10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

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: 001-09383

WESTAMERICA BANCORPORATION

(Exact Name of Registrant as Specified in Its Charter)

CALIFORNIA

(State or Other Jurisdiction of

Incorporation or Organization)

94-2156203

(I.R.S. Employer

Identification No.)

1108 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code (707) 863-6000

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

Title of Class	Shares outstanding as of October 25, 2016
Common Stock, No Par Value	25,671,339

TABLE OF CONTENTS

		Page
Forward Looking Statements		3
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Notes to Unaudited Consolidated Financial Statements	9
	Financial Summary	30
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4	Controls and Procedures	53
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	53
Item 1A	Risk Factors	53
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3	Defaults upon Senior Securities	54
Item 4	Mine Safety Disclosures	54
Item 5	Other Information	54
Item 6	Exhibits	54
Signatures		55
Exhibit Index		56
Exhibit 31.1 - Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)		57
Exhibit 31.2 - Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)		58
Exhibit 32.1 - Certification of Chief Executive Officer Required by 18 U.S.C. Section 1350		59
Exhibit 32.2 - Certification of Chief Financial Officer Required by 18 U.S.C. Section 1350		60

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FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements about Westamerica Bancorporation (the “Company”) for which it claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, future credit quality and performance, the appropriateness of the allowance for loan losses, loan growth or the reduction, mitigation of risk in the Company’s loan and investment portfolios, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or board of directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", “estimates”, "intends", "targeted", "projected", “forecast”, "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

These forward-looking statements are based on Management’s current knowledge and belief and include information concerning the Company’s possible or assumed future financial condition and results of operations. A number of factors, some of which are beyond the Company’s ability to predict or control, could cause future results to differ materially from those contemplated. These factors include but are not limited to (1) the length and severity of difficulties in the global, national and California economies and the effects of government efforts to address those difficulties; (2) liquidity levels in capital markets; (3) fluctuations in asset prices including, but not limited to stocks, bonds, real estate, and commodities; (4) the effect of acquisitions and integration of acquired businesses; (5) economic uncertainty created by terrorist threats and attacks on the United States, the actions taken in response, and the uncertain effect of these events on the national and regional economies; (6) changes in the interest rate environment; (7) changes in the regulatory environment; (8) competitive pressure in the banking industry; (9) operational risks including a failure or breach in data processing or security systems or those of third party vendors and other service providers, including as a result of cyber attacks or fraud; (10) volatility of interest rate sensitive loans, deposits and investments; (11) asset/liability management risks and liquidity risks; (12) the effect of natural disasters, including earthquakes, fire, flood, drought, and other disasters, on the uninsured value of loan collateral, the financial condition of debtors and issuers of investment securities, the economic conditions affecting the Company’s market place, and commodities and asset values; (13) changes in the securities markets and (14) the outcome of contingencies, such as legal proceedings. The reader is directed to the Company's annual report on Form 10-K for the year ended December 31, 2015, for further discussion of factors which could affect the Company's business and cause actual results to differ materially from those expressed in any forward-looking statement made in this report. However, the reader should not consider these factors to be a complete set of all potential risks or uncertainties.

Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements in this report to reflect circumstances or events that occur after the date forward looking statements are made, except as may be required by law.

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PART I - FINANCIAL INFORMATION

Item 1 Financial Statements

WESTAMERICA BANCORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

	At September 30, 2016			At December 31, 2015
	(In thousands)
Assets:
Cash and due from banks	$	471,367		$	433,044
Investment securities available for sale		1,762,408			1,570,216
Investment securities held to maturity, with fair values of: $1,440,119 at September 30, 2016 and $1,325,699 at December 31, 2015		1,411,019			1,316,075
Loans		1,364,329			1,533,396
Allowance for loan losses		(26,359	)		(29,771	)
Loans, net of allowance for loan losses		1,337,970			1,503,625
Other real estate owned		3,032			9,264
Premises and equipment, net		37,059			38,693
Identifiable intangibles, net		7,789			10,431
Goodwill		121,673			121,673
Other assets		154,461			165,854
Total Assets	$	5,306,778		$	5,168,875
Liabilities:
Noninterest bearing deposits	$	2,064,988		$	2,026,049
Interest bearing deposits		2,579,882			2,514,610
Total deposits		4,644,870			4,540,659
Short-term borrowed funds		56,358			53,028
Other liabilities		42,554			42,983
Total Liabilities		4,743,782			4,636,670
Shareholders' Equity:
Common stock (no par value), authorized - 150,000 shares Issued and outstanding: 25,665 at September 30, 2016 and 25,528 at December 31, 2015		391,601			378,858
Deferred compensation		1,533			2,578
Accumulated other comprehensive income		9,001			675
Retained earnings		160,861			150,094
Total Shareholders' Equity		562,996			532,205
Total Liabilities and  Shareholders' Equity	$	5,306,778		$	5,168,875

See accompanying notes to unaudited consolidated financial statements.

- 4 -

WESTAMERICA BANCORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	For the Three Months					For the Nine  Months
	Ended September 30,
	2016			2015		2016			2015
	(In thousands, except per share data)
Interest and Fee Income:
Loans	$	16,968		$	19,378	$	52,904		$	59,643
Investment securities available for sale		8,796			7,880		24,855			23,347
Investment securities held to maturity		7,704			7,041		23,083			19,651
Total Interest and Fee Income		33,468			34,299		100,842			102,641
Interest Expense:
Deposits		512			573		1,586			1,816
Short-term borrowed funds		11			12		30			44
Federal Home Loan Bank advances		-			-		-			1
Total Interest Expense		523			585		1,616			1,861
Net Interest Income		32,945			33,714		99,226			100,780
Reversal of Provision for Loan Losses		(3,200	)		-		(3,200	)		-
Net Interest Income After Reversal of Provision For Loan Losses		36,145			33,714		102,426			100,780
Noninterest Income:
Service charges on deposit accounts		5,303			5,581		15,790			16,981
Debit card fees		1,587			1,538		4,724			4,528
Merchant processing services		1,532			1,485		4,699			4,971
Trust fees		686			682		2,004			2,061
Other service fees		671			693		1,951			2,041
ATM processing fees		600			616		1,860			1,828
Financial services commissions		118			177		411			527
Other		1,101			1,221		3,590			3,625
Total Noninterest Income		11,598			11,993		35,029			36,562
Noninterest Expense:
Salaries and related benefits		13,063			12,761		39,067			39,795
Occupancy		3,749			3,746		10,546			11,199
Outsourced data processing services		2,114			2,115		6,375			6,334
Professional fees		1,693			746		3,183			1,876
Furniture and equipment		1,211			1,075		3,611			3,353
Amortization of identifiable intangibles		867			952		2,642			2,908
Courier service		451			604		1,458			1,744
Other real estate owned		(206	)		83		(487	)		451
Other		3,146			4,091		10,780			12,136
Total Noninterest Expense		26,088			26,173		77,175			79,796
Income Before Income Taxes		21,655			19,534		60,280			57,546
Provision for income taxes		6,027			4,677		15,880			13,371
Net Income	$	15,628		$	14,857	$	44,400		$	44,175
Average Common Shares Outstanding		25,641			25,530		25,558			25,565
Diluted Average Common Shares Outstanding		25,687			25,565		25,595			25,585
Per Common Share Data:
Basic earnings	$	0.61		$	0.58	$	1.74		$	1.73
Diluted earnings		0.61			0.58		1.73			1.73
Dividends paid		0.39			0.38		1.17			1.14

See accompanying notes to unaudited consolidated financial statements.

- 5 -

WESTAMERICA BANCORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
	(In thousands)
Net income	$	15,628		$	14,857		$	44,400		$	44,175
Other comprehensive (loss) income:
(Decrease) increase in net unrealized gains on securities available for sale		(4,992	)		5,522			14,319			3,242
Deferred tax benefit (expense)		2,099			(2,321	)		(6,020	)		(1,363	)
(Decrease) increase in net unrealized gains on securities available for sale, net of tax		(2,893	)		3,201			8,299			1,879
Post-retirement benefit transition obligation amortization		15			15			45			45
Deferred tax expense		(6	)		(6	)		(18	)		(18	)
Post-retirement benefit transition obligation amortization, net of tax		9			9			27			27
Total other comprehensive (loss) income		(2,884	)		3,210			8,326			1,906
Total comprehensive income	$	12,744		$	18,067		$	52,726		$	46,081

See accompanying notes to unaudited consolidated financial statements.

- 6 -

WESTAMERICA BANCORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(unaudited)

	Common Shares Outstanding			Common Stock			Deferred Compensation			Accumulated Other Comprehensive Income		Retained Earnings			Total
	(In thousands)
Balance, December 31, 2014		25,745		$	378,132		$	2,711		$	5,292	$	140,468		$	526,603
Net income for the period													44,175			44,175
Other comprehensive income											1,906					1,906
Exercise of stock options		108			4,848											4,848
Tax benefit decrease upon exercise and expiration of stock options					(1,215	)										(1,215	)
Restricted stock activity		17			874			(133	)							741
Stock based compensation					987											987
Stock awarded to employees		2			89											89
Retirement of common stock		(342	)		(5,066	)							(9,962	)		(15,028	)
Dividends													(29,168	)		(29,168	)
Balance, September 30, 2015		25,530		$	378,649		$	2,578		$	7,198	$	145,513		$	533,938
Balance, December 31, 2015		25,528		$	378,858		$	2,578		$	675	$	150,094		$	532,205
Net income for the period													44,400			44,400
Other comprehensive income											8,326					8,326
Exercise of stock options		258			11,588											11,588
Tax benefit increase upon exercise and expiration of stock options					199											199
Restricted stock activity		15			1,798			(1,045	)							753
Stock based compensation					1,142											1,142
Stock awarded to employees		1			75											75
Retirement of common stock		(137	)		(2,059	)							(3,721	)		(5,780	)
Dividends													(29,912	)		(29,912	)
Balance, September 30, 2016		25,665		$	391,601		$	1,533		$	9,001	$	160,861		$	562,996

See accompanying notes to unaudited consolidated financial statements.

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WESTAMERICA BANCORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the Nine Months Ended September 30,
	2016			2015
	(In thousands)
Operating Activities:
Net income	$	44,400		$	44,175
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,211			12,379
Reversal of provision for loan losses		(3,200	)		-
Net amortization of deferred loan fees		(281	)		(263	)
Decrease in interest income receivable		475			757
(Increase) decrease in other assets		(753	)		107
Increase (decrease) in income taxes payable		403			(257	)
Decrease in net deferred tax asset		3,258			968
Decrease in interest expense payable		(19	)		(56	)
Decrease in other liabilities		143			(2,571	)
Stock option compensation expense		1,142			987
Tax benefit (increase) decrease upon exercise and expiration of stock options		(199	)		1,215
Net writedown/loss on sale of premises and equipment		21			24
Net gain on sale of foreclosed assets		(1,182	)		(73	)
Writedown of foreclosed assets		759			315
Net Cash Provided by Operating Activities		59,178			57,707
Investing Activities:
Net repayments of loans		171,573			124,615
Change in payable to FDIC(1)		3,180			-
Purchases of investment securities available for sale		(812,697	)		(828,169	)
Proceeds from sale/maturity/calls of securities available for sale		632,795			858,850
Purchases of investment securities held to maturity		(246,956	)		(366,247	)
Proceeds from maturity/calls of securities held to maturity		141,770			117,877
Purchases of premises and equipment		(1,299	)		(4,049	)
Net change in FRB(2)/FHLB(3) securities		-			940
Proceeds from sale of foreclosed assets		7,143			1,774
Net Cash Used in Investing Activities		(104,491	)		(94,409	)
Financing Activities:
Net increase in deposits		104,211			17,737
Net increase (decrease) in short-term borrowings and FHLB(3) advances		3,330			(52,721	)
Exercise of stock options/issuance of shares		11,588			4,848
Tax benefit increase (decrease) upon exercise and expiration of stock options		199			(1,215	)
Retirement of common stock		(5,780	)		(15,028	)
Common stock dividends paid		(29,912	)		(29,168	)
Net Cash Provided by (Used in) Financing Activities		83,636			(75,547	)
Net Change In Cash and Due from Banks		38,323			(112,249	)
Cash and Due from Banks at Beginning of Period		433,044			380,836
Cash and Due from Banks at End of Period	$	471,367		$	268,587
Supplemental Cash Flow Disclosures:
Supplemental disclosure of non cash activities:
Loan collateral transferred to other real estate owned	$	488		$	4,911
Securities purchases pending settlement		171			-
Supplemental disclosure of cash flow activities:
Interest paid for the period		1,635			1,941
Income tax payments for the period		14,032			12,596

See accompanying notes to unaudited consolidated financial statements.

⁽¹⁾ Federal Deposit Insurance Corporation ("FDIC")

⁽²⁾ Federal Reserve Bank ("FRB")

⁽³⁾ Federal Home Loan Bank ("FHLB")

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission and follow general practices within the banking industry. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and which, in the opinion of Management, are necessary for a fair presentation of the results for the interim periods presented. The interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as well as other information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Note 2: Accounting Policies

The most significant accounting policies followed by the Company are presented in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, Management has identified the allowance for loan losses accounting to be the accounting area requiring the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available. A discussion of the factors affecting accounting for the allowance for loan losses and purchased loans is included in the “Loan Portfolio Credit Risk” discussion below.

Application of these principles requires the Company to make certain estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment writedown or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available.

Recently Issued Accounting Standards

FASB Accounting Standards Update (ASU) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, was issued January 2016. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, the ASU changes the income statement impact of equity investments held by the Company and the requirement for the Company to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

The Company will be required to adopt the ASU provisions on January 1, 2018. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements.

FASB Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), was issued February 25, 2016. The provisions of the new standard require lessees to recognize most leases on-balance sheet, increasing reported assets and liabilities. Lessor accounting remains substantially similar to current U.S. GAAP.

The Company will be required to adopt the ASU provisions January 1, 2019, utilizing the modified retrospective transition approach. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

- 9 -

FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, was issued March 30, 2016. The provisions of the new standard changes several aspects of the accounting for share-based payment award transactions, including: (1) Accounting and Cash Flow Classification for Excess Tax Benefits, (2) Forfeitures, and (3) Tax Withholding Requirements and Cash Flow Classification.

The Company will be required to adopt the ASU provisions January 1, 2017. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements. The most notable impact will be the effect of Excess Tax Benefits on the provision for income taxes.

FASB ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, was issued on June 16, 2016. The ASU significantly changes estimates for credit losses related to financial assets measured at amortized cost and certain other contracts. For estimating credit losses, the FASB is replacing the incurred loss model with the current expected credit loss (CECL) model, which will accelerate recognition of credit losses. Additionally, credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses under the new standard. The Company will also be required to provide additional disclosures related to the financial assets within the scope of the new standard.

The Company will be required to adopt the ASU provisions on January 1, 2020. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

Note 3: Investment Securities

An analysis of the amortized cost, gross unrealized gains and losses accumulated in other comprehensive income, and fair value of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,579	$	300	$	(33	)	$	171,846
Agency residential mortgage-backed securities (MBS)		499,860		1,712		(1,883	)		499,689
Non-agency residential MBS		301		1		-			302
Non-agency commercial MBS		2,127		1		(10	)		2,118
Obligations of states and political subdivisions		177,786		8,086		(378	)		185,494
Asset-backed securities		1,003		-		(3	)		1,000
FHLMC(1) and FNMA(2) stock		775		3,481		-			4,256
Corporate securities		891,335		5,808		(1,911	)		895,232
Other securities		2,034		577		(140	)		2,471
Total	$	1,746,800	$	19,966	$	(4,358	)	$	1,762,408

⁽¹⁾ Federal Home Loan Mortgage Corporation

⁽²⁾ Federal National Mortgage Association

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An analysis of the amortized cost, gross unrecognized gains and losses, and fair value of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At September 30, 2016
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	621	$	3	$	-		$	624
Agency residential MBS		712,470		10,210		(194	)		722,486
Non-agency residential MBS		5,678		54		(1	)		5,731
Agency commercial MBS		9,404		24		(163	)		9,265
Obligations of states and political subdivisions		682,846		19,508		(341	)		702,013
Total	$	1,411,019	$	29,799	$	(699	)	$	1,440,119

An analysis of the amortized cost, gross unrealized gains and losses accumulated in other comprehensive income, and fair value of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	302,292	$	255	$	(665	)	$	301,882
Agency residential MBS		208,046		1,407		(6,909	)		202,544
Non-agency residential MBS		354		16		-			370
Non-agency commercial MBS		2,383		5		(9	)		2,379
Obligations of states and political subdivisions		148,705		8,861		(57	)		157,509
Asset-backed securities		2,025		-		(22	)		2,003
FHLMC(1) and FNMA(2) stock		775		3,554		-			4,329
Corporate securities		902,308		882		(6,821	)		896,369
Other securities		2,039		952		(160	)		2,831
Total	$	1,568,927	$	15,932	$	(14,643	)	$	1,570,216

⁽¹⁾ Federal Home Loan Mortgage Corporation

⁽²⁾ Federal National Mortgage Association

An analysis of the amortized cost, gross unrecognized gains and losses, and fair value of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At December 31, 2015
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	764	$	-	$	-		$	764
Agency residential MBS		595,503		1,810		(4,966	)		592,347
Non-agency residential MBS		9,667		185		-			9,852
Agency commercial MBS		16,258		20		(274	)		16,004
Obligations of states and political subdivisions		693,883		13,638		(789	)		706,732
Total	$	1,316,075	$	15,653	$	(6,029	)	$	1,325,699

- 11 -

The amortized cost and fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated:

	At September 30, 2016
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	159,685	$	160,009	$	18,809	$	19,437
Over 1 to 5 years		745,541		750,330		290,412		295,190
Over 5 to 10 years		301,266		308,276		308,222		319,417
Over 10 years		35,211		34,957		66,024		68,593
Subtotal		1,241,703		1,253,572		683,467		702,637
MBS		502,288		502,109		727,552		737,482
Other securities		2,809		6,727		-		-
Total	$	1,746,800	$	1,762,408	$	1,411,019	$	1,440,119

	At December 31, 2015
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	136,717	$	136,976	$	20,709	$	21,354
Over 1 to 5 years		1,049,786		1,044,453		259,556		262,163
Over 5 to 10 years		166,352		173,585		289,568		296,352
Over 10 years		2,475		2,749		124,814		127,627
Subtotal		1,355,330		1,357,763		694,647		707,496
MBS		210,783		205,293		621,428		618,203
Other securities		2,814		7,160		-		-
Total	$	1,568,927	$	1,570,216	$	1,316,075	$	1,325,699

Expected maturities of mortgage-related securities can differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. In addition, such factors as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities. At September 30, 2016 and December 31, 2015, the Company had no high-risk collateralized mortgage obligations as defined by regulatory guidelines.

