FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2013

Summary of Fair Value Measured on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis. There were no transfers between any of the levels for the periods presented.

	September 30, 2013
(000's omitted)	Level 1	Level 2	Level 3	Total Fair Value
Available-for-sale investment securities:
U.S. Treasury and agency securities	$862,068	$15,204	$0	$877,272
Obligations of state and political subdivisions	0	625,995	0	625,995
Government agency mortgage-backed securities	0	244,899	0	244,899
Pooled trust preferred securities	0	0	51,251	51,251
Corporate debt securities	0	24,807	0	24,807
Government agency collateralized mortgage obligations	0	23,936	0	23,936
Marketable equity securities	492	0	0	492
Total available-for-sale investment securities	862,560	934,841	51,251	1,848,652
Forward sales commitments	0	(129)	0	(129)
Commitments to originate real estate loans for sale	0	0	268	268
Mortgage loans held for sale	0	945	0	945
Total	$862,560	$935,657	$51,519	$1,849,736

	December 31, 2012
(000's omitted)	Level 1	Level 2	Level 3	Total Fair Value
Available-for-sale investment securities:
U.S. Treasury and agency securities	$891,803	$187,454	$0	$1,079,257
Obligations of state and political subdivisions	0	662,892	0	662,892
Government agency mortgage-backed securities	0	269,951	0	269,951
Pooled trust preferred securities	0	0	49,600	49,600
Government agency collateralized mortgage obligations	0	33,935	0	33,935
Corporate debt securities	0	25,357	0	25,357
Marketable equity securities	402	0	0	402
Total available-for-sale investment securities/Total	$892,205	$1,179,589	$49,600	$2,121,394

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis are summarized in the following tables:

	Three Months Ended September 30,
	2013			2012
(000's omitted)	Pooled Trust Preferred Securities	Commitments to Originate Real Estate Loans for Sale	Total	Pooled Trust Preferred Securities
Beginning balance	$47,290	($19)	$47,271	$48,786
Total gains (losses) included in earnings (1)	16	19	35	32
Total gains included in other comprehensive income(2)	4,217	0	4,217	2,769
Principal reductions	(272)	0	(272)	(750)
Commitments to originate real estate loans held for sale	0	268	268	0
Ending balance	$51,251	$268	$51,519	$50,837

(1)	Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount
	and are reported in interest and dividends on taxable investments.
(2)	Amounts included in other comprehensive income associated with the pooled trust preferred securities relate to changes
	in unrealized loss and are reported as a component of unrealized gains on securities in the Statement of Comprehensive Income.

	Nine Months Ended September 30,
	2013			2012
(000's omitted)	Pooled Trust Preferred Securities	Commitments to Originate Real Estate Loans for Sale	Total	Pooled Trust Preferred Securities
Beginning balance	$49,600	$0	$49,600	$43,846
Total gains (losses) included in earnings (1)	166	0	166	176
Total gains included in other comprehensive income(2)	7,090	0	7,090	11,136
Principal reductions	(5,605)	0	(5,605)	(4,321)
Commitments to originate real estate loans held for sale	0	268	268	0
Ending balance	$51,251	$268	$51,519	$50,837

(1)	Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount
	and are reported in interest and dividends on taxable investments.
(2)	Amounts included in other comprehensive income associated with the pooled trust preferred securities relate to changes
	in unrealized loss and are reported as a component of unrealized gains on securities in the Statement of Comprehensive Income.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets and liabilities measured on a non-recurring basis:

	September 30, 2013				December 31, 2012
(000's omitted)	Level 1	Level 2	Level 3	Total Fair Value	Level 1	Level 2	Level 3	Total Fair Value
Impaired loans	$0	$0	$1,746	$1,746	$0	$0	$1,186	$1,186
Other real estate owned	0	0	5,218	5,218	0	0	4,788	4,788
Mortgage servicing rights	0	0	1,011	1,011	0	0	1,028	1,028
Total	$0	$0	$7,975	$7,975	$0	$0	$7,002	$7,002

Significant Unobservable Inputs, Fair Value Valuation Techniques

The significant unobservable inputs used in the determination of fair value of assets classified as Level 3 on a recurring or non-recurring basis as of September 30, 2013 are as follows:

(000's omitted)	Fair Value at September 30, 2013	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Range (Weighted Average)

Pooled trust preferred securities	$51,251	Consensus pricing	Weighting of offered quotes	75.6% - 98.1% (88.9%)

Impaired loans	1,746	Fair Value of Collateral	Estimated cost of disposal/market adjustment	11.0%-50.0% (39.0%)

Other real estate owned	5,218	Fair Value of Collateral	Estimated cost of disposal/market adjustment	11.0%-66.7% (29.1%)

Mortgage servicing rights	1,011	Discounted cash flow	Weighted average constant prepayment rate	9.9%-35.4% (31.4%)
			Discount rate	3.4%-4.4% (4.0%)
			Adequate compensation	$7/loan

Commitments to originate real estate loans for sale	268	Discounted cash flow	Embedded servicing value	1%

The significant unobservable inputs used in the determination of fair value of assets classified as Level 3 on a recurring or non-recurring basis as of December 31, 2012 are as follows:

(000's omitted)	Fair Value at December 31, 2012	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Range (Weighted Average)

Pooled trust preferred securities	$49,600	Consensus pricing	Weighting of offered quotes	65.3% - 85.1% (78.4%)

Impaired loans	1,186	Fair value of collateral	Estimated cost of disposal/market adjustment	25.0% - 50.0% (27.5%)

Other real estate owned	4,788	Fair value of collateral	Estimated cost of disposal/market adjustment	11.0% - 60.2% (19.9%)

Mortgage servicing rights	1,028	Discounted cash flow	Weighted average constant prepayment rate	1.1% - 39.6% (34.4%)
			Discount rate	2.5% - 3.3% (3.1%)
			Adequate compensation	$7/loan

Carrying Amounts and Estimated Fair Values of Other Financial Instruments

The carrying amounts and estimated fair values of the Company’s other financial instruments that are not accounted for at fair value at September 30, 2013 and December 31, 2012 are as follows:

	September 30, 2013		December 31, 2012
	Carrying	Fair	Carrying	Fair
(000's omitted)	Value	Value	Value	Value
Financial assets:
Net loans	$4,025,455	$3,964,894	$3,865,576	$3,881,354
Financial liabilities:
Deposits	5,687,333	5,690,954	5,628,039	5,635,320
Borrowings	567,116	590,074	728,061	820,377
Subordinated debt held by unconsolidated subsidiary trusts	102,091	109,182	102,073	97,899

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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