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 June 30, 2019

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 July 31, 2019:  25,623,016

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets — June 30, 2019 and December 31, 2018	1
	Consolidated Statements of Income — three months and six months ended June 30, 2019 and 2018	2
	Consolidated Statements of Comprehensive Income — three months and six months ended June 30, 2019 and 2018	3
	Consolidated Statements of Changes in Stockholders’ Equity — three months and six months ended June 30, 2019 and 2018	4
	Consolidated Statements of Cash Flows — six months ended June 30, 2019 and 2018	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
SIGNATURES		54

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

	June 30,		December 31,
	2019		2018
	(Unaudited)
ASSETS
Cash and due from banks	$	154,856	$	192,290
Short-term investments		41,514		24,632
Total cash and cash equivalents		196,370		216,922
Securities available-for-sale (carried at fair value)		609,826		585,549
Real estate mortgage loans held-for-sale		5,929		2,293
Loans, net of allowance for loan losses of $50,564 and $48,453		3,948,054		3,866,292
Land, premises and equipment, net		58,719		58,097
Bank owned life insurance		82,591		77,106
Federal Reserve and Federal Home Loan Bank stock		13,772		13,772
Accrued interest receivable		17,418		15,518
Goodwill		4,970		4,970
Other assets		37,870		34,735
Total assets	$	4,975,519	$	4,875,254
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Noninterest bearing deposits	$	946,471	$	946,838
Interest bearing deposits		3,274,828		3,097,227
Total deposits		4,221,299		4,044,065
Borrowings
Federal funds purchased		15,000		0
Securities sold under agreements to repurchase		0		75,555
Federal Home Loan Bank advances		100,000		170,000
Subordinated debentures		30,928		30,928
Total borrowings		145,928		276,483
Accrued interest payable		12,454		10,404
Other liabilities		30,475		22,598
Total liabilities		4,410,156		4,353,550
STOCKHOLDERS’ EQUITY
Common stock: 90,000,000 shares authorized, no par value 25,615,216 shares issued and 25,442,300 outstanding as of June 30, 2019 25,301,732 shares issued and 25,128,773 outstanding as of December 31, 2018		112,689		112,383
Retained earnings		446,969		419,179
Accumulated other comprehensive income (loss)		9,500		(6,191)
Treasury stock at cost (172,916 shares as of June 30, 2019, 172,959 shares as of December 31, 2018)		(3,884)		(3,756)
Total stockholders’ equity		565,274		521,615
Noncontrolling interest		89		89
Total equity		565,363		521,704
Total liabilities and equity	$	4,975,519	$	4,875,254

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				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
NET INTEREST INCOME
Interest and fees on loans
Taxable	$	50,089	$	44,439	$	98,955	$	86,233
Tax exempt		235		202		486		419
Interest and dividends on securities
Taxable		2,250		2,492		4,747		4,926
Tax exempt		1,710		1,466		3,352		2,797
Other interest income		351		196		589		488
Total interest income		54,635		48,795		108,129		94,863
Interest on deposits		15,556		10,648		29,439		20,015
Interest on borrowings
Short-term		232		195		1,182		306
Long-term		436		419		888		786
Total interest expense		16,224		11,262		31,509		21,107
NET INTEREST INCOME		38,411		37,533		76,620		73,756
Provision for loan losses		785		1,700		1,985		5,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		37,626		35,833		74,635		68,756
NONINTEREST INCOME
Wealth advisory fees		1,646		1,544		3,266		3,049
Investment brokerage fees		528		377		914		667
Service charges on deposit accounts		4,850		3,800		9,137		7,428
Loan and service fees		2,481		2,421		4,885		4,598
Merchant card fee income		670		549		1,292		1,191
Bank owned life insurance income		287		348		731		711
Mortgage banking income		398		438		620		679
Net securities gains (losses)		65		0		88		(6)
Other income		663		245		2,180		1,284
Total noninterest income		11,588		9,722		23,113		19,601
NONINTEREST EXPENSE
Salaries and employee benefits		11,835		11,493		24,394		23,512
Net occupancy expense		1,283		1,237		2,649		2,663
Equipment costs		1,409		1,250		2,758		2,524
Data processing fees and supplies		2,574		2,290		4,999		4,803
Corporate and business development		1,171		1,046		2,377		2,179
FDIC insurance and other regulatory fees		409		409		815		870
Professional fees		1,071		910		2,008		1,782
Other expense		2,340		1,668		4,565		3,172
Total noninterest expense		22,092		20,303		44,565		41,505
INCOME BEFORE INCOME TAX EXPENSE		27,122		25,252		53,183		46,852
Income tax expense		5,409		5,110		9,788		8,374
NET INCOME	$	21,713	$	20,142	$	43,395	$	38,478
BASIC WEIGHTED AVERAGE COMMON SHARES		25,614,701		25,293,329		25,553,254		25,275,471
BASIC EARNINGS PER COMMON SHARE	$	0.85	$	0.80	$	1.70	$	1.52
DILUTED WEIGHTED AVERAGE COMMON SHARES		25,774,002		25,709,216		25,721,079		25,704,505
DILUTED EARNINGS PER COMMON SHARE	$	0.85	$	0.78	$	1.69	$	1.50

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

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - in thousands)

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Net income	$	21,713	$	20,142	$	43,395	$	38,478
Other comprehensive income
Change in securities available for sale:
Unrealized holding gain/(loss) on securities available-for-sale arising during the period		8,893		(2,242)		19,853		(11,402)
Reclassification adjustment for (gains)/losses included in net income		(65)		0		(88)		6
Net securities gain/(loss) activity during the period		8,828		(2,242)		19,765		(11,396)
Tax effect		(1,853)		471		(4,151)		2,499
Net of tax amount		6,975		(1,771)		15,614		(8,897)
Defined benefit pension plans:
Amortization of net actuarial loss		53		67		103		133
Net gain activity during the period		53		67		103		133
Tax effect		(15)		(18)		(26)		(35)
Net of tax amount		38		49		77		98
Total other comprehensive income, net of tax		7,013		(1,722)		15,691		(8,799)
Comprehensive income	$	28,726	$	18,420	$	59,086	$	29,679

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)

	Three Months Ended
						Accumulated
						Other				Total
	Common Stock			Retained		Comprehensive		Treasury		Stockholders’		Noncontrolling		Total
	Shares	Stock		Earnings		Income (Loss)		Stock		Equity		Interest		Equity
Balance at April 1, 2018	25,124,441	$	107,860	$	376,850	$	(7,988)	$	(3,478)	$	473,244	$	89	$	473,333
Comprehensive income:
Net income					20,142						20,142				20,142
Other comprehensive loss, net of tax							(1,722)				(1,722)				(1,722)
Cash dividends declared, $0.26 per share					(6,588)						(6,588)				(6,588)
Treasury shares purchased under deferred directors’ plan	(904)		44						(44)		0				0
Stock activity under equity compensation plans	3,000		48								48				48
Stock based compensation expense			1,271								1,271				1,271
Balance at June 30, 2018	25,126,537	$	109,223	$	390,404	$	(9,710)	$	(3,522)	$	486,395	$	89	$	486,484
Balance at April 1, 2019	25,442,827	$	111,571	$	432,953	$	2,487	$	(3,833)	$	543,178	$	89	$	543,267
Comprehensive income:
Net income					21,713						21,713				21,713
Other comprehensive income, net of tax							7,013				7,013				7,013
Cash dividends declared, $0.30 per share					(7,697)						(7,697)				(7,697)
Treasury shares purchased under deferred directors’ plan	(1,078)		51						(51)		0				0
Stock activity under equity compensation plans	551										0				0
Stock based compensation expense			1,067								1,067				1,067
Balance at June 30, 2019	25,442,300	$	112,689	$	446,969	$	9,500	$	(3,884)	$	565,274	$	89	$	565,363

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

	Six Months Ended
						Accumulated
						Other				Total
	Common Stock			Retained		Comprehensive		Treasury		Stockholders'		Noncontrolling		Total
	Shares	Stock		Earnings		Income (Loss)		Stock		Equity		Interest		Equity
Balance at January 1, 2018	25,025,933	$	108,862	$	363,794	$	(670)	$	(3,408)	$	468,578	$	89	$	468,667
Adoption of ASU 2018-02					173		(173)				0				0
Adoption of ASU 2014-09					24						24				24
Adoption of ASU 2016-01					68		(68)				0				0
Comprehensive income:
Net income					38,478						38,478				38,478
Other comprehensive loss, net of tax							(8,799)				(8,799)				(8,799)
Cash dividends declared, $0.48 per share					(12,133)						(12,133)				(12,133)
Treasury shares purchased under deferred directors' plan	(4,711)		229						(229)		0				0
Treasury shares sold and distributed under deferred directors' plan	5,636		(115)						115		0				0
Stock activity under equity compensation plans	99,679		(2,435)								(2,435)				(2,435)
Stock based compensation expense			2,682								2,682				2,682
Balance at June 30, 2018	25,126,537	$	109,223	$	390,404	$	(9,710)	$	(3,522)	$	486,395	$	89	$	486,484
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 (See Note 1)					(1,327)						(1,327)				(1,327)
Comprehensive income:
Net income					43,395						43,395				43,395
Other comprehensive income, net of tax							15,691				15,691				15,691
Cash dividends declared, $0.56 per share					(14,278)						(14,278)				(14,278)
Cashless exercise of warrants	224,066		0								0				0
Treasury shares purchased under deferred directors' plan	(5,656)		246						(246)		0				0
Treasury shares sold and distributed under deferred directors' plan	5,699		(118)						118		0				0
Stock activity under equity compensation plans	89,418		(2,089)								(2,089)				(2,089)
Stock based compensation expense			2,267								2,267				2,267
Balance at June 30, 2019	25,442,300	$	112,689	$	446,969	$	9,500	$	(3,884)	$	565,274	$	89	$	565,363

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

4

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)

Six Months Ended June 30	2019		2018
Cash flows from operating activities:
Net income	$	43,395	$	38,478
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		2,930		2,761
Provision for loan losses		1,985		5,000
Net loss on sale and write down of other real estate owned		0		16
Amortization of loan servicing rights		244		254
Loans originated for sale, including participations		(23,689)		(25,121)
Net gain on sales of loans		(690)		(767)
Proceeds from sale of loans, including participations		20,390		22,748
Net loss on sales of premises and equipment		1		22
Net loss (gain) on sales and calls of securities available-for-sale		(88)		6
Net securities amortization		1,866		1,511
Stock based compensation expense		2,267		2,682
Earnings on life insurance		(731)		(711)
Gain on life insurance		(841)		(205)
Tax benefit of stock award issuances		(529)		(761)
Net change:
Interest receivable and other assets		(3,039)		(2,812)
Interest payable and other liabilities		1,188		2,453
Total adjustments		1,264		7,076
Net cash from operating activities		44,659		45,554
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale		25,819		12,322
Proceeds from maturities, calls and principal paydowns of securities available-for-sale		30,150		24,809
Purchases of securities available-for-sale		(60,007)		(72,740)
Purchase of life insurance		(5,422)		(310)
Net increase in total loans		(83,747)		(44,669)
Proceeds from sales of land, premises and equipment		10		28
Purchases of land, premises and equipment		(3,563)		(3,587)
Proceeds from sales of other real estate		0		12
Proceeds from life insurance		1,483		568
Net cash from investing activities		(95,277)		(83,567)
Cash flows from financing activities:
Net increase (decrease) in total deposits		177,234		(73,702)
Net increase (decrease) in short-term borrowings		(60,555)		210,587
Net decrease in short-term FHLB borrowings		(70,000)		0
Payments on long-term FHLB borrowings		0		(80,030)
Common dividends paid		(14,265)		(12,120)
Preferred dividends paid		(13)		(13)
Payments related to equity incentive plans		(2,089)		(2,435)
Purchase of treasury stock		(246)		(229)
Net cash from financing activities		30,066		42,058
Net change in cash and cash equivalents		(20,552)		4,045
Cash and cash equivalents at beginning of the period		216,922		176,180
Cash and cash equivalents at end of the period	$	196,370	$	180,225
Cash paid during the period for:
Interest	$	29,460	$	20,090
Income taxes		9,425		8,154
Supplemental non-cash disclosures:
Securities purchases payable		3,579		1,898
Right-of-use assets obtained in exchange for lease liabilities		5,483		0

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 is 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 and six-months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2019. The Company’s 2018 Annual Report on Form 10-K should be read in conjunction with these statements.

Adoption of New Accounting Standards

The Company accounts for leases in accordance with ASU 2016-02, “Leases”, which the Company adopted on January 1, 2019. This guidance replaced existing lease guidance in GAAP and requires lessees to recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. Lessees and lessors are required to recognize and measure leases that exist at the beginning of the earliest period presented using a modified retrospective approach. The Company recorded a right-of-use asset of $5.5 million and a lease liability of $5.5 million upon adoption, and there was no cumulative period adjustment made to retained earnings. This standard did not have a material impact on the Company’s consolidated balance sheets or cash flows from operations and had no impact on the Company’s operating results. The most significant impact was the recognition of right-of-use assets and lease obligations for operating leases. The Company elected to adopt the package of practical expedients for this standard.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities.” This update amends the amortization period for certain purchased callable debt securities held at a premium. FASB is shortening the amortization period for the premium to the earliest call date. Under legacy GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The Company adopted this new accounting standard on January 1, 2019. The effect of adoption was a reduction in retained earnings of approximately $1.3 million, net of tax, to reflect the acceleration of amortization of premiums on debt securities.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The purpose of this updated guidance is to better align a company's financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company adopted ASU 2017-12 on January 1, 2019. ASU 2017-12 requires a modified retrospective transition method in which the Company recognized the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. Adopting this standard did not have an impact on the Company’s 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 will change the accounting for credit losses on loans and debt securities. The 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 required under current 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 for public business entities that meet the definition of an SEC filer for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years. The

6

Company has formed a cross-functional committee that has evaluated existing technology and other solutions for calculating losses under this new standard, selected a vendor to validate data currently loaded in the technology solution selected, and reviewed the validation assessment report. The committee has selected a model and is working on parallel calculations and evaluating changes to the internal control structure under the new model. Management expects to recognize credit losses earlier upon adoption of this accounting standard and the expected credit loss model than it has historically done under the current incurred credit loss model. While the impact of implementing the CECL model cannot be quantified at this time, the Company expects to recognize a one-time cumulative-effect adjustment to the allowance and beginning retained earnings upon adoption.

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 guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. Management does not expect the adoption of this new accounting standard to have a material impact on our financial statements.

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
June 30, 2019
U.S. Treasury securities	$	995	$	12	$	0	$	1,007
U.S. government sponsored agencies		2,302		0		(12)		2,290
Mortgage-backed securities: residential		320,298		4,381		(734)		323,945
Mortgage-backed securities: commercial		37,847		298		(11)		38,134
State and municipal securities		234,691		9,782		(23)		244,450
Total	$	596,133	$	14,473	$	(780)	$	609,826
December 31, 2018
U.S. Treasury securities	$	994	$	0	$	(7)	$	987
U.S. government sponsored agencies		4,435		0		(85)		4,350
Mortgage-backed securities: residential		329,516		1,392		(5,496)		325,412
Mortgage-backed securities: commercial		38,712		0		(571)		38,141
State and municipal securities		217,964		1,403		(2,708)		216,659
Total	$	591,621	$	2,795	$	(8,867)	$	585,549

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of June 30, 2019 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual

7

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	$	1,655	$	1,664
Due after one year through five years		19,413		19,776
Due after five years through ten years		30,528		31,654
Due after ten years		186,392		194,653
		237,988		247,747
Mortgage-backed securities		358,145		362,079
Total debt securities	$	596,133	$	609,826

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2019		2018		2019		2018
Sales of securities available-for-sale
Proceeds	$	12,126	$	0	$	25,819	$	12,322
Gross gains		68		0		138		21
Gross losses		(3)		0		(50)		(27)
Number of securities		8		0		25		22

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 $62.8 million and $164.7 million were pledged as of June 30, 2019 and December 31, 2018, respectively, as collateral for securities sold under agreements to repurchase, borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law. The Company has no securities sold under agreements to repurchase as of June 30, 2019, causing the decline in pledged securities.

Information regarding securities with unrealized losses as of June 30, 2019 and December 31, 2018 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
June 30, 2019
U.S. government sponsored agencies	$	0	$	0	$	2,290	$	12	$	2,290	$	12
Mortgage-backed securities: residential		2,411		23		79,874		711		82,285		734
Mortgage-backed securities: commercial		0		0		4,618		11		4,618		11
State and municipal securities		500		0		4,826		23		5,326		23
Total temporarily impaired	$	2,911	$	23	$	91,608	$	757	$	94,519	$	780
December 31, 2018
U.S. Treasury securities	$	0	$	0	$	987	$	7	$	987	$	7
U.S. government sponsored agencies		0		0		4,350		85		4,350		85
Mortgage-backed securities: residential		11,619		12		217,182		5,484		228,801		5,496
Mortgage-backed securities: commercial		0		0		38,141		571		38,141		571
State and municipal securities		26,229		124		85,982		2,584		112,211		2,708
Total temporarily impaired	$	37,848	$	136	$	346,642	$	8,731	$	384,490	$	8,867

8

The total number of securities with unrealized losses as of June 30, 2019 and December 31, 2018 is presented below.

	Less than	12 months
	12 months	or more	Total
June 30, 2019
U.S. government sponsored agencies	0	1	1
Mortgage-backed securities: residential	1	30	31
Mortgage-backed securities: commercial	0	1	1
State and municipal securities	1	4	5
Total temporarily impaired	2	36	38
December 31, 2018
U.S. Treasury securities	0	1	1
U.S. government sponsored agencies	0	2	2
Mortgage-backed securities: residential	5	84	89
Mortgage-backed securities: commercial	0	9	9
State and municipal securities	35	111	146
Total temporarily impaired	40	207	247

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 June 30, 2019 and December 31, 2018, 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.

9

NOTE 3. LOANS

	June 30,				December 31,
(dollars in thousands)	2019				2018
Commercial and industrial loans:
Working capital lines of credit loans	$	755,090	18.9	%	$	690,620	17.6	%
Non-working capital loans		695,235	17.3			714,759	18.3
Total commercial and industrial loans		1,450,325	36.2			1,405,379	35.9
Commercial real estate and multi-family residential loans:
Construction and land development loans		321,550	8.0			266,805	6.8
Owner occupied loans		557,115	13.9			586,325	15.0
Nonowner occupied loans		533,880	13.4			520,901	13.3
Multifamily loans		242,966	6.1			195,604	5.0
Total commercial real estate and multi-family residential loans		1,655,511	41.4			1,569,635	40.1
Agri-business and agricultural loans:
Loans secured by farmland		148,883	3.7			177,503	4.6
Loans for agricultural production		165,595	4.2			193,010	4.9
Total agri-business and agricultural loans		314,478	7.9			370,513	9.5
Other commercial loans		104,084	2.6			95,657	2.4
Total commercial loans		3,524,398	88.1			3,441,184	87.9
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		187,863	4.7			185,822	4.7
Open end and junior lien loans		188,558	4.7			187,030	4.8
Residential construction and land development loans		12,270	0.3			16,226	0.4
Total consumer 1-4 family mortgage loans		388,691	9.7			389,078	9.9
Other consumer loans		86,996	2.2			86,064	2.2
Total consumer loans		475,687	11.9			475,142	12.1
Subtotal		4,000,085	100.0	%		3,916,326	100.0	%
Less: Allowance for loan losses		(50,564)				(48,453)
Net deferred loan fees		(1,467)				(1,581)
Loans, net	$	3,948,054			$	3,866,292

The recorded investment in loans does not include accrued interest.

The Company had $493,000 in residential real estate loans in the process of foreclosure as of June 30, 2019, compared to $586,000 as of December 31, 2018.

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 June 30, 2019 and 2018:

			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 June 30, 2019
Beginning balance, April 1	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562
Provision for loan losses		824		(31)		(242)		(18)		(124)		40		336		785
Loans charged-off		(17)		0		0		0		(5)		(62)		0		(84)
Recoveries		187		76		2		0		16		20		0		301
Net loans charged-off		170		76		2		0		11		(42)		0		217
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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 June 30, 2018
Beginning balance, April 1	$	20,725	$	14,438	$	4,848	$	510	$	2,018	$	245	$	2,843	$	45,627
Provision for loan losses		1,392		508		(268)		(46)		(68)		65		117		1,700
Loans charged-off		(57)		0		0		0		0		(71)		0		(128)
Recoveries		464		8		5		0		3		27		0		507
Net loans charged-off		407		8		5		0		3		(44)		0		379
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

The following tables present the activity in the allowance for loan losses by portfolio segment for the six-month periods ended June 30, 2019 and 2018:

			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
Six Months Ended June 30, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		2,317		(13)		(403)		(13)		(79)		125		51		1,985
Loans charged-off		(100)		0		0		0		(87)		(181)		0		(368)
Recoveries		289		112		4		0		27		62		0		494
Net loans charged-off		189		112		4		0		(60)		(119)		0		126
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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
Six Months Ended June 30, 2018
Beginning balance, January 1	$	21,097	$	14,714	$	4,920	$	577	$	2,768	$	379	$	2,666	$	47,121
Provision for loan losses		5,294		715		(344)		(113)		(862)		16		294		5,000
Loans charged-off		(4,417)		(491)		0		0		(7)		(190)		0		(5,105)
Recoveries		550		16		9		0		54		61		0		690
Net loans charged-off		(3,867)		(475)		9		0		47		(129)		0		(4,415)
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

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 June 30, 2019 and December 31, 2018:

			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
June 30, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,208	$	394	$	87	$	0	$	339	$	0	$	0	$	10,028
Collectively evaluated for impairment		15,816		15,098		3,819		355		1,814		289		3,345		40,536
Total ending allowance balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564
Loans:
Loans individually evaluated for impairment	$	18,819	$	3,193	$	430	$	0	$	1,851	$	0	$	0	$	24,293
Loans collectively evaluated for impairment		1,431,542		1,649,854		314,153		103,949		388,078		86,749		0		3,974,325
Total ending loans balance	$	1,450,361	$	1,653,047	$	314,583	$	103,949	$	389,929	$	86,749	$	0	$	3,998,618

			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, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,552	$	921	$	73	$	0	$	457	$	26	$	0	$	10,029
Collectively evaluated for impairment		13,966		14,472		4,232		368		1,835		257		3,294		38,424
Total ending allowance balance	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Loans:
Loans individually evaluated for impairment	$	19,734	$	4,266	$	433	$	0	$	2,240	$	44	$	0	$	26,717
Loans collectively evaluated for impairment		1,385,604		1,562,899		370,174		95,520		388,053		85,778		0		3,888,028
Total ending loans balance	$	1,405,338	$	1,567,165	$	370,607	$	95,520	$	390,293	$	85,822	$	0	$	3,914,745

12

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 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	$	3,129	$	437	$	0
Non-working capital loans		2,321		926		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,975		1,437		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		200		119		0
Open end and junior lien loans		92		92		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,610		6,301		2,995
Non-working capital loans		11,135		11,155		6,213
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,756		1,756		394
Agri-business and agricultural loans:
Loans secured by farmland		148		147		87
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,637		1,640		339
Total	$	29,606	$	24,293	$	10,028

13

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2018:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	3,284	$	1,889	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,773		1,527		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		583		502		0
Open end and junior lien loans		220		220		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		9,691		6,694		2,602
Non-working capital loans		11,099		11,151		5,950
Commercial real estate and multi-family residential loans:
Construction and land development loans		291		291		142
Owner occupied loans		2,938		2,448		779
Agri-business and agricultural loans:
Loans secured by farmland		150		150		73
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,517		1,518		457
Other consumer loans		45		44		26
Total	$	32,194	$	26,717	$	10,029

14

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 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	$	287	$	0	$	1
Non-working capital loans		933		9		4
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,450		10		10
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		164		1		1
Open end and junior lien loans		93		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,326		75		26
Non-working capital loans		11,105		127		94
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,763		16		11
Agri-business and agricultural loans:
Loans secured by farmland		147		1		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,680		13		13
Other consumer loans		28		1		0
Total	$	24,259	$	253	$	160

15

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 2018:

					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	$	1,011	$	6	$	14
Non-working capital loans		1,738		16		26
Commercial real estate and multi-family residential loans:
Construction and land development loans		88		2		3
Owner occupied loans		2,868		9		12
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		533		2		3
Open end and junior lien loans		247		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		3,005		2		2
Non-working capital loans		3,513		3		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		491		6		13
Owner occupied loans		1,041		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		993		8		10
Other consumer loans		48		0		2
Total	$	15,859	$	55	$	92

16

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 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	$	221	$	1	$	1
Non-working capital loans		1,241		38		28
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,535		21		18
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		272		2		2
Open end and junior lien loans		143		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,406		147		85
Non-working capital loans		11,260		259		222
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,922		29		23
Agri-business and agricultural loans:
Loans secured by farmland		147		3		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,639		25		25
Other consumer loans		36		2		1
Total	$	25,105	$	527	$	406

17

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 2018:

					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	$	1,011	$	13	$	16
Non-working capital loans		1,733		31		31
Commercial real estate and multi-family residential loans:
Construction and land development loans		95		3		3
Owner occupied loans		2,712		16		14
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		538		4		4
Open end and junior lien loans		169		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		2,307		4		3
Non-working capital loans		3,365		5		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		606		17		18
Owner occupied loans		1,117		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		981		15		14
Open end and junior lien loans		77		0		0
Other consumer loans		48		1		2
Total	$	15,042	$	110	$	112

18

The following table presents the aging of the recorded investment in past due loans as of June 30, 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	$	748,862	$	20	$	0	$	6,364	$	6,384	$	755,246
Non-working capital loans		689,781		5		0		5,329		5,334		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,380		24		0		0		24		320,404
Owner occupied loans		554,607		0		0		2,185		2,185		556,792
Nonowner occupied loans		533,215		103		0		0		103		533,318
Multifamily loans		242,533		0		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		148,469		0		0		430		430		148,899
Loans for agricultural production		165,684		0		0		0		0		165,684
Other commercial loans		103,949		0		0		0		0		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		185,676		1,235		0		597		1,832		187,508
Open end and junior lien loans		189,150		945		0		92		1,037		190,187
Residential construction loans		12,234		0		0		0		0		12,234
Other consumer loans		86,624		125		0		0		125		86,749
Total	$	3,981,164	$	2,457	$	0	$	14,997	$	17,454	$	3,998,618

The following table presents the aging of the recorded investment in past due loans as of December 31, 2018 by class of loans:

					Greater than
			30‑89		90 Days Past				Total Past
	Loans Not		Days		Due and Still				Due and
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	684,191	$	4,328	$	0	$	2,245	$	6,573	$	690,764
Non-working capital loans		709,629		3,368		0		1,577		4,945		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		265,544		0		0		0		0		265,544
Owner occupied loans		583,214		486		0		2,269		2,755		585,969
Nonowner occupied loans		520,431		57		0		0		57		520,488
Multi-family loans		195,164		0		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		177,080		150		0		283		433		177,513
Loans for agricultural production		193,094		0		0		0		0		193,094
Other commercial loans		95,520		0		0		0		0		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		183,420		1,370		0		671		2,041		185,461
Open end and junior lien loans		188,320		98		0		220		318		188,638
Residential construction loans		16,194		0		0		0		0		16,194
Other consumer loans		85,654		168		0		0		168		85,822
Total	$	3,897,455	$	10,025	$	0	$	7,265	$	17,290	$	3,914,745

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $2.9 million and $3.7 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2019

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and December 31, 2018, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	June 30,		December 31,
(dollars in thousands)	2019		2018
Accruing troubled debt restructured loans	$	6,082	$	8,016
Nonaccrual troubled debt restructured loans		3,512		4,384
Total troubled debt restructured loans	$	9,594	$	12,400

During the three months ended June 30, 2019, no loans were modified as troubled debt restructurings.