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- 12 -

An analysis of the gross unrealized losses of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		3	$	39,965	$	(33	)		-	$	-	$	-			3	$	39,965	$	(33	)
Agency residential MBS		9		109,244		(222	)		28		133,665		(1,661	)		37		242,909		(1,883	)
Non-agency residential MBS		1		31		-			-		-		-			1		31		-
Non-agency commercial MBS		1		324		(4	)		1		794		(6	)		2		1,118		(10	)
Obligations of states and political subdivisions		30		42,214		(356	)		3		1,118		(22	)		33		43,332		(378	)
Asset-backed securities		-		-		-			1		1,000		(3	)		1		1,000		(3	)
Corporate securities		25		136,421		(704	)		26		102,085		(1,207	)		51		238,506		(1,911	)
Other securities		-		-		-			1		1,860		(140	)		1		1,860		(140	)
Total		69	$	328,199	$	(1,319	)		60	$	240,522	$	(3,039	)		129	$	568,721	$	(4,358	)

An analysis of gross unrecognized losses of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		6	$	12,463	$	(79	)		3	$	11,615	$	(115	)		9	$	24,078	$	(194	)
Non-agency residential MBS		1		1,253		(1	)		-		-		-			1		1,253		(1	)
Agency commercial MBS		-		-		-			1		7,250		(163	)		1		7,250		(163	)
Obligations of states and political subdivisions		31		30,041		(182	)		9		6,779		(159	)		40		36,820		(341	)
Total		38	$	43,757	$	(262	)		13	$	25,644	$	(437	)		51	$	69,401	$	(699	)

The unrealized losses on the Company’s investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates. The Company evaluates securities on a quarterly basis including changes in security ratings issued by rating agencies, changes in the financial condition of the issuer, and, for mortgage-backed and asset-backed securities, delinquency and loss information with respect to the underlying collateral, changes in the levels of subordination for the Company’s particular position within the repayment structure and remaining credit enhancement as compared to expected credit losses of the security. Substantially all of these securities continue to be investment grade rated by a major rating agency. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset backed securities.

The Company does not intend to sell any investments and has concluded that it is more likely than not that it will not be required to sell the investments prior to recovery of the amortized cost basis. Therefore, the Company does not consider these investments to be other-than-temporarily impaired as of September 30, 2016.

The fair values of the investment securities could decline in the future if the general economy deteriorates, inflation increases, credit ratings decline, the issuer’s financial condition deteriorates, or the liquidity for securities declines. As a result, other than temporary impairments may occur in the future.

As of September 30, 2016, $755,762  thousand of investment securities were pledged to secure public deposits and short-term borrowed funds. As of December 31, 2015, $738,865  thousand of investment securities were pledged to secure public deposits and short-term borrowed funds.

- 13 -

An analysis of gross unrealized losses of investment securities available for sale follows:

	Investment Securities Available for Sale At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		8	$	121,392	$	(665	)		-	$	-	$	-			8	$	121,392	$	(665	)
Agency residential MBS		2		12,491		(366	)		31		161,296		(6,543	)		33		173,787		(6,909	)
Non-agency commercial MBS		1		1,071		-			1		855		(9	)		2		1,926		(9	)
Obligations of states and political subdivisions		3		2,728		(18	)		4		1,644		(39	)		7		4,372		(57	)
Asset-backed securities		-		-		-			1		2,003		(22	)		1		2,003		(22	)
Corporate securities		97		548,177		(5,442	)		25		86,762		(1,379	)		122		634,939		(6,821	)
Other securities		-		-		-			1		1,840		(160	)		1		1,840		(160	)
Total		111	$	685,859	$	(6,491	)		63	$	254,400	$	(8,152	)		174	$	940,259	$	(14,643	)

An analysis of gross unrecognized losses of investment securities held to maturity follows:

	Investment Securities Held to Maturity At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		41	$	426,317	$	(3,490	)		13	$	62,041	$	(1,476	)		54	$	488,358	$	(4,966	)
Agency commercial MBS		-		-		-			2		13,951		(274	)		2		13,951		(274	)
Obligations of states and political subdivisions		55		44,585		(249	)		54		42,081		(540	)		109		86,666		(789	)
Total		96	$	470,902	$	(3,739	)		69	$	118,073	$	(2,290	)		165	$	588,975	$	(6,029	)

The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from regular federal income tax:

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands)
Taxable	$	11,024	$	9,120	$	31,256	$	25,067
Tax-exempt from regular federal income tax		5,476		5,801		16,682		17,931
Total interest income from investment securities	$	16,500	$	14,921	$	47,938	$	42,998

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- 14 -

Note 4: Loans and Allowance for Loan Losses

A summary of the major categories of loans outstanding is shown in the following tables.

	At September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	331,429		$	480,950		$	2,282	$	91,934		$	335,629		$	1,242,224
Purchased covered loans		-			-			-		2,233			9,512			11,745
Purchased non-covered loans:
Gross purchased non-covered loans		12,337			74,595			153		224			27,973			115,282
Purchased loan discount		(682	)		(3,197	)		-		(23	)		(1,020	)		(4,922	)
Total	$	343,084		$	552,348		$	2,435	$	94,368		$	372,094		$	1,364,329

	At December 31, 2015
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	368,117		$	517,070		$	2,978	$	117,631		$	346,043		$	1,351,839
Purchased covered loans:
Gross purchased covered loans		-			-			-		2,385			11,828			14,213
Purchased loan discount		-			-			-		(133	)		(19	)		(152	)
Purchased non-covered loans:
Gross purchased non-covered loans		15,620			124,650			973		231			32,454			173,928
Purchased loan discount		(989	)		(4,264	)		-		(23	)		(1,156	)		(6,432	)
Total	$	382,748		$	637,456		$	3,951	$	120,091		$	389,150		$	1,533,396

Changes in the carrying amount of impaired purchased loans were as follows:

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Impaired purchased loans	(In thousands)
Carrying amount at the beginning of the period	$	3,887		$	4,672
Reductions during the period		(2,651	)		(785	)
Carrying amount at the end of the period	$	1,236		$	3,887

Changes in the accretable yield for purchased loans were as follows:

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Accretable yield:	(In thousands)
Balance at the beginning of the period	$	1,259		$	2,261
Reclassification from nonaccretable difference		3,322			3,051
Accretion		(2,936	)		(4,053	)
Balance at the end of the period	$	1,645		$	1,259
Accretion	$	(2,936	)	$	(4,053	)
Change in FDIC indemnification		995			698
(Increase) in interest income	$	(1,941	)	$	(3,355	)

- 15 -

The following summarizes activity in the allowance for loan losses:

	Allowance for Loan Losses For the Three Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	10,402		$	3,912		$	127	$	1,601		$	6,616		$	1,044		$	66		$	5,142		$	28,910
Additions:
Provision		(3,638	)		(328	)		9		(193	)		1,651			(399	)		(4	)		(298	)		(3,200	)
Deductions:
Chargeoffs		(88	)		-			-		-			(1,736	)		(112	)		-			-			(1,936	)
Recoveries		1,735			15			-		-			337			498			-			-			2,585
Net loan recoveries (losses)		1,647			15			-		-			(1,399	)		386			-			-			649
Total allowance for loan losses	$	8,411		$	3,599		$	136	$	1,408		$	6,868		$	1,031		$	62		$	4,844		$	26,359

	Allowance for Loan Losses For the Nine Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	9,559		$	4,224		$	177		$	1,801		$	7,080		$	967		$	-	$	5,963		$	29,771
Additions:
Provision		(1,641	)		(670	)		(41	)		(393	)		2,074			(1,472	)		62		(1,119	)		(3,200	)
Deductions:
Chargeoffs		(2,024	)		-			-			-			(3,418	)		(150	)		-		-			(5,592	)
Recoveries		2,517			45			-			-			1,132			1,686			-		-			5,380
Net loan recoveries (losses)		493			45			-			-			(2,286	)		1,536			-		-			(212	)
Total allowance for loan losses	$	8,411		$	3,599		$	136		$	1,408		$	6,868		$	1,031		$	62	$	4,844		$	26,359

	Allowance for Loan Losses For the Three Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	7,107		$	4,896		$	403		$	2,058		$	7,248		$	1,244		$	-	$	7,872		$	30,828
Additions:
Provision		1,246			(96	)		(205	)		(50	)		367			(15	)		65		(1,312	)		-
Deductions:
Chargeoffs		(239	)		(449	)		-			-			(773	)		-			-		-			(1,461	)
Recoveries		300			27			-			-			336			6			-		-			669
Net loan recoveries (losses)		61			(422	)		-			-			(437	)		6			-		-			(792	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

	Allowance for Loan Losses For the Nine Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	5,460		$	4,245		$	644		$	2,241		$	7,717		$	2,120		$	-	$	9,058		$	31,485
Additions:
Provision		2,840			525			(446	)		(233	)		436			(689	)		65		(2,498	)		-
Deductions:
Chargeoffs		(700	)		(449	)		-			-			(2,344	)		(431	)		-		-			(3,924	)
Recoveries		814			57			-			-			1,369			235			-		-			2,475
Net loan recoveries (losses)		114			(392	)		-			-			(975	)		(196	)		-		-			(1,449	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

- 16 -

The allowance for loan losses and recorded investment in loans were evaluated for impairment as follows:

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	5,070	$	216	$	-	$	-	$	-	$	-	$	-	$	-	$	5,286
Collectively evaluated for impairment		3,341		3,383		136		1,408		6,868		1,031		62		4,844		21,073
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	8,411	$	3,599	$	136	$	1,408	$	6,868	$	1,031	$	62	$	4,844	$	26,359
Carrying value of loans:
Individually evaluated for impairment	$	11,210	$	5,270	$	-	$	-	$	-	$	6,125	$	-	$	-	$	22,605
Collectively evaluated for impairment		320,219		475,680		2,282		91,934		335,629		103,189		11,555		-		1,340,488
Purchased loans with evidence of credit deterioration		-		-		-		-		-		1,046		190		-		1,236
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360	$	11,745	$	-	$	1,364,329

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	4,942	$	585	$	-	$	-	$	-	$	-	$	-	$	-	$	5,527
Collectively evaluated for impairment		4,617		3,639		177		1,801		7,080		967		-		5,963		24,244
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	9,559	$	4,224	$	177	$	1,801	$	7,080	$	967	$	-	$	5,963	$	29,771
Carrying value of loans:
Individually evaluated for impairment	$	12,587	$	5,541	$	-	$	-	$	-	$	11,777	$	-	$	-	$	29,905
Collectively evaluated for impairment		355,530		511,529		2,978		117,631		346,043		152,038		13,855		-		1,499,604
Purchased loans with evidence of credit deterioration		-		-		-		-		-		3,681		206		-		3,887
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496	$	14,061	$	-	$	1,533,396

The Bank’s customers are small businesses, professionals and consumers. Given the scale of these borrowers, corporate credit rating agencies do not evaluate the borrowers’ financial condition. The Bank maintains a Loan Review Department which reports directly to the Board of Directors. The Loan Review Department performs independent evaluations of loans and assigns credit risk grades to evaluated loans using grading standards employed by bank regulatory agencies. Loans judged to carry lower-risk attributes are assigned a “pass” grade, with a minimal likelihood of loss. Loans judged to carry higher-risk attributes are referred to as “classified loans,” and are further disaggregated, with increasing expectations for loss recognition, as “substandard,” “doubtful,” and “loss.” Loan Review Department evaluations occur every calendar quarter. If the Bank becomes aware of deterioration in a borrower’s performance or financial condition between Loan Review Department examinations, assigned risk grades are re-evaluated promptly. Credit risk grades assigned by the Loan Review Department are subject to review by the Bank’s regulatory authorities during regulatory examinations.

The following summarizes the credit risk profile by internally assigned grade:

	Credit Risk Profile by Internally Assigned Grade At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)		Total
	(In thousands)
Grade:
Pass	$	318,077	$	466,364	$	2,282	$	88,920	$	334,163	$	101,295		$	10,126	$	1,321,227
Substandard		13,352		14,586		-		3,014		1,000		13,983			1,619		47,554
Doubtful		-		-		-		-		26		-			-		26
Loss		-		-		-		-		440		4			-		444
Purchased loan discount		-		-		-		-		-		(4,922	)		-		(4,922	)
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360		$	11,745	$	1,364,329

⁽¹⁾ Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

- 17 -

	Credit Risk Profile by Internally Assigned Grade At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)			Total
	(In thousands)
Grade:
Pass	$	353,474	$	496,744	$	2,978	$	114,525	$	344,876	$	149,100		$	12,563		$	1,474,260
Substandard		14,643		20,326		-		3,106		781		24,810			1,650			65,316
Doubtful		-		-		-		-		12		18			-			30
Loss		-		-		-		-		374		-			-			374
Purchased loan discount		-		-		-		-		-		(6,432	)		(152	)		(6,584	)
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496		$	14,061		$	1,533,396

⁽¹⁾ Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

The following tables summarize loans by delinquency and nonaccrual status:

	Summary of Loans by Delinquency and Nonaccrual Status At September 30, 2016
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	330,596	$	647	$	186	$	-	$	-	$	331,429
Commercial real estate		474,741		914		-		-		5,295		480,950
Construction		2,282		-		-		-		-		2,282
Residential real estate		90,713		908		-		-		313		91,934
Consumer installment and other		331,310		3,198		683		438		-		335,629
Total originated loans		1,229,642		5,667		869		438		5,608		1,242,224
Purchased non-covered loans		105,255		4,030		370		49		656		110,360
Purchased covered loans		11,716		-		-		-		29		11,745
Total	$	1,346,613	$	9,697	$	1,239	$	487	$	6,293	$	1,364,329

	Summary of Loans by Delinquency and Nonaccrual Status At December 31, 2015
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	365,450	$	1,777	$	122	$	-	$	768	$	368,117
Commercial real estate		504,970		5,930		726		-		5,444		517,070
Construction		2,978		-		-		-		-		2,978
Residential real estate		115,575		1,202		414		-		440		117,631
Consumer installment and other		341,566		3,263		919		295		-		346,043
Total originated loans		1,330,539		12,172		2,181		295		6,652		1,351,839
Purchased non-covered loans		158,554		589		7		-		8,346		167,496
Purchased covered loans		13,929		132		-		-		-		14,061
Total	$	1,503,022	$	12,893	$	2,188	$	295	$	14,998	$	1,533,396

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The following is a summary of the effect of nonaccrual loans on interest income:

	For the Three Months Ended					For the Nine Months Ended
	September 30,
	2016			2015		2016			2015
	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	193		$	315	$	756		$	969
Less: Interest income (recognized) reversed on nonaccrual loans		(500	)		17		(1,033	)		(308	)
Total (addition) reduction of interest income	$	(307	)	$	332	$	(277	)	$	661

There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2016 and December 31, 2015.

The following summarizes impaired loans:

	Impaired Loans At September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	1,058	$	1,145	$	-
Commercial real estate		8,013		9,560		-
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-
Impaired loans with an allowance recorded:
Commercial		10,202		10,211		5,070
Commercial real estate		4,410		5,427		216
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	11,260	$	11,356	$	5,070
Commercial real estate		12,423		14,987		216
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-

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	Impaired Loans At December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	2,917	$	2,979	$	-
Commercial real estate		16,309		21,168		-
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-
Impaired loans with an allowance recorded:
Commercial		10,170		10,170		4,942
Commercial real estate		4,660		5,109		585
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	13,087	$	13,149	$	4,942
Commercial real estate		20,969		26,277		585
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-

Impaired loans include troubled debt restructured loans. Impaired loans at September 30, 2016, included $12,402 thousand of restructured loans, $5,307 thousand of which were on nonaccrual status. Impaired loans at December 31, 2015, included $15,712 thousand of restructured loans, $7,464 thousand of which were on nonaccrual status.

	Impaired Loans
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2016				2015				2016				2015
	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
	(In thousands)
Commercial	$	12,858	$	126	$	12,750	$	147	$	13,454	$	394	$	12,513	$	440
Commercial real estate		14,486		188		21,923		142		17,991		549		19,985		546
Construction		-		-		-		-		136		-		306		-
Residential real estate		530		4		403		9		693		13		652		23
Consumer installment and other		545		6		516		6		435		18		856		19
Total	$	28,419	$	324	$	35,592	$	304	$	32,709	$	974	$	34,312	$	1,028

The following table provides information on troubled debt restructurings:

	Troubled Debt Restructurings At September 30, 2016
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		7	$	2,719	$	1,519	$	169
Commercial real estate		10		11,257		10,663		216
Residential real estate		1		241		220		-
Total		18	$	14,217	$	12,402	$	385

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	Troubled Debt Restructurings At December 31, 2015
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		6	$	3,138	$	2,802	$	194
Commercial real estate		10		12,927		12,684		-
Residential real estate		1		242		226		-
Total		17	$	16,307	$	15,712	$	194

During the three and nine months ended September 30, 2016, the Company modified zero loans and four loans with a total carrying value of $4,843 thousand, respectively, that were considered troubled debt restructurings. The concessions granted in the four restructurings completed in the first nine months of 2016 consisted of three modifications of payment terms to extend the maturity date to allow for deferred principal repayment and under-market terms and one court order requiring under-market terms.

