other consumer loans | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Unobservable Inputs		Discount to reflect current market conditions and ultimate collectability
Other consumer loans | Fair Value, Measurements, Nonrecurring [Member] | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans		$ 11
Other consumer loans | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs (Average) (in hundredths) | item		36

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LEASES - Gross Difference (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Operating Lease Liabilities, Gross Difference, Amount [Abstract]
Total undiscounted lease payments	$ 5,702
Less imputed interest	(703)
Lease liability	$ 4,999

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Cash and due from banks	$ 52,988	$ 68,605
Short-term investments	79,593	30,776
Total cash and cash equivalents	132,581	99,381
Securities available-for-sale (carried at fair value)	624,325	608,233
Real estate mortgage loans held-for-sale	7,982	4,527
Loans, net of allowance for loan losses of $53,609 and $50,652	4,032,129	4,015,176
Land, premises and equipment, net	60,945	60,365
Bank owned life insurance	83,037	83,848
Federal Reserve and Federal Home Loan Bank stock	13,772	13,772
Accrued interest receivable	15,433	15,391
Goodwill	4,970	4,970
Other assets	54,904	41,082
Total assets	5,030,078	4,946,745
LIABILITIES
Noninterest bearing deposits	1,057,994	983,307
Interest bearing deposits	3,223,709	3,150,512
Total deposits	4,281,703	4,133,819
Federal Home Loan Bank advances	75,000	170,000
Miscellaneous borrowings	10,500	0
Total borrowings	85,500	170,000
Accrued interest payable	10,082	11,604
Other liabilities	46,221	33,222
Total liabilities	4,423,506	4,348,645
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value 25,701,115 shares issued and 25,234,572 outstanding as of March 31, 2020 25,623,016 shares issued and 25,444,275 outstanding as of December 31, 2019	113,337	114,858
Retained earnings	484,857	475,247
Accumulated other comprehensive income	22,550	12,059
Treasury stock at cost (466,543 shares as of March 31, 2020, 178,741 shares as of December 31, 2019)	(14,261)	(4,153)
Total stockholders' equity	606,483	598,011
Noncontrolling interest	89	89
Total equity	606,572	598,100
Total liabilities and equity	$ 5,030,078	$ 4,946,745

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total Stockholders' Equity	Noncontrolling Interest	Total
Balance at Dec. 31, 2018	$ 112,383	$ 419,179	$ (6,191)	$ (3,756)	$ 521,615	$ 89	$ 521,704
Balance (in shares) at Dec. 31, 2018	25,128,773
Increase (Decrease) in Stockholders' Equity
Adoption of ASU | Accounting Standards Update 2017-08		(1,327)			(1,327)		(1,327)
Net income		21,682			21,682		21,682
Other comprehensive income, net of tax			8,678		8,678		8,678
Cash dividends declared		(6,581)			(6,581)		(6,581)
Cashless exercise of warrants	$ 0				0		0
Cashless exercise of warrants (in shares)	224,066
Treasury shares purchased under deferred directors' plan	$ 195			(195)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	(4,578)
Treasury shares sold and distributed under deferred directors' plan	$ (118)			118	0		0
Treasury shares sold and distributed under deferred directors' plan (in shares)	5,699
Stock activity under equity compensation plans	$ 2,089				2,089		2,089
Stock activity under equity compensation plans (in shares)	88,867
Stock based compensation expense	$ 1,200				1,200		1,200
Balance at Mar. 31, 2019	$ 111,571	432,953	2,487	(3,833)	543,178	89	543,267
Balance (in shares) at Mar. 31, 2019	25,442,827
Balance at Dec. 31, 2019	$ 114,858	475,247	12,059	(4,153)	598,011	89	$ 598,100
Balance (in shares) at Dec. 31, 2019	25,444,275						25,444,275
Increase (Decrease) in Stockholders' Equity
Net income		17,299			17,299		$ 17,299
Other comprehensive income, net of tax			10,491		10,491		10,491
Cash dividends declared		(7,689)			(7,689)		(7,689)
Treasury shares purchased under share repurchase plan				(10,012)	(10,012)		(10,012)
Treasury shares purchased under share repurchase plan (in shares)	(289,101)
Treasury shares purchased under deferred directors' plan	$ 215			(215)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	4,449
Treasury shares sold and distributed under deferred directors' plan	$ (119)			119	0		0
Treasury shares sold and distributed under deferred directors' plan (in shares)	5,748
Stock activity under equity compensation plans	$ (2,030)				(2,030)		(2,030)
Stock activity under equity compensation plans (in shares)	78,099
Stock based compensation expense	$ 413				413		413
Balance at Mar. 31, 2020	$ 113,337	$ 484,857	$ 22,550	$ (14,261)	$ 606,483	$ 89	$ 606,572
Balance (in shares) at Mar. 31, 2020	25,234,572						25,234,572

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Mar. 31, 2020

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the three months ended March 31, 2020 and 2019:

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2020	$	13,607	$	(1,548)	$	12,059
Other comprehensive income before reclassification		10,444		0		10,444
Amounts reclassified from accumulated other comprehensive income		0		47		47
Net current period other comprehensive income		10,444		47		10,491
Balance at March 31, 2020	$	24,051	$	(1,501)	$	22,550

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		8,663		0		8,663
Amounts reclassified from accumulated other comprehensive income		(23)		38		15
Net current period other comprehensive income		8,640		38		8,678
Balance at March 31, 2019	$	3,844	$	(1,357)	$	2,487

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2020 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Amortization of defined benefit pension items	$	(63)	Other expense
Tax effect		16	Income tax expense
		(47)	Net of tax
Total reclassifications for the period	$	(47)	Net income

Reclassifications out of accumulated comprehensive income for the three months ended March 31, 2019 are as follows:

Details about	Amount		Affected Line Item
Accumulated Other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	23	Net securities gains
Tax effect		0	Income tax expense
		23	Net of tax
Amortization of defined benefit pension items		(50)	Other expense
Tax effect		12	Income tax expense
		(38)	Net of tax
Total reclassifications for the period	$	(15)	Net income

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BORROWINGS

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

BORROWINGS

NOTE 5. BORROWINGS

For the periods ended March 31, 2020 and December 31, 2019, the Company had advances outstanding from the Federal Home Loan Bank (“FHLB”) in the amount of $75.0 million and $170.0 million, respectively. The outstanding FHLB advance at March 31, 2020 is a ten-year fixed-rate putable advance with a rate of 0.39% and is due on March 4, 2030. The outstanding FHLB advance at December 31, 2019 was a short-term fixed rate advance with a rate of 1.61% and was due on January 7, 2020. All FHLB notes require monthly interest payments and are secured by residential real estate loans and securities.