During the three months ending 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 table below.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the six months ended June 30, 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 and six month periods ending June 30, 2019, the troubled debt restructurings described above did not impact the allowance for loan losses and no charge-offs were recorded.

During the three months ended June 30, 2018, one commercial and industrial loan was modified as a troubled debt restructuring due to receiving inadequate compensation for the terms of the restructure and is included in the tables on the next page.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the three-month period ended June 30, 2018. The loan to one of the borrowers is for a commercial real estate building where the collateral value and cash flows from the company occupying the building do not support the loan with a recorded investment of $107,000. The loan to another one of the borrowers is for a vacant commercial real estate building that does not generate cash flow to support the loan with a recorded investment of $875,000. The other loans are to a borrower for an investment in land for residential development which has not had sales activity to support loans with a recorded investment of $484,000. These concessions are not included in table below.

During the three months ended March 31, 2018, 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. These concessions are included in the table below.

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Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the three-month period ended March 31, 2018. The loan to one of the borrowers is for a commercial real estate building where the collateral value and cash flows from the companies occupying the buildings do not support the loan with recorded investments of $341,000. The loans to two other borrowers are for commercial and industrial capital and non-working capital loans with recorded investments of $551,000. These concessions are not included in the table below.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended June 30, 2018:

						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		20		20	1	0
Total	1	$	20	$	20	1	0

The following table presents loans by class modified as new troubled debt restructurings that occurred during the six months ended June 30, 2018:

						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		600		600	1	0
Non-working capital loans	2		1,420		1,420	2	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	1		824		824	1	12
Owner occupied loans	1		387		387	1	12
Consumer 1‑4 family loans:
Closed end first mortgage loans	1		198		197	1	239
Total	6	$	3,429	$	3,428	6	0‑239

For the three-month period ended June 30, 2018, the troubled debt restructuring described above did not impact the allowance for loan losses and no charge-off was recorded. For the six-month period ended June 30, 2018, the debt restructurings described above decreased the allowance for loan losses by $166,000, and resulted in charge-offs of $1.6 million.

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.

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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 June 30, 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	$	660,816	$	70,866	$	23,244	$	0	$	320	$	755,246
Non-working capital loans		645,632		25,350		18,804		0		5,329		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,115		289		0		0		0		320,404
Owner occupied loans		517,431		21,043		18,318		0		0		556,792
Nonowner occupied loans		530,491		2,209		618		0		0		533,318
Multifamily loans		242,329		204		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		134,805		12,840		1,254		0		0		148,899
Loans for agricultural production		153,961		11,723		0		0		0		165,684
Other commercial loans		103,945		0		0		0		4		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		55,538		0		95		0		131,875		187,508
Open end and junior lien loans		11,007		0		55		0		179,125		190,187
Residential construction loans		0		0		0		0		12,234		12,234
Other consumer loans		14,077		0		0		0		72,672		86,749
Total	$	3,390,147	$	144,524	$	62,388	$	0	$	401,559	$	3,998,618

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As of December 31, 2018, 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	$	618,612	$	43,240	$	28,563	$	0	$	349	$	690,764
Non-working capital loans		664,787		15,992		27,548		0		6,247		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		264,900		353		291		0		0		265,544
Owner occupied loans		541,734		21,864		22,371		0		0		585,969
Nonowner occupied loans		517,356		2,491		641		0		0		520,488
Multifamily loans		194,948		216		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		166,623		9,107		1,783		0		0		177,513
Loans for agricultural production		183,189		8,155		1,750		0		0		193,094
Other commercial loans		95,516		0		0		0		4		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		54,879		0		2,021		0		128,561		185,461
Open end and junior lien loans		8,810		0		220		0		179,608		188,638
Residential construction loans		0		0		0		0		16,194		16,194
Other consumer loans		12,700		0		44		0		73,078		85,822
Total	$	3,324,054	$	101,418	$	85,232	$	0	$	404,041	$	3,914,745

NOTE 5. 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

23

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 June 30, 2019, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $4.6 million, none of which are currently impaired and therefore are carried at amortized cost. These residential mortgage loans have a weighted average interest rate of 3.95%, 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

24

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 June 30, 2019, the constant prepayment speed (“PSA”) used was 72 and discount rate used was 9.4%. At December 31, 2018, the PSA used was 81 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:

	June 30, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,007	$	0	$	0	$	1,007
U.S. government sponsored agency securities		0		2,290		0		2,290
Mortgage-backed securities: residential		0		323,945		0		323,945
Mortgage-backed securities: commercial		0		38,134		0		38,134
State and municipal securities		0		244,300		150		244,450
Total Securities		1,007		608,669		150		609,826
Mortgage banking derivative		0		298		0		298
Interest rate swap derivative		0		6,679		0		6,679
Total assets	$	1,007	$	615,646	$	150	$	616,803
Liabilities
Mortgage banking derivative		0		53		0		53
Interest rate swap derivative		0		7,266		0		7,266
Total liabilities	$	0	$	7,319	$	0	$	7,319

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	December 31, 2018
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	987	$	0	$	0	$	987
U.S. government sponsored agency securities		0		4,350		0		4,350
Mortgage-backed securities: residential		0		325,412		0		325,412
Mortgage-backed securities: commercial		0		38,141		0		38,141
State and municipal securities		0		216,509		150		216,659
Total Securities		987		584,412		150		585,549
Mortgage banking derivative		0		95		0		95
Interest rate swap derivative		0		3,869		0		3,869
Total assets	$	987	$	588,376	$	150	$	589,513
Liabilities
Mortgage banking derivative		0		23		0		23
Interest rate swap derivative		0		4,025		0		4,025
Total liabilities	$	0	$	4,048	$	0	$	4,048

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2019 and there were no transfers between Level 1 and Level 2 during 2018.

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

	June 30, 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	$	3,306	$	3,306
Non-working capital loans		0		0		4,678		4,678
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		561		561
Agri-business and agricultural loans:
Loans secured by farmland		0		0		60		60
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		638		638
Total impaired loans	$	0	$	0	$	9,243	$	9,243
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	9,243	$	9,243

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	December 31, 2018
	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	$	4,092	$	4,092
Non-working capital loans		0		0		4,967		4,967
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		148		148
Owner occupied loans		0		0		1,669		1,669
Agri-business and agricultural loans:
Loans secured by farmland		0		0		77		77
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		553		553
Total impaired loans	$	0	$	0	$	11,506	$	11,506
Other real estate owned		0		0		316		316
Total assets	$	0	$	0	$	11,822	$	11,822

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2019 and 2018:

	State and Municipal Securities
(dollars in thousands)	2019		2018
Balance of recurring Level 3 assets at January 1	$	150	$	880
Changes in fair value of securities included in other comprehensive income		0		(7)
Principal payments		0		(45)
Balance of recurring Level 3 assets at June 30	$	150	$	828

The state and municipal securities measured at fair value included below are non-rated Indiana and Ohio municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	June 30, 2019		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	December 31, 2018		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

The primary methodology used in the fair value measurement of the Company’s state and municipal securities classified as Level 3 is a discount to the AAA municipal benchmark index. Significant increases or (decreases) in this index as well as the degree to which the security differs in ratings, coupon, call and duration will result in a higher or (lower) fair value measurement for those securities that are not callable. For those securities that are continuously callable, a slight premium to par is used.

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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 June 30, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,984	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	3	%	-	100	%
Impaired loans:
Commercial real estate		561	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	41	%	29	%	-	53	%
Impaired loans:
Agribusiness and agricultural		60	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	59	%
Impaired loans:
Consumer 1‑4 family mortgage		638	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	13	%	0	%	-	19	%

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, 2018:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,059	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	4	%	-	100	%
Impaired loans:
Commercial real estate		1,817	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	34	%	6	%	-	53	%
Impaired loans:
Agribusiness and agricultural		77	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	49	%
Impaired loans:
Consumer 1‑4 family mortgage		553	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	23	%	0	%	-	64	%
Other real estate owned		316	Collateral based measurements	Discount to reflect current market conditions	0	%

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $18.8 million, with a valuation allowance of $9.6 million at June 30, 2019. The change in the fair value of impaired loans resulted in increases in the provision for loan losses of $100,000 and $300,000, respectively, over the six months and three months ended June 30, 2019, respectively. At June 30, 2018, impaired loans had a gross carrying amount of $9.6 million, with a valuation allowance of $2.1 million. The change in the fair value of impaired loans resulted in a net increase in the provision for loan losses of $4.5 million and $200,000, respectively, in the six months and three months ended June 30, 2018, respectively, primarily due to a partial charge-off on one commercial lending relationship in the amount of $4.6 million, over the three months ended March 31, 2018.

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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.

	June 30, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	196,370	$	193,603	$	2,767	$	0	$	196,370
Securities available for sale		609,826		1,007		608,669		150		609,826
Real estate mortgages held for sale		5,929		0		5,998		0		5,998
Loans, net		3,948,054		0		0		3,901,925		3,901,925
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		17,418		3		3,444		13,971		17,418
Financial Liabilities:
Certificates of deposit		(1,328,062)		0		(1,336,715)		0		(1,336,715)
All other deposits		(2,893,237)		(2,893,237)		0		0		(2,893,237)
Federal funds purchased		(15,000)		(15,000)		0		0		(15,000)
Federal Home Loan Bank advances		(100,000)		0		(100,000)		0		(100,000)
Subordinated debentures		(30,928)		0		0		(31,196)		(31,196)
Standby letters of credit		(1,128)		0		0		(1,128)		(1,128)
Accrued interest payable		(12,454)		(174)		(12,275)		(5)		(12,454)

	December 31, 2018
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	216,922	$	214,452	$	2,470	$	0	$	216,922
Securities available for sale		585,549		987		584,412		150		585,549
Real estate mortgages held for sale		2,293		0		2,314		0		2,314
Loans, net		3,866,292		0		0		3,786,175		3,786,175
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,518		3		3,569		11,946		15,518
Financial Liabilities:
Certificates of deposit		(1,419,754)		0		(1,424,553)		0		(1,424,553)
All other deposits		(2,624,311)		(2,624,311)		0		0		(2,624,311)
Securities sold under agreements to repurchase		(75,555)		0		(75,555)		0		(75,555)
Federal Home Loan Bank advances		(170,000)		0		(169,996)		0		(169,996)
Subordinated debentures		(30,928)		0		0		(31,195)		(31,195)
Standby letters of credit		(978)		0		0		(978)		(978)
Accrued interest payable		(10,404)		(110)		(10,289)		(5)		(10,404)

NOTE 6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase represent collateralized borrowings with customers located primarily within the Company’s service area. These repurchase liabilities are not covered by federal deposit insurance and are secured by securities owned. The Company retains the right to substitute similar type securities and has the right to withdraw all excess collateral applicable to the repurchase liabilities whenever the collateral values are in excess of the related repurchase liabilities. However, as a means of mitigating market risk, the Company maintains excess collateral to cover normal changes in the repurchase liability by monitoring daily usage. The Company maintains control of the securities through the use of third-party safekeeping arrangements.

There were no securities sold under agreements to repurchase at June 30, 2019. Securities sold under agreements to repurchase of $75.6 million, which matured on demand, were secured by mortgage-backed securities with a carrying amount of $100.7 million at December 31, 2018. Additional information concerning recognition of these liabilities is disclosed in Note 8.

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NOTE 7. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(dollars in thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Service cost	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Interest cost		22		24		10		8		44		47		19		17
Expected return on plan assets		(35)		(35)		(15)		(16)		(69)		(69)		(28)		(31)
Recognized net actuarial (gain) loss		34		48		19		19		66		96		37		37
Net pension expense (benefit)	$	21	$	37	$	14	$	11	$	41	$	74	$	28	$	23

The Company previously disclosed in its financial statements for the year ended December 31, 2018 that it expected to contribute $0 to its pension plan and $0 to its Supplemental Executive Retirement Plan ("SERP") in 2019. The Company has contributed $27,000 to its pension plan and $0 to its SERP as of June 30, 2019. The contribution to the pension plan was made in order to keep the plan fully funded, based upon the final actuarial calculation. The Company does not expect to make any additional contributions to its pension plan or SERP during the remainder of 2019. As a result of freezing the plan effective April 1, 2000, there is no service cost to record on the pension plan or the SERP for the six-month periods ending June 30, 2019 and 2018. All other components of cost noted in the table above were recorded in other expense under noninterest expenses on the Consolidated Statements of Income for all periods presented.

NOTE 8. 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 June 30, 2019 and December 31, 2018.

	June 30, 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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Total Assets	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Liabilities
Interest Rate Swap Derivatives	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)
Repurchase Agreements		0		0		0		0		0		0
Total Liabilities	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)

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	December 31, 2018
			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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Total Assets	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Liabilities
Interest Rate Swap Derivatives	$	4,025	$	0	$	4,025	$	0	$	(560)	$	3,465
Repurchase Agreements		75,555		0		75,555		(75,555)		0		0
Total Liabilities	$	79,580	$	0	$	79,580	$	(75,555)	$	(560)	$	3,465

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 9. 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. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants, none of which were antidilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per common share		25,614,701		25,293,329		25,553,254		25,275,471
Dilutive effect of stock options, awards and warrants		159,301		415,887		167,825		429,034
Weighted average shares outstanding for diluted earnings per common share		25,774,002		25,709,216		25,721,079		25,704,505
Basic earnings per common share	$	0.85	$	0.80	$	1.70	$	1.52
Diluted earnings per common share	$	0.85	$	0.78	$	1.69	$	1.50

NOTE 10. 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 June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2019	$	3,843	$	(1,356)	$	2,487
Other comprehensive income before reclassification		7,040		0		7,040
Amounts reclassified from accumulated other comprehensive income (loss)		(65)		38		(27)
Net current period other comprehensive income		6,975		38		7,013
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

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	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2018	$	(6,270)	$	(1,718)	$	(7,988)
Other comprehensive income before reclassification		(1,771)		0		(1,771)
Amounts reclassified from accumulated other comprehensive income (loss)		0		49		49
Net current period other comprehensive income		(1,771)		49		(1,722)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the six months ended June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		15,702		0		15,702
Amounts reclassified from accumulated other comprehensive income (loss)		(88)		77		(11)
Net current period other comprehensive income		15,614		77		15,691
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2018	$	784	$	(1,454)	$	(670)
Other comprehensive income before reclassification		(8,903)		0		(8,903)
Amounts reclassified from accumulated other comprehensive income (loss)		6		98		104
Net current period other comprehensive income		(8,897)		98		(8,799)
Adoption of ASU 2018‑02		140		(313)		(173)
Adoption of ASU 2016‑01		(68)		0		(68)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

Reclassifications out of accumulated comprehensive income for the three months ended June 30, 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	$	65	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		65	Net of tax
Amortization of defined benefit pension items		(53)	Other expense
Tax effect		15	Income tax expense
Subtotal		(38)	Net of tax
Total reclassifications for the period	$	27	Net income

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Reclassifications out of accumulated comprehensive income for the three months ended June 30, 2018 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	$	0	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		0	Net of tax
Amortization of defined benefit pension items		(67)	Other expense
Tax effect		18	Income tax expense
Subtotal		(49)	Net of tax
Total reclassifications for the period	$	(49)	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 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	$	88	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		88	Net of tax
Amortization of defined benefit pension items		(103)	Other expense
Tax effect		26	Income tax expense
Subtotal		(77)	Net of tax
Total reclassifications for the period	$	11	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2018 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	$	(6)	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		(6)	Net of tax
Amortization of defined benefit pension items		(133)	Other expense
Tax effect		35	Income tax expense
Subtotal		(98)	Net of tax
Total reclassifications for the period	$	(104)	Net income

NOTE 11. 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

33

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 June 30, 2019:

	Operating lease
Years ending December 31, (in thousands)	Obligation
2019	$	271
2020		561
2021		581
2022		595
2023		606
2024 - 2029		3,495
Total undiscounted lease payments		6,109
Less imputed interest		(810)
Lease liability	$	5,299
Right-of-use asset	$	5,299

	Three months ended			Six months ended
	June 30, 2019			June 30, 2019
Lease cost
Operating lease cost	$	125		$	244
Short-term lease cost		6			12
Total lease cost	$	131		$	256
Other information
Operating cash outflows from operating leases	$	244
Weighted-average remaining lease term - operating leases		10.3 years
Weighted average discount rate - operating leases		2.8	%

NOTE 12. SUBSEQUENT EVENTS

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 million. Funds provided under the agreement may be used to repurchase shares of the Company's common stock under the share repurchase program approved by the Company's board of directors on January 8, 2019, as well as for general corporate purposes. The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of Lake City Bank. The credit agreement has a one year term which may be amended, extended, modified or renewed.

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 expires on December 31, 2019. 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.

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

OVERVIEW

Net income in the first six months of 2019 was $43.4 million, up 12.8% from $38.5 million for the comparable period of 2018. Diluted income per common share was $1.69 in the first six months of 2019, up 12.7% from $1.50 in the comparable period of 2018. Annualized return on average total equity was 16.17% in the first six months of 2019 versus 16.35% in the comparable period of 2018. Annualized return on average total assets was 1.78% in the first six months of 2019 versus 1.64% in the comparable period of 2018. The average equity to average assets ratio was 11.00% in the first six months of 2019 versus 10.05% in the comparable period of 2018.

Net income in the second quarter of 2019 was $21.7 million, up 7.8% from $20.1 million for the comparable period of 2018. Diluted income per common share was $0.85 in the second quarter of 2019, up 9.0% from $0.78 in the comparable period of 2018. Return on average total equity was 15.76% in the second quarter of 2019 versus 16.86% in the comparable period of 2018. Return on average total assets was 1.76% in the second quarter of 2019 versus 1.70% in the comparable period of 2018. The average equity to average assets ratio was 11.14% in the second quarter of 2019 versus 10.11% in the comparable period of 2018.

Total assets were $4.976 billion as of June 30, 2019 versus $4.875 billion as of December 31, 2018, an increase of $100.3 million, or 2.1%. This increase was primarily due to an $83.9 million increase in gross loans as well as a $24.3 million increase in securities available for sale and an increase in bank owned life insurance of $5.5 million, offset by a $20.6 million decrease in cash and cash equivalents. Total deposits increased by $177.2 million while total borrowings decreased by $130.6 million. Securities sold under agreements to repurchase declined by $75.6 million to zero at June 30, 2019. Total equity increased by $43.7 million as a result of net income of $43.4 million as well as an increase in accumulated other comprehensive income of $15.7 million offset by dividends declared of $0.56 per share totaling $14.3 million.

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 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

35

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 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 after considering the following: application of historical loss percentages, emerging market risk, commercial loan focus and large credit concentration, new industry lending activity and general economic conditions. 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, and are subjectively 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 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 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.

36

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 and six months ended June 30, 2019 and 2018 is presented in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2019			2018			2019			2018
Income Statement Summary:
Net interest income	$	38,411		$	37,533		$	76,620		$	73,756
Provision for loan losses		785			1,700			1,985			5,000
Noninterest income		11,588			9,722			23,113			19,601
Noninterest expense		22,092			20,303			44,565			41,505
Other Data:
Efficiency ratio (1)		44.19	%		42.93	%		44.68	%		44.44	%
Dilutive EPS	$	0.85		$	0.78		$	1.69		$	1.50
Tangible capital ratio (2)		11.30	%		10.15	%		11.30	%		10.15	%
Net charge-offs/(recoveries) to average loans		(0.02)	%		(0.04)	%		(0.01)	%		0.23	%
Net interest margin		3.37	%		3.42	%		3.42	%		3.39	%
Noninterest income to total revenue		23.18	%		20.57	%		23.17	%		21.00	%

(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 “total equity” excluding intangible assets, net of deferred tax, and “tangible assets” which is “total assets” excluding intangible assets, net of deferred tax.

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See reconciliation below.

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2019			2018			2019			2018
Total Equity	$	565,363		$	486,484		$	565,363		$	486,484
Less: Goodwill		(4,970)			(4,970)			(4,970)			(4,970)
Plus: Deferred tax assets related to goodwill		1,191			1,177			1,191			1,177
Tangible Common Equity		561,584			482,691			561,584			482,691
Total Assets	$	4,975,519		$	4,760,869		$	4,975,519		$	4,760,869
Less: Goodwill		(4,970)			(4,970)			(4,970)			(4,970)
Plus: Deferred tax assets related to goodwill		1,191			1,177			1,191			1,177
Tangible Assets		4,971,740			4,757,076			4,971,740			4,757,076
Tangible Common Equity/Tangible Assets		11.30	%		10.15	%		11.30	%		10.15	%

Net Income

Net income was $43.4 million in the first six months of 2019, an increase of $4.9 million, or 12.8%, versus net income of $38.5 million in the first six months of 2018. The growth in net income of $4.9 million for the first six months of 2019 as compared to the prior year period resulted primarily from growth in noninterest income of $3.5 million, a decrease in provision expenses of $3.0 million and increased net interest income of $2.9 million. These increases were offset by an increase in noninterest expense of $3.1 million and an increase in income tax expense of $1.4 million.

Net income was $21.7 million in the second quarter of 2019, an increase of $1.6 million, or 7.8%, versus net income of $20.1 million in the second quarter of 2018. The increase was driven by growth in noninterest income of $1.9 million, a decrease in provision expense of $915,000 and increased net interest income of $878,000. These increases were offset by increased noninterest expense of $1.8 million and an increase in income tax expense of $299,000.