During the three and nine months ended September 30, 2015, the Company modified one loan with a carrying value of $6,330 thousand and seven loans with an aggregate carrying value of $8,150 thousand, respectively, that were considered troubled debt restructurings. The concessions granted in the seven restructurings completed in the first nine months of 2015 consisted of modification of payment terms to extend the maturity date to allow for deferred principal repayment, under-market terms and court order.

During the three and nine months ended September 30, 2016 and 2015, no troubled debt restructured loans defaulted within 12 months of the modification date. A troubled debt restructuring is considered to be in default when payments are 90 days or more past due.

There were no loans restricted due to collateral requirements at September 30, 2016 and December 31, 2015.

There were no loans held for sale at September 30, 2016 and December 31, 2015.

At September 30, 2016 and December 31, 2015, the Company held total other real estate owned (OREO) of $3,032 thousand net of reserve of $2,238 thousand and $9,264 thousand net of reserve of $1,986 thousand, respectively, of which $-0-  thousand was foreclosed residential real estate properties at both dates. The amount of consumer mortgage loans outstanding secured by residential real estate properties for which formal foreclosure proceedings were in process was $-0-  thousand at September 30, 2016 and $-0- thousand at December 31, 2015.

Note 5: Concentration of Credit Risk

Under the California Financial Code, credit extended to any one person owing to a commercial bank at any one time shall not exceed the following limitations: (a) unsecured loans shall not exceed 15 percent of the sum of the shareholders' equity, allowance for loan losses, capital notes, and debentures of the bank, or (b) secured and unsecured loans in all shall not exceed 25 percent of the sum of the shareholders' equity, allowance for loan losses, capital notes, and debentures of the bank. At September 30, 2016, Westamerica Bank did not have credit extended to any one entity exceeding these limits. At September 30, 2016, Westamerica Bank had 32 lending relationships with aggregate loans exceeding $5 million. The Company has significant credit arrangements that are secured by real estate collateral. In addition to real estate loans outstanding as disclosed in Note 4, the Company had loan commitments related to real estate loans of $58,148 thousand and $61,190 thousand at September 30, 2016 and December 31, 2015, respectively. The Company requires collateral on all real estate loans with loan-to-value ratios at origination generally no greater than 75% on commercial real estate loans and no greater than 80% on residential real estate loans. At September 30, 2016, Westamerica Bank held corporate bonds in 51 issuing entities which exceeded $5 million of each issuer.

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Note 6: Other Assets

Other assets consisted of the following:

	At September 30, 2016		At December 31, 2015
	(In thousands)
Cost method equity investments:
Federal Reserve Bank stock (1)	$	14,069	$	14,069
Other investments		201		201
Total cost method equity investments		14,270		14,270
Life insurance cash surrender value		50,883		48,972
Net deferred tax asset		42,505		51,748
Limited partnership investments		13,188		15,259
Interest receivable		19,699		20,174
Prepaid assets		4,112		4,771
Other assets		9,804		10,660
Total other assets	$	154,461	$	165,854

⁽¹⁾ A bank applying for membership in the Federal Reserve System is required to subscribe to stock in the Federal Reserve Bank (FRB) in its district in a sum equal to six percent of the bank’s paid-up capital stock and surplus. One-half of the amount of the bank's subscription shall be paid to the FRB and the remaining half will be subject to call when deemed necessary by the Board of Governors of the Federal Reserve System.

The Company invests in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for low-income housing tax credits. At September 30, 2016, this investment totaled $13,188 thousand and $2,299 thousand of this amount represents outstanding equity capital commitments that are included in other liabilities. At December 31, 2015, this investment totaled $15,259 thousand and $2,299 thousand of this amount represents outstanding equity capital commitments. At September 30, 2016, the $2,299 thousand of outstanding equity capital commitments are expected to be paid as follows, $453 thousand in 2016, $763 thousand in 2017, and $1,083 thousand in 2018 or thereafter.

The amounts recognized in net income for these investments include:

	For the Three Months Ended				For the Nine Months Ended
	September 30,
	2016		2015		2016		2015
	(In thousands)
Investment loss included in pre-tax income	$	675	$	750	$	2,025	$	2,175
Tax credits recognized in provision for income taxes		562		663		1,723		1,988

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Note 7: Goodwill and Identifiable Intangible Assets

The Company has recorded goodwill and other identifiable intangibles associated with purchase business combinations. Goodwill is not amortized, but is evaluated for impairment at least annually. The Company did not recognize impairment during the three and nine months ended September 30, 2016 and year ended December 31, 2015. Identifiable intangibles are amortized to their estimated residual values over their expected useful lives. Such lives and residual values are also periodically reassessed to determine if any amortization period adjustments are indicated. During the three and nine months ended September 30, 2016 and year ended December 31, 2015, no such adjustments were recorded.

The carrying values of goodwill were:

	At September 30, 2016		At December 31, 2015
	(In thousands)
Goodwill	$	121,673	$	121,673

The gross carrying amount of identifiable intangible assets and accumulated amortization was:

	At September 30, 2016					At December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Core Deposit Intangibles	$	56,808	$	(49,263	)	$	56,808	$	(46,782	)
Merchant Draft Processing Intangible		10,300		(10,056	)		10,300		(9,895	)
Total Identifiable Intangible Assets	$	67,108	$	(59,319	)	$	67,108	$	(56,677	)

As of September 30, 2016, the current period and estimated future amortization expense for identifiable intangible assets was:

	Core Deposit Intangibles		Merchant Draft Processing Intangible		Total
	(In thousands)
For the Nine Months ended September 30, 2016 (actual)	$	2,481	$	161	$	2,642
Estimate for the remainder of year ended December 31, 2016		811		51		862
Estimate for year ended December 31, 2017		2,913		164		3,077
2018		1,892		29		1,921
2019		538		-		538
2020		287		-		287
2021		269		-		269

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Note 8: Deposits and Borrowed Funds

The following table provides additional detail regarding deposits.

	Deposits
	At September 30, 2016		At December 31, 2015
	(In thousands)
Noninterest-bearing	$	2,064,988	$	2,026,049
Interest-bearing:
Transaction		851,885		860,706
Savings		1,462,860		1,366,936
Time deposits less than $100 thousand		138,655		150,780
Time deposits $100 thousand through $250 thousand		88,666		96,971
Time deposits more than $250 thousand		37,816		39,217
Total deposits	$	4,644,870	$	4,540,659

Demand deposit overdrafts of $2,880  thousand and $3,038  thousand were included as loan balances at September 30, 2016 and December 31, 2015, respectively. Interest expense for aggregate time deposits with individual account balances in excess of $100 thousand was $124 thousand and $395 thousand for the three months and nine months ended September 30, 2016, respectively and $164 thousand and $543 thousand for the three months and nine months ended September 30, 2015, respectively.

The following table provides additional detail regarding short-term borrowed funds.

	Repurchase Agreements (Sweep) Accounted for as Secured Borrowings
	Remaining Contractual Maturity of the Agreements Overnight and Continuous
	At September 30, 2016		At December 31, 2015
Repurchase agreements:	(In thousands)
Collateral securing borrowings:
Securities of U.S. Government sponsored entities	$	86,034	$	98,969
Agency residential MBS		20,742		-
Obligations of states and political subdivisions		1,015		3,975
Corporate securities		91,160		54,681
Total collateral carrying value	$	198,951	$	157,625
Total short-term borrowed funds	$	56,358	$	53,028

The Company had a $35,000 thousand unsecured line of credit which expired March 18, 2016. There was no outstanding balance at December 31, 2015.

Note 9: Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Available for sale investment securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as other real estate owned, impaired loans, certain loans held for investment, investment securities held to maturity, and other assets. These nonrecurring fair value adjustments typically involve the lower-of-cost or fair-value accounting of individual assets.

In accordance with the Fair Value Measurement and Disclosure topic of the Codification, the Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in the principal market or most advantageous market for an asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. A fair value measurement reflects all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance.

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The Company groups its assets and liabilities measured at fair value into a three-level hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. When the valuation assumptions used to measure the fair value of the asset or liability are categorized within different levels of the fair value hierarchy, the asset or liability is categorized in its entirety within the lowest level of the hierarchy. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Level 1 includes U.S. Treasury and equity securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 includes federal agency securities, mortgage-backed securities, corporate securities, asset-backed securities, and municipal bonds.

Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The Company relies on independent vendor pricing services to measure fair value for investment securities available for sale and investment securities held to maturity. The Company employs three pricing services. To validate the pricing of these vendors, the Company compares vendors’ pricing for each of the securities for consistency; significant pricing differences, if any, are evaluated using all available independent quotes with the quote closely affecting the market generally used as the fair value estimate. In addition, the Company conducts “other than temporary impairment (OTTI)” analysis on a quarterly basis; securities selected for OTTI analysis include all securities at a market price below 95 percent of par value or with a market to book ratio below 95:100. As with any valuation technique used to estimate fair value, changes in underlying assumptions used could significantly affect the results of current and future values. Accordingly, these fair value estimates may not be realized in an actual sale of the securities.

The Company regularly reviews the valuation techniques and assumptions used by its vendors and determines which valuation techniques are utilized based on observable market inputs for the type of securities being measured. The Company uses the information to determine the placement in the fair value hierarchy as level 1, 2 or 3. When the Company changes its valuation assumptions for measuring financial assets and financial liabilities at fair value, either due to changes in current market conditions or other factors, or reevaluates the valuation techniques and assumptions used by its vendors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new information. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the nine months ended September 30, 2016, and three months ended March 31, 2015, there were no transfers in or out of levels 1, 2 or 3. During the three months ended June 30, 2015, the Company reevaluated the valuation techniques and assumptions used by its vendors in valuing the Company’s available for sale securities, and based on the evaluation, transferred $437,715 thousand out of level 1 and transferred $437,715 thousand into level 2. There were no transfers into level 1 or into or out of level 3 during this same period. Subsequent to June 30, 2015 and through the year ended December 31, 2015, there were no transfers into or out of levels 1, 2 or 3.

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Assets Recorded at Fair Value on a Recurring Basis

The tables below present assets measured at fair value on a recurring basis on the dates indicated.

	At September 30, 2016
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,846	$	-	$	171,846	$	-
Agency residential MBS		499,689		-		499,689		-
Non-agency residential MBS		302		-		302		-
Non-agency commercial MBS		2,118		-		2,118		-
Obligations of states and political subdivisions		185,494		-		185,494		-
Asset-backed securities		1,000		-		1,000		-
FHLMC and FNMA stock		4,256		7		4,249		-
Corporate securities		895,232		-		895,232		-
Other securities		2,471		611		1,860		-
Total securities available for sale	$	1,762,408	$	618	$	1,761,790	$	-

	At December 31, 2015
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	301,882	$	-	$	301,882	$	-
Agency residential MBS		202,544		-		202,544		-
Non-agency residential MBS		370		-		370		-
Non-agency commercial MBS		2,379		-		2,379		-
Obligations of states and political subdivisions		157,509		-		157,509		-
Asset-backed securities		2,003		-		2,003		-
FHLMC and FNMA stock		4,329		7		4,322		-
Corporate securities		896,369		-		896,369		-
Other securities		2,831		991		1,840		-
Total securities available for sale	$	1,570,216	$	998	$	1,569,218	$	-

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Assets Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost or fair-value accounting of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the balance sheet at September 30, 2016 and December 31, 2015, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets at period end.

	At September 30, 2016								For the Nine Months Ended September 30, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	3,032	$	-	$	-	$	3,032	$	(705	)
Impaired loans		9,326		-		-		9,326		-
Total assets measured at fair value on a nonrecurring basis	$	12,358	$	-	$	-	$	12,358	$	(705	)

	At December 31, 2015								For the Year Ended December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	9,264	$	-	$	-	$	9,264	$	(320	)
Impaired loans		15,633		-		-		15,633		(449	)
Total assets measured at fair value on a nonrecurring basis	$	24,897	$	-	$	-	$	24,897	$	(769	)

Level 3 – Valuation is based upon present value of expected future cash flows, independent market prices, estimated liquidation values of loan collateral or appraised value of the collateral as determined by third-party independent appraisers, less 10% for selling costs, generally. Level 3 includes other real estate owned that has been measured at fair value upon transfer to foreclosed assets and impaired loans collateralized by real property and other business asset collateral where a specific reserve has been established or a chargeoff has been recorded. Losses on other real estate owned represent losses recognized in earnings during the period subsequent to its initial classification as foreclosed assets. The unobservable inputs and qualitative information about the unobservable inputs are not presented due to the unavailability from third party evaluators.

Disclosures about Fair Value of Financial Instruments

The following section describes the valuation methodologies used by the Company for estimating fair value of financial instruments not recorded at fair value in the balance sheet.

Cash and Due from Banks Cash and due from banks represent U.S. dollar denominated coin and currency, deposits at the Federal Reserve Bank and correspondent banks, and amounts being settled with other banks to complete the processing of customers’ daily transactions. Collectively, the Federal Reserve Bank and financial institutions operate in a market in which cash and due from banks transactions are processed continuously in significant daily volumes honoring the face value of the U.S. dollar.

Investment Securities Held to Maturity The fair values of investment securities were estimated using quoted prices as described above for Level 2 valuation.

Loans Loans were separated into two groups for valuation. Variable rate loans, except for those described below, which reprice frequently with changes in market rates were valued using historical cost. Fixed rate loans and variable rate loans that have reached their minimum contractual interest rates were valued by discounting the future cash flows expected to be received from the loans using current interest rates charged on loans with similar characteristics. Additionally, the allowance for loan losses of $26,359 thousand at September 30, 2016 and $29,771 thousand at December 31, 2015 and the purchased loan discount associated with purchased covered and purchased non-covered loans of $-0- thousand and $4,922 thousand, respectively at September 30, 2016 and $152 thousand and $6,432 thousand, respectively at December 31, 2015 were applied against the estimated fair values to recognize estimated future defaults of contractual cash flows. The Company does not consider these values to be a liquidation price for the loans.

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Deposit Liabilities Deposits with no stated maturity such as checking accounts, savings accounts and money market accounts can be readily converted to cash or used to settle transactions at face value through the broad financial system operated by the Federal Reserve Bank and financial institutions. The fair value of deposits with no stated maturity is equal to the amount payable on demand. The fair values of time deposits were estimated by discounting estimated future contractual cash flows using current market rates for financial instruments with similar characteristics.

Short-Term Borrowed Funds The carrying amount of securities sold under agreement to repurchase and other short-term borrowed funds approximate fair value due to the relatively short period of time between their origination and their expected realization.

The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized, excluding financial instruments recorded at fair value on a recurring basis. The values assigned do not necessarily represent amounts which ultimately may be realized for assets or paid to settle liabilities. In addition, these values do not give effect to adjustments to fair value which may occur when financial instruments are sold or settled in larger quantities. The carrying amounts in the following table are recorded in the balance sheet under the indicated captions.

The Company has not included assets and liabilities that are not financial instruments, such as goodwill, long-term relationships with deposit, merchant processing and trust customers, other purchased intangibles, premises and equipment, deferred taxes and other assets and liabilities. The total estimated fair values do not represent, and should not be construed to represent, the underlying value of the Company.

	At September 30, 2016
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	471,367	$	471,367	$	471,367	$	-	$	-
Investment securities held to maturity		1,411,019		1,440,119		-		1,440,119		-
Loans		1,337,970		1,358,225		-		-		1,358,225
Financial Liabilities:
Deposits	$	4,644,870	$	4,643,754	$	-	$	4,379,733	$	264,021
Short-term borrowed funds		56,358		56,358		-		56,358		-

	At December 31, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	433,044	$	433,044	$	433,044	$	-	$	-
Investment securities held to maturity		1,316,075		1,325,699		-		1,325,699		-
Loans		1,503,625		1,517,394		-		-		1,517,394
Financial Liabilities:
Deposits	$	4,540,659	$	4,539,455	$	-	$	4,253,691	$	285,764
Short-term borrowed funds		53,028		53,028		-		53,028		-

The majority of the Company’s standby letters of credit and other commitments to extend credit carry current market interest rates if converted to loans. No premium or discount was ascribed to these commitments because virtually all funding would be at current market rates.

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Note 10: Commitments and Contingent Liabilities

Loan commitments are agreements to lend to a customer provided there is no violation of any condition established in the agreement. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements. Loan commitments are subject to the Company’s normal credit policies and collateral requirements. Unfunded loan commitments were $312,592 thousand and $299,884 thousand at September 30, 2016 and December 31, 2015, respectively. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Standby letters of credit are primarily issued to support customers’ short-term financing requirements and must meet the Company’s normal credit policies and collateral requirements. Financial and performance standby letters of credit outstanding totaled $21,131 thousand and $26,149 thousand at September 30, 2016 and December 31, 2015, respectively. The Company also had commitments for commercial and similar letters of credit of $-0- thousand at September 30, 2016 and $40 thousand at December 31, 2015. At September 30, 2016 and December 31, 2015, the Company had a reserve for unfunded commitments of $2,593 thousand, included in other liabilities.

Due to the nature of its business, the Company is subject to various threatened or filed legal cases. Based on the advice of legal counsel, the Company does not expect such cases will have a material, adverse effect on its financial position or results of operations. Legal liabilities are accrued when obligations become probable and the amount is reasonably estimable.