On August 2, 2019 the Company entered into an unsecured revolving credit agreement with another financial institution allowing the Company to borrow up to $30.0 million. Funds provided under the agreement may be used to repurchase shares of the Company’s common stock under the share repurchase program, which was authorized by the Company’s board of directors on January 14, 2020. The Company had drawn $10.5 million on this line at a rate of Prime minus 150 basis points, or 1.75%, as of March 31, 2020. There were no amounts drawn against this line as of December 31, 2019.

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Allowance for loan losses by portfolio segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Financing Receivable, Allowance for Credit Losses
Beginning balance	$ 50,652	$ 48,453
Provision for loan losses	6,600	1,200
Loans charged-off	(3,849)	(284)
Recoveries	206	193
Net loans charged-off/(recovered)	(3,643)	(91)
Ending balance	53,609	49,562
Commercial and Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses
Beginning balance	25,789	22,518
Provision for loan losses	2,628	1,493
Loans charged-off	(3,735)	(83)
Recoveries	57	102
Net loans charged-off/(recovered)	(3,678)	19
Ending balance	24,739	24,030
Commercial Real Estate and Multi-family Residential Loans [Member]
Financing Receivable, Allowance for Credit Losses
Beginning balance	15,796	15,393
Provision for loan losses	2,750	18
Loans charged-off	0	0
Recoveries	112	36
Net loans charged-off/(recovered)	112	36
Ending balance	18,658	15,447
Agri-business and Agricultural Loans [Member]
Financing Receivable, Allowance for Credit Losses
Beginning balance	3,869	4,305
Provision for loan losses	(167)	(161)
Loans charged-off	0	0
Recoveries	2	2
Net loans charged-off/(recovered)	2	2
Ending balance	3,704	4,146
Other Commercial
Financing Receivable, Allowance for Credit Losses
Beginning balance	447	368
Provision for loan losses	74	5
Loans charged-off	0	0
Recoveries	0	0
Net loans charged-off/(recovered)	0	0
Ending balance	521	373
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses
Beginning balance	2,086	2,292
Provision for loan losses	395	45
Loans charged-off	(13)	(82)
Recoveries	7	11
Net loans charged-off/(recovered)	(6)	(71)
Ending balance	2,475	2,266
Other Consumer
Financing Receivable, Allowance for Credit Losses
Beginning balance	345	283
Provision for loan losses	175	85
Loans charged-off	(101)	(119)
Recoveries	28	42
Net loans charged-off/(recovered)	(73)	(77)
Ending balance	447	291
Unallocated
Financing Receivable, Allowance for Credit Losses
Beginning balance	2,320	3,294
Provision for loan losses	745	(285)
Loans charged-off	0	0
Recoveries	0	0
Net loans charged-off/(recovered)	0	0
Ending balance	$ 3,065	$ 3,009

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SECURITIES - Summary of Available For Sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Information related to available for sale securities
Amortized Cost	$ 593,882	$ 591,009
Gross Unrealized Gain	30,645	17,841
Gross Unrealized Losses	(202)	(617)
Fair Value	624,325	608,233
Mortgage-backed securities residential [Member]
Information related to available for sale securities
Amortized Cost	280,674	283,817
Gross Unrealized Gain	12,766	4,751
Gross Unrealized Losses	(170)	(387)
Fair Value	293,270	288,181
Mortgage-backed securities commercial [Member]
Information related to available for sale securities
Amortized Cost	41,003	36,712
Gross Unrealized Gain	811	262
Gross Unrealized Losses	0	(2)
Fair Value	41,814	36,972
State and Municipal Securities [Member]
Information related to available for sale securities
Amortized Cost	272,205	270,480
Gross Unrealized Gain	17,068	12,828
Gross Unrealized Losses	(32)	(228)
Fair Value	$ 289,241	$ 283,080

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SECURITIES - Quantitative Disclosure of Available For Sale of Securities (Details)	Mar. 31, 2020	Dec. 31, 2019
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	6	19
Number of available-for-sale securities in unrealized loss positions, 12 months or more	2	6
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	8	25
Mortgage-backed securities residential [Member]
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	1	7
Number of available-for-sale securities in unrealized loss positions, 12 months or more	2	6
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	3	13
Mortgage-backed securities commercial [Member]
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	1	1
Number of available-for-sale securities in unrealized loss positions, 12 months or more	0	0
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	1	1
State and Municipal Securities [Member]
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	4	11
Number of available-for-sale securities in unrealized loss positions, 12 months or more	0	0
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	4	11

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OFFSETTING ASSETS AND LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2020

OFFSETTING ASSETS AND LIABILITIES

Offsetting Assets And Liability

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at March 31, 2020 and December 31, 2019.

	March 31, 2020
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Total Assets	$	21,565	$	0	$	21,565	$	0	$	0	$	21,565
Liabilities
Interest Rate Swap Derivatives	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229
Total Liabilities	$	21,599	$	0	$	21,599	$	0	$	(21,370)	$	229

	December 31, 2019
			Gross
	Gross		Amounts		Net Amounts		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net Amount
Assets
Interest Rate Swap Derivatives	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Total Assets	$	7,263	$	0	$	7,263	$	0	$	0	$	7,263
Liabilities
Interest Rate Swap Derivatives	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300
Total Liabilities	$	7,860	$	0	$	7,860	$	0	$	(7,560)	$	300

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SECURITIES (Tables)

3 Months Ended

Mar. 31, 2020

SECURITIES

Summary of Available-For-Sale Securities

Information related to the fair value and amortized cost of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gain		Losses		Value
March 31, 2020
Mortgage-backed securities: residential	$	280,674	$	12,766	$	(170)	$	293,270
Mortgage-backed securities: commercial		41,003		811		0		41,814
State and municipal securities		272,205		17,068		(32)		289,241
Total	$	593,882	$	30,645	$	(202)	$	624,325
December 31, 2019
Mortgage-backed securities: residential	$	283,817	$	4,751	$	(387)	$	288,181
Mortgage-backed securities: commercial		36,712		262		(2)		36,972
State and municipal securities		270,480		12,828		(228)		283,080
Total	$	591,009	$	17,841	$	(617)	$	608,233

Schedule of Available-For-Sale Securities By Maturity

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of March 31, 2020 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	3,924	$	3,946
Due after one year through five years		15,371		15,741
Due after five years through ten years		27,257		28,584
Due after ten years		225,653		240,970
		272,205		289,241
Mortgage-backed securities		321,677		335,084
Total debt securities	$	593,882	$	624,325

Schedule of Sales of Securities Available For Sale

Securities proceeds, gross gains and gross losses are presented below.

