FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2014

Summary of Fair Value Measured on a Recurring Basis

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. 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, 2014
(000's omitted)	Level 1	Level 2	Level 3	Total Fair Value
Available-for-sale investment securities:
U.S. Treasury and agency securities	$1,465,231	$21,396	$0	$1,486,627
Obligations of state and political subdivisions	0	688,334	0	688,334
Government agency mortgage-backed securities	0	244,122	0	244,122
Corporate debt securities	0	27,287	0	27,287
Government agency collateralized mortgage obligations	0	19,130	0	19,130
Marketable equity securities	431	0	0	431
Total available-for-sale investment securities	1,465,662	1,000,269	0	2,465,931
Mortgage loans held for sale	0	726	0	726
Commitments to originate real estate loans for sale	0	0	170	170
Forward sales commitments	0	(7)	0	(7)
Total	$1,465,662	$1,000,988	$170	$2,466,820

	December 31, 2013
(000's omitted)	Level 1	Level 2	Level 3	Total Fair Value
Available-for-sale investment securities:
U.S. Treasury and agency securities	$1,182,261	$29,886	$0	$1,212,147
Obligations of state and political subdivisions	0	668,982	0	668,982
Government agency mortgage-backed securities	0	254,978	0	254,978
Corporate debt securities	0	27,587	0	27,587
Government agency collateralized mortgage obligations	0	22,048	0	22,048
Marketable equity securities	421	0	0	421
Total available-for-sale investment securities	1,182,682	1,003,481	0	2,186,163
Mortgage loans held for sale	0	728	0	728
Commitments to originate real estate loans for sale	0	0	44	44
Forward sales commitments	0	27	0	27
Total	$1,182,682	$1,004,236	$44	$2,186,962

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,
	2014	2013
	Commitments		Commitments
	to Originate	Pooled Trust	to Originate
	Real Estate	Preferred	Real Estate
(000's omitted)	Loans for Sale	Securities	Loans for Sale	Total
Beginning balance	$142	$47,290	($19)	$47,271
Total (losses)/gains included in earnings (1)(3)	(142)	16	19	35
Total gains included in other comprehensive income(2)	0	4,217	0	4,217
Principal reductions	0	(272)	0	(272)
Commitments to originate real estate loans held for sale, net	170	0	268	268
Ending balance	$170	$51,251	$268	$51,519

(1) Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount, which 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 net unrealized gains/(losses) on available-for sale securities in the Statement of Comprehensive Income.
(3) Amounts included in earnings associated with the commitments to originate real estate loans for sale are reported as a component of other banking services in the Consolidated Statement of Income.

	Nine Months Ended September 30,
	2014	2013
	Commitments		Commitments
	to Originate	Pooled Trust	to Originate
	Real Estate	Preferred	Real Estate
(000's omitted)	Loans for Sale	Securities	Loans for Sale	Total
Beginning balance	$44	$49,600	$0	$49,600
Total (losses)/gains included in earnings (1)(3)	(253)	166	0	166
Total gains included in other comprehensive income(2)	0	7,090	0	7,090
Principal reductions	0	(5,605)	0	(5,605)
Commitments to originate real estate loans held for sale, net	379	0	268	268
Ending balance	$170	$51,251	$268	$51,519

(1) Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount, which 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 net unrealized gains/(losses) on available-for sale securities in the Statement of Comprehensive Income.

(3) Amounts included in earnings associated with the commitments to originate real estate loans for sale are reported

as a component of other banking services in the Consolidated Statement of Income.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets and liabilities measured on a non-recurring basis:

	September 30, 2014				December 31, 2013
(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	$0	$0	$0	$600	$0	$600
Other real estate owned	0	0	3,619	3,619	0	0	5,060	5,060
Total	$0	$0	$3,619	$3,619	$0	$600	$5,060	$5,660

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 are as follows:

(000's omitted)	Fair Value at September 30, 2014	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Range (Weighted Average)
Other real estate owned	$3,619	Fair Value of Collateral	Estimated cost of disposal/market adjustment	10.0%-75.1% (25.9%)
Commitments to originate real estate loans for sale	170	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, 2013 are as follows:

(000's omitted)	Fair Value at December 31, 2013	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Range (Weighted Average)
Other real estate owned	$5,060	Fair value of collateral	Estimated cost of disposal/market adjustment	11.0% - 54.4% (28.1%)
Commitments to originate real estate loans for sale	44	Discounted cash flow	Embedded servicing value	1%

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, 2014 and December 31, 2013 are as follows:

	September 30, 2014		December 31, 2013
	Carrying	Fair	Carrying	Fair
(000's omitted)	Value	Value	Value	Value
Financial assets:
Net loans	$4,171,971	$4,217,967	$4,064,764	$4,044,449
Financial liabilities:
Deposits	5,967,331	5,967,675	5,896,044	5,898,138
Borrowings	343,805	343,805	141,913	141,913
Subordinated debt held by unconsolidated subsidiary trusts	102,115	93,435	102,097	109,284

- 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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