Note 11: Earnings Per Common Share

The table below shows earnings per common share and diluted earnings per common share. Basic earnings per common share are computed by dividing net income by the average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income by the average number of common shares outstanding during the period plus the impact of common stock equivalents.

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands, except per share data)
Net income applicable to common equity (numerator)	$	15,628	$	14,857	$	44,400	$	44,175
Basic earnings per common share
Weighted average number of common shares outstanding - basic (denominator)		25,641		25,530		25,558		25,565
Basic earnings per common share	$	0.61	$	0.58	$	1.74	$	1.73
Diluted earnings per common share
Weighted average number of common shares outstanding - basic		25,641		25,530		25,558		25,565
Add common stock equivalents for options		46		35		37		20
Weighted average number of common shares outstanding - diluted (denominator)		25,687		25,565		25,595		25,585
Diluted earnings per common share	$	0.61	$	0.58	$	1.73	$	1.73

For the three and nine months ended September 30, 2016, options to purchase 771 thousand and 948 thousand shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the option exercise price exceeded the fair value of the stock such that their inclusion would have had an anti-dilutive effect.

For the three and nine months ended September 30, 2015, options to purchase 1,043 thousand and 1,396 thousand shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the option exercise price exceeded the fair value of the stock such that their inclusion would have had an anti-dilutive effect.

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WESTAMERICA BANCORPORATION

FINANCIAL SUMMARY

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
	(In thousands, except per share data)
Net Interest and Fee Income (FTE)(1)	$	36,176		$	37,179		$	109,118		$	111,524
Reversal of Provision for Loan Losses		(3,200	)		-			(3,200	)		-
Noninterest Income		11,598			11,993			35,029			36,562
Noninterest Expense		26,088			26,173			77,175			79,796
Income Before Income Taxes (FTE)(1)		24,886			22,999			70,172			68,290
Income Tax Provision (FTE)(1)		9,258			8,142			25,772			24,115
Net Income	$	15,628		$	14,857		$	44,400		$	44,175
Average Common Shares Outstanding		25,641			25,530			25,558			25,565
Average Diluted Common Shares Outstanding		25,687			25,565			25,595			25,585
Common Shares Outstanding at Period End		25,665			25,530
Per Common Share:
Basic Earnings	$	0.61		$	0.58		$	1.74		$	1.73
Diluted Earnings		0.61			0.58			1.73			1.73
Book Value	$	21.94		$	20.91
Financial Ratios:
Return on Assets		1.18	%		1.16	%		1.14	%		1.17	%
Return on Common Equity		11.39	%		11.33	%		11.04	%		11.42	%
Net Interest Margin (FTE)(1)		3.21	%		3.31	%		3.27	%		3.37	%
Net Loan (Recoveries) Losses to Average Loans		(0.19	%)		0.20	%		0.02	%		0.12	%
Efficiency Ratio(2)		54.6	%		53.2	%		53.5	%		53.9	%
Average Balances:
Assets	$	5,253,502		$	5,062,334		$	5,204,418		$	5,055,421
Earning Assets		4,489,317			4,471,690			4,448,261			4,417,114
Loans		1,386,186			1,591,798			1,447,061			1,643,438
Deposits		4,588,762			4,414,711			4,552,819			4,404,379
Shareholders' Equity		545,771			520,261			537,010			517,054
Period End Balances:
Assets	$	5,306,778		$	5,001,395
Earning Assets		4,537,756			4,422,367
Loans		1,364,329			1,571,843
Deposits		4,644,870			4,366,920
Shareholders' Equity		562,996			533,938
Capital Ratios at Period End:
Total Risk Based Capital		15.16	%		13.39	%
Tangible Equity to Tangible Assets		8.37	%		8.23	%
Dividends Paid Per Common Share	$	0.39		$	0.38		$	1.17		$	1.14
Common Dividend Payout Ratio		64	%		66	%		68	%		66	%

The above financial summary has been derived from the Company's unaudited consolidated financial statements. This information should be read in conjunction with those statements, notes and the other information included elsewhere herein. Percentages under the heading "Financial Ratios" are annualized with the exception of the efficiency ratio.

⁽¹⁾ Yields on securities and certain loans have been adjusted upward to a "fully taxable equivalent" ("FTE") basis, which is a non-GAAP financial measure, in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.

⁽²⁾ The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income on an FTE basis, which is a non-GAAP financial measure, and noninterest income).

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Westamerica Bancorporation and subsidiaries’ (the “Company”) principal source of revenue is net interest and fee income, which represents interest earned on loans and investment securities (“interest-earning assets”) reduced by interest paid on deposits and other borrowings (“interest-bearing liabilities”). The relatively low level of market interest rates reduced the spread between interest rates on earning assets and interest bearing liabilities. The Company’s net interest margin and net interest income declined as market interest rates on newly originated loans remain below the yields earned on older-dated loans and on the overall loan portfolio. The Company’s loan portfolio has declined from the third quarter 2015 through the third quarter 2016; Management has been avoiding long-dated, low-yielding loans given historically low interest rates. Management has also maintained, in their opinion, conservative loan underwriting, terms and conditions. During this period, the investment portfolio has grown. The Company has been reducing its exposure to rising interest rates by purchasing shorter-duration investment securities, which have lower yields than longer-duration securities. The changing composition of interest earning assets and low market interest rates has pressured the net interest margin on a fully taxable equivalent (“FTE”) basis. In the third quarter 2016 the Company’s average checking and savings deposits were 5 percent higher than in the third quarter 2015. These lower-costing deposit products, which earn relatively low interest rates and are less volatile than time deposits during periods of rising market interest rates, represented 94 percent of average total deposits during the third quarter 2016. Credit quality improved with nonperforming assets declining to $9.8 million at September 30, 2016 from $26.2 million at September 30, 2015; the resolution of these problem loans contributed to net recoveries of prior loan losses of $649 thousand during the third quarter 2016. Reflecting Management's evaluation of losses inherent in the loan portfolio, including improvements in most credit metrics during the third quarter, the Company recorded a reversal of the provision for loan losses of $3.2 million for the third quarter 2016. Management is focused on controlling all noninterest expense levels, particularly due to market interest rate pressure on net interest income.

The Company presents its net interest margin and net interest income on a FTE basis using the current statutory federal tax rate, which is a non-generally accepted accounting principles (GAAP) financial measure. Management believes the FTE basis is valuable to the reader because the Company’s loan and investment securities portfolios contain a relatively large portion of municipal loans and securities that are federally tax exempt. The Company’s tax exempt loans and securities composition may not be similar to that of other banks, therefore in order to reflect the impact of the federally tax exempt loans and securities on the net interest margin and net interest income for comparability with other banks, the Company presents its net interest margin and net interest income on a FTE basis.

The Company’s significant accounting policies are presented in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and are fundamental to understanding the Company’s results of operations and financial condition. There have been no changes to the Company’s significant accounting policies during the first nine months of 2016.

The Company reported net income of $15.6 million or $0.61 diluted earnings per common share for the third quarter 2016 and net income of $44.4 million or $1.73 diluted earnings per common share for the nine months ended September 30, 2016. These results compare to net income of $14.9 million or $0.58 diluted earnings per common share for the third quarter 2015 and net income of $44.2 million or $1.73 diluted earnings per common share for the nine months ended September 30, 2015.

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Net Income

Following is a summary of the components of net income for the periods indicated:

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
	(In thousands, except per share data)
Net interest and fee income (FTE)	$	36,176		$	37,179		$	109,118		$	111,524
Reversal of provision for loan losses		3,200			-			3,200			-
Noninterest income		11,598			11,993			35,029			36,562
Noninterest expense		(26,088	)		(26,173	)		(77,175	)		(79,796	)
Income  before taxes (FTE)		24,886			22,999			70,172			68,290
Income tax provision (FTE)		(9,258	)		(8,142	)		(25,772	)		(24,115	)
Net income	$	15,628		$	14,857		$	44,400		$	44,175
Average diluted common shares		25,687			25,565			25,595			25,585
Diluted earnings per common share	$	0.61		$	0.58		$	1.73		$	1.73
Average total assets	$	5,253,502		$	5,062,334		$	5,204,418		$	5,055,421
Net income to average total assets (annualized)		1.18	%		1.16	%		1.14	%		1.17	%
Net income to average common shareholders' equity (annualized)		11.39	%		11.33	%		11.04	%		11.42	%

Net income for the third quarter of 2016 was $771 thousand more than the same quarter of 2015, the net result of a reversal of provision for loan losses, partially offset by lower net interest and fee income (FTE), lower noninterest income and higher income tax provision (FTE). A decrease in net interest and fee income (FTE) was mostly attributed to lower average balances of loans, partially offset by higher average balances of investments and lower average balances of higher-costing time deposits. The Company recorded a reversal of provision for loan losses of $3.2 million, reflecting Management's evaluation of losses inherent in the loan portfolio. Noninterest income decreased primarily due to reduced levels of service charges on deposit accounts. The income tax provision (FTE) was higher in the third quarter 2016 due to reduced levels of federally tax-exempt income on interest-earning assets relative to pre-tax income, and lower tax credits.

Comparing the first nine months of 2016 with the first nine months of 2015, net income increased $225 thousand due to a reversal of provision for loan losses and lower noninterest expense, partially offset by lower net interest and fee income (FTE), lower noninterest income and higher income tax provision (FTE). The lower net interest and fee income (FTE) was primarily caused by lower average balances of loans, partially offset by higher average balances of investments and lower average balances of higher-costing time deposits. The Company recorded a reversal of provision for loan losses of $3.2 million, reflecting Management's evaluation of losses inherent in the loan portfolio. Noninterest income decreased primarily due to reduced levels of service charges on deposit accounts and lower merchant credit card fees, partially offset by higher debit card fees. Noninterest expense decreased mostly due to lower net expenses for foreclosed properties, lower personnel costs, lower occupancy expense and lower other expenses, offset in part by higher legal fees. Income tax provision (FTE) increased in the first nine months of 2016 due to reduced levels of federally tax-exempt income on interest-earning assets relative to pre-tax income, and lower tax credits.

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Net Interest and Fee Income (FTE)

Following is a summary of the components of net interest and fee income (FTE) for the periods indicated:

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
	($ in thousands)
Interest and fee income	$	33,468		$	34,299		$	100,842		$	102,641
Interest expense		(523	)		(585	)		(1,616	)		(1,861	)
FTE adjustment		3,231			3,465			9,892			10,744
Net interest and fee income (FTE)	$	36,176		$	37,179		$	109,118		$	111,524
Average earning assets	$	4,489,317		$	4,471,690		$	4,448,261		$	4,417,114
Net interest margin (FTE) (annualized)		3.21	%		3.31	%		3.27	%		3.37	%

Net interest and fee income (FTE) decreased during the third quarter 2016 by $1.0 million from the same period in 2015, mainly due to lower average balances of loans (down $206 million), partially offset by higher average balances of investments (up $223 million) and lower average balances of higher-costing time deposits (down $47 million).

Comparing the first nine months of 2016 with the first nine months of 2015, net interest and fee income (FTE) decreased $2.4 million due to lower average balances of loans (down $196 million), partially offset by higher average balances of investments (up $228 million) and lower average balances of higher-costing time deposits (down $72 million).

Loan volumes have declined due to problem loan workout activities (such as chargeoffs, collateral repossessions and principal payments), particularly with purchased loans, and reduced volumes of loan originations. In Management’s opinion, current levels of competitive loan pricing do not provide adequate forward earnings potential. As a result, the Company has not currently taken an aggressive posture relative to loan portfolio growth. Management has maintained relatively stable interest-earning asset volumes by increasing investment securities as loan volumes have declined.

Yields on interest-earning assets declined due to relatively low interest rates prevailing in the market. The annualized net interest margin (FTE) was 3.21% in the third quarter 2016 and 3.27% in the first nine months of 2016 compared with 3.31% in the third quarter 2015 and 3.37% in the first nine months of 2015. The volume of older-dated higher-yielding loans declined due to principal maturities and paydowns. The Company, in anticipation of rising interest rates, has been purchasing shorter-duration investment securities with lower yields than longer-duration securities to increase liquidity. The Company’s high levels of liquidity will provide an opportunity to invest in higher yielding assets assuming market interest rates start rising.

The Company has been replacing higher-cost funding sources with low-cost deposits and interest expense has declined to offset some of the decline in interest income. Average balances of time deposits declined $47 million from the third quarter 2015 to third quarter 2016 while lower-cost checking and savings deposits grew 5% in the same period. Average balances of checking and saving deposits accounted for 94.1% of average total deposits in the third quarter 2016 and 93.9% in the first nine months of 2016 compared with 92.8% and 92.1% in the third quarter 2015 and first nine months of 2015, respectively.

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Net Interest Margin (FTE)

The following summarizes the components of the Company's net interest margin for the periods indicated (percentages are annualized.):

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
Yield on earning assets (FTE)		3.26	%		3.36	%		3.32	%		3.43	%
Rate paid on interest-bearing liabilities		0.08	%		0.09	%		0.08	%		0.10	%
Net interest spread (FTE)		3.18	%		3.27	%		3.24	%		3.33	%
Impact of noninterest-bearing demand deposits		0.03	%		0.04	%		0.03	%		0.04	%
Net interest margin (FTE)		3.21	%		3.31	%		3.27	%		3.37	%

During 2015 and 2016, the net interest margin (FTE) was affected by historically low market interest rates. The volume of older-dated higher-yielding loans and securities declined due to principal maturities and paydowns. Management has avoided long-dated, low-yielding loans given historically low interest rates. Management has also maintained conservative loan underwriting, terms and conditions. During this period, the investment portfolio has grown. The changing composition of interest-earning assets and low market rates has pressured the net interest margin. Rates on interest-bearing liabilities were kept low by reducing the volume of higher-cost time deposits and increasing balances of checking and savings deposits, which earn relatively low interest rates and are less volatile than time deposits during periods of rising market interest rates.

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Summary of Average Balances, Yields/Rates and Interest Differential

The following tables present information regarding the consolidated average assets, liabilities and shareholders’ equity, the amounts of interest income earned from average interest earning assets and the resulting yields, and the amounts of interest expense incurred on average interest-bearing liabilities and the resulting rates. Average loan balances include nonperforming loans. Interest income includes reversal of previously accrued interest on loans placed on non-accrual status during the period and proceeds from loans on nonaccrual status only to the extent cash payments have been received and applied as interest income and accretion of purchased loan discounts. Yields on tax-exempt securities and loans have been adjusted upward to reflect the effect of income exempt from federal income taxation at the current statutory tax rate. Yields, rates and interest margins are annualized.

Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin

	For the Three Months Ended September 30, 2016
			Interest
	Average		Income/		Yields/
	Balance		Expense		Rates
	($ in thousands)
Assets
Investment securities:
Taxable	$	2,265,883	$	11,024		1.95	%
Tax-exempt (1)		837,248		8,415		4.02	%
Total investments (1)		3,103,131		19,439		2.51	%
Loans:
Taxable		1,320,635		16,424		4.95	%
Tax-exempt (1)		65,551		836		5.07	%
Total loans (1)		1,386,186		17,260		4.95	%
Total Interest-earning assets (1)		4,489,317		36,699		3.26	%
Other assets		764,185
Total assets	$	5,253,502
Liabilities and shareholders' equity
Noninterest-bearing demand	$	2,041,045	$	-		-	%
Savings and interest-bearing transaction		2,277,462		293		0.05	%
Time less than $100,000		152,142		95		0.25	%
Time $100,000 or more		118,113		124		0.42	%
Total interest-bearing deposits		2,547,717		512		0.08	%
Short-term borrowed funds		68,640		11		0.06	%
Total interest-bearing liabilities		2,616,357		523		0.08	%
Other liabilities		50,329
Shareholders' equity		545,771
Total liabilities and shareholders' equity	$	5,253,502
Net interest spread (1) (2)						3.18	%
Net interest and fee income and interest margin (1) (3)			$	36,176		3.21	%

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

⁽²⁾ Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities.

⁽³⁾ Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.

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Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin

	For the Three Months Ended September 30, 2015
			Interest
	Average		Income/		Yields/
	Balance		Expense		Rates
	($ in thousands)
Assets
Investment securities:
Taxable	$	2,043,470	$	9,120		1.79	%
Tax-exempt (1)		836,422		8,912		4.26	%
Total investments (1)		2,879,892		18,032		2.50	%
Loans:
Taxable		1,516,937		18,719		4.90	%
Tax-exempt (1)		74,861		1,013		5.37	%
Total loans (1)		1,591,798		19,732		4.92	%
Total Interest-earning assets (1)		4,471,690	$	37,764		3.36	%
Other assets		590,644
Total assets	$	5,062,334
Liabilities and shareholders' equity
Noninterest-bearing demand	$	1,975,498	$	-		-	%
Savings and interest-bearing transaction		2,121,607		276		0.05	%
Time less than $100,000		170,390		133		0.31	%
Time $100,000 or more		147,216		164		0.44	%
Total interest-bearing deposits		2,439,213		573		0.09	%
Short-term borrowed funds		72,607		12		0.07	%
Total interest-bearing liabilities		2,511,820	$	585		0.09	%
Other liabilities		54,755
Shareholders' equity		520,261
Total liabilities and shareholders' equity	$	5,062,334
Net interest spread (1) (2)						3.27	%
Net interest and fee income and interest margin (1) (3)			$	37,179		3.31	%

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

⁽²⁾ Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities.

⁽³⁾ Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.