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Net Interest Income

The following tables set forth consolidated information regarding average balances and rates:

	Six Months Ended June 30,
	2019						2018
	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)	$	3,915,011	$	98,955	5.10	%	$	3,792,226	$	86,233	4.59	%
Tax exempt (1)		24,781		606	4.93			23,586		526	4.50
Investments: (1)
Available for sale		594,141		8,990	3.05			553,303		8,466	3.09
Short-term investments		8,415		97	2.32			4,328		20	0.93
Interest bearing deposits		46,308		492	2.14			61,481		468	1.54
Total earning assets	$	4,588,656	$	109,140	4.80	%	$	4,434,924	$	95,713	4.35	%
Less: Allowance for loan losses		(49,370)						(46,839)
Nonearning Assets
Cash and due from banks		168,085						138,713
Premises and equipment		58,729						56,142
Other nonearning assets		155,633						140,094
Total assets	$	4,921,733					$	4,723,034
Interest Bearing Liabilities
Savings deposits	$	244,049	$	143	0.12	%	$	264,018	$	176	0.13	%
Interest bearing checking accounts		1,621,035		13,530	1.68			1,510,378		7,987	1.07
Time deposits:
In denominations under $100,000		275,106		2,532	1.86			259,777		1,794	1.39
In denominations over $100,000		1,151,904		13,234	2.32			1,225,923		10,058	1.65
Miscellaneous short-term borrowings		112,344		1,182	2.12			97,210		306	0.63
Long-term borrowings and subordinated debentures		30,928		888	5.79			30,931		786	5.12
Total interest bearing liabilities	$	3,435,366	$	31,509	1.85	%	$	3,388,237	$	21,107	1.26	%
Noninterest Bearing Liabilities
Demand deposits		904,031						833,428
Other liabilities		41,011						26,699
Stockholders’ Equity		541,325						474,670
Total liabilities and stockholders’ equity	$	4,921,733					$	4,723,034
Interest Margin Recap
Interest income/average earning assets				109,140	4.80					95,713	4.35
Interest expense/average earning assets				31,509	1.38					21,107	0.96
Net interest income and margin			$	77,631	3.42	%			$	74,606	3.39	%

(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 $1.0 million and $850,000 in the six-month periods ended June 30, 2019 and 2018, respectively.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the six months ended June 30, 2019 and 2018, are included as taxable loan interest income.

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

	Three Months Ended June 30,
	2019						2018
	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)	$	3,936,747	$	50,089	5.10	%	$	3,816,879	$	44,439	4.67	%
Tax exempt (1)		24,575		292	4.77			22,562		253	4.50
Investments: (1)
Available for sale		601,178		4,415	2.95			560,484		4,347	3.25
Short-term investments		12,092		97	3.22			4,079		11	1.08
Interest bearing deposits		51,357		254	1.98			44,236		185	1.68
Total earning assets	$	4,625,949	$	55,147	4.78	%	$	4,448,240	$	49,235	4.44	%
Less: Allowance for loan losses		(49,965)						(46,494)
Nonearning Assets
Cash and due from banks		171,313						139,677
Premises and equipment		58,857						56,093
Other nonearning assets		155,299						141,647
Total assets	$	4,961,453					$	4,739,163
Interest Bearing Liabilities
Savings deposits	$	240,824	$	71	0.12	%	$	259,989	$	86	0.13	%
Interest bearing checking accounts		1,743,813		7,576	1.74			1,528,733		4,412	1.16
Time deposits:
In denominations under $100,000		274,217		1,300	1.90			264,294		946	1.44
In denominations over $100,000		1,119,176		6,609	2.37			1,213,792		5,204	1.72
Miscellaneous short-term borrowings		35,424		232	2.63			111,402		195	0.70
Long-term borrowings and subordinated debentures		30,928		436	5.65			30,928		419	5.43
Total interest bearing liabilities	$	3,444,382	$	16,224	1.89	%	$	3,409,138	$	11,262	1.33	%
Noninterest Bearing Liabilities
Demand deposits		922,729						825,337
Other liabilities		41,806						25,397
Stockholders’ Equity		552,536						479,291
Total liabilities and stockholders’ equity	$	4,961,453					$	4,739,163
Interest Margin Recap
Interest income/average earning assets				55,147	4.78					49,235	4.44
Interest expense/average earning assets				16,224	1.41					11,262	1.02
Net interest income and margin			$	38,923	3.37	%			$	37,973	3.42	%

(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 $512,000 and $440,000 in the three-month periods ended June 30, 2019 and 2018, respectively.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended June 30, 2019 and 2018, are included as taxable loan interest income.

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

Net interest income increased $2.9 million, or 3.9%, for the six months ended June 30, 2019 compared with the first six months of 2018. The increased level of net interest income during the first six months of 2019 was largely driven by an increase in average earning assets of $153.7 million, due primarily to loan growth of $124.0 million and growth in investment securities of $40.8 million, as well as expansion in net interest margin. Average loans outstanding increased $124.0 million to $3.940 billion during the

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six months ended June 30, 2019 compared to $3.816 billion during the same period of 2018, with most of the growth being in commercial loans. The earning asset growth was funded through an increase in deposits. Average deposits increased $102.6 million to $4.196 billion during the six months ended June 30, 2019 compared to $4.094 billion for the same period of 2018. Total deposits are comprised of core deposits and brokered deposits. During this same period average core deposits increased $156.4 million and average brokered deposits decreased $53.8 million. Average borrowings increased by $15.1 million to $143.3 million in the six months ended June 30, 2019, compared to $128.1 million during the same period of 2018. Short-term interest expense was $1.2 million compared to $306,000 for the six months ended June 30, 2019 and 2018, respectively. The increase was due partially to an increase in average balance of $15.1 million and primarily due to an increase in rate of 149 basis points as the Fed Funds overnight rate has increased since June 30, 2018.

The tax equivalent net interest margin was 3.42% for the first six months of 2019 compared to 3.39% during the first six months of 2018. The yield on earning assets totaled 4.80% during the six months ended June 30, 2019 compared to 4.35% in the same period of 2018. Cost of funds (expressed as a percentage of average earning assets) totaled 1.38% during the first six months of 2019 compared to 0.96% in the same period of 2018. The higher margin in the first half of 2019 was due to higher yields on loans, partially offset by a higher cost of funds driven by the Federal Reserve Bank increasing the target Federal Funds Rate in March, June, September and December of 2018.

Average earning assets increased by $177.7 million for the three months ended June 30, 2019 compared with the same period of 2018. Average loans outstanding increased $121.9 million during the three months ended June 30, 2019 compared with the same period of 2018, with most of the growth being in commercial loans. In addition, investment securities increased by $40.7 million. The earning asset growth was funded through deposit growth offset by a decrease in borrowings. Average interest bearing deposits increased by $111.2 million, average noninterest bearing demand deposits increased by $97.4 million and average borrowings decreased by $76.0 million.

The tax equivalent net interest margin was 3.37% for the second quarter of 2019 compared to 3.42% during the second quarter of 2018. The decline in net interest margin during the second quarter of 2019 as compared to the prior year period resulted from increased costs of deposits that were not fully absorbed by increases in earning assets. The yield on earning assets totaled 4.78% during the second quarter of 2019 compared to 4.44% in the same period of 2018, while the cost of funds (expressed as a percentage of average earning assets) totaled 1.41% during the second quarter of 2019 compared to 1.02% in the same period of 2018.

Provision for Loan Losses

The Company recorded a provision for loan loss expense of $2.0 million and $785,000, respectively, in the six-month and three-month periods ended June 30, 2019, compared to a provision of $5.0 million and $1.7 million, respectively, during the comparable periods of 2018. The primary factors impacting management’s decision to record a lower the provision in the first six months of 2019 were net recoveries during the first six months of 2019 versus net charge-offs during the first six months of 2018. Net recoveries in the second quarter of 2019 were $217,000 versus net recoveries of $379,000 in the second quarter of 2018 and net charge-offs of $91,000 during the linked first quarter of 2019. Additional factors considered by management included the continued stability in key loan quality metrics, including appropriate reserve coverage of nonperforming loans and stable 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 six month and three-month periods ended June 30, 2019 and 2018 are shown in the following tables:

	Six Months Ended
	June 30,
							Percent
(dollars in thousands)	2019			2018			Change
Wealth advisory fees	$	3,266		$	3,049		7.1	%
Investment brokerage fees		914			667		37.0
Service charges on deposit accounts		9,137			7,428		23.0
Loan and service fees		4,885			4,598		6.2
Merchant card fee income		1,292			1,191		8.5
Bank owned life insurance		731			711		2.8
Mortgage banking income		620			679		(8.7)
Net securities gains (losses)		88			(6)		(1,566.7)
Other income		2,180			1,284		69.8
Total noninterest income	$	23,113		$	19,601		17.9	%
Noninterest income to total revenue		23.17	%		21.00	%

	Three Months Ended
	June 30,
							Percent
(dollars in thousands)	2019			2018			Change
Wealth advisory fees	$	1,646		$	1,544		6.6	%
Investment brokerage fees		528			377		40.1
Service charges on deposit accounts		4,850			3,800		27.6
Loan and service fees		2,481			2,421		2.5
Merchant card fee income		670			549		22.0
Bank owned life insurance		287			348		(17.5)
Mortgage banking income		398			438		(9.1)
Net securities gains (losses)		65			0		NA
Other income		663			245		170.6
Total noninterest income	$	11,588		$	9,722		19.2	%
Noninterest income to total revenue		23.18	%		20.57	%

The Company’s noninterest income increased $3.5 million, or 17.9%, to $23.1 million for the six months ended June 30, 2019, compared to $19.6 million for the prior period. Noninterest income was positively impacted by a $1.7 million increase over the prior year period in fee income for service charges on deposit accounts, primarily due to growth in treasury management fees from business accounts. In addition, due to continued growth in client relationships, loan and service fees increased $287,000, investment brokerage fees increased $247,000 and wealth advisory fees increased $217,000. Other income increased primarily due to a gain related to proceeds from bank owned life insurance.

The Company’s noninterest income increased $1.9 million, or 19.2%, to $11.6 million for the second quarter of 2019, compared to $9.7 million for the second quarter of 2018. Service charges on deposit accounts increased $1.1 million, primarily due to fees from business accounts. Wealth advisory and investment brokerage fees increased by $102,000 and $151,000, respectively, compared to the second quarter of 2018 due to continued growth of client relationships.

During the second quarter, a single commercial treasury management relationship contributed $2.1 million in treasury management fees that are reported with service charges on deposit accounts. This relationship contributed $1.6 million in the first quarter of 2019, resulting in a total of $3.7 million of revenue on a year to date basis. As a result of the bank discovering potentially fraudulent activity by this client involving multiple banks, the related treasury management activity was terminated and the revenue will not recur in future periods. The bank has not incurred any loss related to this activity and we believe that an investigation is ongoing by authorities. In addition, the bank continues its review of its enterprise risk management policies and procedures.

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Noninterest Expense

Noninterest expense categories for the six month and three-month periods ended June 30, 2019 and 2018 are shown in the following tables:

	Six Months Ended
	June 30,
					Percent
(dollars in thousands)	2019		2018		Change
Salaries and employee benefits	$	24,394	$	23,512	3.8	%
Net occupancy expense		2,649		2,663	(0.5)
Equipment costs		2,758		2,524	9.3
Data processing fees and supplies		4,999		4,803	4.1
Corporate and business development		2,377		2,179	9.1
FDIC insurance and other regulatory fees		815		870	(6.3)
Professional fees		2,008		1,782	12.7
Other expense		4,565		3,172	43.9
Total noninterest expense	$	44,565	$	41,505	7.4	%

The Company’s noninterest expense increased by $3.1 million, or 7.4%, to $44.6 million in the first six months of 2019 compared to $41.5 million in the prior year period. The increase was driven by salaries and employee benefits, which increased by 3.8%, or $882,000, primarily due to higher health insurance expense, staffing increases in revenue producing areas and normal merit increases. Other expense increased by $1.4 million or 43.9% to $4.6 million from $3.2 million in the six month period ended June 30, 2019.

	Three Months Ended
	June 30,
					Percent
(dollars in thousands)	2019		2018		Change
Salaries and employee benefits	$	11,835	$	11,493	3.0	%
Net occupancy expense		1,283		1,237	3.7
Equipment costs		1,409		1,250	12.7
Data processing fees and supplies		2,574		2,290	12.4
Corporate and business development		1,171		1,046	12.0
FDIC insurance and other regulatory fees		409		409	—
Professional fees		1,071		910	17.7
Other expense		2,340		1,668	40.3
Total noninterest expense	$	22,092	$	20,303	8.8	%

The Company’s noninterest expense increased $1.8 million, or 8.8%, to $22.1 million in the second quarter of 2019, compared to $20.3 million in the second quarter of 2018. Salaries and employee benefits increased on a year over year basis primarily due to higher employee health insurance expense, staffing increases in revenue producing areas and normal merit increases. Other expense increased by 672,000 or 40.3% to $2.3 million from $1.7 million in the second quarter 2018.

The Company’s income tax expense increased $1.4 million and $299,000, respectively, in the six-month and three-month periods ended June 30, 2019, compared to the same periods in 2018. The effective tax rate was 18.4% and 19.9%, respectively, in the six-month and three-month periods ended June 30, 2019, compared to 17.9% and 20.2% for the comparable periods of 2018. The year to date effective tax rate for 2019 increased as compared to the prior year period primarily due to a reduced benefit related to employee long-term incentive stock awards.

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FINANCIAL CONDITION

Overview

Total assets of the Company were $4.976 billion as of June 30, 2019, an increase of $100.3 million, or 2.1%, when compared to $4.875 billion as of December 31, 2018. Overall asset growth was primarily driven by an $81.8 million, or 2.1%, increase in net loans to $3.948 billion at June 30, 2019 from $3.866 billion December 31, 2018 and an increase of $24.3 million or 4.1% in securities available for sale to $609.8 million at June 30, 2019 from $585.5 billion at December 31, 2018. Funding for the loan growth came from an increase in total deposits of $177.2 million offset by a decrease in total borrowings of $130.6 million. The increase is deposits was primarily driven by growth in core deposits of $124.1 million and to a lesser extent, an increase in wholesale funding of $53.1 million. Core deposits were $4.003 billion as of June 30, 2019, an increase of $124.1 million, or 3.2%, when compared to $3.879 billion as of December 31, 2018. Additionally, commercial deposits increased by $111.8 million, or 10.4%, to $1.187 billion at June 30, 2019 compared to $1.075 billion at December 31, 2018.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents decreased by $20.6 million, or 9.5%, to $196.4 million at June 30, 2019, from $216.9 million at December 31, 2018. The short-term investment component of cash and cash equivalents decreased primarily due to lower noninterest-bearing balances on deposit with correspondent banks, driven by public fund checks outstanding at December 31, 2018, which subsequently cleared during 2019.

Investment Portfolio

The amortized cost and the fair value of securities as of June 30, 2019 and December 31, 2018 were as follows:

	June 30, 2019				December 31, 2018
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	Cost		Value		Cost		Value
U.S. Treasury securities	$	995	$	1,007	$	994	$	987
U.S. government sponsored agencies		2,302		2,290		4,435		4,350
Mortgage-backed securities: residential		320,298		323,945		329,516		325,412
Mortgage-backed securities: commercial		37,847		38,134		38,712		38,141
State and municipal securities		234,691		244,450		217,964		216,659
Total	$	596,133	$	609,826	$	591,621	$	585,549

At June 30, 2019 and December 31, 2018, 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 $60.0 million in the first six 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 $22.3 million were received in the first six months of 2019, and the amortization of premiums, net of the accretion of discounts, was $1.9 million. Sales of securities totaled $25.8 million in the first six months of 2019. Maturities and calls of securities totaled $7.9 million in the first six months of 2019, as well as increased prepayment assumptions. The increase in the amortization of premiums, net of the accretion of discounts was primarily driven by the adoption of ASU 2017-08 on January 1, 2019, as well as the increase in prepayments that have resulted from decreased interest rates. No other-than-temporary impairment was recognized in the first six months of 2019.

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Purchases of securities available for sale totaled $72.7 million in the first six months of 2018. The purchases consisted primarily of mortgage-backed securities issued by government sponsored entities and also purchases of state and municipal securities. Paydowns from prepayments and scheduled payments of $20.4 million were received in the first six months of 2018, and the amortization of premiums, net of the accretion of discounts, was $1.5 million. Sales of securities totaled $12.3 million in the first six months of 2018. Maturities and calls of securities totaled $4.4 million in the first six months of 2018. No other-than-temporary impairment was recognized in the first six months of 2018.

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 risk 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 $3.6 million, or 158.6%, to $5.9 million at June 30, 2019, from $2.3 million at December 31, 2018. 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 totaled $20.4 million in the first six months of 2019 compared to $22.7 million in the first six months of 2018.

Loan Portfolio

The loan portfolio by portfolio segment as of June 30, 2019 and December 31, 2018 is summarized as follows:

									Current
	June 30,				December 31,				Period
(dollars in thousands)	2019				2018				Change
Commercial and industrial loans	$	1,450,325	36.2	%	$	1,405,379	35.9	%	$	44,946
Commercial real estate and multi-family residential loans		1,655,511	41.4			1,569,635	40.1			85,876
Agri-business and agricultural loans		314,478	7.9			370,513	9.5			(56,035)
Other commercial loans		104,084	2.6			95,657	2.4			8,427
Consumer 1‑4 family mortgage loans		388,691	9.7			389,078	9.9			(387)
Other consumer loans		86,996	2.2			86,064	2.2			932
Subtotal, gross loans		4,000,085	100.0	%		3,916,326	100.0	%		83,759
Less: Allowance for loan losses		(50,564)				(48,453)				(2,111)
Net deferred loan fees		(1,467)				(1,581)				114
Loans, net	$	3,948,054			$	3,866,292			$	81,762

Total loans, excluding real estate mortgage loans held for sale and deferred fees, increased by $83.8 million to $4.000 billion at June 30, 2019 from $3.916 billion at December 31, 2018. 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 lenders.

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The following table summarizes the Company’s non-performing assets as of June 30, 2019 and December 31, 2018:

	June 30,			December 31,
(dollars in thousands)	2019			2018
Nonaccrual loans including nonaccrual troubled debt restructured loans	$	14,995		$	7,260
Loans past due over 90 days and still accruing		0			0
Total nonperforming loans	$	14,995		$	7,260
Other real estate owned		316			316
Repossessions		7			0
Total nonperforming assets	$	15,318		$	7,576
Impaired loans including troubled debt restructurings	$	24,271		$	26,661
Nonperforming loans to total loans		0.38	%		0.19	%
Nonperforming assets to total assets		0.31	%		0.16	%
Performing troubled debt restructured loans	$	6,082		$	8,016
Nonperforming troubled debt restructured loans (included in nonaccrual loans)		3,512			4,384
Total troubled debt restructured loans	$	9,594		$	12,400

Total nonperforming assets increased by $7.7 million, or 102.2%, to $15.3 million during the six-month period ended June 30, 2019. The increase in nonperforming assets was primarily due to a single commercial relationship being placed in nonaccrual status, which was 30-89 days past due as of March 31, 2019. The borrower is a manufacturing business that has experienced cash flow challenges and over supply of inventory.

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 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 $2.4 million, or 9.0%, to $24.3 million at June 30, 2019 from $26.7 million at December 31, 2018. The decrease in the impaired loans category was primarily due to payments received on impaired loans.

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 June 30, 2019, the allowance for loan losses was 1.26% of total loans outstanding, versus 1.24% of total loans outstanding at December 31, 2018. At June 30, 2019, 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 do not remain stable, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require increases in the allowance for

46

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, most of which are extended to small or medium-sized businesses from a wide variety of industries. Generally, this type of lending has more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk 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 June 30, 2019, on the basis of management’s review of the loan portfolio, the Company had 91 credits totaling $207.9 million on the classified loan list versus 91 credits totaling $186.6 million on December 31, 2018. The increased in classified loans for the first six months of 2019 resulted primarily from two commercial borrowers. As of June 30, 2019, the Company had $144.5 million of assets classified as Special Mention, $62.4 million classified as Substandard, $0 classified as Doubtful and $0 classified as Loss as compared to $101.4 million, $85.2 million, $0 and $0, respectively, at December 31, 2018.

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 current 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. 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 4.4%, or $2.1 million, from $48.5 million at December 31, 2018 to $50.6 million at June 30, 2019. Pooled loan allocations increased from $35.1 million at December 31, 2018 to $37.2 million at June 30, 2019, which was primarily due to management’s view of current credit quality, the current economic environment and loan growth. Impaired loan allocations were $10.0 million at June 30, 2019 and December 31, 2018. The unallocated component of the allowance for loan losses was $3.3 million at June 30, 2019 and December 31, 2018. While general trends in the overall economy and credit quality were stable, the Company believes that the unallocated component is appropriate given the 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 six months of 2019 has been moderate and economic conditions in the Company’s markets have been stable. While there has been an increase of $7.7 million in nonperforming assets since year-end, management does not believe that the increase is reflective of any broader concerns and watch list loans are stable at $207.9 million compared to $186.6 million at December 31, 2018. The increase in watch list loans since year end was primarily impacted by an increase of $23.7 million in non-impaired watch list loans offset by a decline of $2.4 million in impaired watch list loans. While the growth is not robust, commercial real estate activity and manufacturing growth is occurring. 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 are stable and continue to be somewhat mitigated by its overall expansion strategy.

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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 six months ended June 30, 2019 and 2018 are summarized in the following table:

	Six months ended June 30,
	2019				2018
(dollars in thousands)	Balance		Rate		Balance		Rate
Noninterest bearing demand deposits	$	904,031	0.00	%	$	833,428	0.00	%
Savings and transaction accounts:
Savings deposits		244,049	0.12			264,018	0.13
Interest bearing demand deposits		1,621,035	1.68			1,510,378	1.07
Time deposits:
Deposits of $100,000 or more		1,151,904	2.32			1,225,923	1.65
Other time deposits		275,106	1.86			259,777	1.39
Total deposits	$	4,196,125	1.41	%	$	4,093,524	0.99	%
FHLB advances and other borrowings		143,272	2.91			128,141	1.72
Total funding sources	$	4,339,397	1.46	%	$	4,221,665	1.01	%

Deposits and Borrowings

As of June 30, 2019, total deposits increased by $177.2 million, or 4.4%, from December 31, 2018. Core deposits increased by $124.1 million to $4.003 billion as of June 30, 2019 from $3.879 billion as of December 31, 2018. Total brokered deposits were $218.0 million at June 30, 2019 compared to $164.9 million at December 31, 2018 reflecting a $53.1 million increase during the first six months of 2019.

Since December 31, 2018, the change in core deposits was comprised of increases in commercial deposits of $111.8 million and in public funds deposits of $38.2 million, which were offset by a decrease in retail deposits of $25.9 million. Total public funds deposits, including public funds transaction accounts, were $1.254 billion at June 30, 2019 and $1.216 billion at December 31, 2018.

The following table summarizes deposit composition at June 30, 2019 and December 31, 2018:

					Current
	June 30,		December 31,		Period
(dollars in thousands)	2019		2018		Change
Retail	$	1,562,356	$	1,588,225	$	(25,869)
Commercial		1,187,258		1,075,419		111,839
Public funds		1,253,704		1,215,533		38,171
Core deposits	$	4,003,318	$	3,879,177	$	124,141
Brokered deposits		217,981		164,888		53,093
Total deposits	$	4,221,299	$	4,044,065	$	177,234

Total borrowings decreased by $130.6 million, or 47.2%, from December 31, 2018. The decrease consisted of $70.0 million in Federal home Loan Bank advances, as well as $75.6 million in securities sold under agreements to repurchase. Federal funds purchased increased by $15.0 million at June 30, 2019. 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.

Capital

As of June 30, 2019, total stockholders’ equity was $565.3 million, an increase of $43.7 million, or 8.4%, from $521.6 million at December 31, 2018. In addition to net income of $43.4 million, other increases in equity during the first six months of 2019 included $15.7 million 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 and $2.3 million in stock based compensation expense. Offsetting the

48

increases to stockholders’ equity were decreases due to dividends declared and paid in the amount of $14.3 million and $2.1 million in stock activity under equity compensation plans.

The impact on equity by other comprehensive income 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 June 30, 2019, 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 June 30, 2019 and December 31, 2018, 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 June 30, 2019:
Total Capital (to Risk Weighted Assets)
Consolidated	$	631,457	14.49	%	$	348,597	8.00	%	$	449,298	N/A			N/A	N/A
Bank	$	611,375	14.06	%	$	347,820	8.00	%	$	456,514	10.50	%	$	434,776	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	580,803	13.33	%	$	261,447	6.00	%	$	370,384	N/A			N/A	N/A
Bank	$	560,721	12.90	%	$	260,865	6.00	%	$	369,559	8.50	%	$	347,820	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	550,803	12.64	%	$	196,086	4.50	%	$	305,022	N/A			N/A	N/A
Bank	$	560,721	12.90	%	$	195,649	4.50	%	$	304,343	7.00	%	$	282,604	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	580,803	11.72	%	$	198,277	4.00	%	$	198,277	N/A			N/A	N/A
Bank	$	560,721	11.37	%	$	197,314	4.00	%	$	197,314	4.00	%	$	246,643	5.00	%
As of December 31, 2018:
Total Capital (to Risk Weighted Assets)
Consolidated	$	601,379	14.20	%	$	338,690	8.00	%	$	418,070	N/A			N/A	N/A
Bank	$	583,206	13.80	%	$	338,098	8.00	%	$	417,340	9.875	%	$	422,623	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	552,836	13.06	%	$	254,017	6.00	%	$	333,398	N/A			N/A	N/A
Bank	$	534,664	12.65	%	$	253,574	6.00	%	$	332,815	7.875	%	$	338,098	8.00	%
Common Equity Tier 1 (CET1)
Consolidated	$	522,836	12.35	%	$	190,513	4.50	%	$	269,893	N/A			N/A	N/A
Bank	$	534,664	12.65	%	$	190,180	4.50	%	$	269,422	6.375	%	$	274,705	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	552,836	11.44	%	$	193,305	4.00	%	$	193,305	N/A			N/A	N/A
Bank	$	534,664	11.06	%	$	193,312	4.00	%	$	193,312	4.00	%	$	241,639	5.00	%

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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 Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "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. A number of factors, many of which are beyond the Company to control or predict, could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries. These factors include, but are not limited to, the following:

● the effects of future economic, trade, 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;

● 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 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; and

● 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.

