FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and gain

December 31,  (in thousands)	2015		2014
Aggregate fair value	$	4,083	$	6,388
Contractual balance		3,993		6,265
Unrealized gain		90		123

Schedule of gains and losses from changes in fair value included in earnings

Years Ended December 31,  (in thousands)	2015		2014		2013
Interest income	$	219	$	183	$	471
Change in fair value		(33)		34		(488)
Total included in earnings	$	186	$	217	$	(17)

Impaired collateral dependent loans classified with Level 3 fair value hierarchy

December 31,  (in thousands)	2015		2014
Carrying amount of loans measured at fair value	$	8,162	$	8,343
Estimated selling costs considered in carrying amount		946		1,505
Valuation allowance		(100)		—
Total fair value	$	9,008	$	9,848

Provisions for loss on collateral dependent impaired loans

Years Ended December 31,  (in thousands)	2015		2014		2013
Provisions for loss on collateral dependent impaired loans	$	88	$	729	$	1,295

Other Real Estate Owned

December 31,  (in thousands)	2015		2014		2013
Other real estate carried at fair value	$	870	$	9,188	$	8,418
Other real estate carried at cost		350		2,055		8,684
Total carrying value of other real estate owned	$	1,220	$	11,243	$	17,102
Other real estate owned write-downs during the year	$	1,257	$	3,101	$	1,824

Carrying Amount and Estimated Fair Values of Financial Instruments

			Fair Value Measurements at
			December 31, 2015:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	210,082	$	210,082	$	—	$	—	$	210,082
Securities available for sale		517,058		1,011		507,510		8,537		517,058
Securities held to maturity		38,727		—		39,196		—		39,196
Mortgage loans held for sale		4,083		—		4,083		—		4,083
Other loans held for sale		514		—		514		—		514
Loans, net		3,299,119		—		—		3,332,608		3,332,608
Federal Home Loan Bank stock		28,208		—		—		—		NA
Accrued interest receivable		9,233		—		9,233		—		9,233
Liabilities:
Non interest-bearing deposits		634,863		—		634,863		—		634,863
Transaction deposits		1,601,647		—		1,601,647		—		1,601,647
Time deposits		250,967		—		250,882		—		250,882
Securities sold under agreements to repurchase and other short-term borrowings		395,433		—		395,433		—		395,433
Federal Home Loan Bank advances		699,500		—		708,722		—		708,722
Subordinated note		41,240		—		33,358		—		33,358
Accrued interest payable		1,229		—		1,229		—		1,229

NA - Not applicable

			Fair Value Measurements at
			December 31, 2014:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	72,878	$	72,878	$	—	$	—	$	72,878
Securities available for sale		435,911		1,018		429,643		5,250		435,911
Securities held to maturity		45,437		—		45,807		—		45,807
Mortgage loans held for sale		6,388		—		6,388		—		6,388
Loans, net		3,016,085		—		—		3,045,443		3,045,443
Federal Home Loan Bank stock		28,208		—		—		—		NA
Accrued interest receivable		8,807		—		8,807		—		8,807
Liabilities:
Non interest-bearing deposits		502,569		—		502,569		—		502,569
Transaction deposits		1,290,400		—		1,290,400		—		1,290,400
Time deposits		265,213		—		265,858		—		265,858
Securities sold under agreements to repurchase and other short-term borrowings		356,108		—		356,108		—		356,108
Federal Home Loan Bank advances		707,500		—		721,346		—		721,346
Subordinated note		41,240		—		41,198		—		41,198
Accrued interest payable		1,262		—		1,262		—		1,262

NA - Not applicable

Recurring basis

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	December 31, 2015 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	286,479	$	—	$	286,479
Private label mortgage backed security		—		—		5,132		5,132
Mortgage backed securities - residential		—		92,268		—		92,268
Collateralized mortgage obligations		—		113,668		—		113,668
Freddie Mac preferred stock		—		173		—		173
Mutual fund		1,011		—		—		1,011
Corporate bonds		—		14,922		—		14,922
Trust preferred security		—		—		3,405		3,405
Total securities available for sale	$	1,011	$	507,510	$	8,537	$	517,058
Mortgage loans held for sale	$	—	$	4,083	$	—	$	4,083
Rate lock commitments		—		306		—		306
Interest rate swap agreements		—		400		—		400
Financial liabilities:
Mandatory forward contracts		—		25		—		25
Interest rate swap agreements		—		1,000		—		1,000

	Fair Value Measurements at
	December 31, 2014 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	146,922	$	—	$	146,922
Private label mortgage backed security		—		—		5,250		5,250
Mortgage backed securities - residential		—		124,256		—		124,256
Collateralized mortgage obligations		—		143,171		—		143,171
Freddie Mac preferred stock		—		231		—		231
Mutual fund		1,018		—		—		1,018
Corporate bonds		—		15,063		—		15,063
Total securities available for sale	$	1,018	$	429,643	$	5,250	$	435,911
Mortgage loans held for sale	$	—	$	6,388	$	—	$	6,388
Rate lock commitments		—		250		—		250
Financial liabilities:
Mandatory forward contracts		—		33		—		33
Interest rate swap agreements		—		488		—		488