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Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin

	For the Nine Months Ended September 30, 2016
			Interest
	Average		Income/		Yields/
	Balance		Expense		Rates
	($ in thousands)
Assets
Investment securities:
Taxable	$	2,165,463	$	31,256		1.92	%
Tax-exempt (1)		835,737		25,632		4.09	%
Total investments (1)		3,001,200		56,888		2.53	%
Loans:
Taxable		1,378,593		51,150		4.96	%
Tax-exempt (1)		68,468		2,696		5.26	%
Total loans (1)		1,447,061		53,846		4.97	%
Total Interest-earning assets (1)		4,448,261		110,734		3.32	%
Other assets		756,157
Total assets	$	5,204,418
Liabilities and shareholders' equity
Noninterest-bearing demand	$	2,010,058	$	-		-	%
Savings and interest-bearing transaction		2,265,775		878		0.05	%
Time less than $100,000		156,568		313		0.27	%
Time $100,000 or more		120,418		395		0.44	%
Total interest-bearing deposits		2,542,761		1,586		0.08	%
Short-term borrowed funds		62,823		30		0.06	%
Total interest-bearing liabilities		2,605,584		1,616		0.08	%
Other liabilities		51,766
Shareholders' equity		537,010
Total liabilities and shareholders' equity	$	5,204,418
Net interest spread (1) (2)						3.24	%
Net interest and fee income and interest margin (1) (3)			$	109,118		3.27	%

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

⁽²⁾ Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities.

⁽³⁾ Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.

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Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin

	For the Nine months Ended September 30, 2015
			Interest
	Average		Income/		Yields/
	Balance		Expense		Rates
	($ in thousands)
Assets
Investment securities:
Taxable	$	1,918,319	$	25,067		1.74	%
Tax-exempt (1)		855,357		27,549		4.29	%
Total investments (1)		2,773,676		52,616		2.53	%
Loans:
Taxable		1,566,333		57,547		4.91	%
Tax-exempt (1)		77,105		3,222		5.59	%
Total loans (1)		1,643,438		60,769		4.94	%
Total Interest-earning assets (1)		4,417,114	$	113,385		3.43	%
Other assets		638,307
Total assets	$	5,055,421
Liabilities and shareholders' equity
Noninterest-bearing demand	$	1,946,018	$	-		-	%
Savings and interest-bearing transaction		2,109,831		824		0.05	%
Time less than $100,000		175,696		449		0.34	%
Time $100,000 or more		172,834		543		0.42	%
Total interest-bearing deposits		2,458,361		1,816		0.10	%
Short-term borrowed funds		81,926		44		0.07	%
Federal Home Loan Bank advances		661		1		0.20	%
Total interest-bearing liabilities		2,540,948	$	1,861		0.10	%
Other liabilities		51,401
Shareholders' equity		517,054
Total liabilities and shareholders' equity	$	5,055,421
Net interest spread (1) (2)						3.33	%
Net interest and fee income and interest margin (1) (3)			$	111,524		3.37	%

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

⁽²⁾ Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities.

⁽³⁾ Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets. The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits.

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Summary of Changes in Interest Income and Expense due to Changes in Average Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income and interest expense due to changes in average assets and liability balances (volume) and changes in average interest yields/rates for the periods indicated. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.

Summary of Changes in Interest Income and Expense

	For the Three Months Ended September 30, 2016
	Compared with
	For the Three Months Ended September 30, 2015
	Volume			Yield/Rate			Total
	(In thousands)
Increase (decrease) in interest and loan fee income:
Investment securities:
Taxable	$	993		$	911		$	1,904
Tax-exempt (1)		9			(506	)		(497	)
Total investments (1)		1,002			405			1,407
Loans:
Taxable		(2,462	)		167			(2,295	)
Tax-exempt (1)		(128	)		(49	)		(177	)
Total loans (1)		(2,590	)		118			(2,472	)
Total (decrease) increase in interest and loan fee income (1)		(1,588	)		523			(1,065	)
Increase (decrease) in interest expense:
Deposits:
Savings and interest-bearing transaction		20			(3	)		17
Time less than $100,000		(14	)		(24	)		(38	)
Time $100,000 or more		(33	)		(7	)		(40	)
Total interest-bearing deposits		(27	)		(34	)		(61	)
Short-term borrowed funds		(1	)		-			(1	)
Total decrease in interest expense		(28	)		(34	)		(62	)
(Decrease) increase in net interest and loan fee income (1)	$	(1,560	)	$	557		$	(1,003	)

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

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Summary of Changes in Interest Income and Expense

	For the Nine Months Ended September 30, 2016
	Compared with
	For the Nine Months Ended September 30, 2015
	Volume			Yield/Rate			Total
	(In thousands)
Increase (decrease) in interest and loan fee income:
Investment securities:
Taxable	$	3,229		$	2,960		$	6,189
Tax-exempt (1)		(632	)		(1,285	)		(1,917	)
Total investments (1)		2,597			1,675			4,272
Loans:
Taxable		(6,854	)		457			(6,397	)
Tax-exempt (1)		(359	)		(167	)		(526	)
Total loans (1)		(7,213	)		290			(6,923	)
Total (decrease) increase in interest and loan fee income (1)		(4,616	)		1,965			(2,651	)
Increase (decrease) in interest expense:
Deposits:
Savings and interest-bearing transaction		62			(8	)		54
Time less than $100,000		(49	)		(87	)		(136	)
Time $100,000 or more		(164	)		16			(148	)
Total interest-bearing deposits		(151	)		(79	)		(230	)
Short-term borrowed funds		(11	)		(3	)		(14	)
Federal Home Loan Bank advances		(1	)		-			(1	)
Total decrease in interest expense		(163	)		(82	)		(245	)
(Decrease) increase in net interest and loan fee income (1)	$	(4,453	)	$	2,047		$	(2,406	)

⁽¹⁾ Amounts calculated on an FTE basis using the current statutory federal tax rate.

Provision for Loan Losses

The Company manages credit costs by consistently enforcing, in Management’s opinion, conservative underwriting and administration procedures and aggressively pursuing collection efforts with debtors experiencing financial difficulties. The provision for loan losses reflects Management's assessment of credit risk in the loan portfolio during each of the periods presented.

The Company recorded a reversal of the provision for loan losses of $3.2 million in the three months and nine months ended September 30, 2016. The Company provided no provision for loan losses in the three months and nine months ended September 30, 2015. During the third quarter 2016, classified loans declined $15.6 million (which included nonperforming loans of $7.1 million) and the Company achieved net recoveries of prior loan losses of $649 thousand; these developments were reflected in Management’s evaluation of credit quality and the adequacy of the allowance for loan losses at September 30, 2016. Management’s evaluation of credit quality includes originated and purchased loans. The Company recorded purchased loans at estimated fair value upon the acquisition dates. Such estimated fair values were recognized for individual loans, although small balance homogenous loans were pooled for valuation purposes. The valuation discounts recorded for purchased loans included Management’s assessment of the risk of principal loss under economic and borrower conditions prevailing on the dates of purchase. The purchased County Bank loans secured by single-family residential real estate are “covered” through February 6, 2019 by loss-sharing agreements the Company entered with the FDIC which mitigates losses during the term of the agreements. Any deterioration in estimated value related to principal loss subsequent to the acquisition dates requires additional loss recognition through a provision for loan losses. No assurance can be given future provisions for loan losses related to purchased loans will not be necessary. For further information regarding credit risk, the FDIC loss-sharing agreements, net credit losses and the allowance for loan losses, see the “Loan Portfolio Credit Risk” and “Allowance for Loan Losses” sections of this report.

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Noninterest Income

The following table summarizes the components of noninterest income for the periods indicated.

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands)
Service charges on deposit accounts	$	5,303	$	5,581	$	15,790	$	16,981
Debit card fees		1,587		1,538		4,724		4,528
Merchant processing services		1,532		1,485		4,699		4,971
Trust fees		686		682		2,004		2,061
Other service charges		671		693		1,951		2,041
ATM processing fees		600		616		1,860		1,828
Financial services commissions		118		177		411		527
Other noninterest income		1,101		1,221		3,590		3,625
Total	$	11,598	$	11,993	$	35,029	$	36,562

Noninterest income for the third quarter 2016 declined by $395 thousand or 3.3% from the same period in 2015. Service charges on deposits decreased $278 thousand due to declines in fees charged on overdrawn and insufficient funds accounts (down $292 thousand), partially offset by the effect of deposit fee increases effective February 2016. Other noninterest income decreased $120 thousand primarily due to a decline in interest recoveries on charged off loans.

In the first nine months of 2016, noninterest income decreased $1.5 million or 4.2% compared with the first nine months of 2015. Service charges on deposits decreased $1.2 million due to declines in fees charged on overdrawn and insufficient funds accounts (down $826 thousand) and lower fees on analyzed accounts (down $391 thousand), partially offset by the effect of deposit fee increases effective February 2016. Merchant processing services fees decreased $272 thousand primarily due to lower transaction volumes and because larger sales relationships with low margins accounted for a significant portion of transaction volumes, offset in part by increased debit card fees of $196 thousand as a result of increased transaction volumes.

Noninterest Expense

The following table summarizes the components of noninterest expense for the periods indicated.

	For the Three Months					For the Nine Months
	Ended September 30,
	2016			2015		2016			2015
	(In thousands)
Salaries and related benefits	$	13,063		$	12,761	$	39,067		$	39,795
Occupancy		3,749			3,746		10,546			11,199
Outsourced data processing services		2,114			2,115		6,375			6,334
Professional services		1,693			746		3,183			1,876
Furniture and equipment		1,211			1,075		3,611			3,353
Amortization of identifiable intangibles		867			952		2,642			2,908
Courier service		451			604		1,458			1,744
Other real estate owned		(206	)		83		(487	)		451
Other noninterest expense		3,146			4,091		10,780			12,136
Total	$	26,088		$	26,173	$	77,175		$	79,796

Noninterest expense decreased $85 thousand in the third quarter 2016 compared with the same period in 2015. Expenses for other real estate owned in the third quarter 2016 were reduced by net gains from the sale of foreclosed properties. Courier expense decreased $153 thousand primarily due to switching to new low-cost vendors. Other categories of expense offset the decrease: Professional fees increased $947 thousand due to higher legal fees associated with loan administration and collection activities. Salaries and related benefits increased $302 thousand in the third quarter 2016 compared with the same period in 2015 mostly due to higher employee benefit costs. Furniture and equipment expense increased $136 thousand due to increases in depreciation and maintenance expenses.

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In the first nine months of 2016, noninterest expense decreased $2.6 million or 3.3% compared with the first nine months of 2015. Expenses for other real estate owned in the first nine months of 2016 were reduced by net gains from the sale of foreclosed properties. Salaries and related benefits decreased $728 thousand primarily due to lower salaries resulting from employee attrition. Occupancy expense decreased $653 thousand in the first nine months of 2016 compared with the first nine months of 2015 mostly due to branch closures and a lease expiration related to a non-branch building. Courier expense decreased $286 thousand primarily due to logistical changes and switching to new low-cost vendors. Amortization of identifiable intangibles decreased as assets are amortized on a declining balance method. Two categories of expense offset the decrease: Professional fees increased $1.3 million due to higher legal fees associated with loan administration and collection activities. Furniture and equipment expense increased $258 thousand mainly due to increased depreciation costs for technology.

Provision for Income Tax

During the third quarter 2016, the Company recorded an income tax provision (FTE) of $9.3 million, compared with $8.1 million in the third quarter 2015. The third quarter 2016 provision represents an effective tax rate (FTE) of 37.2%, compared with 35.4% for the third quarter 2015. The income tax provision (FTE) was $25.8 million for the first nine months of 2016 compared with $24.1 million for the corresponding period of 2015. The first nine months of 2016 effective tax rate (FTE) was 36.7% compared to 35.3% for the same period of 2015. The effective tax rates (FTE) for the third quarter 2015 and the first nine months of 2015 were lower than the effective tax rates for the respective periods in 2016 due to higher pre-tax income and declining tax preference items. Interest income earned on municipal securities and tax free loans which are exempt from federal income taxes have declined in 2016. The tax credits earned from investments in limited partnerships have also declined in 2016.

Investment Portfolio

The Company maintains a securities portfolio consisting of securities issued by U.S. Government sponsored entities, agency and non-agency mortgage backed securities, state and political subdivisions, corporations, and asset-backed and other securities. Investment securities are held in safekeeping by an independent custodian.

Management has increased the investment portfolio in response to deposit growth and loan volume declines. The carrying value of the Company’s investment securities portfolio was $3.2 billion as of September 30, 2016, an increase of $287 million compared to December 31, 2015.

Management continually evaluates the Company’s investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, liquidity, and the level of interest rate risk to which the Company is exposed. These evaluations may cause Management to change the level of funds the Company deploys into investment securities and change the composition of the Company’s investment securities portfolio. During the nine months ended September 30, 2016, Management reduced securities of U.S. Government sponsored entities to reduce call optionality and increased agency residential MBS to develop more reliable cash flows.

As of September 30, 2016, substantially all of the Company’s investment securities continue to be investment grade rated by one or more major rating agencies. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset-backed securities. The Company’s procedures for evaluating investments in securities are in accordance with guidance issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Agencies” (SR 12-15) and other regulatory guidance. Credit ratings are considered in our analysis only as a guide to the historical default rate associated with similarly-rated bonds. There have been no significant differences in our internal analyses compared with the ratings assigned by the third party credit rating agencies.

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The following tables summarize the total general obligation and revenue bonds in the Company’s investment securities portfolios as of the dates indicated identifying the state in which the issuing government municipality or agency operates.

At September 30, 2016, the Company’s investment securities portfolios included securities issued by 718 state and local government municipalities and agencies located within 44 states with a fair value of $887.5 million. None of the Company’s investment securities were issued by Puerto Rican government entities. The largest exposure to any one municipality or agency was $10.5 million (fair value) represented by nine general obligation bonds.

	At September 30, 2016
	Amortized		Fair
	Cost		Value
	(In thousands)
Obligations of states and political subdivisions:
General obligation bonds:
California	$	110,820	$	115,071
Texas		69,205		70,598
New Jersey		40,198		41,236
Pennsylvania		39,844		40,367
Minnesota		33,019		33,761
Other (36 states)		277,560		286,215
Total general obligation bonds	$	570,646	$	587,248
Revenue bonds:
California	$	49,641	$	51,653
Kentucky		23,912		24,667
Pennsylvania		23,617		23,905
Iowa		18,103		18,638
Colorado		16,100		16,717
Other (30 states)		158,613		164,679
Total revenue bonds	$	289,986	$	300,259
Total obligations of states and political subdivisions	$	860,632	$	887,507

At December 31, 2015, the Company’s investment securities portfolios included securities issued by 725 state and local government municipalities and agencies located within 44 states with a fair value of $864.2 million. None of the Company’s investment securities were issued by Puerto Rican government entities. The largest exposure to any one municipality or agency was $10.3 million (fair value) represented by nine general obligation bonds.

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	At December 31, 2015
	Amortized		Fair
	Cost		Value
	(In thousands)
Obligations of states and political subdivisions:
General obligation bonds:
California	$	117,968	$	121,096
Texas		62,030		63,394
Pennsylvania		51,547		52,115
New Jersey		38,651		39,322
Minnesota		32,588		33,133
Other (34 states)		243,488		249,854
Total general obligation bonds	$	546,272	$	558,914
Revenue bonds:
California	$	49,095	$	51,206
Pennsylvania		29,446		29,841
Kentucky		19,825		20,400
Iowa		18,156		18,728
Colorado		16,161		16,560
Other (31 states)		163,633		168,592
Total revenue bonds	$	296,316	$	305,327
Total obligations of states and political subdivisions	$	842,588	$	864,241

At September 30, 2016 and December 31, 2015, the revenue bonds in the Company’s investment securities portfolios were issued by state and local government municipalities and agencies to fund public services such as water utility, sewer utility, recreational and school facilities, and general public and economic improvements. The revenue bonds were payable from 22 revenue sources at September 30, 2016 and December 31, 2015. The revenue sources that represent 5% or more individually of the total revenue bonds are summarized in the following tables.

	At September 30, 2016
	Amortized		Fair
	Cost		Value
	(In thousands)
Revenue bonds by revenue source:
Water	$	55,972	$	58,898
Sewer		41,629		43,204
Sales tax		31,598		33,184
Lease (renewal)		25,291		26,134
College & University		18,312		18,594
Lease (abatement)		15,211		15,948
Other		101,973		104,297
Total revenue bonds by revenue source	$	289,986	$	300,259

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	At December 31, 2015
	Amortized		Fair
	Cost		Value
	(In thousands)
Revenue bonds by revenue source:
Water	$	62,661	$	65,412
Sewer		45,912		47,242
Sales tax		31,680		32,945
Lease (renewal)		21,673		22,227
College & University		17,967		18,215
Lease (abatement)		17,017		17,769
Other		99,406		101,517
Total revenue bonds by revenue source	$	296,316	$	305,327

See Note 3 to the unaudited consolidated financial statements for additional information related to the investment securities.

Loan Portfolio Credit Risk

The Company extends loans to commercial and consumer customers which expose the Company to the risk borrowers will default, causing loan losses. The Company’s lending activities are exposed to various qualitative risks. All loan segments are exposed to risks inherent in the economy and market conditions. Significant risk characteristics related to the commercial loan segment include the borrowers’ business performance and financial condition, and the value of collateral for secured loans. Significant risk characteristics related to the commercial real estate segment include the borrowers’ business performance and the value of properties collateralizing the loans. Significant risk characteristics related to the construction loan segment include the borrowers’ performance in successfully developing the real estate into the intended purpose and the value of the property collateralizing the loans. Significant risk characteristics related to the residential real estate segment include the borrowers’ financial wherewithal to service the mortgages and the value of the property collateralizing the loans. Significant risk characteristics related to the consumer loan segment include the financial condition of the borrowers and the value of collateral securing the loans.