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These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K.

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 100 basis points, falling 50 basis points, 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 June 30, 2019. 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			Falling			Falling			Rising			Rising			Rising			Rising			Rising
			(100 Basis			(50 Basis			(25 Basis			(25 Basis			(50 Basis			(100 Basis			(200 Basis			(300 Basis
(dollars in thousands)	Base		Points)			Points)			Points)			Points)			Points)			Points)			Points)			Points)
Net interest income	$	162,160	$	150,011		$	156,210		$	159,294		$	164,843		$	167,508		$	172,739		$	182,622		$	191,963
Variance from Base			$	(12,149)		$	(5,950)		$	(2,866)		$	2,683		$	5,348		$	10,579		$	20,462		$	29,803
Percent of change from Base				(7.49)	%		(3.67)	%		(1.77)	%		1.65	%		3.30	%		6.52	%		12.62	%		18.38	%

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 June 30, 2019. 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 Securities and Exchange Commission 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 June 30, 2019, 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.

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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

There have been no material changes to the risk factors disclosed in Item 1A. of Part I of the Company’s Form 10-K for the year ended December 31, 2018. Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

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

On February 8, 2019, the Company issued 224,066 shares of common stock to the holder of a warrant the Company originally issued to the Treasury in February 2009. The aggregate exercise price was approximately $4.2 million, which was paid pursuant to a cashless exercise of the warrant. The issuance of the shares was exempt from registration pursuant to Section 3(a)(9) under the Securities Act of 1933.

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 expires on December 31, 2019. 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.

The following table provides information as of June 30, 2019 with respect to shares of common stock repurchased by the Company during the quarter then ended:

					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
April 1-30	0	$	0	0	$	30,000,000
May 1-31	1,078		47.80	0		30,000,000
June 1-30	0		0	0		30,000,000
Total	1,078	$	47.80	0	$	30,000,000

(a) The shares purchased during the periods 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.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None

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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 June 30, 2019 and December 31, 2018; (ii) Consolidated Statements of Income for the three months and six months ended June 30, 2019 and June 30, 2018; (iii) Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2019 and June 30, 2018; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three months and six months ended June 30, 2019 and June 30, 2018; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and June 30, 2018; and (vi) Notes to Unaudited Consolidated Financial Statements.

53

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: August 9, 2019	/s/ David M. Findlay
	David M. Findlay – President and
	Chief Executive Officer
Date: August 9, 2019	/s/ Lisa M. O’Neill
	Lisa M. O’Neill – Executive Vice President and
	Chief Financial Officer
	(principal financial officer)
Date: August 9, 2019	/s/ Brok A. Lahrman
	Brok A. Lahrman – Senior Vice President and Chief Accounting Officer
	(principal accounting officer)

54

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:  August 9, 2019	/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:  August 9, 2019	/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  June 30, 2019 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

August 9, 2019

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 June 30, 2019 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

August 9, 2019

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

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2019
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
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		25,623,016
Entity Central Index Key	0000721994
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 154,856	$ 192,290
Short-term investments	41,514	24,632
Total cash and cash equivalents	196,370	216,922
Securities available for sale (carried at fair value)	609,826	585,549
Real estate mortgage loans held for sale	5,929	2,293
Loans, net of allowance for loan losses of $50,564 and $48,453	3,948,054	3,866,292
Land, premises and equipment, net	58,719	58,097
Bank owned life insurance	82,591	77,106
Federal Reserve and Federal Home Loan Bank Stock	13,772	13,772
Accrued interest receivable	17,418	15,518
Goodwill	4,970	4,970
Other assets	37,870	34,735
Total assets	4,975,519	4,875,254
LIABILITIES
Noninterest bearing deposits	946,471	946,838
Interest bearing deposits	3,274,828	3,097,227
Total deposits	4,221,299	4,044,065
Federal funds purchased	15,000	0
Securities sold under agreements to repurchase	0	75,555
Federal Home Loan Bank advances	100,000	170,000
Subordinated debentures	30,928	30,928
Total borrowings	145,928	276,483
Accrued interest payable	12,454	10,404
Other liabilities	30,475	22,598
Total liabilities	4,410,156	4,353,550
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value 25,615,216 shares issued and 25,442,300 outstanding as of June 30, 2019 25,301,732 shares issued and 25,128,773 outstanding as of December31, 2018	112,689	112,383
Retained earnings	446,969	419,179
Accumulated other comprehensive income (loss)	9,500	(6,191)
Treasury stock at cost (172,916 shares as of June 30, 2019, 172,959 shares as of December 31, 2018)	(3,884)	(3,756)
Total stockholders' equity	565,274	521,615
Noncontrolling interest	89	89
Total equity	565,363	521,704
Total liabilities and stockholders' equity	$ 4,975,519	$ 4,875,254

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Valuation allowance	$ 50,564	$ 48,453
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)	25,615,216	25,301,732
Common stock, shares outstanding (in shares)	25,442,300	25,128,773
Treasury stock, at cost	172,916	172,959

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Interest and fees on loans
Taxable	$ 50,089	$ 44,439	$ 98,955	$ 86,233
Tax exempt	235	202	486	419
Interest and dividends on securities
Taxable	2,250	2,492	4,747	4,926
Tax exempt	1,710	1,466	3,352	2,797
Other interest income	351	196	589	488
Total interest income	54,635	48,795	108,129	94,863
Interest on deposits	15,556	10,648	29,439	20,015
Interest on borrowings
Short-term	232	195	1,182	306
Long-term	436	419	888	786
Total interest expense	16,224	11,262	31,509	21,107
NET INTEREST INCOME	38,411	37,533	76,620	73,756
Provision for loan losses	785	1,700	1,985	5,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	37,626	35,833	74,635	68,756
NONINTEREST INCOME
Wealth advisory fees	1,646	1,544	3,266	3,049
Investment brokerage fees	528	377	914	667
Service charges on deposit accounts	4,850	3,800	9,137	7,428
Loan and service fees	2,481	2,421	4,885	4,598
Merchant and interchange fee income	670	549	1,292	1,191
Bank owned life insurance income	287	348	731	711
Mortgage banking income	398	438	620	679
Net securities gains (losses)	65	0	88	(6)
Other income	663	245	2,180	1,284
Total noninterest income	11,588	9,722	23,113	19,601
NONINTEREST EXPENSE
Salaries and employee benefits	11,835	11,493	24,394	23,512
Net occupancy expense	1,283	1,237	2,649	2,663
Equipment costs	1,409	1,250	2,758	2,524
Data processing fees and supplies	2,574	2,290	4,999	4,803
Corporate and business development	1,171	1,046	2,377	2,179
FDIC insurance and other regulatory fees	409	409	815	870
Professional fees	1,071	910	2,008	1,782
Other expense	2,340	1,668	4,565	3,172
Total noninterest expense	22,092	20,303	44,565	41,505
INCOME BEFORE INCOME TAX EXPENSE	27,122	25,252	53,183	46,852
Income tax expense	5,409	5,110	9,788	8,374
NET INCOME	$ 21,713	$ 20,142	$ 43,395	$ 38,478
BASIC WEIGHTED AVERAGE COMMON SHARES	25,614,701	25,293,329	25,553,254	25,275,471
BASIC EARNINGS PER COMMON SHARE	$ 0.85	$ 0.80	$ 1.70	$ 1.52
DILUTED WEIGHTED AVERAGE COMMON SHARES	25,774,002	25,709,216	25,721,079	25,704,505
DILUTED EARNINGS PER COMMON SHARE	$ 0.85	$ 0.78	$ 1.69	$ 1.50

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 21,713	$ 20,142	$ 43,395	$ 38,478
Change in securities available for sale:
Unrealized holding gain/(loss) on securities available-for-sale arising during the period	8,893	(2,242)	19,853	(11,402)
Reclassification adjustment for (gains)/losses included in net income	(65)	0	(88)	6
Net securities gain/(loss) activity during the period	8,828	(2,242)	19,765	(11,396)
Tax effect	(1,853)	471	(4,151)	2,499
Net of tax amount	6,975	(1,771)	15,614	(8,897)
Defined benefit pension plans:
Amortization of net actuarial loss	53	67	103	133
Net gain on activity during the period	53	67	103	133
Tax effect	(15)	(18)	(26)	(35)
Net of tax amount	38	49	77	98
Total other comprehensive income, net of tax	7,013	(1,722)	15,691	(8,799)
Comprehensive income	$ 28,726	$ 18,420	$ 59,086	$ 29,679

XML

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, 2017	$ 108,862	$ 363,794	$ (670)	$ (3,408)	$ 468,578	$ 89	$ 468,667
Balance (in shares) at Dec. 31, 2017	25,025,933
Adoption of ASU | Accounting Standards Update 2018-02		173	(173)		0		0
Adoption of ASU | Accounting Standards Update 2014-09		24			24		24
Adoption of ASU | Accounting Standards Update 2016-01		68	(68)		0		0
Net income		38,478			38,478		38,478
Other comprehensive income (loss), net of tax			(8,799)		(8,799)		(8,799)
Comprehensive income (loss)							29,679
Cash dividends declared		(12,133)			(12,133)		(12,133)
Treasury shares purchased under deferred directors' plan	$ 229			(229)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	(4,711)
Treasury shares sold and distributed under deferred directors' plan	$ (115)			115	0		0
Treasury shares sold and distributed under deferred directors' plan (in shares)	5,636
Stock activity under equity incentive plans	$ (2,435)				(2,435)		(2,435)
Stock activity under equity incentive plans (in shares)	99,679
Stock based compensation expense	$ (2,682)				(2,682)		(2,682)
Balance at Jun. 30, 2018	$ 109,223	390,404	(9,710)	(3,522)	486,395	89	486,484
Balance (in shares) at Jun. 30, 2018	25,126,537
Balance at Mar. 31, 2018	$ 107,860	376,850	(7,988)	(3,478)	473,244	89	473,333
Balance (in shares) at Mar. 31, 2018	25,124,441
Net income		20,142			20,142		20,142
Other comprehensive income (loss), net of tax			(1,722)		(1,722)		(1,722)
Comprehensive income (loss)							18,420
Cash dividends declared		(6,588)			(6,588)		(6,588)
Treasury shares purchased under deferred directors' plan	$ 44			(44)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	(904)
Stock activity under equity incentive plans	$ 48				48		48
Stock activity under equity incentive plans (in shares)	3,000
Stock based compensation expense	$ (1,271)				(1,271)		(1,271)
Balance at Jun. 30, 2018	$ 109,223	390,404	(9,710)	(3,522)	486,395	89	486,484
Balance (in shares) at Jun. 30, 2018	25,126,537
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
Adoption of ASU | Accounting Standards Update 2017-08		(1,327)			(1,327)		(1,327)
Net income		43,395			43,395		43,395
Other comprehensive income (loss), net of tax			15,691		15,691		15,691
Comprehensive income (loss)							59,086
Cash dividends declared		(14,278)			(14,278)		(14,278)
Cashless exercise of warrants (in shares)	224,066
Cashless exercise of warrants	$ 0				0		0
Treasury shares purchased under deferred directors' plan	$ 246			(246)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	(5,656)
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 incentive plans	$ 2,089				2,089		2,089
Stock activity under equity incentive plans (in shares)	89,418
Stock based compensation expense	$ (2,267)				(2,267)		(2,267)
Balance at Jun. 30, 2019	$ 112,689	446,969	9,500	(3,884)	565,274	89	565,363
Balance (in shares) at Jun. 30, 2019	25,442,300
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
Net income		21,713			21,713		21,713
Other comprehensive income (loss), net of tax			7,013		7,013		7,013
Comprehensive income (loss)							28,726
Cash dividends declared		(7,697)			(7,697)		(7,697)
Treasury shares purchased under deferred directors' plan	$ 51			(51)	0		0
Treasury shares purchased under deferred directors' plan (in shares)	(1,078)
Stock activity under equity incentive plans					0		0
Stock activity under equity incentive plans (in shares)	551
Stock based compensation expense	$ (1,067)				(1,067)		(1,067)
Balance at Jun. 30, 2019	$ 112,689	$ 446,969	$ 9,500	$ (3,884)	$ 565,274	$ 89	$ 565,363
Balance (in shares) at Jun. 30, 2019	25,442,300

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Stockholders' Equity [Abstract]
Common Stock, Dividends, Per Share, Declared	$ 0.30	$ 0.26	$ 0.56	$ 0.48

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net income	$ 43,395	$ 38,478
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	2,930	2,761
Provision for loan losses	1,985	5,000
Net loss on sale and write down of other real estate owned	0	16
Amortization of loan servicing rights	244	254
Loans originated for sale, including participations	(23,689)	(25,121)
Net gain on sales of loans	(690)	(767)
Proceeds from sale of loans, including participations	20,390	22,748
Net loss on sale of premises and equipment	1	22
Net loss (gain) on sales and calls of securities available-for-sale	(88)	6
Net securities amortization	1,866	1,511
Stock based compensation expense	2,267	2,682
Earnings on life insurance	(731)	(711)
Gain on life insurance	(841)	(205)
Tax benefit of stock award issuances	(529)	(761)
Net change:
Interest receivable and other assets	(3,039)	(2,812)
Interest payable and other liabilities	1,188	2,453
Total adjustments	1,264	7,076
Net cash from operating activities	44,659	45,554
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale	25,819	12,322
Proceeds from maturities, calls and principal paydowns of securities available-for-sale	30,150	24,809
Purchases of securities available-for-sale	(60,007)	(72,740)
Purchase of life insurance	(5,422)	(310)
Net increase in total loans	(83,747)	(44,669)
Proceeds from sales of land, premises and equipment	10	28
Purchases of land, premises and equipment	(3,563)	(3,587)
Proceeds from sales of other real estate owned	0	12
Proceeds from life insurance	1,483	568
Net cash from investing activities	(95,277)	(83,567)
Cash flows from financing activities:
Net increase (decrease) in total deposits	177,234	(73,702)
Net increase (decrease) in short-term borrowings	(60,555)	210,587
Net decrease in short-term FHLB borrowings	(70,000)	0
Payments on long-term FHLB borrowings	0	(80,030)
Common dividends paid	(14,265)	(12,120)
Preferred dividends paid	(13)	(13)
Payments related to equity incentive plans	(2,089)	(2,435)
Purchase of treasury stock	(246)	(229)
Net cash from financing activities	30,066	42,058
Net change in cash and cash equivalents	(20,552)	4,045
Cash and cash equivalents at beginning of the year	216,922	176,180
Cash and cash equivalents at end of the year	196,370	180,225
Cash paid during the year for:
Interest	29,460	20,090
Income taxes	9,425	8,154
Supplemental non-cash disclosures:
Securities purchases payable	3,579	1,898
Right-of-use assets obtained in exchange for lease liabilities	$ 5,483	$ 0

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

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 is 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 and six-months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2019. The Company’s 2018 Annual Report on Form 10-K should be read in conjunction with these statements.

Adoption of New Accounting Standards

The Company accounts for leases in accordance with ASU 2016-02, “Leases”, which the Company adopted on January 1, 2019. This guidance replaced existing lease guidance in GAAP and requires lessees to recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. Lessees and lessors are required to recognize and measure leases that exist at the beginning of the earliest period presented using a modified retrospective approach. The Company recorded a right-of-use asset of $5.5 million and a lease liability of $5.5 million upon adoption, and there was no cumulative period adjustment made to retained earnings. This standard did not have a material impact on the Company’s consolidated balance sheets or cash flows from operations and had no impact on the Company’s operating results. The most significant impact was the recognition of right-of-use assets and lease obligations for operating leases. The Company elected to adopt the package of practical expedients for this standard.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities.” This update amends the amortization period for certain purchased callable debt securities held at a premium. FASB is shortening the amortization period for the premium to the earliest call date. Under legacy GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The Company adopted this new accounting standard on January 1, 2019. The effect of adoption was a reduction in retained earnings of approximately $1.3 million, net of tax, to reflect the acceleration of amortization of premiums on debt securities.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The purpose of this updated guidance is to better align a company's financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company adopted ASU 2017-12 on January 1, 2019. ASU 2017-12 requires a modified retrospective transition method in which the Company recognized the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. Adopting this standard did not have an impact on the Company’s 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 will change the accounting for credit losses on loans and debt securities. The 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 required under current 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 for public business entities that meet the definition of an SEC filer for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years. The

Company has formed a cross-functional committee that has evaluated existing technology and other solutions for calculating losses under this new standard, selected a vendor to validate data currently loaded in the technology solution selected, and reviewed the validation assessment report. The committee has selected a model and is working on parallel calculations and evaluating changes to the internal control structure under the new model. Management expects to recognize credit losses earlier upon adoption of this accounting standard and the expected credit loss model than it has historically done under the current incurred credit loss model. While the impact of implementing the CECL model cannot be quantified at this time, the Company expects to recognize a one-time cumulative-effect adjustment to the allowance and beginning retained earnings upon adoption.

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 guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. Management does not expect the adoption of this new accounting standard to have a material impact on our financial statements.

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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SECURITIES

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

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
June 30, 2019
U.S. Treasury securities	$	995	$	12	$	0	$	1,007
U.S. government sponsored agencies		2,302		0		(12)		2,290
Mortgage-backed securities: residential		320,298		4,381		(734)		323,945
Mortgage-backed securities: commercial		37,847		298		(11)		38,134
State and municipal securities		234,691		9,782		(23)		244,450
Total	$	596,133	$	14,473	$	(780)	$	609,826
December 31, 2018
U.S. Treasury securities	$	994	$	0	$	(7)	$	987
U.S. government sponsored agencies		4,435		0		(85)		4,350
Mortgage-backed securities: residential		329,516		1,392		(5,496)		325,412
Mortgage-backed securities: commercial		38,712		0		(571)		38,141
State and municipal securities		217,964		1,403		(2,708)		216,659
Total	$	591,621	$	2,795	$	(8,867)	$	585,549

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of June 30, 2019 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	$	1,655	$	1,664
Due after one year through five years		19,413		19,776
Due after five years through ten years		30,528		31,654
Due after ten years		186,392		194,653
		237,988		247,747
Mortgage-backed securities		358,145		362,079
Total debt securities	$	596,133	$	609,826

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2019		2018		2019		2018
Sales of securities available-for-sale
Proceeds	$	12,126	$	0	$	25,819	$	12,322
Gross gains		68		0		138		21
Gross losses		(3)		0		(50)		(27)
Number of securities		8		0		25		22

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 $62.8 million and $164.7 million were pledged as of June 30, 2019 and December 31, 2018, respectively, as collateral for securities sold under agreements to repurchase, borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law. The Company has no securities sold under agreements to repurchase as of June 30, 2019, causing the decline in pledged securities.

Information regarding securities with unrealized losses as of June 30, 2019 and December 31, 2018 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
June 30, 2019
U.S. government sponsored agencies	$	0	$	0	$	2,290	$	12	$	2,290	$	12
Mortgage-backed securities: residential		2,411		23		79,874		711		82,285		734
Mortgage-backed securities: commercial		0		0		4,618		11		4,618		11
State and municipal securities		500		0		4,826		23		5,326		23
Total temporarily impaired	$	2,911	$	23	$	91,608	$	757	$	94,519	$	780
December 31, 2018
U.S. Treasury securities	$	0	$	0	$	987	$	7	$	987	$	7
U.S. government sponsored agencies		0		0		4,350		85		4,350		85
Mortgage-backed securities: residential		11,619		12		217,182		5,484		228,801		5,496
Mortgage-backed securities: commercial		0		0		38,141		571		38,141		571
State and municipal securities		26,229		124		85,982		2,584		112,211		2,708
Total temporarily impaired	$	37,848	$	136	$	346,642	$	8,731	$	384,490	$	8,867

The total number of securities with unrealized losses as of June 30, 2019 and December 31, 2018 is presented below.

	Less than	12 months
	12 months	or more	Total
June 30, 2019
U.S. government sponsored agencies	0	1	1
Mortgage-backed securities: residential	1	30	31
Mortgage-backed securities: commercial	0	1	1
State and municipal securities	1	4	5
Total temporarily impaired	2	36	38
December 31, 2018
U.S. Treasury securities	0	1	1
U.S. government sponsored agencies	0	2	2
Mortgage-backed securities: residential	5	84	89
Mortgage-backed securities: commercial	0	9	9
State and municipal securities	35	111	146
Total temporarily impaired	40	207	247

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 June 30, 2019 and December 31, 2018, 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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LOANS

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

LOANS

NOTE 3. LOANS

	June 30,				December 31,
(dollars in thousands)	2019				2018
Commercial and industrial loans:
Working capital lines of credit loans	$	755,090	18.9	%	$	690,620	17.6	%
Non-working capital loans		695,235	17.3			714,759	18.3
Total commercial and industrial loans		1,450,325	36.2			1,405,379	35.9
Commercial real estate and multi-family residential loans:
Construction and land development loans		321,550	8.0			266,805	6.8
Owner occupied loans		557,115	13.9			586,325	15.0
Nonowner occupied loans		533,880	13.4			520,901	13.3
Multifamily loans		242,966	6.1			195,604	5.0
Total commercial real estate and multi-family residential loans		1,655,511	41.4			1,569,635	40.1
Agri-business and agricultural loans:
Loans secured by farmland		148,883	3.7			177,503	4.6
Loans for agricultural production		165,595	4.2			193,010	4.9
Total agri-business and agricultural loans		314,478	7.9			370,513	9.5
Other commercial loans		104,084	2.6			95,657	2.4
Total commercial loans		3,524,398	88.1			3,441,184	87.9
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		187,863	4.7			185,822	4.7
Open end and junior lien loans		188,558	4.7			187,030	4.8
Residential construction and land development loans		12,270	0.3			16,226	0.4
Total consumer 1-4 family mortgage loans		388,691	9.7			389,078	9.9
Other consumer loans		86,996	2.2			86,064	2.2
Total consumer loans		475,687	11.9			475,142	12.1
Subtotal		4,000,085	100.0	%		3,916,326	100.0	%
Less: Allowance for loan losses		(50,564)				(48,453)
Net deferred loan fees		(1,467)				(1,581)
Loans, net	$	3,948,054			$	3,866,292

The recorded investment in loans does not include accrued interest.

The Company had $493,000 in residential real estate loans in the process of foreclosure as of June 30, 2019, compared to $586,000 as of December 31, 2018.