	Three months ended March 31,
(dollars in thousands)	2020		2019
Sales of securities available-for-sale
Proceeds	$	0	$	13,693
Gross gains		0		70
Gross losses		0		(47)
Number of securities		0		17

Schedule of Available-For-Sale Securities Continuous Unrealized Loss Position

Information regarding securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Mortgage-backed securities: residential	$	3,021	$	69	$	5,134	$	101	$	8,155	$	170
Mortgage-backed securities: commercial		2,214		0		0		0		2,214		0
State and municipal securities		4,509		32		0		0		4,509		32
Total temporarily impaired	$	9,744	$	101	$	5,134	$	101	$	14,878	$	202
December 31, 2019
Mortgage-backed securities: residential	$	23,436	$	112	$	14,174	$	275	$	37,610	$	387
Mortgage-backed securities: commercial		4,591		2		0		0		4,591		2
State and municipal securities		14,188		228		0		0		14,188		228
Total temporarily impaired	$	42,215	$	342	$	14,174	$	275	$	56,389	$	617

Quantitative Disclosure of Available-For-Sale Securities

The total number of securities with unrealized losses as of March 31, 2020 and December 31, 2019 is presented below.

	Less than	12 months
	12 months	or more	Total
March 31, 2020
Mortgage-backed securities: residential	1	2	3
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	4	0	4
Total temporarily impaired	6	2	8
December 31, 2019
Mortgage-backed securities: residential	7	6	13
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	11	0	11
Total temporarily impaired	19	6	25

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BASIS OF PRESENTATION (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 subsidiary	Mar. 31, 2019 USD ($)
New Accounting Pronouncements or Change in Accounting Principle
Number of wholly owned subsidiaries | subsidiary	2
Accounting Standards Update 2017-08
New Accounting Pronouncements or Change in Accounting Principle
Cumulative period adjustment made to retained earnings | $		$ (1,327)

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BORROWINGS - Revolving Credit Agreement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Aug. 02, 2019
Line of Credit Facility [Line Items]
Long-term line of credit	$ 10,500	$ 0
Unsecured revolving credit agreement
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 30,000
Debt instrument, interest rate, stated percentage (as a percent)	1.75%
Long-term line of credit	$ 10,500	$ 0
Unsecured revolving credit agreement | Prime Rate [Member]
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate (as a percent)	(1.50%)

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Loans Individually Evaluated For Impairment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Loans Individually Evaluated for Impairment [Abstract]
Unpaid Principal Balance	$ 29,291		$ 30,422
Recorded Investment	22,978		27,829
Allowance for Loan Losses Allocated	7,662		10,384
Average Recorded Investment	25,258	$ 25,952
Interest Income Recognized	148	274
Cash Basis Interest Income Recognized	146	246
Open End and Junior Lien Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	49		121
Recorded Investment with no related allowance recorded	49		121
Commercial and Industrial Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	6,676		9,324
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	1,097		22
Unpaid principal balance with an allowance recorded	5,140		6,214
Recorded Investment with no related allowance recorded	1,097		22
Recorded investment with an allowance recorded	3,433		6,214
Allowance for Loan Losses Allocated	1,431		3,089
Average Recorded Investment with no related allowance recorded	380	155
Average Recorded Investment with an allowance recorded	5,287	6,487
Interest Income Recognized with no related allowance recorded	0	1
Interest Income Recognized with an allowance recorded	0	72
Cash basis interest income recognized with no related allowance recorded	0	0
Cash basis interest income recognized with an allowance recorded	0	59
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	2,012		2,130
Unpaid principal balance with an allowance recorded	13,211		13,230
Recorded Investment with no related allowance recorded	619		735
Recorded investment with an allowance recorded	10,577		12,609
Allowance for Loan Losses Allocated	5,245		6,235
Average Recorded Investment with no related allowance recorded	558	1,549
Average Recorded Investment with an allowance recorded	11,719	11,416
Interest Income Recognized with no related allowance recorded	1	29
Interest Income Recognized with an allowance recorded	90	132
Cash basis interest income recognized with no related allowance recorded	1	24
Cash basis interest income recognized with an allowance recorded	90	128
Commercial Real Estate and Multi-family Residential Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	502		538
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	2,284		3,189
Unpaid principal balance with an allowance recorded	2,024		1,988
Recorded Investment with no related allowance recorded	2,103		3,010
Recorded investment with an allowance recorded	2,024		1,988
Allowance for Loan Losses Allocated	502		538
Average Recorded Investment with no related allowance recorded	2,144	1,621
Average Recorded Investment with an allowance recorded	1,999	2,080
Interest Income Recognized with no related allowance recorded	5	11
Interest Income Recognized with an allowance recorded	30	13
Cash basis interest income recognized with no related allowance recorded	4	8
Cash basis interest income recognized with an allowance recorded	30	12
Agri-business and Agricultural Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	57		90
Agri-business and Agricultural Loans [Member] | Owner Occupied Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Average Recorded Investment with an allowance recorded		147
Interest Income Recognized with an allowance recorded		2
Cash basis interest income recognized with an allowance recorded		1
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	603		603
Unpaid principal balance with an allowance recorded	147		147
Recorded Investment with no related allowance recorded	283		283
Recorded investment with an allowance recorded	147		147
Allowance for Loan Losses Allocated	57		90
Average Recorded Investment with no related allowance recorded	283	283
Average Recorded Investment with an allowance recorded	147
Interest Income Recognized with no related allowance recorded	0	0
Interest Income Recognized with an allowance recorded	0
Cash basis interest income recognized with no related allowance recorded	0	0
Cash basis interest income recognized with an allowance recorded	0
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded			15
Recorded Investment with no related allowance recorded			15
Consumer 1-4 Family Mortgage Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	427		426
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	403		411
Unpaid principal balance with an allowance recorded	1,635		1,643
Recorded Investment with no related allowance recorded	322		330
Recorded investment with an allowance recorded	1,638		1,646
Allowance for Loan Losses Allocated	371		363
Average Recorded Investment with no related allowance recorded	325	380
Average Recorded Investment with an allowance recorded	1,641	1,598
Interest Income Recognized with no related allowance recorded	1	1
Interest Income Recognized with an allowance recorded	21	12
Cash basis interest income recognized with no related allowance recorded	1	1
Cash basis interest income recognized with an allowance recorded	20	12
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded	635		641
Recorded investment with an allowance recorded	634		640
Allowance for Loan Losses Allocated	46		53
Average Recorded Investment with no related allowance recorded	85
Average Recorded Investment with an allowance recorded	638
Interest Income Recognized with no related allowance recorded	0
Interest Income Recognized with an allowance recorded	0
Cash basis interest income recognized with no related allowance recorded	0
Cash basis interest income recognized with an allowance recorded	0
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded	51		51
Recorded investment with an allowance recorded	52		52
Allowance for Loan Losses Allocated	10		10
Average Recorded Investment with no related allowance recorded	52	193
Interest Income Recognized with no related allowance recorded	0	0
Cash basis interest income recognized with no related allowance recorded	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded	0		17
Recorded investment with an allowance recorded	0		17
Allowance for Loan Losses Allocated	$ 0		$ 6
Average Recorded Investment with an allowance recorded		43
Interest Income Recognized with an allowance recorded		1
Cash basis interest income recognized with an allowance recorded		$ 1