The preparation of the financial statements requires Management to estimate the amount of losses inherent in the loan portfolio and establish an allowance for credit losses. The allowance for credit losses is established by assessing a provision for loan losses against the Company’s earnings. In estimating credit losses, Management must exercise judgment in evaluating information deemed relevant, such as financial information regarding individual borrowers, overall credit loss experience, the amount of past due, nonperforming and classified loans, recommendations of regulatory authorities, prevailing economic conditions and other information. The amount of ultimate losses on the loan portfolio can vary from the estimated amounts. Management follows a systematic methodology to estimate loss potential in an effort to reduce the differences between estimated and actual losses.

The Company closely monitors the markets in which it conducts its lending operations and follows a strategy to control exposure to loans with high credit risk. The Bank’s organization structure separates the functions of business development and loan underwriting; Management believes this segregation of duties avoids inherent conflicts of combining business development and loan approval functions. In measuring and managing credit risk, the Company adheres to the following practices.

• The Bank maintains a Loan Review Department which reports directly to the Board of Directors. The Loan Review Department performs independent evaluations of loans and assigns credit risk grades to evaluated loans using grading standards employed by bank regulatory agencies. Those loans judged to carry higher risk attributes are referred to as “classified loans.” Classified loans receive elevated management attention to maximize collection.

• The Bank maintains two loan administration offices whose sole responsibility is to manage and collect classified loans.

Classified loans with higher levels of credit risk are further designated as “nonaccrual loans.” Management places classified loans on nonaccrual status when full collection of contractual interest and principal payments is in doubt. Uncollected interest previously accrued on loans placed on nonaccrual status is reversed as a charge against interest income. The Company does not accrue interest income on loans following placement on nonaccrual status. Interest payments received on nonaccrual loans are applied to reduce the carrying amount of the loan unless the carrying amount is well secured by loan collateral. “Nonperforming assets” include nonaccrual loans, loans 90 or more days past due and still accruing, and repossessed loan collateral (commonly referred to as “Other Real Estate Owned”).

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The former County Bank loans and repossessed loan collateral were purchased from the FDIC with indemnifying loss-sharing agreements. The loss-sharing agreement on single-family residential real estate assets expires February 6, 2019. The loss-sharing agreement on non-single-family residential real estate assets expired February 6, 2014 as to losses and expires February 6, 2017 as to loss recoveries.

Nonperforming Assets
	At September 30,				At December 31,
	2016		2015		2015
	(In thousands)
Originated:
Nonperforming nonaccrual loans	$	1,198	$	7,578	$	6,302
Performing nonaccrual loans		4,410		-		350
Total nonaccrual loans		5,608		7,578		6,652
Accruing loans 90 or more days past due		438		481		295
Total nonperforming loans		6,046		8,059		6,947
Other real estate owned		666		5,834		5,829
Total nonperforming assets	$	6,712	$	13,893	$	12,776
Purchased covered:
Nonperforming nonaccrual loans	$	29	$	-	$	-
Performing nonaccrual loans		-		-		-
Total nonaccrual loans		29		-		-
Accruing loans 90 or more days past due		-		-		-
Total nonperforming loans		29		-		-
Other real estate owned		-		486		-
Total nonperforming assets	$	29	$	486	$	-
Purchased non-covered:
Nonperforming nonaccrual loans	$	634	$	8,784	$	8,346
Performing nonaccrual loans		22		84		-
Total nonaccrual loans		656		8,868		8,346
Accruing loans 90 or more days past due		49		-		-
Total nonperforming loans		705		8,868		8,346
Other real estate owned		2,366		2,949		3,435
Total nonperforming assets	$	3,071	$	11,817	$	11,781
Total nonperforming assets	$	9,812	$	26,196	$	24,557

Nonperforming assets have declined during the nine months ended September 30, 2016 due to payoffs and chargeoffs. At September 30, 2016, one loan secured by commercial real estate with a balance of $4.4 million was on nonaccrual status. During the third quarter 2016, nonaccrual loans declined due to loan payoffs which generated recoveries of prior charge-offs. The remaining nine nonaccrual loans held at September 30, 2016 had an average carrying value of $209 thousand and the largest carrying value was $584 thousand.

Management believes the overall credit quality of the loan portfolio is reasonably stable; however, classified and nonperforming assets could fluctuate from period to period. The performance of any individual loan can be affected by external factors such as the interest rate environment, economic conditions, and collateral values or factors particular to the borrower. No assurance can be given that additional increases in nonaccrual and delinquent loans will not occur in the future.

Allowance for Credit Losses

The Company’s allowance for loan losses represents Management’s estimate of loan losses inherent in the loan portfolio. In evaluating credit risk for loans, Management measures loss potential of the carrying value of loans. As described above, payments received on nonaccrual loans may be applied against the principal balance of the loans until such time as full collection of the remaining recorded balance is expected. Further, the carrying value of purchased loans includes fair value discounts assigned at the time of purchase under the provisions of FASB ASC 805, Business Combinations, and FASB ASC 310-30, Loans or Debt Securities with Deteriorated Credit Quality. The allowance for loan losses represents Management’s estimate of loan losses in excess of these reductions to the carrying value of loans within the loan portfolio.

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The following table summarizes the allowance for loan losses, chargeoffs and recoveries of the Company for the periods indicated:

	For the Three Months						For the Nine Months
	Ended September 30,
	2016			2015			2016			2015
	($ in thousands)
Analysis of the Allowance for Loan Losses
Balance, beginning of period	$	28,910		$	30,828		$	29,771		$	31,485
Reversal of provision for loan losses		(3,200	)		-			(3,200	)		-
Loans charged off
Commercial		(88	)		(239	)		(2,024	)		(700	)
Commercial real estate		-			(449	)		-			(449	)
Real estate residential		-			-			-			-
Consumer installment and other		(1,736	)		(773	)		(3,418	)		(2,344	)
Purchased non-covered loans		(112	)		-			(150	)		(431	)
Total chargeoffs		(1,936	)		(1,461	)		(5,592	)		(3,924	)
Recoveries of loans previously charged off
Commercial		1,735			300			2,517			814
Commercial real estate		15			27			45			57
Real estate construction		-			-			-			-
Consumer installment and other		337			336			1,132			1,369
Purchased non-covered loans		498			6			1,686			235
Total recoveries		2,585			669			5,380			2,475
Net loan recoveries (losses)		649			(792	)		(212	)		(1,449	)
Balance, end of period	$	26,359		$	30,036		$	26,359		$	30,036
Net loan recoveries (losses):
Originated loans	$	263		$	(798	)	$	(1,748	)	$	(1,253	)
Purchased non-covered loans		386			6			1,536			(196	)
Net loan (recoveries) losses as a percentage of average total loans (annualized)		(0.19	%)		0.20	%		0.02	%		0.12	%

The Company's allowance for loan losses is maintained at a level considered appropriate to provide for losses that can be estimated based upon specific and general conditions. These include conditions unique to individual borrowers, as well as overall loan loss experience, the amount of past due, nonperforming and classified loans, the amount of non-indemnified purchased loans, recommendations of regulatory authorities, prevailing economic conditions and other factors. A portion of the allowance is individually allocated to impaired loans whose full collectability of principal is uncertain. Such allocations are determined by Management based on loan-by-loan analyses. The Company evaluates for impairment all loans with outstanding principal balances in excess of $500 thousand which are classified or on nonaccrual status and all “troubled debt restructured” loans. The remainder of the loan portfolio is collectively evaluated for impairment based in part on quantitative analyses of historical loan loss experience of loan portfolio segments to determine standard loss rates for each segment. The loss rate for each loan portfolio segment reflects both the historical loss experience during a look-back period and the loss emergence period. The loss rates are applied to segmented loan balances to allocate the allowance to the segments of the loan portfolio.

Purchased loans were recorded on the date of purchase at estimated fair value; fair value discounts include a component for estimated loan losses. The Company evaluates all nonaccrual purchased loans with outstanding principal balances in excess of $500 thousand for impairment; the impaired loan value is compared to the recorded investment in the loan, which has been reduced by the loan default discount estimated on the date of purchase. If Management’s impairment analysis determines the impaired loan value is less than the recorded investment in the purchased loan, an allocation of the allowance for loan losses is established for the deficiency. For all other purchased loan portfolio segments, Management applies loss rates to the purchased loan portfolio segments to determine initial allocations of the allowance. Further, liquidating purchased consumer installment loans are evaluated separately by applying historical loss rates to forecasted liquidating principal balances to initially measure losses inherent in this portfolio segment. The initial allocations of the allowance to purchased loan portfolio segments are compared to loan default discounts ascribed to each segment. Management establishes allocations of the allowance for loan losses for any estimated deficiency.

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The remainder of the allowance is considered to be unallocated. The unallocated allowance is established to provide for probable losses that have been incurred as of the reporting date but not reflected in the allocated allowance. The unallocated allowance addresses additional qualitative factors consistent with Management's analysis of the level of risks inherent in the loan portfolio, which are related to the risks of the Company's general lending activity. Included in the unallocated allowance is the risk of losses that are attributable to national or local economic or industry trends which have occurred but have not yet been recognized in loan chargeoff history (external factors). The primary external factor evaluated by the Company and the judgmental amount of unallocated reserve assigned by Management as of September 30, 2016 is economic and business conditions $0.8 million. Also included in the unallocated allowance is the risk of losses attributable to general attributes of the Company's loan portfolio and credit administration (internal factors). The internal factors evaluated by the Company and the judgmental amount of unallocated reserve assigned by Management are: loan review system $1.4 million, adequacy of lending Management and staff $1.0 million and concentrations of credit $1.3 million.

	Allowance for Loan Losses
	For the Three Months Ended September 30, 2016
												Consumer			Purchased			Purchased
				Commercial					Residential			Installment			Non-covered			Covered
	Commercial			Real Estate			Construction		Real Estate			and Other			Loans			Loans			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	10,402		$	3,912		$	127	$	1,601		$	6,616		$	1,044		$	66		$	5,142		$	28,910
Additions:
Provision		(3,638	)		(328	)		9		(193	)		1,651			(399	)		(4	)		(298	)		(3,200	)
Deductions:
Chargeoffs		(88	)		-			-		-			(1,736	)		(112	)		-			-			(1,936	)
Recoveries		1,735			15			-		-			337			498			-			-			2,585
Net loan recoveries (losses)		1,647			15			-		-			(1,399	)		386			-			-			649
Total allowance for loan losses	$	8,411		$	3,599		$	136	$	1,408		$	6,868		$	1,031		$	62		$	4,844		$	26,359

The decline in the portion of the allowance for loan losses ascribed to commercial loans was due to declines in classified commercial loans.

	Allowance for Loan Losses
	For the Nine Months Ended September 30, 2016
													Consumer			Purchased			Purchased
				Commercial						Residential			Installment			Non-covered			Covered
	Commercial			Real Estate			Construction			Real Estate			and Other			Loans			Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	9,559		$	4,224		$	177		$	1,801		$	7,080		$	967		$	-	$	5,963		$	29,771
Additions:
Provision		(1,641	)		(670	)		(41	)		(393	)		2,074			(1,472	)		62		(1,119	)		(3,200	)
Deductions:
Chargeoffs		(2,024	)		-			-			-			(3,418	)		(150	)		-		-			(5,592	)
Recoveries		2,517			45			-			-			1,132			1,686			-		-			5,380
Net loan recoveries (losses)		493			45			-			-			(2,286	)		1,536			-		-			(212	)
Total allowance for loan losses	$	8,411		$	3,599		$	136		$	1,408		$	6,868		$	1,031		$	62	$	4,844		$	26,359

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment
	At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	5,070	$	216	$	-	$	-	$	-	$	-	$	-	$	-	$	5,286
Collectively evaluated for impairment		3,341		3,383		136		1,408		6,868		1,031		62		4,844		21,073
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	8,411	$	3,599	$	136	$	1,408	$	6,868	$	1,031	$	62	$	4,844	$	26,359
Carrying value of loans:
Individually evaluated for impairment	$	11,210	$	5,270	$	-	$	-	$	-	$	6,125	$	-	$	-	$	22,605
Collectively evaluated for impairment		320,219		475,680		2,282		91,934		335,629		103,189		11,555		-		1,340,488
Purchased loans with evidence of credit deterioration		-		-		-		-		-		1,046		190		-		1,236
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360	$	11,745	$	-	$	1,364,329

Management considers the $26.4 million allowance for loan losses to be adequate as a reserve against loan losses inherent in the loan portfolio as of September 30, 2016.

See Note 4 to the unaudited consolidated financial statements for additional information related to the loan portfolio, loan portfolio credit risk, and allowance for loan losses.

- 48 -

Asset/Liability and Market Risk Management

Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The fundamental objective of the Company's management of assets and liabilities is to maximize its economic value while maintaining adequate liquidity and a conservative level of interest rate risk.

Interest Rate Risk

Interest rate risk is a significant market risk affecting the Company. Many factors affect the Company’s exposure to interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Assets and liabilities may mature or re-price at different times. Assets and liabilities may re-price at the same time but by different amounts. Short-term and long-term market interest rates may change by different amounts. The timing and amount of cash flows of various assets or liabilities may shorten or lengthen as interest rates change. In addition, the changing levels of interest rates may have an impact on loan demand, demand for various deposit products, credit losses, and other elements of earnings such as account analysis fees on commercial deposit accounts and correspondent bank service charges.

The Company’s earnings are affected not only by general economic conditions, but also by the monetary and fiscal policies of the United States government and its agencies, particularly the Federal Reserve Board (the “FRB”). The monetary policies of the FRB can influence the overall growth of loans, investment securities, and deposits and the level of interest rates earned on assets and paid for liabilities. The nature and impact of future changes in monetary policies are generally not predictable.

Management expects a high level of uncertainty in regard to interest rate levels in the immediate term, and Management’s most likely earnings forecast for the twelve months ending September 30, 2017 assumes market interest rates will either remain at relatively low levels or short-term rates will rise gradually.

In adjusting the Company's asset/liability position, Management attempts to manage interest rate risk while enhancing the net interest margin and net interest income. At times, depending on expected increases or decreases in general interest rates, the relationship between long and short-term interest rates, market conditions and competitive factors, Management may adjust the Company's interest rate risk position in order to manage its net interest margin and net interest income. The Company's results of operations and net portfolio values remain subject to changes in interest rates and to fluctuations in the difference between long and short-term interest rates.

The Company’s asset and liability position was slightly “asset sensitive” at September 30, 2016, depending on the interest rate assumptions applied to the simulation model employed by Management to measure interest rate risk. An “asset sensitive” position results in a slightly larger change in interest income than in interest expense resulting from application of assumed interest rate changes. Simulation estimates depend on, and will change with, the size and mix of the actual and projected balance sheet at the time of each simulation. Management continues to monitor the interest rate environment as well as economic conditions and other factors it deems relevant in managing the Company's exposure to interest rate risk.

The Company does not currently engage in trading activities or use derivative instruments to control interest rate risk, even though such activities may be permitted with the approval of the Company's Board of Directors.

Market Risk - Equity Markets

Equity price risk can affect the Company. As an example, any preferred or common stock holdings, as permitted by banking regulations, can fluctuate in value. Management regularly assesses the extent and duration of any declines in market value, the causes of such declines, the likelihood of a recovery in market value, and its intent to hold securities until a recovery in value occurs. Declines in value of preferred or common stock holdings that are deemed “other than temporary” could result in loss recognition in the Company's income statement.

Fluctuations in the Company's common stock price can impact the Company's financial results in several ways. First, the Company has regularly repurchased and retired its common stock; the market price paid to retire the Company's common stock affects the level of the Company's shareholders' equity, cash flows and shares outstanding. Second, the Company's common stock price impacts the number of dilutive equivalent shares used to compute diluted earnings per share. Third, fluctuations in the Company's common stock price can motivate holders of options to purchase Company common stock through the exercise of such options thereby increasing the number of shares outstanding. Finally, the amount of compensation expense associated with share based compensation fluctuates with changes in and the volatility of the Company's common stock price.

- 49 -

Market Risk - Other

Market values of loan collateral can directly impact the level of loan chargeoffs and the provision for loan losses. The financial condition and liquidity of debtors issuing bonds and debtors whose mortgages or other obligations are securitized can directly impact the credit quality of the Company’s investment portfolio requiring the Company to recognize other than temporary impairment charges. Other types of market risk, such as foreign currency exchange risk, are not significant in the normal course of the Company's business activities.

Liquidity and Funding

The objective of liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund the Company's operations and meet obligations and other commitments on a timely basis and at a reasonable cost. The Company achieves this objective through the selection of asset and liability maturity mixes that it believes best meet its needs. The Company's liquidity position is enhanced by its ability to raise additional funds as needed in the wholesale markets.

In recent years, the Company's deposit base has provided the majority of the Company's funding requirements. This relatively stable and low-cost source of funds, along with shareholders' equity, provided 98 percent of funding for average total assets in the first nine months of 2016 and 97 percent in 2015. The stability of the Company’s funding from customer deposits is in part reliant on the confidence clients have in the Company. The Company places a very high priority in maintaining this confidence through conservative credit and capital management practices and by maintaining an appropriate level of liquidity reserves.

Liquidity is further provided by assets such as balances held at the Federal Reserve Bank, investment securities, and amortizing loans. The Company's investment securities portfolio provides a substantial secondary liquidity reserve. The Company held $3.2 billion in total investment securities at September 30, 2016. Under certain deposit, borrowing and other arrangements, the Company must hold and pledge investment securities as collateral. At September 30, 2016, such collateral requirements totaled approximately $756 million.