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

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 June 30, 2019 and 2018:

			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 June 30, 2019
Beginning balance, April 1	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562
Provision for loan losses		824		(31)		(242)		(18)		(124)		40		336		785
Loans charged-off		(17)		0		0		0		(5)		(62)		0		(84)
Recoveries		187		76		2		0		16		20		0		301
Net loans charged-off		170		76		2		0		11		(42)		0		217
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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 June 30, 2018
Beginning balance, April 1	$	20,725	$	14,438	$	4,848	$	510	$	2,018	$	245	$	2,843	$	45,627
Provision for loan losses		1,392		508		(268)		(46)		(68)		65		117		1,700
Loans charged-off		(57)		0		0		0		0		(71)		0		(128)
Recoveries		464		8		5		0		3		27		0		507
Net loans charged-off		407		8		5		0		3		(44)		0		379
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

The following tables present the activity in the allowance for loan losses by portfolio segment for the six-month periods ended June 30, 2019 and 2018:

			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
Six Months Ended June 30, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		2,317		(13)		(403)		(13)		(79)		125		51		1,985
Loans charged-off		(100)		0		0		0		(87)		(181)		0		(368)
Recoveries		289		112		4		0		27		62		0		494
Net loans charged-off		189		112		4		0		(60)		(119)		0		126
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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
Six Months Ended June 30, 2018
Beginning balance, January 1	$	21,097	$	14,714	$	4,920	$	577	$	2,768	$	379	$	2,666	$	47,121
Provision for loan losses		5,294		715		(344)		(113)		(862)		16		294		5,000
Loans charged-off		(4,417)		(491)		0		0		(7)		(190)		0		(5,105)
Recoveries		550		16		9		0		54		61		0		690
Net loans charged-off		(3,867)		(475)		9		0		47		(129)		0		(4,415)
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

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 June 30, 2019 and December 31, 2018:

			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
June 30, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,208	$	394	$	87	$	0	$	339	$	0	$	0	$	10,028
Collectively evaluated for impairment		15,816		15,098		3,819		355		1,814		289		3,345		40,536
Total ending allowance balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564
Loans:
Loans individually evaluated for impairment	$	18,819	$	3,193	$	430	$	0	$	1,851	$	0	$	0	$	24,293
Loans collectively evaluated for impairment		1,431,542		1,649,854		314,153		103,949		388,078		86,749		0		3,974,325
Total ending loans balance	$	1,450,361	$	1,653,047	$	314,583	$	103,949	$	389,929	$	86,749	$	0	$	3,998,618

			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, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,552	$	921	$	73	$	0	$	457	$	26	$	0	$	10,029
Collectively evaluated for impairment		13,966		14,472		4,232		368		1,835		257		3,294		38,424
Total ending allowance balance	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Loans:
Loans individually evaluated for impairment	$	19,734	$	4,266	$	433	$	0	$	2,240	$	44	$	0	$	26,717
Loans collectively evaluated for impairment		1,385,604		1,562,899		370,174		95,520		388,053		85,778		0		3,888,028
Total ending loans balance	$	1,405,338	$	1,567,165	$	370,607	$	95,520	$	390,293	$	85,822	$	0	$	3,914,745

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 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	$	3,129	$	437	$	0
Non-working capital loans		2,321		926		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,975		1,437		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		200		119		0
Open end and junior lien loans		92		92		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,610		6,301		2,995
Non-working capital loans		11,135		11,155		6,213
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,756		1,756		394
Agri-business and agricultural loans:
Loans secured by farmland		148		147		87
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,637		1,640		339
Total	$	29,606	$	24,293	$	10,028

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2018:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	3,284	$	1,889	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,773		1,527		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		583		502		0
Open end and junior lien loans		220		220		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		9,691		6,694		2,602
Non-working capital loans		11,099		11,151		5,950
Commercial real estate and multi-family residential loans:
Construction and land development loans		291		291		142
Owner occupied loans		2,938		2,448		779
Agri-business and agricultural loans:
Loans secured by farmland		150		150		73
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,517		1,518		457
Other consumer loans		45		44		26
Total	$	32,194	$	26,717	$	10,029

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 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	$	287	$	0	$	1
Non-working capital loans		933		9		4
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,450		10		10
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		164		1		1
Open end and junior lien loans		93		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,326		75		26
Non-working capital loans		11,105		127		94
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,763		16		11
Agri-business and agricultural loans:
Loans secured by farmland		147		1		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,680		13		13
Other consumer loans		28		1		0
Total	$	24,259	$	253	$	160

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 2018:

					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	$	1,011	$	6	$	14
Non-working capital loans		1,738		16		26
Commercial real estate and multi-family residential loans:
Construction and land development loans		88		2		3
Owner occupied loans		2,868		9		12
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		533		2		3
Open end and junior lien loans		247		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		3,005		2		2
Non-working capital loans		3,513		3		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		491		6		13
Owner occupied loans		1,041		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		993		8		10
Other consumer loans		48		0		2
Total	$	15,859	$	55	$	92

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 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	$	221	$	1	$	1
Non-working capital loans		1,241		38		28
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,535		21		18
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		272		2		2
Open end and junior lien loans		143		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,406		147		85
Non-working capital loans		11,260		259		222
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,922		29		23
Agri-business and agricultural loans:
Loans secured by farmland		147		3		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,639		25		25
Other consumer loans		36		2		1
Total	$	25,105	$	527	$	406

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 2018:

					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	$	1,011	$	13	$	16
Non-working capital loans		1,733		31		31
Commercial real estate and multi-family residential loans:
Construction and land development loans		95		3		3
Owner occupied loans		2,712		16		14
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		538		4		4
Open end and junior lien loans		169		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		2,307		4		3
Non-working capital loans		3,365		5		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		606		17		18
Owner occupied loans		1,117		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		981		15		14
Open end and junior lien loans		77		0		0
Other consumer loans		48		1		2
Total	$	15,042	$	110	$	112

The following table presents the aging of the recorded investment in past due loans as of June 30, 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	$	748,862	$	20	$	0	$	6,364	$	6,384	$	755,246
Non-working capital loans		689,781		5		0		5,329		5,334		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,380		24		0		0		24		320,404
Owner occupied loans		554,607		0		0		2,185		2,185		556,792
Nonowner occupied loans		533,215		103		0		0		103		533,318
Multifamily loans		242,533		0		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		148,469		0		0		430		430		148,899
Loans for agricultural production		165,684		0		0		0		0		165,684
Other commercial loans		103,949		0		0		0		0		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		185,676		1,235		0		597		1,832		187,508
Open end and junior lien loans		189,150		945		0		92		1,037		190,187
Residential construction loans		12,234		0		0		0		0		12,234
Other consumer loans		86,624		125		0		0		125		86,749
Total	$	3,981,164	$	2,457	$	0	$	14,997	$	17,454	$	3,998,618

The following table presents the aging of the recorded investment in past due loans as of December 31, 2018 by class of loans:

					Greater than
			30‑89		90 Days Past				Total Past
	Loans Not		Days		Due and Still				Due and
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	684,191	$	4,328	$	0	$	2,245	$	6,573	$	690,764
Non-working capital loans		709,629		3,368		0		1,577		4,945		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		265,544		0		0		0		0		265,544
Owner occupied loans		583,214		486		0		2,269		2,755		585,969
Nonowner occupied loans		520,431		57		0		0		57		520,488
Multi-family loans		195,164		0		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		177,080		150		0		283		433		177,513
Loans for agricultural production		193,094		0		0		0		0		193,094
Other commercial loans		95,520		0		0		0		0		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		183,420		1,370		0		671		2,041		185,461
Open end and junior lien loans		188,320		98		0		220		318		188,638
Residential construction loans		16,194		0		0		0		0		16,194
Other consumer loans		85,654		168		0		0		168		85,822
Total	$	3,897,455	$	10,025	$	0	$	7,265	$	17,290	$	3,914,745

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $2.9 million and $3.7 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2019

and December 31, 2018, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	June 30,		December 31,
(dollars in thousands)	2019		2018
Accruing troubled debt restructured loans	$	6,082	$	8,016
Nonaccrual troubled debt restructured loans		3,512		4,384
Total troubled debt restructured loans	$	9,594	$	12,400

During the three months ended June 30, 2019, no loans were modified as troubled debt restructurings.

During the three months ending 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 table below.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the six months ended June 30, 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 and six month periods ending June 30, 2019, the troubled debt restructurings described above did not impact the allowance for loan losses and no charge-offs were recorded.

During the three months ended June 30, 2018, one commercial and industrial loan was modified as a troubled debt restructuring due to receiving inadequate compensation for the terms of the restructure and is included in the tables on the next page.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the three-month period ended June 30, 2018. The loan to one of the borrowers is for a commercial real estate building where the collateral value and cash flows from the company occupying the building do not support the loan with a recorded investment of $107,000. The loan to another one of the borrowers is for a vacant commercial real estate building that does not generate cash flow to support the loan with a recorded investment of $875,000. The other loans are to a borrower for an investment in land for residential development which has not had sales activity to support loans with a recorded investment of $484,000. These concessions are not included in table below.

During the three months ended March 31, 2018, 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. These concessions are included in the table below.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the three-month period ended March 31, 2018. The loan to one of the borrowers is for a commercial real estate building where the collateral value and cash flows from the companies occupying the buildings do not support the loan with recorded investments of $341,000. The loans to two other borrowers are for commercial and industrial capital and non-working capital loans with recorded investments of $551,000. These concessions are not included in the table below.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended June 30, 2018:

						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		20		20	1	0
Total	1	$	20	$	20	1	0

The following table presents loans by class modified as new troubled debt restructurings that occurred during the six months ended June 30, 2018:

						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		600		600	1	0
Non-working capital loans	2		1,420		1,420	2	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	1		824		824	1	12
Owner occupied loans	1		387		387	1	12
Consumer 1‑4 family loans:
Closed end first mortgage loans	1		198		197	1	239
Total	6	$	3,429	$	3,428	6	0‑239

For the three-month period ended June 30, 2018, the troubled debt restructuring described above did not impact the allowance for loan losses and no charge-off was recorded. For the six-month period ended June 30, 2018, the debt restructurings described above decreased the allowance for loan losses by $166,000, and resulted in charge-offs of $1.6 million.

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 June 30, 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	$	660,816	$	70,866	$	23,244	$	0	$	320	$	755,246
Non-working capital loans		645,632		25,350		18,804		0		5,329		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,115		289		0		0		0		320,404
Owner occupied loans		517,431		21,043		18,318		0		0		556,792
Nonowner occupied loans		530,491		2,209		618		0		0		533,318
Multifamily loans		242,329		204		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		134,805		12,840		1,254		0		0		148,899
Loans for agricultural production		153,961		11,723		0		0		0		165,684
Other commercial loans		103,945		0		0		0		4		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		55,538		0		95		0		131,875		187,508
Open end and junior lien loans		11,007		0		55		0		179,125		190,187
Residential construction loans		0		0		0		0		12,234		12,234
Other consumer loans		14,077		0		0		0		72,672		86,749
Total	$	3,390,147	$	144,524	$	62,388	$	0	$	401,559	$	3,998,618

As of December 31, 2018, 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	$	618,612	$	43,240	$	28,563	$	0	$	349	$	690,764
Non-working capital loans		664,787		15,992		27,548		0		6,247		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		264,900		353		291		0		0		265,544
Owner occupied loans		541,734		21,864		22,371		0		0		585,969
Nonowner occupied loans		517,356		2,491		641		0		0		520,488
Multifamily loans		194,948		216		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		166,623		9,107		1,783		0		0		177,513
Loans for agricultural production		183,189		8,155		1,750		0		0		193,094
Other commercial loans		95,516		0		0		0		4		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		54,879		0		2,021		0		128,561		185,461
Open end and junior lien loans		8,810		0		220		0		179,608		188,638
Residential construction loans		0		0		0		0		16,194		16,194
Other consumer loans		12,700		0		44		0		73,078		85,822
Total	$	3,324,054	$	101,418	$	85,232	$	0	$	404,041	$	3,914,745

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FAIR VALUE DISCLOSURES

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE

NOTE 5. 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 June 30, 2019, the fair value of the Company’s Level 3 servicing assets for residential mortgage loans (“MSRs”) was $4.6 million, none of which are currently impaired and therefore are carried at amortized cost. These residential mortgage loans have a weighted average interest rate of 3.95%, 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 June 30, 2019, the constant prepayment speed (“PSA”) used was 72 and discount rate used was 9.4%. At December 31, 2018, the PSA used was 81 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:

	June 30, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,007	$	0	$	0	$	1,007
U.S. government sponsored agency securities		0		2,290		0		2,290
Mortgage-backed securities: residential		0		323,945		0		323,945
Mortgage-backed securities: commercial		0		38,134		0		38,134
State and municipal securities		0		244,300		150		244,450
Total Securities		1,007		608,669		150		609,826
Mortgage banking derivative		0		298		0		298
Interest rate swap derivative		0		6,679		0		6,679
Total assets	$	1,007	$	615,646	$	150	$	616,803
Liabilities
Mortgage banking derivative		0		53		0		53
Interest rate swap derivative		0		7,266		0		7,266
Total liabilities	$	0	$	7,319	$	0	$	7,319

	December 31, 2018
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	987	$	0	$	0	$	987
U.S. government sponsored agency securities		0		4,350		0		4,350
Mortgage-backed securities: residential		0		325,412		0		325,412
Mortgage-backed securities: commercial		0		38,141		0		38,141
State and municipal securities		0		216,509		150		216,659
Total Securities		987		584,412		150		585,549
Mortgage banking derivative		0		95		0		95
Interest rate swap derivative		0		3,869		0		3,869
Total assets	$	987	$	588,376	$	150	$	589,513
Liabilities
Mortgage banking derivative		0		23		0		23
Interest rate swap derivative		0		4,025		0		4,025
Total liabilities	$	0	$	4,048	$	0	$	4,048

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2019 and there were no transfers between Level 1 and Level 2 during 2018.

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

	June 30, 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	$	3,306	$	3,306
Non-working capital loans		0		0		4,678		4,678
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		561		561
Agri-business and agricultural loans:
Loans secured by farmland		0		0		60		60
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		638		638
Total impaired loans	$	0	$	0	$	9,243	$	9,243
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	9,243	$	9,243

	December 31, 2018
	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	$	4,092	$	4,092
Non-working capital loans		0		0		4,967		4,967
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		148		148
Owner occupied loans		0		0		1,669		1,669
Agri-business and agricultural loans:
Loans secured by farmland		0		0		77		77
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		553		553
Total impaired loans	$	0	$	0	$	11,506	$	11,506
Other real estate owned		0		0		316		316
Total assets	$	0	$	0	$	11,822	$	11,822

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2019 and 2018:

	State and Municipal Securities
(dollars in thousands)	2019		2018
Balance of recurring Level 3 assets at January 1	$	150	$	880
Changes in fair value of securities included in other comprehensive income		0		(7)
Principal payments		0		(45)
Balance of recurring Level 3 assets at June 30	$	150	$	828

The state and municipal securities measured at fair value included below are non-rated Indiana and Ohio municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	June 30, 2019		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	December 31, 2018		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

The primary methodology used in the fair value measurement of the Company’s state and municipal securities classified as Level 3 is a discount to the AAA municipal benchmark index. Significant increases or (decreases) in this index as well as the degree to which the security differs in ratings, coupon, call and duration will result in a higher or (lower) fair value measurement for those securities that are not callable. For those securities that are continuously callable, a slight premium to par is used.

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,984	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	3	%	-	100	%
Impaired loans:
Commercial real estate		561	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	41	%	29	%	-	53	%
Impaired loans:
Agribusiness and agricultural		60	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	59	%
Impaired loans:
Consumer 1‑4 family mortgage		638	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	13	%	0	%	-	19	%

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, 2018:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,059	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	4	%	-	100	%
Impaired loans:
Commercial real estate		1,817	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	34	%	6	%	-	53	%
Impaired loans:
Agribusiness and agricultural		77	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	49	%
Impaired loans:
Consumer 1‑4 family mortgage		553	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	23	%	0	%	-	64	%
Other real estate owned		316	Collateral based measurements	Discount to reflect current market conditions	0	%

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $18.8 million, with a valuation allowance of $9.6 million at June 30, 2019. The change in the fair value of impaired loans resulted in increases in the provision for loan losses of $100,000 and $300,000, respectively, over the six months and three months ended June 30, 2019, respectively. At June 30, 2018, impaired loans had a gross carrying amount of $9.6 million, with a valuation allowance of $2.1 million. The change in the fair value of impaired loans resulted in a net increase in the provision for loan losses of $4.5 million and $200,000, respectively, in the six months and three months ended June 30, 2018, respectively, primarily due to a partial charge-off on one commercial lending relationship in the amount of $4.6 million, over the three months ended March 31, 2018.

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.

	June 30, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	196,370	$	193,603	$	2,767	$	0	$	196,370
Securities available for sale		609,826		1,007		608,669		150		609,826
Real estate mortgages held for sale		5,929		0		5,998		0		5,998
Loans, net		3,948,054		0		0		3,901,925		3,901,925
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		17,418		3		3,444		13,971		17,418
Financial Liabilities:
Certificates of deposit		(1,328,062)		0		(1,336,715)		0		(1,336,715)
All other deposits		(2,893,237)		(2,893,237)		0		0		(2,893,237)
Federal funds purchased		(15,000)		(15,000)		0		0		(15,000)
Federal Home Loan Bank advances		(100,000)		0		(100,000)		0		(100,000)
Subordinated debentures		(30,928)		0		0		(31,196)		(31,196)
Standby letters of credit		(1,128)		0		0		(1,128)		(1,128)
Accrued interest payable		(12,454)		(174)		(12,275)		(5)		(12,454)

	December 31, 2018
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	216,922	$	214,452	$	2,470	$	0	$	216,922
Securities available for sale		585,549		987		584,412		150		585,549
Real estate mortgages held for sale		2,293		0		2,314		0		2,314
Loans, net		3,866,292		0		0		3,786,175		3,786,175
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,518		3		3,569		11,946		15,518
Financial Liabilities:
Certificates of deposit		(1,419,754)		0		(1,424,553)		0		(1,424,553)
All other deposits		(2,624,311)		(2,624,311)		0		0		(2,624,311)
Securities sold under agreements to repurchase		(75,555)		0		(75,555)		0		(75,555)
Federal Home Loan Bank advances		(170,000)		0		(169,996)		0		(169,996)
Subordinated debentures		(30,928)		0		0		(31,195)		(31,195)
Standby letters of credit		(978)		0		0		(978)		(978)
Accrued interest payable		(10,404)		(110)		(10,289)		(5)		(10,404)

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

6 Months Ended

Jun. 30, 2019

Securities Sold under Agreements to Repurchase [Abstract]

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE 6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase represent collateralized borrowings with customers located primarily within the Company’s service area. These repurchase liabilities are not covered by federal deposit insurance and are secured by securities owned. The Company retains the right to substitute similar type securities and has the right to withdraw all excess collateral applicable to the repurchase liabilities whenever the collateral values are in excess of the related repurchase liabilities. However, as a means of mitigating market risk, the Company maintains excess collateral to cover normal changes in the repurchase liability by monitoring daily usage. The Company maintains control of the securities through the use of third-party safekeeping arrangements.

There were no securities sold under agreements to repurchase at June 30, 2019. Securities sold under agreements to repurchase of $75.6 million, which matured on demand, were secured by mortgage-backed securities with a carrying amount of $100.7 million at December 31, 2018. Additional information concerning recognition of these liabilities is disclosed in Note 8.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 7. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(dollars in thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Service cost	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Interest cost		22		24		10		8		44		47		19		17
Expected return on plan assets		(35)		(35)		(15)		(16)		(69)		(69)		(28)		(31)
Recognized net actuarial (gain) loss		34		48		19		19		66		96		37		37
Net pension expense (benefit)	$	21	$	37	$	14	$	11	$	41	$	74	$	28	$	23

The Company previously disclosed in its financial statements for the year ended December 31, 2018 that it expected to contribute $0 to its pension plan and $0 to its Supplemental Executive Retirement Plan ("SERP") in 2019. The Company has contributed $27,000 to its pension plan and $0 to its SERP as of June 30, 2019. The contribution to the pension plan was made in order to keep the plan fully funded, based upon the final actuarial calculation. The Company does not expect to make any additional contributions to its pension plan or SERP during the remainder of 2019. As a result of freezing the plan effective April 1, 2000, there is no service cost to record on the pension plan or the SERP for the six-month periods ending June 30, 2019 and 2018. All other components of cost noted in the table above were recorded in other expense under noninterest expenses on the Consolidated Statements of Income for all periods presented.

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OFFSETTING ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2019

OFFSETTING ASSETS AND LIABILITIES

OFFSETTING ASSETS AND LIABILITIES

NOTE 8. 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 June 30, 2019 and December 31, 2018.

	June 30, 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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Total Assets	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Liabilities
Interest Rate Swap Derivatives	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)
Repurchase Agreements		0		0		0		0		0		0
Total Liabilities	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)

	December 31, 2018
			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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Total Assets	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Liabilities
Interest Rate Swap Derivatives	$	4,025	$	0	$	4,025	$	0	$	(560)	$	3,465
Repurchase Agreements		75,555		0		75,555		(75,555)		0		0
Total Liabilities	$	79,580	$	0	$	79,580	$	(75,555)	$	(560)	$	3,465

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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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 9. 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. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants, none of which were antidilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per common share		25,614,701		25,293,329		25,553,254		25,275,471
Dilutive effect of stock options, awards and warrants		159,301		415,887		167,825		429,034
Weighted average shares outstanding for diluted earnings per common share		25,774,002		25,709,216		25,721,079		25,704,505
Basic earnings per common share	$	0.85	$	0.80	$	1.70	$	1.52
Diluted earnings per common share	$	0.85	$	0.78	$	1.69	$	1.50

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2019

Stockholders' Equity Note [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 10. 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 June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2019	$	3,843	$	(1,356)	$	2,487
Other comprehensive income before reclassification		7,040		0		7,040
Amounts reclassified from accumulated other comprehensive income (loss)		(65)		38		(27)
Net current period other comprehensive income		6,975		38		7,013
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2018	$	(6,270)	$	(1,718)	$	(7,988)
Other comprehensive income before reclassification		(1,771)		0		(1,771)
Amounts reclassified from accumulated other comprehensive income (loss)		0		49		49
Net current period other comprehensive income		(1,771)		49		(1,722)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the six months ended June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		15,702		0		15,702
Amounts reclassified from accumulated other comprehensive income (loss)		(88)		77		(11)
Net current period other comprehensive income		15,614		77		15,691
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2018	$	784	$	(1,454)	$	(670)
Other comprehensive income before reclassification		(8,903)		0		(8,903)
Amounts reclassified from accumulated other comprehensive income (loss)		6		98		104
Net current period other comprehensive income		(8,897)		98		(8,799)
Adoption of ASU 2018‑02		140		(313)		(173)
Adoption of ASU 2016‑01		(68)		0		(68)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

Reclassifications out of accumulated comprehensive income for the three months ended June 30, 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	$	65	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		65	Net of tax
Amortization of defined benefit pension items		(53)	Other expense
Tax effect		15	Income tax expense
Subtotal		(38)	Net of tax
Total reclassifications for the period	$	27	Net income

Reclassifications out of accumulated comprehensive income for the three months ended June 30, 2018 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	$	0	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		0	Net of tax
Amortization of defined benefit pension items		(67)	Other expense
Tax effect		18	Income tax expense
Subtotal		(49)	Net of tax
Total reclassifications for the period	$	(49)	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 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	$	88	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		88	Net of tax
Amortization of defined benefit pension items		(103)	Other expense
Tax effect		26	Income tax expense
Subtotal		(77)	Net of tax
Total reclassifications for the period	$	11	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2018 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	$	(6)	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		(6)	Net of tax
Amortization of defined benefit pension items		(133)	Other expense
Tax effect		35	Income tax expense
Subtotal		(98)	Net of tax
Total reclassifications for the period	$	(104)	Net income

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Leases

6 Months Ended

Jun. 30, 2019

LEASES

LEASES

NOTE 11. 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 June 30, 2019:

	Operating lease
Years ending December 31, (in thousands)	Obligation
2019	$	271
2020		561
2021		581
2022		595
2023		606
2024 - 2029		3,495
Total undiscounted lease payments		6,109
Less imputed interest		(810)
Lease liability	$	5,299
Right-of-use asset	$	5,299

	Three months ended			Six months ended
	June 30, 2019			June 30, 2019
Lease cost
Operating lease cost	$	125		$	244
Short-term lease cost		6			12
Total lease cost	$	131		$	256
Other information
Operating cash outflows from operating leases	$	244
Weighted-average remaining lease term - operating leases		10.3 years
Weighted average discount rate - operating leases		2.8	%

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12. SUBSEQUENT EVENTS

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 million. Funds provided under the agreement may be used to repurchase shares of the Company's common stock under the share repurchase program approved by the Company's board of directors on January 8, 2019, as well as for general corporate purposes. The credit agreement includes a negative pledge agreement whereby the Company agrees not to pledge or otherwise encumber the stock of Lake City Bank. The credit agreement has a one year term which may be amended, extended, modified or renewed.

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 expires on December 31, 2019. 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.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Adoption of New Accounting Standards

Adoption of New Accounting Standards

The Company accounts for leases in accordance with ASU 2016-02, “Leases”, which the Company adopted on January 1, 2019. This guidance replaced existing lease guidance in GAAP and requires lessees to recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. Lessees and lessors are required to recognize and measure leases that exist at the beginning of the earliest period presented using a modified retrospective approach. The Company recorded a right-of-use asset of $5.5 million and a lease liability of $5.5 million upon adoption, and there was no cumulative period adjustment made to retained earnings. This standard did not have a material impact on the Company’s consolidated balance sheets or cash flows from operations and had no impact on the Company’s operating results. The most significant impact was the recognition of right-of-use assets and lease obligations for operating leases. The Company elected to adopt the package of practical expedients for this standard.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities.” This update amends the amortization period for certain purchased callable debt securities held at a premium. FASB is shortening the amortization period for the premium to the earliest call date. Under legacy GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. The Company adopted this new accounting standard on January 1, 2019. The effect of adoption was a reduction in retained earnings of approximately $1.3 million, net of tax, to reflect the acceleration of amortization of premiums on debt securities.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The purpose of this updated guidance is to better align a company's financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company adopted ASU 2017-12 on January 1, 2019. ASU 2017-12 requires a modified retrospective transition method in which the Company recognized the cumulative effect of the change on the opening balance of each affected component of equity in the consolidated balance sheet as of the date of adoption. Adopting this standard did not have an impact on the Company’s 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 will change the accounting for credit losses on loans and debt securities. The 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 required under current 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 for public business entities that meet the definition of an SEC filer for fiscal years beginning after December 15, 2019, including interim periods in those fiscal years. The

Company has formed a cross-functional committee that has evaluated existing technology and other solutions for calculating losses under this new standard, selected a vendor to validate data currently loaded in the technology solution selected, and reviewed the validation assessment report. The committee has selected a model and is working on parallel calculations and evaluating changes to the internal control structure under the new model. Management expects to recognize credit losses earlier upon adoption of this accounting standard and the expected credit loss model than it has historically done under the current incurred credit loss model. While the impact of implementing the CECL model cannot be quantified at this time, the Company expects to recognize a one-time cumulative-effect adjustment to the allowance and beginning retained earnings upon adoption.

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 guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. Management does not expect the adoption of this new accounting standard to have a material impact on our financial statements.