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment
Total ending loans balance	$ 4,085,738	$ 4,065,828
Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	104,163	112,166
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	1,428,646	1,426,826
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	730,848	709,983
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	697,798	716,843
Commercial Real Estate and Multi-family Residential Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	1,758,212	1,670,840
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	333,699	286,534
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	571,738	573,359
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	583,709	570,687
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	269,066	240,260
Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		573,359
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	329,497	379,631
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	145,554	174,389
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	183,943	205,242
Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	104,163	112,166
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	368,361	377,999
Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	96,859	98,366
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	173,075	176,873
Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	183,180	188,204
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	12,106	12,922
Pass
Financing Receivable, Recorded Investment
Total ending loans balance	3,516,048	3,490,863
Pass | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	651,403	631,728
Pass | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	653,230	673,370
Pass | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	333,699	286,534
Pass | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	527,818
Pass | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	582,374	569,315
Pass | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	269,066	240,260
Pass | Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		535,496
Pass | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	138,247	165,005
Pass | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	172,730	191,489
Pass | Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	104,163	112,166
Pass | Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	27,439	27,250
Pass | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	44,863	47,405
Pass | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	11,016	10,845
Pass | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention
Financing Receivable, Recorded Investment
Total ending loans balance	123,798	96,608
Special Mention | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	54,559	40,551
Special Mention | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	17,834	18,782
Special Mention | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	33,555
Special Mention | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	758	781
Special Mention | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		14,804
Special Mention | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	5,879	7,952
Special Mention | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	11,213	13,738
Special Mention | Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Substandard
Financing Receivable, Recorded Investment
Total ending loans balance	60,998	84,562
Substandard | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	24,527	37,278
Substandard | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	21,406	19,381
Substandard | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Substandard | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	10,365
Substandard | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	577	591
Substandard | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Substandard | Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		23,059
Substandard | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	1,428	1,432
Substandard | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	0	15
Substandard | Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Substandard | Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	17
Substandard | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	1,960	1,976
Substandard | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	683	762
Substandard | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	52	51
Doubtful
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		0
Doubtful | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated
Financing Receivable, Recorded Investment
Total ending loans balance	384,894	393,795
Not Rated | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	359	426
Not Rated | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	5,328	5,310
Not Rated | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance		0
Not Rated | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	0	0
Not Rated | Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment
Total ending loans balance	69,420	71,099
Not Rated | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	126,252	127,492
Not Rated | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	171,481	176,597
Not Rated | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment
Total ending loans balance	$ 12,054	$ 12,871

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SUBSEQUENT EVENTS (Details) $ in Thousands	Apr. 22, 2020 USD ($) borrower	Mar. 31, 2020 USD ($) borrower
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $		$ 99,800
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower		77
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)		2.00%
Financing receivable, loan portfolio, deferrals, COVID-19, three-month principal only, percentage of deferrals (as a percent)		95.00%
Commercial Loan
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $		$ 99,300
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower		50
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)		3.00%
Consumer Loan
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $		$ 528
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower		27
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)		1.00%
Subsequent Event
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $	$ 467,100
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	404
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	11.00%
Financing receivable, loan portfolio, deferrals, COVID-19, three-month principal only, percentage of deferrals (as a percent)	85.00%
Subsequent Event | Commercial Loan
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $	$ 459,800
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	267
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	13.00%
Subsequent Event | Consumer Loan
Subsequent Event [Line Items]
Financing receivable, loan portfolio, deferrals, COVID-19 | $	$ 7,300
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	137
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	2.00%

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LEASES (Tables)

3 Months Ended

Mar. 31, 2020

LEASES

Schedule of Maturity Analysis of the Operating Lease Liabilities

	Operating lease
Years ending December 31, (in thousands)	Obligation
2020	$	425
2021		581
2022		595
2023		606
2024		622
2025 and thereafter		2,873
Total undiscounted lease payments		5,702
Less imputed interest		(703)
Lease liability	$	4,999
Right-of-use asset	$	4,999

Schedule of Lease Cost

	Three months ended			Three months ended
	March 31, 2020			March 31, 2019
Lease cost
Operating lease cost	$	128		$	119
Short-term lease cost		6			6
Total lease cost	$	134		$	125
Other information
Operating cash outflows from operating leases	$	128
Weighted-average remaining lease term - operating leases		9.6 years
Weighted average discount rate - operating leases		2.8	%

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FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2020

FAIR VALUE DISCLOSURES

Schedule of Assets Measured at Fair Value on a Recurring Basis

The table below presents the balances of assets measured at fair value on a recurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	293,270	$	0	$	293,270
Mortgage-backed securities: commercial		0		41,814		0		41,814
State and municipal securities		0		289,096		145		289,241
Total Securities		0		624,180		145		624,325
Mortgage banking derivative		0		1,307		0		1,307
Interest rate swap derivative		0		21,565		0		21,565
Total assets	$	0	$	647,052	$	145	$	647,197
Liabilities:
Mortgage banking derivative		0		544		0		544
Interest rate swap derivative		0		21,599		0		21,599
Total liabilities	$	0	$	22,143	$	0	$	22,143

	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets:
Mortgage-backed securities: residential	$	0	$	288,181	$	0	$	288,181
Mortgage-backed securities: commercial		0		36,972		0		36,972
State and municipal securities		0		282,935		145		283,080
Total Securities		0		608,088		145		608,233
Mortgage banking derivative		0		198		0		198
Interest rate swap derivative		0		7,263		0		7,263
Total assets	$	0	$	615,549	$	145	$	615,694
Liabilities:
Mortgage banking derivative		0		14		0		14
Interest rate swap derivative		0		7,860		0		7,860
Total liabilities	$	0	$	7,874	$	0	$	7,874

Schedule of Assets Measured at Fair Value on a Nonrecurring Basis

The fair value of Level 3 available-for-sale securities was immaterial and thus did not require additional recurring fair value disclosure.

The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	March 31, 2020
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	2,002	$	2,002
Non-working capital loans		0		0		5,332		5,332
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		1,527		1,527
Agri-business and agricultural loans:
Loans secured by farmland		0		0		90		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		459		459
Open end and junior lien loans		0		0		587		587
Residential construction loans		0		0		42		42
Total impaired loans	$	0	$	0	$	10,039	$	10,039
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	10,039	$	10,039

	December 31, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	3,126	$	3,126
Non-working capital loans		0		0		6,374		6,374
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		43		43
Owner occupied loans		0		0		1,449		1,449
Agri-business and agricultural loans:
Loans secured by farmland		0		0		57		57
Other commercial loans		0		0		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		474		474
Open end and junior lien loans		0		0		587		587
Other consumer loans		0		0		11		11
Total impaired loans	$	0	$	0	$	12,121	$	12,121
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	12,121	$	12,121