Liquidity risk can result from the mismatching of asset and liability cash flows, or from disruptions in the financial markets. The Company performs liquidity stress tests on a periodic basis to evaluate the sustainability of its liquidity. Under the stress testing, the Company assumes outflows of funds increase beyond expected levels. Measurement of such heightened outflows considers the composition of the Company’s deposit base, including any concentration of deposits, non-deposit funding such as short-term borrowings, and unfunded lending commitments. The Company evaluates its stock of highly liquid assets to meet the assumed higher levels of outflows. Highly liquid assets include cash and amounts due from other banks from daily transaction settlements, reduced by branch cash needs and Federal Reserve Bank reserve requirements, and investment securities based on regulatory risk-weighting guidelines. Based on the results of the most recent liquidity stress test, Management is satisfied with the liquidity condition of the Bank and the Company. However, no assurance can be given the Bank or Company will not experience a period of reduced liquidity.

Management will monitor the Company’s cash levels throughout 2016. Loan demand from credit worthy borrowers will be dictated by economic and competitive conditions. The Company aggressively solicits non-interest bearing demand deposits and money market checking deposits, which are the least sensitive to changes in interest rates. The growth of these deposit balances is subject to heightened competition, the success of the Company's sales efforts, delivery of superior customer service, new regulations and market conditions. The Company does not aggressively solicit higher-costing time deposits; as a result, Management anticipates such deposits will decline. Changes in interest rates, most notably rising interest rates, could impact deposit volumes. Depending on economic conditions, interest rate levels, liquidity management and a variety of other conditions, deposit growth may be used to fund loans or purchase investment securities. However, due to possible volatility in economic conditions, competition and political uncertainty, loan demand and levels of customer deposits are not certain. Shareholder dividends are expected to continue subject to the Board's discretion and continuing evaluation of capital levels, earnings, asset quality and other factors.

Westamerica Bancorporation ("Parent Company") is a separate entity apart from Westamerica Bank (“Bank”) and must provide for its own liquidity. In addition to its operating expenses, the Parent Company is responsible for the payment of dividends declared for its shareholders, and interest and principal on any outstanding debt. Substantially all of the Parent Company's revenues are obtained from subsidiary dividends and service fees.

The Bank’s dividends paid to the Parent Company and proceeds from the exercise of stock options provided adequate cash flow for the Parent Company to pay shareholder dividends of $30 million in the first nine months of 2016 and $39 million in 2015, and retire common stock in the amount of $6 million and $15 million, respectively. Payment of dividends to the Parent Company by the Bank is limited under California and Federal laws. The Company believes these regulatory dividend restrictions will not have an impact on the Parent Company's ability to meet its ongoing cash obligations.

- 50 -

Capital Resources

The Company has historically generated high levels of earnings, which provides a means of accumulating capital. The Company's net income as a percentage of average shareholders' equity (“return on equity” or “ROE”) has been 11.0% (annualized) in the first nine months of 2016 and 11.3% in 2015. The Company also raises capital as employees exercise stock options. Capital raised through the exercise of stock options was $12 million in the first nine months of 2016 compared with $5 million in 2015.

The Company paid common dividends totaling $30 million in the first nine months of 2016 and $39 million in 2015, which represent dividends per common share of $1.17, $1.53 and $1.52, respectively. The Company's earnings have historically exceeded dividends paid to shareholders. The amount of earnings in excess of dividends provides the Company resources to finance growth and maintain appropriate levels of shareholders' equity. In the absence of profitable growth opportunities, the Company has repurchased and retired its common stock as another means to return earnings to shareholders. The Company repurchased and retired 137 thousand shares valued at $6 million in the first nine months of 2016 and 344 thousand shares valued at $15 million in 2015.

The Company's primary capital resource is shareholders' equity, which was $563 million at September 30, 2016 compared with $532 million at December 31, 2015. The Company's ratio of equity to total assets was 10.61% at September 30, 2016 and 10.30% at December 31, 2015.

The Company performs capital stress tests on a periodic basis to evaluate the sustainability of its capital. Under the stress testing, the Company assumes various scenarios such as deteriorating economic and operating conditions, unanticipated asset devaluations, and significant operational lapses. The Company measures the impact of these scenarios on its earnings and capital. Based on the results of the most recent stress tests, Management is satisfied with the capital condition of the Bank and the Company. However, no assurance can be given the Bank or Company will not experience a period of reduced earnings or a reduction in capital from unanticipated events and circumstances.

Capital to Risk-Adjusted Assets

On July 2, 2013, the Federal Reserve Board approved a final rule that implements changes to the regulatory capital framework for all banking organizations. The rule’s provisions which most affected the regulatory capital requirements of the Company and the Bank:

• Introduced a new “Common Equity Tier 1” capital measurement,

• Established higher minimum levels of capital,

• Introduced a “capital conservation buffer,”

• Increased the risk-weighting of certain assets, and

• Established limits on the amount of deferred tax assets with any excess treated as a deduction from Tier 1 capital.

Under the final rule, a banking organization that is not subject to the “advanced approaches rule” may make a one-time election not to include most elements of Accumulated Other Comprehensive Income, including net-of-tax unrealized gains and losses on available for sale investment securities, in regulatory capital. Neither the Company nor the Bank are subject to the “advanced approaches rule” and made the election not to include most elements of Accumulated Other Comprehensive Income in regulatory capital.

Banking organizations that are not subject to the “advanced approaches rule” began complying with the final rule on January 1, 2015; on such date, the Company and the Bank became subject to the revised definitions of regulatory capital, the new minimum regulatory capital ratios, and various regulatory capital adjustments and deductions according to transition provisions and timelines. All banking organizations began calculating standardized total risk-weighted assets on January 1, 2015. The transition period for the capital conservation buffer for all banking organizations began on January 1, 2016 and will end January 1, 2019. Any bank subject to the rule which is unable to maintain its “capital conservation buffer” will be restricted in the payment of discretionary executive compensation and shareholder distributions, such as dividends and share repurchases.

- 51 -

The final rule did not supersede provisions of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) requiring federal banking agencies to take prompt corrective action (PCA) to resolve problems of insured depository institutions. The final rule revised the PCA thresholds to incorporate the higher minimum levels of capital, including the “common equity tier 1” ratio.

The capital ratios for the Company and the Bank under the new capital framework are presented in the table below.

							Transitional								Well-capitalized
							Minimum				Minimum				by Regulatory
							Regulatory				Regulatory				Definition
							Requirement				Requirement				Under FDICIA
	At September 30, 2016						Effective				Effective				Effective
	Company			Bank			January 1, 2016				January 1, 2019				January 1, 2015
Common Equity Tier I Capital		14.32	%		11.75	%		5.125	%	(1)		7.00	%	(2)		6.50	%
Tier I Capital		14.32	%		11.75	%		6.625	%	(1)		8.50	%	(2)		8.00	%
Total Capital		15.16	%		12.64	%		8.625	%	(1)		10.50	%	(2)		10.00	%
Leverage Ratio		8.30	%		6.76	%		4.000	%			4.00	%			5.00	%

⁽¹⁾ Includes 0.625% capital conservation buffer.

⁽²⁾ Includes 2.5% capital conservation buffer.

							Transitional							Well-capitalized
							Minimum			Minimum				by Regulatory
							Regulatory			Regulatory				Definition
							Requirement			Requirement				Under FDICIA
	At December 31, 2015						Effective			Effective				Effective
	Company			Bank			January 1, 2015			January 1, 2019				January 1, 2015
Common Equity Tier I Capital		12.82	%		11.00	%		4.50	%		7.00	%	(3)		6.50	%
Tier I Capital		12.82	%		11.00	%		6.00	%		8.50	%	(3)		8.00	%
Total Capital		13.39	%		11.68	%		8.00	%		10.50	%	(3)		10.00	%
Leverage Ratio		7.99	%		6.82	%		4.00	%		4.00	%			5.00	%

⁽³⁾ Includes 2.5% capital conservation buffer.

The Company and the Bank routinely project capital levels by analyzing forecasted earnings, credit quality, securities valuations, shareholder dividends, asset volumes, share repurchase activity, stock option exercise proceeds, and other factors. Based on current capital projections, the Company and the Bank expect to maintain regulatory capital levels exceeding the highest effective regulatory standard and pay quarterly dividends to shareholders. No assurance can be given that changes in capital management plans will not occur.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company does not currently engage in trading activities or use derivative instruments to control interest rate risk, even though such activities may be permitted with the approval of the Company’s Board of Directors.

Credit risk and interest rate risk are the most significant market risks affecting the Company, and equity price risk can also affect the Company’s financial results. These risks are described in the preceding sections regarding “Loan Portfolio Credit Risk,” and “Asset/Liability and Market Risk Management.” Other types of market risk, such as foreign currency exchange risk, are not significant in the normal course of the Company’s business activities.

- 52 -

Item 4. Controls and Procedures

The Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, as of September 30, 2016.

Based upon their evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported as and when required and that such information is communicated to the Company’s Management, including the principal executive officer and the principal financial officer, to allow for timely decisions regarding required disclosures. The evaluation did not identify any change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party to any material pending legal proceeding, nor is its property the subject of any material pending legal proceeding, other than ordinary routine legal proceedings arising in the ordinary course of the Company’s business. None of these proceedings is expected to have a material adverse impact upon the Company’s business, financial position or results of operations.

Item 1A. Risk Factors

The Company’s Form 10-K as of December 31, 2015 includes detailed disclosure about the risks faced by the Company’s business; such risks have not materially changed since the Form 10-K was filed.

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

(a) Previously reported on Form 8-K.

(b) None

(c) Issuer Purchases of Equity Securities

The table below sets forth the information with respect to purchases made by or on behalf of Westamerica Bancorporation or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of common stock during the quarter ended September 30, 2016 (in thousands, except per share data).

	2016
Period	(a) Total Number of shares Purchased		(b) Average Price Paid per Share		(c) Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
	(In thousands, except price paid)
July 1 through July 31		-	$	-		-		1,750
August 1 through August 31		-		-		-		1,750
September 1 through September 30		-		-		-		1,750
Total		-		-		-		1,750

The Company repurchases shares of its common stock in the open market to optimize the Company’s use of equity capital and enhance shareholder value and with the intention of lessening the dilutive impact of issuing new shares under stock option plans, and other ongoing requirements.

- 53 -

No shares were repurchased during the period from July 1, 2016 through September 30, 2016. A replacement program approved by the Board of Directors on July 28, 2016 authorizes the purchase of up to 1,750 thousand shares of the Company’s common stock from time to time prior to September 1, 2017.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

The exhibit list required by this item is incorporated by reference to the Exhibit Index filed with this report.

[The remainder of this page intentionally left blank]

- 54 -

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 hereunto duly authorized.

WESTAMERICA BANCORPORATION

(Registrant)

/s/ JOHN "ROBERT" THORSON

John "Robert" Thorson

Senior Vice President and Chief Financial Officer

(Chief Financial and Accounting Officer)

Date: November 2, 2016

- 55 -

EXHIBIT INDEX

Exhibit 31.1: Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)

Exhibit 31.2: Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)

Exhibit 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

Exhibit 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

Exhibit 101: Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016, is formatted in XBRL interactive data files: (i) Consolidated Statements of Income for the three and nine months ended September 30, 2016 and 2015; (ii) Consolidated Balance Sheets at September 30, 2016, and December 31, 2015; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2016 and 2015; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 and (vi) Notes to the Unaudited Consolidated Financial Statements.

- 56 -

EX-31.1

EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David L. Payne certify that:

1. I have reviewed this report on Form 10-Q of Westamerica Bancorporation;

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(s) 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 purposes 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 (the registrant's fourth fiscal quarter in case of an annual report) 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(s) 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 functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control 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.

/s/ David L. Payne

David L. Payne

Chairman, President and Chief Executive Officer

Date: November 2, 2016

- 57 -

EX-31.2

EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John "Robert" Thorson certify that:

1. I have reviewed this report on Form 10-Q of Westamerica Bancorporation;

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(s) 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 purposes 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 (the registrant's fourth fiscal quarter in case of an annual report) 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(s) 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 functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control 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.

/s/ John "Robert" Thorson

John “Robert” Thorson

Senior Vice President and Chief Financial Officer

Date: November 2, 2016

- 58 -

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 Westamerica Bancorporation (the Company) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David L. Payne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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/ David L. Payne

David L. Payne

Chairman, President and Chief Executive Officer

Date: November 2, 2016

- 59 -

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Westamerica Bancorporation (the Company) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John "Robert" Thorson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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/ John "Robert" Thorson

John “Robert” Thorson

Senior Vice President and Chief Financial Officer

Date: November 2, 2016

- 60 -

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 25, 2016
Document Information [Line Items]
Entity Registrant Name	WESTAMERICA BANCORPORATION
Entity Central Index Key	0000311094
Trading Symbol	wabc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding (in shares)		25,671,339
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Assets:
Cash and due from banks	$ 471,367,000	$ 433,044,000
Investment securities available for sale	1,762,408,000	1,570,216,000
Investment securities held to maturity, with fair values of: $1,440,119 at September 30, 2016 and $1,325,699 at December 31, 2015	1,411,019,000	1,316,075,000
Loans	1,364,329,000	1,533,396,000
Allowance for loan losses	(26,359,000)	(29,771,000)
Loans, net of allowance for loan losses	1,337,970,000	1,503,625,000
Other real estate owned	3,032,000	9,264,000
Premises and equipment, net	37,059,000	38,693,000
Identifiable intangibles, net	7,789,000	10,431,000
Goodwill	121,673,000	121,673,000
Other assets	154,461,000	165,854,000
Total Assets	5,306,778,000	5,168,875,000
Liabilities:
Noninterest bearing deposits	2,064,988,000	2,026,049,000
Interest bearing deposits	2,579,882,000	2,514,610,000
Total deposits	4,644,870,000	4,540,659,000
Short-term borrowed funds	56,358,000	53,028,000
Other liabilities	42,554,000	42,983,000
Total Liabilities	4,743,782,000	4,636,670,000
Shareholders' Equity:
Common stock (no par value), authorized - 150,000 shares Issued and outstanding: 25,665 at September 30, 2016 and 25,528 at December 31, 2015	391,601,000	378,858,000
Deferred compensation	1,533,000	2,578,000
Accumulated other comprehensive income	9,001,000	675,000
Retained earnings	160,861,000	150,094,000
Total Shareholders' Equity	562,996,000	532,205,000
Total Liabilities and Shareholders' Equity	$ 5,306,778,000	$ 5,168,875,000

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Investment securities held to maturity, fair values	$ 1,440,119	$ 1,325,699
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	150,000	150,000
Common stock, Issued (in shares)	25,665	25,528
Common stock, outstanding (in shares)	25,665	25,528

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Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest and Fee Income:
Loans	$ 16,968,000	$ 19,378,000	$ 52,904,000	$ 59,643,000
Investment securities available for sale	8,796,000	7,880,000	24,855,000	23,347,000
Investment securities held to maturity	7,704,000	7,041,000	23,083,000	19,651,000
Total Interest and Fee Income	33,468,000	34,299,000	100,842,000	102,641,000
Interest Expense:
Deposits	512,000	573,000	1,586,000	1,816,000
Short-term borrowed funds	11,000	12,000	30,000	44,000
Federal Home Loan Bank advances	0			1,000
Total Interest Expense	523,000	585,000	1,616,000	1,861,000
Net Interest Income	32,945,000	33,714,000	99,226,000	100,780,000
Reversal of provision for loan losses	(3,200,000)		(3,200,000)
Net Interest Income After Reversal of Provision For Loan Losses	36,145,000	33,714,000	102,426,000	100,780,000
Noninterest Income:
Service charges on deposit accounts	5,303,000	5,581,000	15,790,000	16,981,000
Debit card fees	1,587,000	1,538,000	4,724,000	4,528,000
Merchant processing services	1,532,000	1,485,000	4,699,000	4,971,000
Trust fees	686,000	682,000	2,004,000	2,061,000
Other service fees	671,000	693,000	1,951,000	2,041,000
ATM processing fees	600,000	616,000	1,860,000	1,828,000
Financial services commissions	118,000	177,000	411,000	527,000
Other	1,101,000	1,221,000	3,590,000	3,625,000
Total Noninterest Income	11,598,000	11,993,000	35,029,000	36,562,000
Noninterest Expense:
Salaries and related benefits	13,063,000	12,761,000	39,067,000	39,795,000
Occupancy	3,749,000	3,746,000	10,546,000	11,199,000
Outsourced data processing services	2,114,000	2,115,000	6,375,000	6,334,000
Professional fees	1,693,000	746,000	3,183,000	1,876,000
Furniture and equipment	1,211,000	1,075,000	3,611,000	3,353,000
Amortization of identifiable intangibles	867,000	952,000	2,642,000	2,908,000
Courier service	451,000	604,000	1,458,000	1,744,000
Other real estate owned	(206,000)	83,000	(487,000)	451,000
Other	3,146,000	4,091,000	10,780,000	12,136,000
Total Noninterest Expense	26,088,000	26,173,000	77,175,000	79,796,000
Income Before Income Taxes	21,655,000	19,534,000	60,280,000	57,546,000
Provision for income taxes	6,027,000	4,677,000	15,880,000	13,371,000
Net Income	$ 15,628,000	$ 14,857,000	$ 44,400,000	$ 44,175,000
Average Common Shares Outstanding (in shares)	25,641	25,530	25,558	25,565
Diluted Average Common Shares Outstanding (in shares)	25,687	25,565	25,595	25,585
Per Common Share Data:
Basic earnings (in dollars per share)	$ 0.61	$ 0.58	$ 1.74	$ 1.73
Diluted earnings (in dollars per share)	0.61	0.58	1.73	1.73
Dividends paid (in dollars per share)	$ 0.39	$ 0.38	$ 1.17	$ 1.14