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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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

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
June 30, 2019
U.S. Treasury securities	$	995	$	12	$	0	$	1,007
U.S. government sponsored agencies		2,302		0		(12)		2,290
Mortgage-backed securities: residential		320,298		4,381		(734)		323,945
Mortgage-backed securities: commercial		37,847		298		(11)		38,134
State and municipal securities		234,691		9,782		(23)		244,450
Total	$	596,133	$	14,473	$	(780)	$	609,826
December 31, 2018
U.S. Treasury securities	$	994	$	0	$	(7)	$	987
U.S. government sponsored agencies		4,435		0		(85)		4,350
Mortgage-backed securities: residential		329,516		1,392		(5,496)		325,412
Mortgage-backed securities: commercial		38,712		0		(571)		38,141
State and municipal securities		217,964		1,403		(2,708)		216,659
Total	$	591,621	$	2,795	$	(8,867)	$	585,549

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 June 30, 2019 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	$	1,655	$	1,664
Due after one year through five years		19,413		19,776
Due after five years through ten years		30,528		31,654
Due after ten years		186,392		194,653
		237,988		247,747
Mortgage-backed securities		358,145		362,079
Total debt securities	$	596,133	$	609,826

Schedule of Sales of Securities Available For Sale

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2019		2018		2019		2018
Sales of securities available-for-sale
Proceeds	$	12,126	$	0	$	25,819	$	12,322
Gross gains		68		0		138		21
Gross losses		(3)		0		(50)		(27)
Number of securities		8		0		25		22

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

Information regarding securities with unrealized losses as of June 30, 2019 and December 31, 2018 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
June 30, 2019
U.S. government sponsored agencies	$	0	$	0	$	2,290	$	12	$	2,290	$	12
Mortgage-backed securities: residential		2,411		23		79,874		711		82,285		734
Mortgage-backed securities: commercial		0		0		4,618		11		4,618		11
State and municipal securities		500		0		4,826		23		5,326		23
Total temporarily impaired	$	2,911	$	23	$	91,608	$	757	$	94,519	$	780
December 31, 2018
U.S. Treasury securities	$	0	$	0	$	987	$	7	$	987	$	7
U.S. government sponsored agencies		0		0		4,350		85		4,350		85
Mortgage-backed securities: residential		11,619		12		217,182		5,484		228,801		5,496
Mortgage-backed securities: commercial		0		0		38,141		571		38,141		571
State and municipal securities		26,229		124		85,982		2,584		112,211		2,708
Total temporarily impaired	$	37,848	$	136	$	346,642	$	8,731	$	384,490	$	8,867

Quantitative Disclosure of Available-For-Sale Securities

The total number of securities with unrealized losses as of June 30, 2019 and December 31, 2018 is presented below.

	Less than	12 months
	12 months	or more	Total
June 30, 2019
U.S. government sponsored agencies	0	1	1
Mortgage-backed securities: residential	1	30	31
Mortgage-backed securities: commercial	0	1	1
State and municipal securities	1	4	5
Total temporarily impaired	2	36	38
December 31, 2018
U.S. Treasury securities	0	1	1
U.S. government sponsored agencies	0	2	2
Mortgage-backed securities: residential	5	84	89
Mortgage-backed securities: commercial	0	9	9
State and municipal securities	35	111	146
Total temporarily impaired	40	207	247

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LOANS (Tables)

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Schedule of Loans

	June 30,				December 31,
(dollars in thousands)	2019				2018
Commercial and industrial loans:
Working capital lines of credit loans	$	755,090	18.9	%	$	690,620	17.6	%
Non-working capital loans		695,235	17.3			714,759	18.3
Total commercial and industrial loans		1,450,325	36.2			1,405,379	35.9
Commercial real estate and multi-family residential loans:
Construction and land development loans		321,550	8.0			266,805	6.8
Owner occupied loans		557,115	13.9			586,325	15.0
Nonowner occupied loans		533,880	13.4			520,901	13.3
Multifamily loans		242,966	6.1			195,604	5.0
Total commercial real estate and multi-family residential loans		1,655,511	41.4			1,569,635	40.1
Agri-business and agricultural loans:
Loans secured by farmland		148,883	3.7			177,503	4.6
Loans for agricultural production		165,595	4.2			193,010	4.9
Total agri-business and agricultural loans		314,478	7.9			370,513	9.5
Other commercial loans		104,084	2.6			95,657	2.4
Total commercial loans		3,524,398	88.1			3,441,184	87.9
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		187,863	4.7			185,822	4.7
Open end and junior lien loans		188,558	4.7			187,030	4.8
Residential construction and land development loans		12,270	0.3			16,226	0.4
Total consumer 1-4 family mortgage loans		388,691	9.7			389,078	9.9
Other consumer loans		86,996	2.2			86,064	2.2
Total consumer loans		475,687	11.9			475,142	12.1
Subtotal		4,000,085	100.0	%		3,916,326	100.0	%
Less: Allowance for loan losses		(50,564)				(48,453)
Net deferred loan fees		(1,467)				(1,581)
Loans, net	$	3,948,054			$	3,866,292

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Tables)

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

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 June 30, 2019 and 2018:

			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 June 30, 2019
Beginning balance, April 1	$	24,030	$	15,447	$	4,146	$	373	$	2,266	$	291	$	3,009	$	49,562
Provision for loan losses		824		(31)		(242)		(18)		(124)		40		336		785
Loans charged-off		(17)		0		0		0		(5)		(62)		0		(84)
Recoveries		187		76		2		0		16		20		0		301
Net loans charged-off		170		76		2		0		11		(42)		0		217
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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 June 30, 2018
Beginning balance, April 1	$	20,725	$	14,438	$	4,848	$	510	$	2,018	$	245	$	2,843	$	45,627
Provision for loan losses		1,392		508		(268)		(46)		(68)		65		117		1,700
Loans charged-off		(57)		0		0		0		0		(71)		0		(128)
Recoveries		464		8		5		0		3		27		0		507
Net loans charged-off		407		8		5		0		3		(44)		0		379
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

The following tables present the activity in the allowance for loan losses by portfolio segment for the six-month periods ended June 30, 2019 and 2018:

			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
Six Months Ended June 30, 2019
Beginning balance, January 1	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Provision for loan losses		2,317		(13)		(403)		(13)		(79)		125		51		1,985
Loans charged-off		(100)		0		0		0		(87)		(181)		0		(368)
Recoveries		289		112		4		0		27		62		0		494
Net loans charged-off		189		112		4		0		(60)		(119)		0		126
Ending balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564

			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
Six Months Ended June 30, 2018
Beginning balance, January 1	$	21,097	$	14,714	$	4,920	$	577	$	2,768	$	379	$	2,666	$	47,121
Provision for loan losses		5,294		715		(344)		(113)		(862)		16		294		5,000
Loans charged-off		(4,417)		(491)		0		0		(7)		(190)		0		(5,105)
Recoveries		550		16		9		0		54		61		0		690
Net loans charged-off		(3,867)		(475)		9		0		47		(129)		0		(4,415)
Ending balance	$	22,524	$	14,954	$	4,585	$	464	$	1,953	$	266	$	2,960	$	47,706

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 June 30, 2019 and December 31, 2018:

			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
June 30, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	9,208	$	394	$	87	$	0	$	339	$	0	$	0	$	10,028
Collectively evaluated for impairment		15,816		15,098		3,819		355		1,814		289		3,345		40,536
Total ending allowance balance	$	25,024	$	15,492	$	3,906	$	355	$	2,153	$	289	$	3,345	$	50,564
Loans:
Loans individually evaluated for impairment	$	18,819	$	3,193	$	430	$	0	$	1,851	$	0	$	0	$	24,293
Loans collectively evaluated for impairment		1,431,542		1,649,854		314,153		103,949		388,078		86,749		0		3,974,325
Total ending loans balance	$	1,450,361	$	1,653,047	$	314,583	$	103,949	$	389,929	$	86,749	$	0	$	3,998,618

			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, 2018
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,552	$	921	$	73	$	0	$	457	$	26	$	0	$	10,029
Collectively evaluated for impairment		13,966		14,472		4,232		368		1,835		257		3,294		38,424
Total ending allowance balance	$	22,518	$	15,393	$	4,305	$	368	$	2,292	$	283	$	3,294	$	48,453
Loans:
Loans individually evaluated for impairment	$	19,734	$	4,266	$	433	$	0	$	2,240	$	44	$	0	$	26,717
Loans collectively evaluated for impairment		1,385,604		1,562,899		370,174		95,520		388,053		85,778		0		3,888,028
Total ending loans balance	$	1,405,338	$	1,567,165	$	370,607	$	95,520	$	390,293	$	85,822	$	0	$	3,914,745

Loans individually evaluated for impairment

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 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	$	3,129	$	437	$	0
Non-working capital loans		2,321		926		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,975		1,437		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		200		119		0
Open end and junior lien loans		92		92		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,610		6,301		2,995
Non-working capital loans		11,135		11,155		6,213
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,756		1,756		394
Agri-business and agricultural loans:
Loans secured by farmland		148		147		87
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,637		1,640		339
Total	$	29,606	$	24,293	$	10,028

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2018:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	3,284	$	1,889	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,773		1,527		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		583		502		0
Open end and junior lien loans		220		220		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		9,691		6,694		2,602
Non-working capital loans		11,099		11,151		5,950
Commercial real estate and multi-family residential loans:
Construction and land development loans		291		291		142
Owner occupied loans		2,938		2,448		779
Agri-business and agricultural loans:
Loans secured by farmland		150		150		73
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,517		1,518		457
Other consumer loans		45		44		26
Total	$	32,194	$	26,717	$	10,029

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 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	$	287	$	0	$	1
Non-working capital loans		933		9		4
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,450		10		10
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		164		1		1
Open end and junior lien loans		93		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,326		75		26
Non-working capital loans		11,105		127		94
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,763		16		11
Agri-business and agricultural loans:
Loans secured by farmland		147		1		0
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,680		13		13
Other consumer loans		28		1		0
Total	$	24,259	$	253	$	160

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended June 30, 2018:

					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	$	1,011	$	6	$	14
Non-working capital loans		1,738		16		26
Commercial real estate and multi-family residential loans:
Construction and land development loans		88		2		3
Owner occupied loans		2,868		9		12
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		533		2		3
Open end and junior lien loans		247		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		3,005		2		2
Non-working capital loans		3,513		3		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		491		6		13
Owner occupied loans		1,041		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		993		8		10
Other consumer loans		48		0		2
Total	$	15,859	$	55	$	92

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 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	$	221	$	1	$	1
Non-working capital loans		1,241		38		28
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,535		21		18
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		272		2		2
Open end and junior lien loans		143		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		6,406		147		85
Non-working capital loans		11,260		259		222
Commercial real estate and multi-family residential loans:
Owner occupied loans		1,922		29		23
Agri-business and agricultural loans:
Loans secured by farmland		147		3		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		1,639		25		25
Other consumer loans		36		2		1
Total	$	25,105	$	527	$	406

The following table presents loans individually evaluated for impairment by class of loans as of and for the six-month period ended June 30, 2018:

					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	$	1,011	$	13	$	16
Non-working capital loans		1,733		31		31
Commercial real estate and multi-family residential loans:
Construction and land development loans		95		3		3
Owner occupied loans		2,712		16		14
Agri-business and agricultural loans:
Loans secured by farmland		283		0		0
Consumer 1‑4 family loans:
Closed end first mortgage loans		538		4		4
Open end and junior lien loans		169		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		2,307		4		3
Non-working capital loans		3,365		5		6
Commercial real estate and multi-family residential loans:
Construction and land development loans		606		17		18
Owner occupied loans		1,117		1		1
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		981		15		14
Open end and junior lien loans		77		0		0
Other consumer loans		48		1		2
Total	$	15,042	$	110	$	112

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 June 30, 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	$	748,862	$	20	$	0	$	6,364	$	6,384	$	755,246
Non-working capital loans		689,781		5		0		5,329		5,334		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,380		24		0		0		24		320,404
Owner occupied loans		554,607		0		0		2,185		2,185		556,792
Nonowner occupied loans		533,215		103		0		0		103		533,318
Multifamily loans		242,533		0		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		148,469		0		0		430		430		148,899
Loans for agricultural production		165,684		0		0		0		0		165,684
Other commercial loans		103,949		0		0		0		0		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		185,676		1,235		0		597		1,832		187,508
Open end and junior lien loans		189,150		945		0		92		1,037		190,187
Residential construction loans		12,234		0		0		0		0		12,234
Other consumer loans		86,624		125		0		0		125		86,749
Total	$	3,981,164	$	2,457	$	0	$	14,997	$	17,454	$	3,998,618

The following table presents the aging of the recorded investment in past due loans as of December 31, 2018 by class of loans:

					Greater than
			30‑89		90 Days Past				Total Past
	Loans Not		Days		Due and Still				Due and
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual		Nonaccrual		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	684,191	$	4,328	$	0	$	2,245	$	6,573	$	690,764
Non-working capital loans		709,629		3,368		0		1,577		4,945		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		265,544		0		0		0		0		265,544
Owner occupied loans		583,214		486		0		2,269		2,755		585,969
Nonowner occupied loans		520,431		57		0		0		57		520,488
Multi-family loans		195,164		0		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		177,080		150		0		283		433		177,513
Loans for agricultural production		193,094		0		0		0		0		193,094
Other commercial loans		95,520		0		0		0		0		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		183,420		1,370		0		671		2,041		185,461
Open end and junior lien loans		188,320		98		0		220		318		188,638
Residential construction loans		16,194		0		0		0		0		16,194
Other consumer loans		85,654		168		0		0		168		85,822
Total	$	3,897,455	$	10,025	$	0	$	7,265	$	17,290	$	3,914,745

Troubled Debt Restructuring

	June 30,		December 31,
(dollars in thousands)	2019		2018
Accruing troubled debt restructured loans	$	6,082	$	8,016
Nonaccrual troubled debt restructured loans		3,512		4,384
Total troubled debt restructured loans	$	9,594	$	12,400

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 six months ended June 30, 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

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended June 30, 2018:

						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		20		20	1	0
Total	1	$	20	$	20	1	0

The following table presents loans by class modified as new troubled debt restructurings that occurred during the six months ended June 30, 2018:

						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		600		600	1	0
Non-working capital loans	2		1,420		1,420	2	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	1		824		824	1	12
Owner occupied loans	1		387		387	1	12
Consumer 1‑4 family loans:
Closed end first mortgage loans	1		198		197	1	239
Total	6	$	3,429	$	3,428	6	0‑239

Credit Quality Indicators

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	660,816	$	70,866	$	23,244	$	0	$	320	$	755,246
Non-working capital loans		645,632		25,350		18,804		0		5,329		695,115
Commercial real estate and multi-family residential loans:
Construction and land development loans		320,115		289		0		0		0		320,404
Owner occupied loans		517,431		21,043		18,318		0		0		556,792
Nonowner occupied loans		530,491		2,209		618		0		0		533,318
Multifamily loans		242,329		204		0		0		0		242,533
Agri-business and agricultural loans:
Loans secured by farmland		134,805		12,840		1,254		0		0		148,899
Loans for agricultural production		153,961		11,723		0		0		0		165,684
Other commercial loans		103,945		0		0		0		4		103,949
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		55,538		0		95		0		131,875		187,508
Open end and junior lien loans		11,007		0		55		0		179,125		190,187
Residential construction loans		0		0		0		0		12,234		12,234
Other consumer loans		14,077		0		0		0		72,672		86,749
Total	$	3,390,147	$	144,524	$	62,388	$	0	$	401,559	$	3,998,618

			Special						Not
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	618,612	$	43,240	$	28,563	$	0	$	349	$	690,764
Non-working capital loans		664,787		15,992		27,548		0		6,247		714,574
Commercial real estate and multi-family residential loans:
Construction and land development loans		264,900		353		291		0		0		265,544
Owner occupied loans		541,734		21,864		22,371		0		0		585,969
Nonowner occupied loans		517,356		2,491		641		0		0		520,488
Multifamily loans		194,948		216		0		0		0		195,164
Agri-business and agricultural loans:
Loans secured by farmland		166,623		9,107		1,783		0		0		177,513
Loans for agricultural production		183,189		8,155		1,750		0		0		193,094
Other commercial loans		95,516		0		0		0		4		95,520
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		54,879		0		2,021		0		128,561		185,461
Open end and junior lien loans		8,810		0		220		0		179,608		188,638
Residential construction loans		0		0		0		0		16,194		16,194
Other consumer loans		12,700		0		44		0		73,078		85,822
Total	$	3,324,054	$	101,418	$	85,232	$	0	$	404,041	$	3,914,745

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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

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:

	June 30, 2019
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,007	$	0	$	0	$	1,007
U.S. government sponsored agency securities		0		2,290		0		2,290
Mortgage-backed securities: residential		0		323,945		0		323,945
Mortgage-backed securities: commercial		0		38,134		0		38,134
State and municipal securities		0		244,300		150		244,450
Total Securities		1,007		608,669		150		609,826
Mortgage banking derivative		0		298		0		298
Interest rate swap derivative		0		6,679		0		6,679
Total assets	$	1,007	$	615,646	$	150	$	616,803
Liabilities
Mortgage banking derivative		0		53		0		53
Interest rate swap derivative		0		7,266		0		7,266
Total liabilities	$	0	$	7,319	$	0	$	7,319

	December 31, 2018
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	987	$	0	$	0	$	987
U.S. government sponsored agency securities		0		4,350		0		4,350
Mortgage-backed securities: residential		0		325,412		0		325,412
Mortgage-backed securities: commercial		0		38,141		0		38,141
State and municipal securities		0		216,509		150		216,659
Total Securities		987		584,412		150		585,549
Mortgage banking derivative		0		95		0		95
Interest rate swap derivative		0		3,869		0		3,869
Total assets	$	987	$	588,376	$	150	$	589,513
Liabilities
Mortgage banking derivative		0		23		0		23
Interest rate swap derivative		0		4,025		0		4,025
Total liabilities	$	0	$	4,048	$	0	$	4,048

Schedule of Assets Measured at Fair Value on a Nonrecurring Basis

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

	June 30, 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	$	3,306	$	3,306
Non-working capital loans		0		0		4,678		4,678
Commercial real estate and multi-family residential loans:
Owner occupied loans		0		0		561		561
Agri-business and agricultural loans:
Loans secured by farmland		0		0		60		60
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		638		638
Total impaired loans	$	0	$	0	$	9,243	$	9,243
Other real estate owned		0		0		0		0
Total assets	$	0	$	0	$	9,243	$	9,243

	December 31, 2018
	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	$	4,092	$	4,092
Non-working capital loans		0		0		4,967		4,967
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		148		148
Owner occupied loans		0		0		1,669		1,669
Agri-business and agricultural loans:
Loans secured by farmland		0		0		77		77
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans		0		0		553		553
Total impaired loans	$	0	$	0	$	11,506	$	11,506
Other real estate owned		0		0		316		316
Total assets	$	0	$	0	$	11,822	$	11,822

Schedule of Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2019 and 2018:

	State and Municipal Securities
(dollars in thousands)	2019		2018
Balance of recurring Level 3 assets at January 1	$	150	$	880
Changes in fair value of securities included in other comprehensive income		0		(7)
Principal payments		0		(45)
Balance of recurring Level 3 assets at June 30	$	150	$	828

Fair Value Measurements, Recurring, Valuation Techniques

The state and municipal securities measured at fair value included below are non-rated Indiana and Ohio municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	June 30, 2019		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	December 31, 2018		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	150	Price to type, par, call	Discount to benchmark index	0	‑	1	%
							(0.17)	%

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 June 30, 2019:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	7,984	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	53	%	3	%	-	100	%
Impaired loans:
Commercial real estate		561	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	41	%	29	%	-	53	%
Impaired loans:
Agribusiness and agricultural		60	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	59	%
Impaired loans:
Consumer 1‑4 family mortgage		638	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	13	%	0	%	-	19	%

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, 2018:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	9,059	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	48	%	4	%	-	100	%
Impaired loans:
Commercial real estate		1,817	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	34	%	6	%	-	53	%
Impaired loans:
Agribusiness and agricultural		77	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	49	%
Impaired loans:
Consumer 1‑4 family mortgage		553	Collateral based measurements	Discount to reflect current market conditions and ultimate collectability	23	%	0	%	-	64	%
Other real estate owned		316	Collateral based measurements	Discount to reflect current market conditions	0	%

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.

	June 30, 2019
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	196,370	$	193,603	$	2,767	$	0	$	196,370
Securities available for sale		609,826		1,007		608,669		150		609,826
Real estate mortgages held for sale		5,929		0		5,998		0		5,998
Loans, net		3,948,054		0		0		3,901,925		3,901,925
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		17,418		3		3,444		13,971		17,418
Financial Liabilities:
Certificates of deposit		(1,328,062)		0		(1,336,715)		0		(1,336,715)
All other deposits		(2,893,237)		(2,893,237)		0		0		(2,893,237)
Federal funds purchased		(15,000)		(15,000)		0		0		(15,000)
Federal Home Loan Bank advances		(100,000)		0		(100,000)		0		(100,000)
Subordinated debentures		(30,928)		0		0		(31,196)		(31,196)
Standby letters of credit		(1,128)		0		0		(1,128)		(1,128)
Accrued interest payable		(12,454)		(174)		(12,275)		(5)		(12,454)

	December 31, 2018
	Carrying		Estimated Fair Value
(dollars in thousands)	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	216,922	$	214,452	$	2,470	$	0	$	216,922
Securities available for sale		585,549		987		584,412		150		585,549
Real estate mortgages held for sale		2,293		0		2,314		0		2,314
Loans, net		3,866,292		0		0		3,786,175		3,786,175
Federal Reserve and Federal Home Loan Bank stock		13,772		N/A		N/A		N/A		N/A
Accrued interest receivable		15,518		3		3,569		11,946		15,518
Financial Liabilities:
Certificates of deposit		(1,419,754)		0		(1,424,553)		0		(1,424,553)
All other deposits		(2,624,311)		(2,624,311)		0		0		(2,624,311)
Securities sold under agreements to repurchase		(75,555)		0		(75,555)		0		(75,555)
Federal Home Loan Bank advances		(170,000)		0		(169,996)		0		(169,996)
Subordinated debentures		(30,928)		0		0		(31,195)		(31,195)
Standby letters of credit		(978)		0		0		(978)		(978)
Accrued interest payable		(10,404)		(110)		(10,289)		(5)		(10,404)

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

Components of net periodic benefit cost:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(dollars in thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Service cost	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Interest cost		22		24		10		8		44		47		19		17
Expected return on plan assets		(35)		(35)		(15)		(16)		(69)		(69)		(28)		(31)
Recognized net actuarial (gain) loss		34		48		19		19		66		96		37		37
Net pension expense (benefit)	$	21	$	37	$	14	$	11	$	41	$	74	$	28	$	23

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OFFSETTING ASSETS AND LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2019

Offsettings [Abstract]

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 June 30, 2019 and December 31, 2018.