Schedule of Fair Value Measured on Nonrecurring Basis Valuation Techniques

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at March 31, 2020:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,334	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	7%-100%
Impaired loans:
Commercial real estate		1,527	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	25	%	7%-52%
Impaired loans:
Agribusiness and agricultural		90	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	39	%
Impaired loans:
Consumer 1‑4 family mortgage		1,088	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,500	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	1%-100%
Impaired loans:
Commercial real estate		1,492	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	27	%	7%-61%
Impaired loans:
Agribusiness and agricultural		57	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	61	%
Impaired loans:
Consumer 1‑4 family mortgage		1,061	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	14	%	5%-100%
Impaired loans:
Other consumer		11	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	36	%

Schedule of Fair Values and the Related Carrying Values of Financial Instruments

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	March 31, 2020
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	132,581	$	129,750	$	2,831	$	0	$	132,581
Securities available-for-sale		624,325		0		624,180		145		624,325
Real estate mortgages held-for-sale		7,982		0		8,141		0		8,141
Loans, net		4,032,129		0		0		4,036,193		4,036,193
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,433		0		3,575		11,858		15,433
Financial Liabilities:
Certificates of deposit		(1,273,413)		0		(1,289,272)		0		(1,289,272)
All other deposits		(3,008,290)		(3,008,290)		0		0		(3,008,290)
Other short-term borrowings		(10,500)		0		(10,500)		0		(10,500)
Federal Home Loan Bank advances		(75,000)		0		(64,166)		0		(64,166)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(10,082)		(61)		(10,021)		0		(10,082)

	December 31, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	99,381	$	96,603	$	2,778	$	0	$	99,381
Securities available-for-sale		608,233		0		608,088		145		608,233
Real estate mortgages held-for-sale		4,527		0		4,614		0		4,614
Loans, net		4,015,176		0		0		3,979,006		3,979,006
Federal Reserve and Federal Home Loan Bank Stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,391		0		3,729		11,662		15,391
Financial Liabilities:
Certificates of deposit		(1,192,067)		0		(1,202,060)		0		(1,202,060)
All other deposits		(2,941,752)		(2,941,752)		0		0		(2,941,752)
Federal Home Loan Bank advances		(170,000)		0		(169,998)		0		(169,998)
Standby letters of credit		(915)		0		0		(915)		(915)
Accrued interest payable		(11,604)		(102)		(11,502)		0		(11,604)

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In January 2017, the FASB issued ASU No. 2017-04 "Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment." These amendments eliminate Step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted this new accounting standard on January 1, 2020.

Adopting this standard did not have an impact on the Company's financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." These amendments modify the disclosure requirements in Topic 820 as follows:

Removals: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements.

Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of

liquidation of an investee's assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contact with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The guidance is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-15 on January 1, 2020 and it did not have a material impact on its financial condition or results of operations.

Newly Issued But Not Yet Effective Accounting Standards

Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued guidance related to credit losses on financial instruments. This update, commonly referred to as the current expected credit losses methodology (“CECL”), will change the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. For loans, this measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model previously required, but still permitted, under GAAP, which delays recognition until it is probable a loss has been incurred. In addition, the guidance will modify the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which will allow for reversal of credit impairments in future periods. This guidance is effective, subject to optional delay discussed below, for the Company for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years.

Under a provision provided by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Company elected to delay the adoption of FASB’s new rule covering the CECL standard until the earlier of the termination date of the national emergency declared by President Trump under the National Emergencies Act on March 13, 2020, related to the outbreak of COVID-19, and December 31, 2020. Once the delay provision has been terminated, adoption will be retroactive to January 1, 2020. During 2019, the Company implemented the CECL methodology and ran it concurrently with the historical incurred method. While the Company has not finalized the impact of implementing CECL, the Company expects to recognize a one-time cumulative effect adjustment to the allowance and beginning retained earnings, net of tax, upon adoption. Once final, the calculation will require approval by the loan review committee and governance in accordance with the Company’s internal controls over financial reporting. Additionally, the Company has evaluated the need to recognize an allowance for credit impairment for available-for-sale debt securities. The impact on available-for-sale debt securities is subject to a limitation, which is based on the fair value of the debt securities. When evaluating the credit quality of our existing portfolio, the Company does not expect the allowance for credit impairment for available-for-sale securities to be significant. The future impact of CECL on the Company’s allowance for credit losses and provision expense subsequent to the initial adoption will depend on changes in the loan portfolio, economic conditions and refinements to key assumptions including forecasting and qualitative factors.

In August 2018, the FASB issued ASU 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." The ASU updates the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans by adding, clarifying and removing certain disclosures. These amendments are effective for fiscal years ending after December 15, 2020, for public business entities, and are to be applied on a retrospective basis to all periods presented. Management does not anticipate ASU 2018-14 will have a material impact on its financial statements.

In December 2019, the FASB issued ASU 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." These amendments remove specific exceptions to the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences where there are ownership changes in foreign investments; and exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. It also improves financial statement preparers' application of income tax- related guidance and simplifies GAAP for: franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacts changes in tax laws in interim periods. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is assessing ASU 2019-12 and its impact on its financial statements.

On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform ("ASC 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of the Secured Overnight Financial Rate (“SOFR”). The Company has identified loans that will renew prior to 2021 and will obtain updated reference rate language at the time of renewal. Loans maturing after 2021 will need loan modifications and fallback language has been implemented for newly originated loans. The guidance under ASC-848 will be available for a limited time, generally through December 31, 2022. The Company expects to adopt the LIBOR transition relief allowed under this standard.

Reclassifications

Reclassifications

Certain amounts appearing in the consolidated financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders’ equity as previously reported.

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Aging Of The Recorded Investment In Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	$ 4,069,839	$ 4,045,634
Nonaccrual	13,883	18,675
Total Past Due and Nonaccural	15,899	20,194
Total	4,085,738	4,065,828
Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	1,945	1,474
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	71	45
Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	104,163	112,166
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	104,163	112,166
Other Commercial Loans | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Other Commercial Loans | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Other consumer loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	96,736	98,176
Nonaccrual	0	17
Total Past Due and Nonaccural	123	190
Total	96,859	98,366
Other consumer loans | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	114	173
Other consumer loans | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	9	0
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	1,428,646	1,426,826
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	725,870	703,737
Nonaccrual	4,529	6,236
Total Past Due and Nonaccural	4,978	6,246
Total	730,848	709,983
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	449	10
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	693,515	710,557
Nonaccrual	4,184	6,282
Total Past Due and Nonaccural	4,283	6,286
Total	697,798	716,843
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	99	4
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	1,758,212	1,670,840
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	333,699	286,534
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	333,699	286,534
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	568,122	569,303
Nonaccrual	3,186	4,056
Total Past Due and Nonaccural	3,616	4,056
Total	571,738	573,359
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	430	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	583,709	570,687
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	583,709	570,687
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	269,066	240,260
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	269,066	240,260
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total		573,359
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	329,497	379,631
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	145,124	173,959
Nonaccrual	430	430
Total Past Due and Nonaccural	430	430
Total	145,554	174,389
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	183,943	205,228
Nonaccrual	0	14
Total Past Due and Nonaccural	0	14
Total	183,943	205,242
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	0	0
Agri-business and Agricultural Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	104,163	112,166
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	368,361	377,999
Consumer 1-4 Family Mortgage Loans [Member] | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	96,859	98,366
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	171,452	174,902
Nonaccrual	819	827
Total Past Due and Nonaccural	1,623	1,971
Total	173,075	176,873
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	785	1,099
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	19	45
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	182,388	187,255
Nonaccrual	683	761
Total Past Due and Nonaccural	792	949
Total	183,180	188,204
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	66	188
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	43	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	12,052	12,870
Nonaccrual	52	52
Total Past Due and Nonaccural	54	52
Total	12,106	12,922
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member] | Financial Asset, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	2	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Past Due	$ 0	$ 0

