INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

INCOME TAXES

Schedule of allocation of federal income tax between current and deferred portion

Years Ended December 31, (in thousands)	2015		2014		2013
Current expense:
Federal	$	18,108	$	22,143	$	20,668
State		1,125		2,469		2,167
Deferred expense:
Federal		(1,262)		(8,637)		(7,395)
State		107		(447)		(365)
Total	$	18,078	$	15,528	$	15,075

Schedule of effective tax rate that differs from that computed at the federal statutory rate

Years Ended December 31,	2015		2014		2013
Federal statutory rate times financial statement income	35.00	%	35.00	%	35.00	%
Effect of:
State taxes, net of federal benefit	1.50	%	2.96	%	2.89	%
General business tax credits	(0.43)	%	(0.67)	%	(0.73)	%
Nontaxable income	(2.68)	%	(2.80)	%	(1.63)	%
Other, net	0.56	%	0.55	%	1.69	%
Effective tax rate	33.95	%	35.04	%	37.22	%

Schedule of deferred tax assets and liabilities

December 31, (in thousands)	2015		2014
Deferred tax assets:
Allowance for loan and lease losses	$	9,595	$	8,439
Accrued expenses		3,913		3,109
Net operating loss carryforward*		1,574		1,532
Depreciation		1,289		1,342
Other-than-temporary impairment		750		754
Partnership losses		842		602
OREO writedowns		20		1,386
Fair value of cash flow hedges		210		170
Other		2,061		2,051
Total deferred tax assets		20,254		19,385
Deferred tax liabilities:
Unrealized investment securities gains		(1,314)		(2,494)
Federal Home Loan Bank dividends		(4,315)		(4,341)
Deferred loan fees		(317)		(573)
Mortgage servicing rights		(1,781)		(1,755)
Bargain purchase gain		(552)		(741)
New market tax credits		(707)		(823)
Other		(374)		(288)
Total deferred tax liabilities		(9,360)		(11,015)
Less: Valuation allowance		(1,564)		(1,415)
Net deferred tax asset	$	9,330	$	6,955

*The Company has a Kentucky net operating loss carry forward of $25 million which began to expire in 2012. The Company maintains a valuation allowance, as it does not anticipate generating taxable income in Kentucky to utilize these carryforwards prior to expiration.

Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits

Years Ended December 31, (in thousands)	2015		2014		2013
Balance, beginning of year	$	1,977	$	1,381	$	595
Additions based on tax related to the current year		109		81		39
Additions for tax positions of prior years		15		750		783
Reductions for tax positions of prior years		—		—		—
Reductions due to the statute of limitations		(301)		(235)		(36)
Settlements		—		—		—
Balance, end of year	$	1,800	$	1,977	$	1,381

Schedule of amount of interest and penalties

Years Ended December 31, (in thousands)	2015		2014		2013
Interest and penalties recorded in the income statement	$	19	$	260	$	401
Interest and penalties accrued on balance sheet		847		827		567