	June 30, 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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Total Assets	$	6,679	$	0	$	6,679	$	0	$	0	$	6,679
Liabilities
Interest Rate Swap Derivatives	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)
Repurchase Agreements		0		0		0		0		0		0
Total Liabilities	$	7,266	$	0	$	7,266	$	0	$	(7,360)	$	(94)

	December 31, 2018
			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
(dollars in thousands)	Liabilities		Position		Position		Instruments		Position		Net
Assets
Interest Rate Swap Derivatives	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Total Assets	$	3,869	$	0	$	3,869	$	0	$	(760)	$	3,109
Liabilities
Interest Rate Swap Derivatives	$	4,025	$	0	$	4,025	$	0	$	(560)	$	3,465
Repurchase Agreements		75,555		0		75,555		(75,555)		0		0
Total Liabilities	$	79,580	$	0	$	79,580	$	(75,555)	$	(560)	$	3,465

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of weighted average number of shares

Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants, none of which were antidilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Weighted average shares outstanding for basic earnings per common share		25,614,701		25,293,329		25,553,254		25,275,471
Dilutive effect of stock options, awards and warrants		159,301		415,887		167,825		429,034
Weighted average shares outstanding for diluted earnings per common share		25,774,002		25,709,216		25,721,079		25,704,505
Basic earnings per common share	$	0.85	$	0.80	$	1.70	$	1.52
Diluted earnings per common share	$	0.85	$	0.78	$	1.69	$	1.50

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2019

Stockholders' Equity Note [Abstract]

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 June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2019	$	3,843	$	(1,356)	$	2,487
Other comprehensive income before reclassification		7,040		0		7,040
Amounts reclassified from accumulated other comprehensive income (loss)		(65)		38		(27)
Net current period other comprehensive income		6,975		38		7,013
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at April 1, 2018	$	(6,270)	$	(1,718)	$	(7,988)
Other comprehensive income before reclassification		(1,771)		0		(1,771)
Amounts reclassified from accumulated other comprehensive income (loss)		0		49		49
Net current period other comprehensive income		(1,771)		49		(1,722)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) net of tax for the six months ended June 30, 2019 and 2018:

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2019	$	(4,796)	$	(1,395)	$	(6,191)
Other comprehensive income before reclassification		15,702		0		15,702
Amounts reclassified from accumulated other comprehensive income (loss)		(88)		77		(11)
Net current period other comprehensive income		15,614		77		15,691
Balance at June 30, 2019	$	10,818	$	(1,318)	$	9,500

	Unrealized
	Gains and		Defined
	(Losses) on		Benefit
	Available-		Pension
	for-Sales		Gains
(dollars in thousands)	Securities		(Losses)		Total
Balance at January 1, 2018	$	784	$	(1,454)	$	(670)
Other comprehensive income before reclassification		(8,903)		0		(8,903)
Amounts reclassified from accumulated other comprehensive income (loss)		6		98		104
Net current period other comprehensive income		(8,897)		98		(8,799)
Adoption of ASU 2018‑02		140		(313)		(173)
Adoption of ASU 2016‑01		(68)		0		(68)
Balance at June 30, 2018	$	(8,041)	$	(1,669)	$	(9,710)

Reclassification Accumulated Other Comprehensive Income

Reclassifications out of accumulated comprehensive income for the three months ended June 30, 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	$	65	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		65	Net of tax
Amortization of defined benefit pension items		(53)	Other expense
Tax effect		15	Income tax expense
Subtotal		(38)	Net of tax
Total reclassifications for the period	$	27	Net income

Reclassifications out of accumulated comprehensive income for the three months ended June 30, 2018 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	$	0	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		0	Net of tax
Amortization of defined benefit pension items		(67)	Other expense
Tax effect		18	Income tax expense
Subtotal		(49)	Net of tax
Total reclassifications for the period	$	(49)	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 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	$	88	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		88	Net of tax
Amortization of defined benefit pension items		(103)	Other expense
Tax effect		26	Income tax expense
Subtotal		(77)	Net of tax
Total reclassifications for the period	$	11	Net income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2018 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	$	(6)	Net securities gains (losses)
Tax effect		0	Income tax expense
Subtotal		(6)	Net of tax
Amortization of defined benefit pension items		(133)	Other expense
Tax effect		35	Income tax expense
Subtotal		(98)	Net of tax
Total reclassifications for the period	$	(104)	Net income

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

LEASES

Schedule of maturity analysis of the operating lease liabilities

	Operating lease
Years ending December 31, (in thousands)	Obligation
2019	$	271
2020		561
2021		581
2022		595
2023		606
2024 - 2029		3,495
Total undiscounted lease payments		6,109
Less imputed interest		(810)
Lease liability	$	5,299
Right-of-use asset	$	5,299

Schedule of lease cost

	Three months ended			Six months ended
	June 30, 2019			June 30, 2019
Lease cost
Operating lease cost	$	125		$	244
Short-term lease cost		6			12
Total lease cost	$	131		$	256
Other information
Operating cash outflows from operating leases	$	244
Weighted-average remaining lease term - operating leases		10.3 years
Weighted average discount rate - operating leases		2.8	%

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BASIS OF PRESENTATION (Details) $ in Thousands		6 Months Ended
	Jan. 01, 2019 USD ($)	Jun. 30, 2019 USD ($) subsidiary
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of wholly owned subsidiaries | subsidiary		2
Operating Lease, Right-of-Use Asset	$ 5,500	$ 5,299
Operating Lease, Liability, Noncurrent	5,500
cumulative period adjustment made to retained earnings	0
Accounting Standards Update 2017-08
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
cumulative period adjustment made to retained earnings	$ 1,300

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SECURITIES (Summary Of Available Sale Of Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Information related to available for sale securities [Abstract]
Amortized Cost	$ 596,133	$ 591,621
Gross Unrealized Gain	14,473	2,795
Gross Unrealized Losses	(780)	(8,867)
Fair Value	609,826	585,549
US Treasury Securities
Information related to available for sale securities [Abstract]
Amortized Cost	995	994
Gross Unrealized Gain	12	0
Gross Unrealized Losses	0	(7)
Fair Value	1,007	987
US Government Sponsored Agencies
Information related to available for sale securities [Abstract]
Amortized Cost	2,302	4,435
Gross Unrealized Gain	0	0
Gross Unrealized Losses	(12)	(85)
Fair Value	2,290	4,350
State and Municipal Securities
Information related to available for sale securities [Abstract]
Amortized Cost	234,691	217,964
Gross Unrealized Gain	9,782	1,403
Gross Unrealized Losses	(23)	(2,708)
Fair Value	244,450	216,659
Mortgage-backed securities residential
Information related to available for sale securities [Abstract]
Amortized Cost	320,298	329,516
Gross Unrealized Gain	4,381	1,392
Gross Unrealized Losses	(734)	(5,496)
Fair Value	323,945	325,412
Mortgage-backed securities commercial
Information related to available for sale securities [Abstract]
Amortized Cost	37,847	38,712
Gross Unrealized Gain	298	0
Gross Unrealized Losses	(11)	(571)
Fair Value	$ 38,134	$ 38,141

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SECURITIES (Schedule Of Available Sale Of Securities By Maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Maturities of Available-for-sale Debt Securities [Abstract]
Amortized Cost, Due in one year or less	$ 1,655
Amortized Cost, Due after one year through five years	19,413
Amortized Cost, Due after five years through ten years	30,528
Amortized Cost, Due after ten years	186,392
Amortized Cost, Available for sale securities with maturities amortized cost	237,988
Amortized Cost, Mortgage-backed securities	358,145
Amortized Cost, Total debt securities	596,133	$ 591,621
Fair Value, Due in one year or less	1,664
Fair Value, Due after one year through five years	19,776
Fair Value, Due after five years through ten years	31,654
Fair Value, Due after ten years	194,653
Fair Value, Available for sale securities with maturities fair value	247,747
Fair Value, Mortgage-backed securities	362,079
Fair Value, Total debt securities	$ 609,826	$ 585,549

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SECURITIES (Schedule Of Sales Of Securities Available For Sale) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Sales of securities available for sale
Proceeds	$ 12,126	$ 0	$ 25,819	$ 12,322
Gross gains	68	0	138	21
Gross losses	$ (3)	$ 0	$ (50)	$ (27)
Number of securities	8,000	0	25	22

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SECURITIES (Schedule Of Available Sale Of Securities Continuous Unrealized Loss Position) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	$ 2,911	$ 37,848
12 months or more, Fair value	91,608	346,642
Total Fair value	94,519	384,490
Less than 12 Months, Unrealized Losses	23	136
12 Months or more, Unrealized Losses	757	8,731
Total Unrealized Losses	780	8,867
US Treasury Securities
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value		0
12 months or more, Fair value		987
Total Fair value		987
Less than 12 Months, Unrealized Losses		0
12 Months or more, Unrealized Losses		7
Total Unrealized Losses		7
US Government Sponsored Agencies
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	0	0
12 months or more, Fair value	2,290	4,350
Total Fair value	2,290	4,350
Less than 12 Months, Unrealized Losses	0	0
12 Months or more, Unrealized Losses	12	85
Total Unrealized Losses	12	85
State and Municipal Securities
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	500	26,229
12 months or more, Fair value	4,826	85,982
Total Fair value	5,326	112,211
Less than 12 Months, Unrealized Losses	0	124
12 Months or more, Unrealized Losses	23	2,584
Total Unrealized Losses	23	2,708
Mortgage-backed securities residential
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	2,411	11,619
12 months or more, Fair value	79,874	217,182
Total Fair value	82,285	228,801
Less than 12 Months, Unrealized Losses	23	12
12 Months or more, Unrealized Losses	711	5,484
Total Unrealized Losses	734	5,496
Mortgage-backed securities commercial
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	0	0
12 months or more, Fair value	4,618	38,141
Total Fair value	4,618	38,141
Less than 12 Months, Unrealized Losses	0	0
12 Months or more, Unrealized Losses	11	571
Total Unrealized Losses	$ 11	$ 571

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SECURITIES (Quantitative Disclosure Of Available Sale Of Securities) (Details)	Jun. 30, 2019	Dec. 31, 2018
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	2	40
Number of available-for-sale securities in unrealized loss positions, 12 months or more	36	207
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	38	247
US Treasury Securities
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months		0
Number of available-for-sale securities in unrealized loss positions, 12 months or more		1
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions		1
US Government Sponsored Agencies
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	0	0
Number of available-for-sale securities in unrealized loss positions, 12 months or more	1	2
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	1	2
State and Municipal Securities
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	1	35
Number of available-for-sale securities in unrealized loss positions, 12 months or more	4	111
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	5	146
Mortgage-backed securities residential
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	1	5
Number of available-for-sale securities in unrealized loss positions, 12 months or more	30	84
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	31	89
Mortgage-backed securities commercial
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, less than 12 months	0	0
Number of available-for-sale securities in unrealized loss positions, 12 months or more	1	9
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	1	9

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SECURITIES (Additional information) (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Information related to available for sale securities [Abstract]
Available-for-sale Securities pledged as collateral	$ 62.8	$ 164.7

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LOANS (Total Loans Outstanding) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 4,000,085	$ 3,916,326
Percentage of Subtotal	100.00%	100.00%
Less: Allowance for loan losses	$ (50,564)	$ (48,453)	$ (49,562)	$ (47,706)	$ (45,627)	$ (47,121)
Net deferred loan fees	(1,467)	(1,581)
Loans, net	3,948,054	3,866,292
Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 3,524,398	$ 3,441,184
Percentage of Total commercial loans	88.10%	87.90%
Other consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 86,996	$ 86,064
Consumer loan open-ended revolving line
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 475,687	$ 475,142
Working Capital Lines of Credit Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total consumer loans	11.90%	12.10%
Commercial and Industrial Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less: Allowance for loan losses	$ (25,024)	$ (22,518)	(24,030)	(22,524)	(20,725)	(21,097)
Commercial and Industrial Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 1,450,325	$ 1,405,379
Percentage of Total commercial loans	36.20%	35.90%
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 755,090	$ 690,620
Percentage of Total commercial loans	18.90%	17.60%
Commercial and Industrial Loans | Non-working Capital Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 695,235	$ 714,759
Percentage of Total commercial loans	17.30%	18.30%
Commercial Real Estate and Multi-family Residential Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 1,655,511	$ 1,569,635
Percentage of Total commercial loans	41.40%	40.10%
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 321,550	$ 266,805
Percentage of Total commercial loans	8.00%	6.80%
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 557,115	$ 586,325
Percentage of Total commercial loans	13.90%	15.00%
Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 533,880	$ 520,901
Percentage of Total commercial loans	13.40%	13.30%
Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 242,966	$ 195,604
Percentage of Total commercial loans	6.10%	5.00%
Agri-business and Agricultural Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less: Allowance for loan losses	$ (3,906)	$ (4,305)	$ (4,146)	$ (4,585)	$ (4,848)	$ (4,920)
Agri-business and Agricultural Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 314,478	$ 370,513
Percentage of Total commercial loans	7.90%	9.50%
Agri-business and Agricultural Loans | Loans Secured By Farmland | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 148,883	$ 177,503
Percentage of Total commercial loans	3.70%	4.60%
Agri-business and Agricultural Loans | Loans For Agricultural Production | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 165,595	$ 193,010
Percentage of Total commercial loans	4.20%	4.90%
Other Commercial Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total consumer loans	2.20%	2.20%
Other Commercial Loans | Commercial Portfolio Segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 104,084	$ 95,657
Percentage of Total commercial loans	2.60%	2.40%
Total Consumer 1 To 4 Family Mortgage Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 388,691	$ 389,078
Percentage of Total commercial loans	9.70%	9.90%
Total Consumer 1 To 4 Family Mortgage Loans | Closed End First Mortgage Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 187,863	$ 185,822
Percentage of Total commercial loans	4.70%	4.70%
Total Consumer 1 To 4 Family Mortgage Loans | Open End And Junior Lien Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 188,558	$ 187,030
Percentage of Total commercial loans	4.70%	4.80%
Total Consumer 1 To 4 Family Mortgage Loans | Residential Construction and Land Development Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Commercial And Consumer Loans	$ 12,270	$ 16,226
Percentage of Total commercial loans	0.30%	0.40%

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LOANS (Additional information) (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Mortgage Loans in Process of Foreclosure, Amount	$ 493,000	$ 586,000

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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		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 49,562	$ 45,627	$ 48,453	$ 47,121
Provision for loan losses	785	1,700	1,985	5,000
Loans charged-off	(84)	(128)	(368)	(5,105)
Recoveries	301	507	494	690
Net loans charged-off/(recovered)	217	379	126	(4,415)
Ending balance	50,564	47,706	50,564	47,706
Commercial and Industrial Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	24,030	20,725	22,518	21,097
Provision for loan losses	824	1,392	2,317	5,294
Loans charged-off	(17)	(57)	(100)	(4,417)
Recoveries	187	464	289	550
Net loans charged-off/(recovered)	170	407	189	(3,867)
Ending balance	25,024	22,524	25,024	22,524
Commercial Real Estate and Multi-family Residential Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	15,447	14,438	15,393	14,714
Provision for loan losses	(31)	508	(13)	715
Loans charged-off	0	0	0	(491)
Recoveries	76	8	112	16
Net loans charged-off/(recovered)	76	8	112	(475)
Ending balance	15,492	14,954	15,492	14,954
Agri-business and Agricultural Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	4,146	4,848	4,305	4,920
Provision for loan losses	(242)	(268)	(403)	(344)
Loans charged-off	0	0	0	0
Recoveries	2	5	4	9
Net loans charged-off/(recovered)	2	5	4	9
Ending balance	3,906	4,585	3,906	4,585
Other Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	373	510	368	577
Provision for loan losses	(18)	(46)	(13)	(113)
Loans charged-off	0	0	0	0
Recoveries	0	0	0	0
Net loans charged-off/(recovered)	0	0	0	0
Ending balance	355	464	355	464
Consumer 1-4 Family Mortgage Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,266	2,018	2,292	2,768
Provision for loan losses	(124)	(68)	(79)	(862)
Loans charged-off	(5)	0	(87)	(7)
Recoveries	16	3	27	54
Net loans charged-off/(recovered)	11	3	(60)	47
Ending balance	2,153	1,953	2,153	1,953
Other Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	291	245	283	379
Provision for loan losses	40	65	125	16
Loans charged-off	(62)	(71)	(181)	(190)
Recoveries	20	27	62	61
Net loans charged-off/(recovered)	(42)	(44)	(119)	(129)
Ending balance	289	266	289	266
Unallocated
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,009	2,843	3,294	2,666
Provision for loan losses	336	117	51	294
Loans charged-off	0	0	0	0
Recoveries	0	0	0	0
Net loans charged-off/(recovered)	0	0	0	0
Ending balance	$ 3,345	$ 2,960	$ 3,345	$ 2,960

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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	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 10,028		$ 10,029
Collectively evaluated for impairment	40,536		38,424
Total ending allowance balance	50,564	$ 49,562	48,453	$ 47,706	$ 45,627	$ 47,121
Loans:
Loans individually evaluated for impairment	24,293		26,717
Loans collectively evaluated for impairment	3,974,325		3,888,028
Total ending loans balance	3,998,618		3,914,745
Commercial and Industrial Loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	9,208		8,552
Collectively evaluated for impairment	15,816		13,966
Total ending allowance balance	25,024	24,030	22,518	22,524	20,725	21,097
Loans:
Loans individually evaluated for impairment	18,819		19,734
Loans collectively evaluated for impairment	1,431,542		1,385,604
Total ending loans balance	1,450,361		1,405,338
Commercial Real Estate and Multi-family Residential Loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	394		921
Collectively evaluated for impairment	15,098		14,472
Total ending allowance balance	15,492	15,447	15,393	14,954	14,438	14,714
Loans:
Loans individually evaluated for impairment	3,193		4,266
Loans collectively evaluated for impairment	1,649,854		1,562,899
Total ending loans balance	1,653,047		1,567,165
Agri-business and Agricultural Loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	87		73
Collectively evaluated for impairment	3,819		4,232
Total ending allowance balance	3,906	4,146	4,305	4,585	4,848	4,920
Loans:
Loans individually evaluated for impairment	430		433
Loans collectively evaluated for impairment	314,153		370,174
Total ending loans balance	314,583		370,607
Other Commercial
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	355		368
Total ending allowance balance	355	373	368	464	510	577
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	103,949		95,520
Total ending loans balance	103,949		95,520
Consumer 1-4 Family Mortgage Loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	339		457
Collectively evaluated for impairment	1,814		1,835
Total ending allowance balance	2,153	2,266	2,292	1,953	2,018	2,768
Loans:
Loans individually evaluated for impairment	1,851		2,240
Loans collectively evaluated for impairment	388,078		388,053
Total ending loans balance	389,929		390,293
Other Consumer
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		26
Collectively evaluated for impairment	289		257
Total ending allowance balance	289	291	283	266	245	379
Loans:
Loans individually evaluated for impairment	0		44
Loans collectively evaluated for impairment	86,749		85,778
Total ending loans balance	86,749		85,822
Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	3,345		3,294
Total ending allowance balance	3,345	$ 3,009	3,294	$ 2,960	$ 2,843	$ 2,666
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	0		0
Total ending loans balance	$ 0		$ 0

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Loans Individually Evaluated For Impairment) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Loans Individually Evaluated for Impairment [Abstract]
Unpaid Principal Balance	$ 29,606		$ 29,606		$ 32,194
Recorded Investment	24,293		24,293		26,717
Allowance for Loan Losses Allocated	10,028		10,028		10,029
Average Recorded Investment with no related allowance recorded		$ 1,011	221	$ 1,011
Average Recorded Investment with an allowance recorded		15,859
Average Recorded Investment	24,259		25,105	15,042
Interest Income Recognized with no related allowance recorded		6	1	13
Interest Income Recognized with an allowance recorded		55
Interest Income Recognized	253		527	110
Cash basis interest income recognized with no related allowance recorded		14	1	16
Cash basis interest income recognized with an allowance recorded		92
Cash Basis Interest Income Recognized	160		406	112
Commercial and Industrial Loans
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	9,208		9,208		8,552
Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	3,129		3,129
Unpaid principal balance with an allowance recorded	6,610		6,610		9,691
Recorded Investment with no related allowance recorded	437		437
Recorded investment with an allowance recorded	6,301		6,301		6,694
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	2,995		2,995		2,602
Average Recorded Investment with no related allowance recorded	287	3,005
Average Recorded Investment with an allowance recorded	6,326	3,513	6,406	2,307
Interest Income Recognized with no related allowance recorded	0	2
Interest Income Recognized with an allowance recorded	75	3	147	4
Cash basis interest income recognized with no related allowance recorded	1	2
Cash basis interest income recognized with an allowance recorded	26	6	85	3
Commercial and Industrial Loans | Non-working Capital Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	2,321		2,321		3,284
Unpaid principal balance with an allowance recorded	11,135		11,135		11,099
Recorded Investment with no related allowance recorded	926		926		1,889
Recorded investment with an allowance recorded	11,155		11,155		11,151
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	6,213		6,213		5,950
Average Recorded Investment with no related allowance recorded	933	1,738	1,241	1,733
Average Recorded Investment with an allowance recorded	11,105		11,260	3,365
Interest Income Recognized with no related allowance recorded	9	16	38	31
Interest Income Recognized with an allowance recorded	127		259	5
Cash basis interest income recognized with no related allowance recorded	4	26	28	31
Cash basis interest income recognized with an allowance recorded	94		222	6
Commercial Real Estate and Multi-family Residential Loans
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	394		394		921
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded					291
Recorded investment with an allowance recorded					291
Allowance for loans losses allocated with an allowance recorded					142
Average Recorded Investment with no related allowance recorded		88		95
Average Recorded Investment with an allowance recorded		491		606
Interest Income Recognized with no related allowance recorded		2		3
Interest Income Recognized with an allowance recorded		6		17
Cash basis interest income recognized with no related allowance recorded		3		3
Cash basis interest income recognized with an allowance recorded		13		18
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	1,975		1,975		1,773
Unpaid principal balance with an allowance recorded	1,756		1,756		2,938
Recorded Investment with no related allowance recorded	1,437		1,437		1,527
Recorded investment with an allowance recorded	1,756		1,756		2,448
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	394		394		779
Average Recorded Investment with no related allowance recorded	1,450	2,868	1,535	2,712
Average Recorded Investment with an allowance recorded	1,763	1,041	1,922	1,117
Interest Income Recognized with no related allowance recorded	10	9	21	16
Interest Income Recognized with an allowance recorded	16	1	29	1
Cash basis interest income recognized with no related allowance recorded	10	12	18	14
Cash basis interest income recognized with an allowance recorded	11	1	23	1
Agri-business and Agricultural Loans
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	87		87		73
Agri-business and Agricultural Loans | Owner Occupied Loans
Loans Individually Evaluated for Impairment [Abstract]
Average Recorded Investment with an allowance recorded			147
Interest Income Recognized with an allowance recorded			3
Cash basis interest income recognized with an allowance recorded			1
Agri-business and Agricultural Loans | Loans Secured By Farmland
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	603		603		603
Unpaid principal balance with an allowance recorded	148		148		150
Recorded Investment with no related allowance recorded	283		283		283
Recorded investment with an allowance recorded	147		147		150
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	87		87		73
Average Recorded Investment with no related allowance recorded	283	283	283	283
Average Recorded Investment with an allowance recorded	147
Interest Income Recognized with no related allowance recorded	0	0	0	0
Interest Income Recognized with an allowance recorded	1
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	0
Consumer 1-4 Family Mortgage Loans
Loans Individually Evaluated for Impairment [Abstract]
Allowance for Loan Losses Allocated	339		339		457
Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Loans Individually Evaluated for Impairment [Abstract]
Average Recorded Investment with no related allowance recorded		48
Interest Income Recognized with no related allowance recorded		0
Cash basis interest income recognized with no related allowance recorded		2
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	200		200		583
Unpaid principal balance with an allowance recorded	1,637		1,637		1,517
Recorded Investment with no related allowance recorded	119		119		502
Recorded investment with an allowance recorded	1,640		1,640		1,518
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	339		339		457
Average Recorded Investment with no related allowance recorded	164	533	272	538
Average Recorded Investment with an allowance recorded	1,680	993	1,639	981
Interest Income Recognized with no related allowance recorded	1	2	2	4
Interest Income Recognized with an allowance recorded	13	8	25	15
Cash basis interest income recognized with no related allowance recorded	1	3	2	4
Cash basis interest income recognized with an allowance recorded	13	10	25	14
Consumer 1-4 Family Mortgage Loans | Open End and Junior Lien Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded					220
Recorded Investment with no related allowance recorded					220
Allowance for loan losses allocated with no related allowance recorded					0
Average Recorded Investment with an allowance recorded				77
Interest Income Recognized with an allowance recorded				0
Cash basis interest income recognized with an allowance recorded				0
Consumer 1-4 Family Mortgage Loans | Home Equity Mortgage Open Ended Revolving Lines
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	92		92
Recorded Investment with no related allowance recorded	92		92
Allowance for loan losses allocated with no related allowance recorded	0		0
Average Recorded Investment with no related allowance recorded	93	247	143	169
Interest Income Recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with no related allowance recorded	0	$ 0	0	0
Consumer 1-4 Family Mortgage Loans | Other Consumer Loans
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded					45
Recorded investment with an allowance recorded					44
Allowance for loans losses allocated with an allowance recorded					$ 26
Average Recorded Investment with an allowance recorded	28		36	48
Interest Income Recognized with an allowance recorded	1		2	1
Cash basis interest income recognized with an allowance recorded	$ 0		$ 1	$ 2

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Aging Of The Recorded Investment In Past Due Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	$ 3,981,164	$ 3,897,455
30 to 89 Days Past Due	2,457	10,025
Nonaccrual	14,997	7,265
Total Past Due and Nonaccural	17,454	17,290
Total	3,998,618	3,914,745
Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	103,949	95,520
30 to 89 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	103,949	95,520
Other Commercial Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Other consumer loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	86,624	85,654
30 to 89 Days Past Due	125	168
Nonaccrual	0	0
Total Past Due and Nonaccural	125	168
Total	86,749	85,822
Other consumer loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial and Industrial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	1,450,361	1,405,338
Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	748,862	684,191
30 to 89 Days Past Due	20	4,328
Nonaccrual	6,364	2,245
Total Past Due and Nonaccural	6,384	6,573
Total	755,246	690,764
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	689,781	709,629
30 to 89 Days Past Due	5	3,368
Nonaccrual	5,329	1,577
Total Past Due and Nonaccural	5,334	4,945
Total	695,115	714,574
Commercial and Industrial Loans | Non-working Capital Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	1,653,047	1,567,165
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	320,380	265,544
30 to 89 Days Past Due	24	0
Nonaccrual	0	0
Total Past Due and Nonaccural	24	0
Total	320,404	265,544
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	554,607	583,214
30 to 89 Days Past Due	0	486
Nonaccrual	2,185	2,269
Total Past Due and Nonaccural	2,185	2,755
Total	556,792	585,969
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	533,215	520,431
30 to 89 Days Past Due	103	57
Nonaccrual	0	0
Total Past Due and Nonaccural	103	57
Total	533,318	520,488
Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	242,533	195,164
30 to 89 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	242,533	195,164
Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total		585,969
Agri-business and Agricultural Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	314,583	370,607
Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	148,469	177,080
30 to 89 Days Past Due	0	150
Nonaccrual	430	283
Total Past Due and Nonaccural	430	433
Total	148,899	177,513
Agri-business and Agricultural Loans | Loans Secured By Farmland | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	165,684	193,094
30 to 89 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	165,684	193,094
Agri-business and Agricultural Loans | Loans For Agricultural Production | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	103,949	95,520
Consumer 1-4 Family Mortgage Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	389,929	390,293
Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Total	86,749	85,822
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	185,676	183,420
30 to 89 Days Past Due	1,235	1,370
Nonaccrual	597	671
Total Past Due and Nonaccural	1,832	2,041
Total	187,508	185,461
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Consumer 1-4 Family Mortgage Loans | Home Equity Mortgage Open Ended Revolving Lines
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	189,150	188,320
30 to 89 Days Past Due	945	98
Nonaccrual	92	220
Total Past Due and Nonaccural	1,037	318
Total	190,187	188,638
Consumer 1-4 Family Mortgage Loans | Home Equity Mortgage Open Ended Revolving Lines | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	0	0
Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	12,234	16,194
30 to 89 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due and Nonaccural	0	0
Total	12,234	16,194
Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans | Greater than 90 Days Past Due
Financing Receivable, Recorded Investment, Aging [Abstract]
Total Past Due	$ 0	$ 0