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) loan borrower	Mar. 31, 2019 USD ($) loan
Troubled Debt Restructuring
Increase (decrease) in allowance for loan loss	$ 122,000
Loan amount of credit quality analysis	250,000
Financing receivable, loan portfolio, deferrals, COVID-19	$ 99,800,000
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	77
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	2.00%
Financing receivable, loan portfolio, deferrals, COVID-19, three-month principal only, percentage of deferrals (as a percent)	95.00%
Charge-offs recorded for new troubled debt restructurings	$ 666,000
All Modifications [Member]
Troubled Debt Restructuring
Number of Loans | loan	1	1
Commercial Real Estate Building
Troubled Debt Restructuring
Financing Receivable, Modifications, Recorded Investment		$ 533,000
Commercial and Industrial Nonworking Capital
Troubled Debt Restructuring
Financing Receivable, Modifications, Recorded Investment		$ 70,000
Commercial Loan
Troubled Debt Restructuring
Financing receivable, loan portfolio, deferrals, COVID-19	$ 99,300,000
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	50
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	3.00%
Consumer Loan
Troubled Debt Restructuring
Financing receivable, loan portfolio, deferrals, COVID-19	$ 528,000
Financing receivable, loan portfolio, deferrals, COVID-19, borrowers | borrower	27
Financing receivable, loan portfolio, deferrals, COVID-19, percentage of loan portfolio (as a percent)	1.00%

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FAIR VALUE - Assets and Liabilities Measured At Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Securities available for sale	$ 624,325	$ 608,233
Mortgage banking derivative	21,565	7,263
Liabilities
Mortgage banking derivative		300
Fair Value, Measurements, Recurring [Member]
Assets
Mortgage-backed securities: residential	293,270	288,181
Mortgage-backed securities: commercial	41,814	36,972
State and municipal securities	289,241	283,080
Securities available for sale	624,325	608,233
Mortgage banking derivative	1,307	198
Interest rate swap derivative	21,565	7,263
Total assets	647,197	615,694
Liabilities
Mortgage banking derivative	544	14
Interest rate swap derivative	21,599	7,860
Total liabilities	22,143	7,874
Level 1 | Fair Value, Measurements, Recurring [Member]
Assets
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	0	0
Securities available for sale	0	0
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	0	0
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	0	0
Level 2 | Fair Value, Measurements, Recurring [Member]
Assets
Mortgage-backed securities: residential	293,270	288,181
Mortgage-backed securities: commercial	41,814	36,972
State and municipal securities	289,096	282,935
Securities available for sale	624,180	608,088
Mortgage banking derivative	1,307	198
Interest rate swap derivative	21,565	7,263
Total assets	647,052	615,549
Liabilities
Mortgage banking derivative	544	14
Interest rate swap derivative	21,599	7,860
Total liabilities	22,143	7,874
Level 3 | Fair Value, Measurements, Recurring [Member]
Assets
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	145	145
Securities available for sale	145	145
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	145	145
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	$ 0	$ 0

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LEASES - Other Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
LEASES
Operating cash outflows from operating leases	$ 128
Weighted-average remaining lease term - operating leases	9 years 7 months 6 days
Weighted average discount rate - operating leases	2.80%

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LEASES - Maturity Analysis (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2020	$ 425
2021	581
2022	595
2023	606
2024	622
2025 and thereafter	2,873
Total undiscounted lease payments	$ 5,702

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OFFSETTING ASSETS AND LIABILITIES - Schedule of Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Gross Amounts of Recognized Assets	$ 21,565	$ 7,263
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	21,565	7,263
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	0	0
Net	21,565	7,263
Liabilities
Gross Amounts of Recognized Liabilities	21,599	7,860
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	21,599	7,860
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(21,370)	(7,560)
Net		300
Net	229
Interest Rate Swap
Assets
Gross Amounts of Recognized Assets	21,565	7,263
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	21,565	7,263
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	0	0
Net	21,565	7,263
Liabilities
Gross Amounts of Recognized Liabilities	21,599	7,860
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	21,599	7,860
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Position	(21,370)	(7,560)
Net		$ 300
Net	$ 229

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FAIR VALUE - Assets Measured at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 10,039	$ 12,121
Other real estate owned	0	0
Total assets	10,039	12,121
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Total assets	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Total assets	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	10,039	12,121
Other real estate owned	0	0
Total assets	10,039	12,121
Commercial and Industrial Loans [Member] | Commercial Loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	2,002	3,126
Commercial and Industrial Loans [Member] | Commercial Loan | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Commercial Loan | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Commercial Loan | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	2,002	3,126
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	5,332	6,374
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	5,332	6,374
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		43
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		43
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	1,527	1,449
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	1,527	1,449
Agribusiness and Agricultural | Loans Secured By Farmland
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	90	57
Agribusiness and Agricultural | Loans Secured By Farmland | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agribusiness and Agricultural | Loans Secured By Farmland | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agribusiness and Agricultural | Loans Secured By Farmland | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	90	57
Agribusiness and Agricultural | Other Commercial Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Agribusiness and Agricultural | Other Commercial Loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Agribusiness and Agricultural | Other Commercial Loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Agribusiness and Agricultural | Other Commercial Loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	459	474
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	459	474
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	587	587
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	587	587
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	42
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0
Consumer 1-4 Family Mortgage Loans [Member] | Home Equity Mortgage Open Ended Revolving Lines [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 42
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		11
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		0
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans		$ 11

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 8. EARNINGS PER SHARE

Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period, including shares held in treasury on behalf of participants in the Company’s Directors Fee Deferral Plan and share repurchases. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based awards and warrants, none of which were antidilutive.