Fair value inputs quantitative information

	Fair		Valuation
December 31, 2015 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage backed security	$	5,132	Discounted cash flow	(1) Constant prepayment rate	0.0% - 6.5%
				(2) Probability of default	3.0% - 9.0%
				(2) Loss severity	60% - 90%

	Fair		Valuation
December 31, 2014 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage backed security	$	5,250	Discounted cash flow	(1) Constant prepayment rate	0.5% - 6.5%
				(2) Probability of default	3.0% - 6.2%
				(2) Loss severity	60% - 75%

Nonrecurring basis

Fair Value Disclosures

Fair value inputs quantitative information

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2015 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - residential real estate owner occupied	$	3,631	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 53% (7%)
Impaired loans - residential real estate non owner occupied	$	689	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 1% (1%)
Impaired loans - commercial real estate	$	1,839	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 58% (19%)
Impaired loans - commercial real estate	$	1,604	Income approach	Adjustments for differences between net operating income expectations	17% (17%)
Impaired loans - home equity	$	1,245	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 29% (20%)
Other real estate owned - residential real estate	$	128	Sales comparison approach	Adjustments determined for differences between comparable sales	18% (18%)
Other real estate owned - commercial real estate	$	442	Sales comparison approach	Adjustments determined for differences between comparable sales	12% - 23% (13%)
Other real estate owned - construction & land development	$	300	Sales comparison approach	Adjustments determined for differences between comparable sales	49% (49%)
Premises, held for sale	$	1,185	Sales comparison approach	Adjustments determined for differences between comparable sales	5% (5%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2014 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - residential real estate owner occupied	$	1,678	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 33% (7%)
Impaired loans - residential real estate non owner occupied	$	702	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 33% (18%)
Impaired loans - commercial real estate	$	2,615	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 9% (2%)
Impaired loans - commercial real estate	$	3,507	Income approach	Adjustments for differences between net operating income expectations	3% - 37% (22%)
Impaired loans - home equity	$	1,346	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 35% (12%)
Other real estate owned - residential real estate	$	1,916	Sales comparison approach	Adjustments determined for differences between comparable sales	9% - 23% (19%)
Other real estate owned - commercial real estate	$	1,378	Sales comparison approach	Adjustments determined for differences between comparable sales	11% - 14% (13%)
Other real estate owned - commercial real estate	$	1,467	Income approach	Adjustments for differences between net operating income expectations	19% (19%)
Other real estate owned - construction & land development	$	2,000	Sales comparison approach	Adjustments determined for differences between comparable sales	13% - 70% (38%)
Other real estate owned - construction & land development	$	2,427	Income approach	Adjustments for differences between net operating income expectations	8% - 9% (8%)
Premises, held for sale	$	1,317	Sales comparison approach	Adjustments determined for differences between comparable sales	5% (5%)

Assets Measured at Fair Value on a Non-Recurring Basis

	Fair Value Measurements at
	December 31, 2015 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	3,631	$	3,631
Non owner occupied		—		—		689		689
Commercial real estate		—		—		3,443		3,443
Home equity		—		—		1,245		1,245
Total impaired loans*	$	—	$	—	$	9,008	$	9,008
Other real estate owned:
Residential real estate	$	—	$	—	$	128	$	128
Commercial real estate		—		—		442		442
Construction & land development		—		—		300		300
Total other real estate owned	$	—	$	—	$	870	$	870
Premises, held for sale	$	—	$	—	$	1,185	$	1,185

	Fair Value Measurements at
	December 31, 2014 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,678	$	1,678
Non owner occupied		—		—		702		702
Commercial real estate		—		—		6,122		6,122
Home equity		—		—		1,346		1,346
Total impaired loans*	$	—	$	—	$	9,848	$	9,848
Other real estate owned:
Residential real estate	$	—	$	—	$	1,916	$	1,916
Commercial real estate		—		—		2,845		2,845
Construction & land development		—		—		4,427		4,427
Total other real estate owned	$	—	$	—	$	9,188	$	9,188
Premises, held for sale	$	—	$	—	$	1,317	$	1,317

* The difference between the carrying value and the fair value of impaired loans measured at fair value is reconciled in a subsequent table of this Footnote.

Private label mortgage backed security

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

Years Ended December 31,  (in thousands)	2015		2014		2013
Balance, beginning of year	$	5,250	$	5,485	$	5,687
Total gains or losses included in earnings:
Net change in unrealized gain (loss)		(125)		475		742
Recovery of actual losses previously recorded		35		141		201
Principal paydowns		(28)		(851)		(1,145)
Balance, end of year	$	5,132	$	5,250	$	5,485

Trust preferred security

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

Year Ended December 31,  (in thousands)	2015
Balance, beginning of year	$	—
Purchases, net of accretion recognized		3,405
Balance, end of year	$	3,405