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Troubled Debt Restructuring) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Troubled Debt Restructuring [Abstract]
Accruing troubled debt restructured loans	$ 6,082	$ 8,016
Nonaccrual troubled debt restructured loans	3,512	4,384
Total troubled debt restructured loans	$ 9,594	$ 12,400

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Loans By Class Modified As Troubled Debt Restructuring) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($) item	Jun. 30, 2019 USD ($) item	Jun. 30, 2018 USD ($) item
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		$ 20	$ 3,429
Post-Modification Outstanding Recorded Investment		$ 20	$ 3,428
Modified Repayment Terms
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item	1	1	6
Modified Repayment Terms | Minimum
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms	0 months	0 months
All Modifications
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item	1	1	6
Non-working Capital Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item		1
Pre-Modification Outstanding Recorded Investment		$ 20
Post-Modification Outstanding Recorded Investment		$ 20
Commercial and Industrial Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	$ 35
Post-Modification Outstanding Recorded Investment	$ 35
Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Pre-Modification Outstanding Recorded Investment			$ 600
Post-Modification Outstanding Recorded Investment			$ 600
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Modified Repayment Terms
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Extension period for modified repayment terms			0 months
Commercial and Industrial Loans | Non-working Capital Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms			0 months
Commercial and Industrial Loans | Non-working Capital Loans | Modified Repayment Terms
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item	1		2
Commercial and Industrial Loans | Non-working Capital Loans | Modified Repayment Terms | Minimum
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms	0 months		0 months
Commercial and Industrial Loans | Non-working Capital Loans | All Modifications
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item	1		2
Pre-Modification Outstanding Recorded Investment			$ 1,420
Post-Modification Outstanding Recorded Investment			$ 1,420
Commercial and Industrial Loans | Owner Occupied Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	$ 35
Post-Modification Outstanding Recorded Investment	$ 35
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Pre-Modification Outstanding Recorded Investment			$ 824
Post-Modification Outstanding Recorded Investment			$ 824
Extension period for modified repayment terms			12 months
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Modified Repayment Terms
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Extension period for modified repayment terms			12 months
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | All Modifications
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Pre-Modification Outstanding Recorded Investment			$ 387
Post-Modification Outstanding Recorded Investment			$ 387
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Modified Repayment Terms
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Modified Repayment Terms | Minimum
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		0 months	239 months
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Modified Repayment Terms | Maximum
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		239 months
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | All Modifications
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans | item			1
Pre-Modification Outstanding Recorded Investment			$ 198
Post-Modification Outstanding Recorded Investment			$ 197
Extension period for modified repayment terms			239 months

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Credit Quality Indicators) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	$ 3,998,618	$ 3,914,745
Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	103,949	95,520
Commercial and Industrial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	1,450,361	1,405,338
Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	755,246	690,764
Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	695,115	714,574
Commercial Real Estate and Multi-family Residential Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	1,653,047	1,567,165
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	320,404	265,544
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	556,792	585,969
Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	533,318	520,488
Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	242,533	195,164
Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		585,969
Agri-business and Agricultural Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	314,583	370,607
Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	148,899	177,513
Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	165,684	193,094
Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	103,949	95,520
Consumer 1-4 Family Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	389,929	390,293
Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	86,749	85,822
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	187,508	185,461
Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	190,187	188,638
Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	12,234	16,194
Pass
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	3,390,147	3,324,054
Pass | Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	660,816	618,612
Pass | Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	645,632	664,787
Pass | Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	320,115	264,900
Pass | Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	517,431
Pass | Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	530,491	517,356
Pass | Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	242,329	194,948
Pass | Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		541,734
Pass | Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	134,805	166,623
Pass | Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	153,961	183,189
Pass | Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	103,945	95,516
Pass | Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	14,077	12,700
Pass | Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	55,538	54,879
Pass | Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	11,007	8,810
Pass | Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	144,524	101,418
Special Mention | Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	70,866	43,240
Special Mention | Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	25,350	15,992
Special Mention | Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	289	353
Special Mention | Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	21,043
Special Mention | Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	2,209	2,491
Special Mention | Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	204	216
Special Mention | Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		21,864
Special Mention | Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	12,840	9,107
Special Mention | Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	11,723	8,155
Special Mention | Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Special Mention | Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Substandard
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	62,388	85,232
Substandard | Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	23,244	28,563
Substandard | Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	18,804	27,548
Substandard | Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	291
Substandard | Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	18,318
Substandard | Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	618	641
Substandard | Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Substandard | Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		22,371
Substandard | Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	1,254	1,783
Substandard | Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	1,750
Substandard | Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Substandard | Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	44
Substandard | Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	95	2,021
Substandard | Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	55	220
Substandard | Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		0
Doubtful | Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Doubtful | Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	401,559	404,041
Not Rated | Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	320	349
Not Rated | Commercial and Industrial Loans | Non-working Capital Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	5,329	6,247
Not Rated | Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans | Nonowner Occupied Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans | Multifamily Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated | Commercial Real Estate and Multi-family Residential Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance		0
Not Rated | Agri-business and Agricultural Loans | Loans Secured By Farmland
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated | Agri-business and Agricultural Loans | Loans For Agricultural Production
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	0	0
Not Rated | Agri-business and Agricultural Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	4	4
Not Rated | Consumer 1-4 Family Mortgage Loans | Other Commercial Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	72,672	73,078
Not Rated | Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	131,875	128,561
Not Rated | Consumer 1-4 Family Mortgage Loans | Open End And Junior Lien Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	179,125	179,608
Not Rated | Consumer 1-4 Family Mortgage Loans | Residential Construction and Land Development Loans
Financing Receivable, Recorded Investment [Line Items]
Total ending loans balance	$ 12,234	$ 16,194

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Additional Information) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Troubled Debt Restructuring [Abstract]
Loans Modified In Troubled Debt Restructured Loans	$ 2,900,000		$ 3,700,000
Loan amount of credit quality analysis	250,000
Financing Receivable, Modifications, Recorded Investment	107,000
Construction and Land Development Loans
Troubled Debt Restructuring [Abstract]
Financing Receivable, Modifications, Recorded Investment	875,000
Commercial and Industrial Loans
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss		$ 166,000
Financing Receivable, Modifications, Recorded Investment	341,000
Commercial and Industrial Loans | Non-working Capital Loans
Troubled Debt Restructuring [Abstract]
Financing Receivable, Modifications, Recorded Investment	551,000
Commercial Real Estate and Multi-family Residential Loans
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss		$ 1,600,000
Financing Receivable, Modifications, Recorded Investment	484,000
Commercial Real Estate Building
Troubled Debt Restructuring [Abstract]
Financing Receivable, Modifications, Recorded Investment	533,000
Commercial and Industrial Nonworking Capital
Troubled Debt Restructuring [Abstract]
Financing Receivable, Modifications, Recorded Investment	$ 70,000

XML

FAIR VALUE (Assets and Liabilities Measured At Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Securities available for sale	$ 609,826	$ 585,549
Mortgage banking derivative	6,679	3,109
Liabilities
Mortgage banking derivative		3,465
Fair Value, Measurements, Recurring
Assets
U.S. Treasury securities	1,007	987
U.S. government sponsored agency securities	2,290	4,350
Mortgage-backed securities: residential	323,945	325,412
Mortgage-backed securities: commercial	38,134	38,141
State and municipal securities	244,450	216,659
Securities available for sale	609,826	585,549
Mortgage banking derivative	298	95
Interest rate swap derivative	6,679	3,869
Total assets	616,803	589,513
Liabilities
Mortgage banking derivative	53	23
Interest rate swap derivative	7,266	4,025
Total liabilities	7,319	4,048
Level 1 | Fair Value, Measurements, Recurring
Assets
U.S. Treasury securities	1,007	987
U.S. government sponsored agency securities	0	0
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	0	0
Securities available for sale	1,007	987
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	1,007	987
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	0	0
Level 2 | Fair Value, Measurements, Recurring
Assets
U.S. Treasury securities	0	0
U.S. government sponsored agency securities	2,290	4,350
Mortgage-backed securities: residential	323,945	325,412
Mortgage-backed securities: commercial	38,134	38,141
State and municipal securities	244,300	216,509
Securities available for sale	608,669	584,412
Mortgage banking derivative	298	95
Interest rate swap derivative	6,679	3,869
Total assets	615,646	588,376
Liabilities
Mortgage banking derivative	53	23
Interest rate swap derivative	7,266	4,025
Total liabilities	7,319	4,048
Level 3 | Fair Value, Measurements, Recurring
Assets
U.S. Treasury securities	0	0
U.S. government sponsored agency securities	0	0
Mortgage-backed securities: residential	0	0
Mortgage-backed securities: commercial	0	0
State and municipal securities	150	150
Securities available for sale	150	150
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	150	150
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	$ 0	$ 0

XML

FAIR VALUE (Reconciliation of All Assets Measured at Fair Value on a Recurring Basis using Significant Unobservable Inputs (Level 3)) (Details) - State and Municipal Securities - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Balance of recurring Level 3 assets at January 1	$ 150	$ 880
Changes in fair value of securities included in other comprehensive income	0	(7)
Principal payments	0	(45)
Balance of recurring Level 3 assets at December 31	$ 150	$ 828

XML

FAIR VALUE (Quantitative Information about Level 3 Fair Value Measurements) (Details) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Fair Value, Measurements, Nonrecurring
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	$ 9,243	$ 11,822
Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	9,243	11,822
Level 3 | Measurement Input, Discount Rate | State and Municipal Securities | Price To Type Par Call
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	$ 150	$ 150
Level 3 | Discount To Benchmark Index | Minimum | Measurement Input, Discount Rate | State and Municipal Securities | Price To Type Par Call
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs (Average) (in hundredths)	0.00%	0.00%
Level 3 | Discount To Benchmark Index | Maximum | Measurement Input, Discount Rate | State and Municipal Securities | Price To Type Par Call
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs (Average) (in hundredths)	1.00%	1.00%
Level 3 | Discount To Benchmark Index | Weighted Average | Measurement Input, Discount Rate | State and Municipal Securities | Price To Type Par Call
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Debt Instrument, Measurement Input | item	(0.17)	(0.17)

XML

FAIR VALUE (Assets Measured at Fair Value on a Nonrecurring Basis) (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	$ 9,243	$ 11,506
Other real estate owned	0	316
Total assets	9,243	11,822
Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Total assets	0	0
Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other real estate owned	0	0
Total assets	0	0
Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	9,243	11,506
Other real estate owned	0	316
Total assets	9,243	11,822
Commercial and Industrial Loans | Working Capital Lines of Credit Loans
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	3,306	4,092
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans | Working Capital Lines of Credit Loans | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	3,306	4,092
Commercial and Industrial Loans | Non-working Capital Loans
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	4,678	4,967
Commercial and Industrial Loans | Non-working Capital Loans | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans | Non-working Capital Loans | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans | Non-working Capital Loans | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	4,678	4,967
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		148
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial Real Estate and Multi-family Residential Loans | Construction and Land Development Loans | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		148
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	561	1,669
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-family Residential Loans | Owner Occupied Loans | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	561	1,669
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	638	553
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans | Closed End First Mortgage Loans | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	638	553
Agribusiness and Agricultural | Loans Secured By Farmland
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	60	77
Agribusiness and Agricultural | Loans Secured By Farmland | Level 1
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agribusiness and Agricultural | Loans Secured By Farmland | Level 2
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agribusiness and Agricultural | Loans Secured By Farmland | Level 3
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	$ 60	$ 77

XML

FAIR VALUE (Valuation Methodology and Unobservable Inputs for Level 3 Assets) (Details) - Fair Value, Measurements, Nonrecurring $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $	$ 9,243	$ 11,506
Commercial and Industrial Loans
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 | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $	$ 7,984	$ 9,059
Commercial and Industrial Loans | 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)	3	4
Commercial and Industrial Loans | Maximum | 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)	100	100
Commercial and Industrial Loans | 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)	53	48
Commercial Real Estate and Multi-family Residential Loans
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 | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $	$ 561	$ 1,817
Commercial Real Estate and Multi-family Residential Loans | 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)	29	6
Commercial Real Estate and Multi-family Residential Loans | Maximum | 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)	53	53
Commercial Real Estate and Multi-family Residential Loans | 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)	41	34
Consumer 1-4 Family Mortgage Loans
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 | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $	$ 638	$ 553
Consumer 1-4 Family Mortgage Loans | 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)	0	0
Consumer 1-4 Family Mortgage Loans | Maximum | 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)	19	64
Consumer 1-4 Family Mortgage Loans | 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)	13	23
Other Real Estate Owned | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $		$ 316
Other Real Estate Owned | 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)		0
Agribusiness and Agricultural
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
Agribusiness and Agricultural | Collateral Based Measurements | Measurement Input, Discount Rate
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans | $	$ 60	$ 77
Agribusiness and Agricultural | 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)	59	49

XML

FAIR VALUE (Additional Information) (Details) - USD ($)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Mar. 31, 2019	Dec. 31, 2017
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Mortgage servicing rights	$ 4,600,000			$ 4,600,000
Percentage of discount from appraised value (in hundredths)				3.95%
Weighted average maturity of residential mortgages				20 years
Prepayment Speed used in unobservable assumptions				72		81
Discount rate used to estimate fair value (in hundredths)				9.40%		9.40%
Subtotal	4,000,085,000			$ 4,000,085,000		$ 3,916,326,000
Valuation allowance	50,564,000	$ 47,706,000	$ 45,627,000	50,564,000	$ 47,706,000	$ 48,453,000	$ 49,562,000	$ 47,121,000
Provision for Loan and Lease Losses	785,000	1,700,000		1,985,000	5,000,000
Allowance for Loan and Lease Loss, Recovery of Bad Debts	301,000	507,000		494,000	690,000
Minimum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Amount of variance				$ 100,000
Commercial Real Estates | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				0.00%
Commercial Real Estates | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				50.00%
Inventory Finished Goods | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				35.00%
Inventory Finished Goods | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				65.00%
Finished Goods | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				30.00%
Finished Goods | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				60.00%
Inventory Work In Process | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				50.00%
Inventory Work In Process | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				100.00%
Equipment | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				30.00%
Equipment | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				70.00%
Marketable Securities | Minimum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				10.00%
Marketable Securities | Maximum | Level 3
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)				30.00%
Impaired Loans
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Subtotal	18,800,000	9,600,000		$ 18,800,000	9,600,000
Valuation allowance	9,600,000	2,100,000		9,600,000	2,100,000
Allowance for Loan and Lease Loss, Recovery of Bad Debts	$ 300,000	$ 200,000		$ 100,000	$ 4,500,000
Charge Off			$ 4,600,000
Municipal Notes | Minimum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				(5.00%)
Municipal Notes | Maximum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				5.00%
US Government Agencies Short-term Debt Securities | Minimum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				(3.00%)
US Government Agencies Short-term Debt Securities | Maximum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				3.00%
US Treasury Securities | Minimum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				(1.00%)
US Treasury Securities | Maximum
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of Variance				1.00%

XML

FAIR VALUE (Estimated Fair Values And The Related Carrying Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financial Assets:
Cash and cash equivalents	$ 196,370	$ 216,922
Securities available for sale	609,826	585,549
Financial Liabilities:
Federal funds purchased	(15,000)
Federal Home Loan Bank advances	(100,000)	(170,000)
Carrying Value
Financial Assets:
Cash and cash equivalents	196,370	216,922
Securities available for sale		585,549
Real estate mortgages held for sale	5,929	2,293
Loans, net	3,948,054	3,866,292
Federal Reserve and Federal Home Loan Bank stock	13,772
Federal Home Loan Bank stock		13,772
Accrued interest receivable	17,418	15,518
Financial Liabilities:
Certificates of deposit	(1,328,062)	(1,419,754)
All other deposits	(2,893,237)	(2,624,311)
Federal funds purchased	(15,000)
Federal Home Loan Bank advances	(100,000)	(170,000)
Securities sold under agreements to repurchase		(75,555)
Subordinated debentures	(30,928)	(30,928)
Standby letters of credit	(1,128)	(978)
Accrued interest payable	(12,454)	(10,404)
Estimate of Fair Value Measurement
Financial Assets:
Securities available for sale	609,826	585,549
Real estate mortgages held for sale	5,998	2,314
Loans, net	3,901,925	3,786,175
Accrued interest receivable	17,418	15,518
Financial Liabilities:
Certificates of deposit	(1,336,715)	(1,424,553)
All other deposits	(2,893,237)	(2,624,311)
Federal Home Loan Bank advances		(169,996)
Securities sold under agreements to repurchase		(75,555)
Subordinated debentures	(31,196)	(31,195)
Standby letters of credit	(1,128)	(978)
Accrued interest payable	(12,454)	(10,404)
Level 1
Financial Assets:
Cash and cash equivalents	193,603	214,452
Accrued interest receivable	3
Financial Liabilities:
Certificates of deposit	0
Federal funds purchased	(15,000)
Federal Home Loan Bank advances	0
Level 1 | Estimate of Fair Value Measurement
Financial Assets:
Securities available for sale	1,007	987
Real estate mortgages held for sale	0	0
Loans, net	0	0
Accrued interest receivable		3
Financial Liabilities:
Certificates of deposit		0
All other deposits	(2,893,237)	(2,624,311)
Federal Home Loan Bank advances		0
Securities sold under agreements to repurchase		0
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(174)	(110)
Level 2
Financial Assets:
Cash and cash equivalents	2,767	2,470
Financial Liabilities:
Federal funds purchased	0
Federal Home Loan Bank advances	(100,000)
Level 2 | Estimate of Fair Value Measurement
Financial Assets:
Securities available for sale	608,669	584,412
Real estate mortgages held for sale	5,998	2,314
Loans, net	0	0
Accrued interest receivable	3,444	3,569
Financial Liabilities:
Certificates of deposit	(1,336,715)	(1,424,553)
All other deposits	0	0
Federal Home Loan Bank advances		(169,996)
Securities sold under agreements to repurchase		(75,555)
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(12,275)	(10,289)
Level 3
Financial Assets:
Cash and cash equivalents	0	0
Financial Liabilities:
Federal funds purchased	0
Federal Home Loan Bank advances	0
Level 3 | Estimate of Fair Value Measurement
Financial Assets:
Securities available for sale	150	150
Real estate mortgages held for sale	0	0
Loans, net	3,901,925	3,786,175
Accrued interest receivable	13,971	11,946
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	0	0
Federal Home Loan Bank advances		0
Securities sold under agreements to repurchase		0
Subordinated debentures	(31,196)	(31,195)
Standby letters of credit	(1,128)	(978)
Accrued interest payable	$ (5)	$ (5)

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Additional Information) (Details) (Imported) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Securities Sold under Agreements to Repurchase		$ 75,600
Securities Sold under Agreement to Repurchase	$ 0	75,555
Collateralized Mortgage Backed Securities
Securities Sold under Agreements to Repurchase, Fair Value of Collateral		$ 100,700

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EMPLOYEE BENEFIT PLANS (Components of net periodic benefit cost) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension Benefits
Net pension expense:
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	22	24	44	47
Expected return on plan assets	(35)	(35)	(69)	(69)
Recognized net actuarial (gain) loss	34	48	66	96
Net pension expense (benefit)	21	37	41	74
SERP Benefits
Net pension expense:
Service cost	0	0	0	0
Interest cost	10	8	19	17
Expected return on plan assets	(15)	(16)	(28)	(31)
Recognized net actuarial (gain) loss	19	19	37	37
Net pension expense (benefit)	$ 14	$ 11	$ 28	$ 23

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EMPLOYEE BENEFIT PLANS (Additional Information) (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	$ 27,000	$ 0
SERP Benefits
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	$ 0	$ 0

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OFFSETTING ASSETS AND LIABILITIES (Schedule of Offsetting of Assets and Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Gross Amounts of Recognized Assets	$ 6,679	$ 3,869
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	6,679	3,869
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 Received		(760)
Net Amount	6,679	3,109
Liabilities
Gross Amounts of Recognized Liabilities	7,266	79,580
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	7,266	79,580
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	(75,555)
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	(7,360)	(560)
Net Amount		3,465
Net Amount	(94)
Interest Rate Swap
Assets
Gross Amounts of Recognized Assets	6,679	3,869
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	6,679	3,869
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 Received		(760)
Net Amount	6,679	3,109
Liabilities
Gross Amounts of Recognized Liabilities	7,266	4,025
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	7,266	4,025
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 Received	(7,360)	(560)
Net Amount		3,465
Net Amount	(94)
Repurchase Agreements
Liabilities
Gross Amounts of Recognized Liabilities	0	75,555
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	0	75,555
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	(75,555)
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	0
Net Amount		$ 0
Net Amount	$ 0

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EARNINGS PER SHARE (Earnings Per Share Computations) (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Weighted average shares outstanding for basic earnings per common share	25,614,701	25,293,329	25,553,254	25,275,471
Dilutive effect of stock options, awards and warrants	159,301	415,887	167,825	429,034
Weighted average shares outstanding for diluted earnings per common share	25,774,002	25,709,216	25,721,079	25,704,505
Basic earnings per common share	$ 0.85	$ 0.80	$ 1.70	$ 1.52
Diluted earnings per common share	$ 0.85	$ 0.78	$ 1.69	$ 1.50

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Changes in Accumulated Other Comprehensive Income By Component) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Unrealized Gains and Losses on Available- for-Sales Securities, Opening Balance	$ 3,843	$ (6,270)	$ (4,796)	$ 784
Unrealized Gains and Losses on Available- for-Sales Securities, Other comprehensive income before reclassification	7,040	(1,771)	15,702	(8,903)
Unrealized Gains and Losses on Available- for-Sales Securities, Amounts reclassified from accumulated other comprehensive income (loss)	(65)	0	(88)	6
Unrealized Gains and Losses on Available- for-Sales Securities, Net current period other comprehensive income	6,975	(1,771)	15,614	(8,897)
Unrealized Gains and Losses on Available- for-Sales Securities, Ending Balance	10,818	(8,041)	10,818	(8,041)
Defined Benefit Pension Items, Opening Balance	(1,356)	(1,718)	(1,395)	(1,454)
Defined Benefit Pension Items, Other comprehensive income before reclassification	0	0	0	0
Defined Benefit Pension Items, Amounts reclassified from accumulated other comprehensive income (loss)	38	49	(77)	(98)
Net of tax amount	38	49	77	98
Defined Benefit Pension Items, Ending Balance	(1,318)	(1,669)	(1,318)	(1,669)
Total, Opening Balance	2,487	(7,988)	(6,191)	(670)
Total, Other comprehensive income (loss) before reclassification	7,040	(1,771)	(15,702)	8,903
Total, Amounts reclassified from accumulated other comprehensive income (loss)	(27)	49	(11)	104
Total other comprehensive income, net of tax	7,013	(1,722)	15,691	(8,799)
Total, Ending Balance	$ 9,500	$ (9,710)	$ 9,500	(9,710)
Accounting Standards Update 2018-02
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax				140
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax				(313)
Other Comprehensive Income Loss, Adjustment, Net of Tax				(173)
Accounting Standards Update 2016-01
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax				(68)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax				0
Other Comprehensive Income Loss, Adjustment, Net of Tax				$ (68)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Reclassification Adjustment) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Unrealized gains and losses on available-for-sale securities
Net securities gains (losses)	$ 65	$ 0	$ 88	$ (6)
Income tax expense	0	0	0	0
Net of tax	65	0	88	(6)
Amortization of defined benefit pension items
Other expense	(53)	(67)	(103)	(133)
Income tax expense	15	18	26	35
Net of tax	(38)	(49)	(77)	(98)
Total reclassifications for the period	$ 27	$ (49)	$ 11	$ (104)

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LEASES (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jan. 01, 2019
LEASES
2019	$ 271	$ 271
2020	561	561
2021	581	581
2022	595	595
2023	606	606
2024 - 2029	3,495	3,495
Total undiscounted lease payments	6,109	6,109
Less imputed interest	(810)	(810)
Lease liability	5,299	5,299
Right-of-use asset	5,299	5,299	$ 5,500
Lease cost
Operating lease cost	125	244
Short-term lease cost	6	12
Total lease cost	131	$ 256
Operating cash outflows from operating leases	$ 244
Weighted-average remaining lease term - operating leases	10 years 3 months 18 days	10 years 3 months 18 days
Weighted average discount rate - operating leases	2.80%	2.80%

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SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Millions	Aug. 02, 2019 USD ($)
Subsequent Event
Repurchase authorized limit	$ 30
Unsecured revolving credit agreement
Subsequent Event
Maximum borrowing capacity	$ 30
Credit agreement term	1 year