	Three Months Ended March 31,
	2020		2019
Weighted average shares outstanding for basic earnings per common share		25,622,988		25,491,750
Dilutive effect of stock based awards and warrants		112,838		173,760
Weighted average shares outstanding for diluted earnings per common share		25,735,826		25,665,510
Basic earnings per common share	$	0.68	$	0.85
Diluted earnings per common share	$	0.67	$	0.84

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

3 Months Ended

Mar. 31, 2020

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended March 31, 2020 and 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2020
Beginning balance, January 1	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Provision for credit losses		2,628		2,750		(167)		74		395		175		745		6,600
Loans charged-off		(3,735)		0		0		0		(13)		(101)		0		(3,849)
Recoveries		57		112		2		0		7		28		0		206
Net loans charged-off		(3,678)		112		2		0		(6)		(73)		0		(3,643)
Ending balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended March 31, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		1,493		18		(161)		5		45		85		(285)		1,200
Loans charged-off		(83)		0		0		0		(82)		(119)		0		(284)
Recoveries		102		36		2		0		11		42		0		193
Net loans charged-off		19		36		2		0		(71)		(77)		0		(91)
Ending balance	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31, 2019:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
March 31, 2020
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	6,676	$	502	$	57	$	0	$	427	$	0	$	0	$	7,662
Collectively evaluated for impairment		18,063		18,156		3,647		521		2,048		447		3,065		45,947
Total ending allowance balance	$	24,739	$	18,658	$	3,704	$	521	$	2,475	$	447	$	3,065	$	53,609
Loans:
Loans individually evaluated for impairment	$	15,726	$	4,127	$	430	$	0	$	2,695	$	0	$	0	$	22,978
Loans collectively evaluated for impairment		1,412,920		1,754,085		329,067		104,163		365,666		96,859		0		4,062,760
Total ending loans balance	$	1,428,646	$	1,758,212	$	329,497	$	104,163	$	368,361	$	96,859	$	0	$	4,085,738

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated			Total
December 31, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,324	$	538	$	90	$	0	$	426	$	6	$	0	$	10,384
Collectively evaluated for impairment		16,465		15,258		3,779		447		1,660		339		2,320		40,268
Total ending allowance balance	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Loans:
Loans individually evaluated for impairment	$	19,580	$	4,998	$	445	$	0	$	2,789	$	17	$	0	$	27,829
Loans collectively evaluated for impairment		1,407,246		1,665,842		379,186		112,166		375,210		98,349		0		4,037,999
Total ending loans balance	$	1,426,826	$	1,670,840	$	379,631	$	112,166	$	377,999	$	98,366	$	0	$	4,065,828

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2020:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	1,097	$	1,097	$	—
Non-working capital loans		2,012		619		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,284		2,103		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		403		322		—
Open end and junior lien loans		49		49		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,140		3,433		1,431
Non-working capital loans		13,211		10,577		5,245
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,024		2,024		502
Agri-business and agricultural loans:
Loans secured by farmland		147		147		57
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,635		1,638		371
Open end and junior lien loans		635		634		46
Residential construction loans		51		52		10
Other consumer loans		0		0		0
Total	$	29,291	$	22,978	$	7,662

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2019:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	22	$	—
Non-working capital loans		2,130		735		—
Commercial real estate and multi-family residential loans:
Owner occupied loans		3,189		3,010		—
Agri-business and agricultural loans:
Loans secured by farmland		603		283		—
Loans for ag production		15		15		—
Consumer 1‑4 family loans:
Closed end first mortgage loans		411		330		—
Open end and junior lien loans		121		121		—
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,214		6,214		3,089
Non-working capital loans		13,230		12,609		6,235
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,988		1,988		538
Agri-business and agricultural loans:
Loans secured by farmland		147		147		90
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,643		1,646		363
Open end and junior lien loans		641		640		53
Residential construction loans		51		52		10
Other consumer loans		17		17		6
Total	$	30,422	$	27,829	$	10,384

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2020:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	380	$	0	$	0
Non-working capital loans		558		1		1
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,144		5		4
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		325		1		1
Open end and junior lien loans		85		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,287		0		0
Non-working capital loans		11,719		90		90
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,999		30		30
Agri-business and agricultural loans:
Loans secured by farmland		147		0		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,641		21		20
Open end and junior lien loans		638		0		0
Residential construction loans		52		0		0
Total	$	25,258	$	148	$	146

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended March 31, 2019:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	155	$	1	$	0
Non-working capital loans		1,549		29		24
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,621		11		8
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		380		1		1
Open end and junior lien loans		193		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,487		72		59
Non-working capital loans		11,416		132		128
Commercial real estate and multi-family residential loans:
Owner occupied loans		2,080		13		12
Agri-business and agricultural loans:
Loans secured by farmland		147		2		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,598		12		12
Other consumer loans		43		1		1
Total	$	25,952	$	274	$	246

The following table presents the aging of the recorded investment in past due loans as of March 31, 2020 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	725,870	$	449	$	0	$	4,529	$	4,978	$	730,848
Non-working capital loans		693,515		99		0		4,184		4,283		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		568,122		430		0		3,186		3,616		571,738
Nonowner occupied loans		583,709		0		0		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		145,124		0		0		430		430		145,554
Loans for agricultural production		183,943		0		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		171,452		785		19		819		1,623		173,075
Open end and junior lien loans		182,388		66		43		683		792		183,180
Residential construction loans		12,052		2		0		52		54		12,106
Other consumer loans		96,736		114		9		0		123		96,859
Total	$	4,069,839	$	1,945	$	71	$	13,883	$	15,899	$	4,085,738

The following table presents the aging of the recorded investment in past due loans as of December 31, 2019 by class of loans:

			30‑89		Greater than				Total Past
	Loans Not		Days		90 Days				Due and
(dollars in thousands)	Past Due		Past Due		Past Due		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	703,737	$	10	$	0	$	6,236	$	6,246	$	709,983
Non-working capital loans		710,557		4		0		6,282		6,286		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		569,303		0		0		4,056		4,056		573,359
Nonowner occupied loans		570,687		0		0		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		173,959		0		0		430		430		174,389
Loans for agricultural production		205,228		0		0		14		14		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		174,902		1,099		45		827		1,971		176,873
Open end and junior lien loans		187,255		188		0		761		949		188,204
Residential construction loans		12,870		0		0		52		52		12,922
Other consumer loans		98,176		173		0		17		190		98,366
Total	$	4,045,634	$	1,474	$	45	$	18,675	$	20,194	$	4,065,828

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $2.6 million and $2.5 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2020 and December 31, 2019, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	March 31,		December 31,
(dollars in thousands)	2020		2019
Accruing troubled debt restructured loans	$	5,852	$	5,909
Nonaccrual troubled debt restructured loans		2,311		3,188
Total troubled debt restructured loans	$	8,163	$	9,097

During the three months ended March 31, 2020, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2020:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	1		788		122	1	0
Total	1	$	788	$	122	1	0

For the three month period ended March 31, 2020, the troubled debt restructurings described above increased the allowance for loan losses by $122,000, and charge-offs of $666,000 were recorded.

As of March 31, 2020, total deferrals attributed to COVID-19 were $99.8 million representing 77 borrowers. This represented 2% of the total loan portfolio. Of that total 50 were commercial loan borrowers representing $99.3 million in loans, or 3% of commercial loans and 27 were retail loan borrowers representing $528,000, or less than 1% of total retail loans. Of the total deferrals, 95% are for three-month deferrals of principal only. In accordance with the March 22, 2020 Joint Interagency Regulatory Guidance, these were not considered to be troubled debt restructurings and were excluded from the table above.

During the three months ended March 31, 2019, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the period. One of the loans is for a commercial real estate building where the cash flow does not support the loan with a recorded investment of $533,000. The other loan is for commercial and industrial non-working capital purposes and this borrower had a recorded investment of $70,000 that was subsequently paid off prior to March 31, 2019. These concessions are not included in the table on the next page.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended March 31, 2019:

						Modified Repayment Terms
		Pre-Modification		Post-Modification			Extension
		Outstanding		Outstanding			Period or
	Number of	Recorded		Recorded		Number of	Range
(dollars in thousands)	Loans	Investment		Investment		Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1		35		35	1	0
Total	1	$	35	$	35	1	0

For the three-month period ended March 31, 2019, the troubled debt restructuring described above did not impact the allowance for loan losses and no charge-off was recorded.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with Not Rated loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.

As of March 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	651,403	$	54,559	$	24,527	$	0	$	359	$	730,848
Non-working capital loans		653,230		17,834		21,406		0		5,328		697,798
Commercial real estate and multi-family residential loans:
Construction and land development loans		333,699		0		0		0		0		333,699
Owner occupied loans		527,818		33,555		10,365		0		0		571,738
Nonowner occupied loans		582,374		758		577		0		0		583,709
Multifamily loans		269,066		0		0		0		0		269,066
Agri-business and agricultural loans:
Loans secured by farmland		138,247		5,879		1,428		0		0		145,554
Loans for agricultural production		172,730		11,213		0		0		0		183,943
Other commercial loans		104,163		0		0		0		0		104,163
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		44,863		0		1,960		0		126,252		173,075
Open end and junior lien loans		11,016		0		683		0		171,481		183,180
Residential construction loans		0		0		52		0		12,054		12,106
Other consumer loans		27,439		0		0		0		69,420		96,859
Total	$	3,516,048	$	123,798	$	60,998	$	0	$	384,894	$	4,085,738

As of December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	631,728	$	40,551	$	37,278	$	0	$	426	$	709,983
Non-working capital loans		673,370		18,782		19,381		0		5,310		716,843
Commercial real estate and multi-family residential loans:
Construction and land development loans		286,534		0		0		0		0		286,534
Owner occupied loans		535,496		14,804		23,059		0		0		573,359
Nonowner occupied loans		569,315		781		591		0		0		570,687
Multifamily loans		240,260		0		0		0		0		240,260
Agri-business and agricultural loans:
Loans secured by farmland		165,005		7,952		1,432		0		0		174,389
Loans for agricultural production		191,489		13,738		15		0		0		205,242
Other commercial loans		112,166		0		0		0		0		112,166
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		47,405		0		1,976		0		127,492		176,873
Open end and junior lien loans		10,845		0		762		0		176,597		188,204
Residential construction loans		0		0		51		0		12,871		12,922
Other consumer loans		27,250		0		17		0		71,099		98,366
Total	$	3,490,863	$	96,608	$	84,562	$	0	$	393,795	$	4,065,828

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS
Valuation allowance	$ 53,609	$ 50,652
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued (in shares)	25,701,115	25,623,016
Common stock, shares outstanding (in shares)	25,234,572	25,444,275
Treasury stock, at cost	466,543	178,741

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Cash dividends declared, per share	$ 0.30	$ 0.26

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SECURITIES - Schedule of Available For Sale Securities By Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Maturities of Available-for-sale Debt Securities [Abstract]
Amortized Cost, Due in one year or less	$ 3,924
Amortized Cost, Due after one year through five years	15,371
Amortized Cost, Due after five years through ten years	27,257
Amortized Cost, Due after ten years	225,653
Amortized Cost, Available for sale securities with maturities amortized cost	272,205
Amortized Cost, Mortgage-backed securities	321,677
Amortized Cost, Total debt securities	593,882	$ 591,009
Fair Value, Due in one year or less	3,946
Fair Value, Due after one year through five years	15,741
Fair Value, Due after five years through ten years	28,584
Fair Value, Due after ten years	240,970
Fair Value, Available for sale securities with maturities fair value	289,241
Fair Value, Mortgage-backed securities	335,084
Fair Value, Total debt securities	$ 624,325	$ 608,233

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SECURITIES - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Information related to available for sale securities
Available-for-sale Securities pledged as collateral	$ 214.9	$ 59.3

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY - Balance In The Allowance For Loan Losses And The Recorded Investment In Loans By Portfolio Management (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 7,662	$ 10,384
Collectively evaluated for impairment	45,947	40,268
Total ending allowance balance	53,609	50,652	$ 49,562	$ 48,453
Loans:
Loans individually evaluated for impairment	22,978	27,829
Loans collectively evaluated for impairment	4,062,760	4,037,999
Total ending loans balance	4,085,738	4,065,828
Commercial and Industrial Loans [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	6,676	9,324
Collectively evaluated for impairment	18,063	16,465
Total ending allowance balance	24,739	25,789	24,030	22,518
Loans:
Loans individually evaluated for impairment	15,726	19,580
Loans collectively evaluated for impairment	1,412,920	1,407,246
Total ending loans balance	1,428,646	1,426,826
Commercial Real Estate and Multi-family Residential Loans [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	502	538
Collectively evaluated for impairment	18,156	15,258
Total ending allowance balance	18,658	15,796	15,447	15,393
Loans:
Loans individually evaluated for impairment	4,127	4,998
Loans collectively evaluated for impairment	1,754,085	1,665,842
Total ending loans balance	1,758,212	1,670,840
Agri-business and Agricultural Loans [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	57	90
Collectively evaluated for impairment	3,647	3,779
Total ending allowance balance	3,704	3,869	4,146	4,305
Loans:
Loans individually evaluated for impairment	430	445
Loans collectively evaluated for impairment	329,067	379,186
Total ending loans balance	329,497	379,631
Other Commercial
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	521	447
Total ending allowance balance	521	447	373	368
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	104,163	112,166
Total ending loans balance	104,163	112,166
Consumer 1-4 Family Mortgage Loans [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	427	426
Collectively evaluated for impairment	2,048	1,660
Total ending allowance balance	2,475	2,086	2,266	2,292
Loans:
Loans individually evaluated for impairment	2,695	2,789
Loans collectively evaluated for impairment	365,666	375,210
Total ending loans balance	368,361	377,999
Other Consumer
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	6
Collectively evaluated for impairment	447	339
Total ending allowance balance	447	345	291	283
Loans:
Loans individually evaluated for impairment	0	17
Loans collectively evaluated for impairment	96,859	98,349
Total ending loans balance	96,859	98,366
Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	3,065	2,320
Total ending allowance balance	3,065	2,320	$ 3,009	$ 3,294
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	0	0
Total ending loans balance	$ 0	$ 0