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income	$ 15,628,000	$ 14,857,000	$ 44,400,000	$ 44,175,000
Other comprehensive (loss) income:
(Decrease) increase in net unrealized gains on securities available for sale	(4,992,000)	5,522,000	14,319,000	3,242,000
Deferred tax benefit (expense)	2,099,000	(2,321,000)	(6,020,000)	(1,363,000)
(Decrease) increase in net unrealized gains on securities available for sale, net of tax	(2,893,000)	3,201,000	8,299,000	1,879,000
Post-retirement benefit transition obligation amortization	15,000	15,000	45,000	45,000
Deferred tax expense	(6,000)	(6,000)	(18,000)	(18,000)
Post-retirement benefit transition obligation amortization, net of tax	9,000	9,000	27,000	27,000
Total other comprehensive (loss) income	(2,884,000)	3,210,000	8,326,000	1,906,000
Total comprehensive income	$ 12,744,000	$ 18,067,000	$ 52,726,000	$ 46,081,000

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Accumulated Deferred Compensation [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2014	25,745
Balance at Dec. 31, 2014	$ 378,132	$ 2,711	$ 5,292	$ 140,468	$ 526,603
Net income				44,175	44,175
Other comprehensive income			1,906		1,906
Exercise of stock options (in shares)	108
Exercise of stock options	$ 4,848				4,848
Tax benefit increase (decrease) upon exercise and expiration of stock options	$ (1,215)				(1,215)
Restricted stock activity (in shares)	17
Restricted stock activity	$ 874				741
Stock based compensation	$ 987				987
Stock awarded to employees (in shares)	2
Stock awarded to employees	$ 89				89
Retirement of common stock (in shares)	(342)
Retirement of common stock	$ (5,066)			(9,962)	(15,028)
Dividends				(29,168)	(29,168)
Balance (in shares) at Sep. 30, 2015	25,530
Balance at Sep. 30, 2015	$ 378,649	2,578	7,198	145,513	533,938
Balance (in shares) at Dec. 31, 2015	25,528
Balance at Dec. 31, 2015	$ 378,858	2,578	675	150,094	532,205
Net income				44,400	44,400
Other comprehensive income			8,326		8,326
Exercise of stock options (in shares)	258
Exercise of stock options	$ 11,588				11,588
Tax benefit increase (decrease) upon exercise and expiration of stock options	$ 199				199
Restricted stock activity (in shares)	15
Restricted stock activity	$ 1,798	(1,045)			753
Stock based compensation	$ 1,142				1,142
Stock awarded to employees (in shares)	1
Stock awarded to employees	$ 75				75
Retirement of common stock (in shares)	(137)
Retirement of common stock	$ (2,059)			(3,721)	(5,780)
Dividends				(29,912)	(29,912)
Balance (in shares) at Sep. 30, 2016	25,665
Balance at Sep. 30, 2016	$ 391,601	$ 1,533	$ 9,001	$ 160,861	$ 562,996

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015
Operating Activities:
Net income		$ 44,400,000	$ 44,175,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,211,000	12,379,000
Reversal of provision for loan losses		(3,200,000)
Net amortization of deferred loan fees		(281,000)	(263,000)
Decrease in interest income receivable		475,000	757,000
(Increase) decrease in other assets		(753,000)	107,000
Increase (decrease) in income taxes payable		403,000	(257,000)
Decrease in net deferred tax asset		3,258,000	968,000
Decrease in interest expense payable		(19,000)	(56,000)
Decrease in other liabilities		143,000	(2,571,000)
Stock option compensation expense		1,142,000	987,000
Tax benefit (increase) decrease upon exercise and expiration of stock options		(199,000)	1,215,000
Net writedown/loss on sale of premises and equipment		21,000	24,000
Net gain on sale of foreclosed assets		(1,182,000)	(73,000)
Writedown of foreclosed assets		759,000	315,000
Net Cash Provided by Operating Activities		59,178,000	57,707,000
Investing Activities:
Net repayments of loans		171,573,000	124,615,000
Change in payable to FDIC	[1]	3,180,000
Purchases of investment securities available for sale		(812,697,000)	(828,169,000)
Proceeds from sale/maturity/calls of securities available for sale		632,795,000	858,850,000
Purchases of investment securities held to maturity		(246,956,000)	(366,247,000)
Proceeds from maturity/calls of securities held to maturity		141,770,000	117,877,000
Purchases of premises and equipment		(1,299,000)	(4,049,000)
Net change in FRB(2)/FHLB(3) securities	[2],[3]		940,000
Proceeds from sale of foreclosed assets		7,143,000	1,774,000
Net Cash Used in Investing Activities		(104,491,000)	(94,409,000)
Financing Activities:
Net increase in deposits		104,211,000	17,737,000
Net increase (decrease) in short-term borrowings and FHLB(3) advances		3,330,000	(52,721,000)
Exercise of stock options/issuance of shares		11,588,000	4,848,000
Tax benefit increase (decrease) upon exercise and expiration of stock options		199,000	(1,215,000)
Retirement of common stock		(5,780,000)	(15,028,000)
Common stock dividends paid		(29,912,000)	(29,168,000)
Net Cash Provided by (Used in) Financing Activities		83,636,000	(75,547,000)
Net Change In Cash and Due from Banks		38,323,000	(112,249,000)
Cash and Due from Banks at Beginning of Period		433,044,000	380,836,000
Cash and Due from Banks at End of Period		471,367,000	268,587,000
Supplemental disclosure of non cash activities:
Loan collateral transferred to other real estate owned		488,000	4,911,000
Securities purchases pending settlement		171,000
Supplemental disclosure of cash flow activities:
Interest paid for the period		1,635,000	1,941,000
Income tax payments for the period		$ 14,032,000	$ 12,596,000

[1] Federal Deposit Insurance Corporation ("FDIC").

[2] Federal Home Loan Bank ("FHLB")

[3] Federal Reserve Bank ("FRB")

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Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission and follow general practices within the banking industry. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and which, in the opinion of Management, are necessary for a fair presentation of the results for the interim periods presented. The interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as well as other information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

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Note 2 - Accounting Policies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note 2: Accounting Policies

The most significant accounting policies followed by the Company are presented in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, Management has identified the allowance for loan losses accounting to be the accounting area requiring the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available. A discussion of the factors affecting accounting for the allowance for loan losses and purchased loans is included in the “Loan Portfolio Credit Risk” discussion below.

Application of these principles requires the Company to make certain estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment writedown or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available.

Recently Issued Accounting Standards

FASB Accounting Standards Update (ASU) 2016-01

,

Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,

was issued January 2016. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, the ASU changes the income statement impact of equity investments held by the Company and the requirement for the Company to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

The Company will be required to adopt the ASU provisions on January 1, 2018. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements.

FASB Accounting Standards Update (ASU) 2016-02,

Leases (Topic 842),

was issued February 25, 2016. The provisions of the new standard require lessees to recognize most leases on-balance sheet, increasing reported assets and liabilities. Lessor accounting remains substantially similar to current U.S. GAAP.

The Company will be required to adopt the ASU provisions January 1, 2019, utilizing the modified retrospective transition approach. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

FASB ASU 2016-09,

Improvements to Employee Share-Based Payment Accounting,

was issued March 30, 2016. The provisions of the new standard changes several aspects of the accounting for share-based payment award transactions, including: (1) Accounting and Cash Flow Classification for Excess Tax Benefits, (2) Forfeitures, and (3) Tax Withholding Requirements and Cash Flow Classification.

The Company will be required to adopt the ASU provisions January 1, 2017. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements. The most notable impact will be the effect of Excess Tax Benefits on the provision for income taxes.

FASB ASU 2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,

was issued on June 16, 2016. The ASU significantly changes estimates for credit losses related to financial assets measured at amortized cost and certain other contracts. For estimating credit losses, the FASB is replacing the incurred loss model with the current expected credit loss (CECL) model, which will accelerate recognition of credit losses. Additionally, credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses under the new standard. The Company will also be required to provide additional disclosures related to the financial assets within the scope of the new standard.

The Company will be required to adopt the ASU provisions on January 1, 2020. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

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Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3: Investment Securities

An analysis of the amortized cost, gross unrealized gains and losses accumulated in other comprehensive income, and fair value of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,579	$	300	$	( 33	)	$	171,846
Agency residential mortgage-backed securities (MBS)		499,860		1,712		(1,883	)		499,689
Non-agency residential MBS		301		1		-			302
Non-agency commercial MBS		2,127		1		(10	)		2,118
Obligations of states and political subdivisions		177,786		8,086		(378	)		185,494
Asset-backed securities		1,003		-		(3	)		1,000
FHLMC (1) and FNMA (2) stock		775		3,481		-			4,256
Corporate securities		891,335		5,808		(1,911	)		895,232
Other securities		2,034		577		(140	)		2,471
Total	$	1,746,800	$	19,966	$	( 4,358	)	$	1,762,408

(1)

Federal Home Loan Mortgage Corporation

(2)

Federal National Mortgage Association

An analysis of the amortized cost, gross unrecognized gains and losses, and fair value of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At September 30, 2016
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	621	$	3	$	-		$	624
Agency residential MBS		712,470		10,210		(194	)		722,486
Non-agency residential MBS		5,678		54		(1	)		5,731
Agency commercial MBS		9,404		24		(163	)		9,265
Obligations of states and political subdivisions		682,846		19,508		(341	)		702,013
Total	$	1,411,019	$	29,799	$	( 699	)	$	1,440,119

An analysis of the amortized cost, gross unrealized gains and losses accumulated in other comprehensive income, and fair value of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	302,292	$	255	$	( 665	)	$	301,882
Agency residential MBS		208,046		1,407		(6,909	)		202,544
Non-agency residential MBS		354		16		-			370
Non-agency commercial MBS		2,383		5		(9	)		2,379
Obligations of states and political subdivisions		148,705		8,861		(57	)		157,509
Asset-backed securities		2,025		-		(22	)		2,003
FHLMC (1) and FNMA (2) stock		775		3,554		-			4,329
Corporate securities		902,308		882		(6,821	)		896,369
Other securities		2,039		952		(160	)		2,831
Total	$	1,568,927	$	15,932	$	( 14,643	)	$	1,570,216

(1)

Federal Home Loan Mortgage Corporation

(2)

Federal National Mortgage Association

An analysis of the amortized cost, gross unrecognized gains and losses, and fair value of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At December 31, 2015
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	764	$	-	$	-		$	764
Agency residential MBS		595,503		1,810		(4,966	)		592,347
Non-agency residential MBS		9,667		185		-			9,852
Agency commercial MBS		16,258		20		(274	)		16,004
Obligations of states and political subdivisions		693,883		13,638		(789	)		706,732
Total	$	1,316,075	$	15,653	$	( 6,029	)	$	1,325,699

The amortized cost and fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated:

	At September 30, 2016
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	159,685	$	160,009	$	18,809	$	19,437
Over 1 to 5 years		745,541		750,330		290,412		295,190
Over 5 to 10 years		301,266		308,276		308,222		319,417
Over 10 years		35,211		34,957		66,024		68,593
Subtotal		1,241,703		1,253,572		683,467		702,637
MBS		502,288		502,109		727,552		737,482
Other securities		2,809		6,727		-		-
Total	$	1,746,800	$	1,762,408	$	1,411,019	$	1,440,119

	At December 31, 2015
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	136,717	$	136,976	$	20,709	$	21,354
Over 1 to 5 years		1,049,786		1,044,453		259,556		262,163
Over 5 to 10 years		166,352		173,585		289,568		296,352
Over 10 years		2,475		2,749		124,814		127,627
Subtotal		1,355,330		1,357,763		694,647		707,496
MBS		210,783		205,293		621,428		618,203
Other securities		2,814		7,160		-		-
Total	$	1,568,927	$	1,570,216	$	1,316,075	$	1,325,699

Expected maturities of mortgage-related securities can differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. In addition, such factors as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities. At September 30, 2016 and December 31, 2015, the Company had no high-risk collateralized mortgage obligations as defined by regulatory guidelines.

An analysis of the gross unrealized losses of the available for sale investment securities portfolio follows:

	Investment Securities Available for Sale At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		3	$	39,965	$	( 33	)		-	$	-	$	-			3	$	39,965	$	( 33	)
Agency residential MBS		9		109,244		(222	)		28		133,665		(1,661	)		37		242,909		(1,883	)
Non-agency residential MBS		1		31		-			-		-		-			1		31		-
Non-agency commercial MBS		1		324		(4	)		1		794		(6	)		2		1,118		(10	)
Obligations of states and political subdivisions		30		42,214		(356	)		3		1,118		(22	)		33		43,332		(378	)
Asset-backed securities		-		-		-			1		1,000		(3	)		1		1,000		(3	)
Corporate securities		25		136,421		(704	)		26		102,085		(1,207	)		51		238,506		(1,911	)
Other securities		-		-		-			1		1,860		(140	)		1		1,860		(140	)
Total		69	$	328,199	$	( 1,319	)		60	$	240,522	$	( 3,039	)		129	$	568,721	$	( 4,358	)

An analysis of gross unrecognized losses of the held to maturity investment securities portfolio follows:

	Investment Securities Held to Maturity At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		6	$	12,463	$	(79	)		3	$	11,615	$	( 115	)		9	$	24,078	$	( 194	)
Non-agency residential MBS		1		1,253		(1	)		-		-		-			1		1,253		(1	)
Agency commercial MBS		-		-		-			1		7,250		(163	)		1		7,250		(163	)
Obligations of states and political subdivisions		31		30,041		(182	)		9		6,779		(159	)		40		36,820		(341	)
Total		38	$	43,757	$	( 262	)		13	$	25,644	$	( 437	)		51	$	69,401	$	( 699	)

The unrealized losses on the Company’s investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates. The Company evaluates securities on a quarterly basis including changes in security ratings issued by rating agencies, changes in the financial condition of the issuer, and, for mortgage-backed and asset-backed securities, delinquency and loss information with respect to the underlying collateral, changes in the levels of subordination for the Company’s particular position within the repayment structure and remaining credit enhancement as compared to expected credit losses of the security. Substantially all of these securities continue to be investment grade rated by a major rating agency. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset backed securities.

The Company does not intend to sell any investments and has concluded that it is more likely than not that it will not be required to sell the investments prior to recovery of the amortized cost basis. Therefore, the Company does not consider these investments to be other-than-temporarily impaired as of September 30, 2016.

The fair values of the investment securities could decline in the future if the general economy deteriorates, inflation increases, credit ratings decline, the issuer’s financial condition deteriorates, or the liquidity for securities declines. As a result, other than temporary impairments may occur in the future.

As of September 30, 2016, $

755,762

 thousand of investment securities were pledged to secure public deposits and short-term borrowed funds. As of December 31, 2015, $738,865  thousand of investment securities were pledged to secure public deposits and short-term borrowed funds.

An analysis of gross unrealized losses of investment securities available for sale follows:

	Investment Securities Available for Sale At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		8	$	121,392	$	( 665	)		-	$	-	$	-			8	$	121,392	$	(665	)
Agency residential MBS		2		12,491		(366	)		31		161,296		(6,543	)		33		173,787		(6,909	)
Non-agency commercial MBS		1		1,071		-			1		855		(9	)		2		1,926		(9	)
Obligations of states and political subdivisions		3		2,728		(18	)		4		1,644		(39	)		7		4,372		(57	)
Asset-backed securities		-		-		-			1		2,003		(22	)		1		2,003		(22	)
Corporate securities		97		548,177		(5,442	)		25		86,762		(1,379	)		122		634,939		(6,821	)
Other securities		-		-		-			1		1,840		(160	)		1		1,840		(160	)
Total		111	$	685,859	$	( 6,491	)		63	$	254,400	$	( 8,152	)		174	$	940,259	$	( 14,643	)

An analysis of gross unrecognized losses of investment securities held to maturity follows:

	Investment Securities Held to Maturity At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		41	$	426,317	$	( 3,490	)		13	$	62,041	$	( 1,476	)		54	$	488,358	$	( 4,966	)
Agency commercial MBS		-		-		-			2		13,951		(274	)		2		13,951		(274	)
Obligations of states and political subdivisions		55		44,585		(249	)		54		42,081		(540	)		109		86,666		(789	)
Total		96	$	470,902	$	( 3,739	)		69	$	118,073	$	( 2,290	)		165	$	588,975	$	( 6,029	)

The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from regular federal income tax:

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands)
Taxable	$	11,024	$	9,120	$	31,256	$	25,067
Tax-exempt from regular federal income tax		5,476		5,801		16,682		17,931
Total interest income from investment securities	$	16,500	$	14,921	$	47,938	$	42,998

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Note 4 - Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 4: Loans and Allowance for Loan Losses

A summary of the major categories of loans outstanding is shown in the following tables.

	At September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	331,429		$	480,950		$	2,282	$	91,934		$	335,629		$	1,242,224
Purchased covered loans		-			-			-		2,233			9,512			11,745
Purchased non-covered loans :
Gross purchased non-covered loans		12,337			74,595			153		224			27,973			115,282
Purchased loan discount		(682	)		(3,197	)		-		(23	)		(1,020	)		(4,922	)
Total	$	343,084		$	552,348		$	2,435	$	94,368		$	372,094		$	1,364,329

	At December 31, 2015
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	368,117		$	517,070		$	2,978	$	117,631		$	346,043		$	1,351,839
Purchased covered loans :
Gross purchased covered loans		-			-			-		2,385			11,828			14,213
Purchased loan discount		-			-			-		(133	)		(19	)		(152	)
Purchased non-covered loans :
Gross purchased non-covered loans		15,620			124,650			973		231			32,454			173,928
Purchased loan discount		(989	)		(4,264	)		-		(23	)		(1,156	)		(6,432	)
Total	$	382,748		$	637,456		$	3,951	$	120,091		$	389,150		$	1,533,396

Changes in the carrying amount of impaired purchased loans were as follows:

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Impaired purchased loans	(In thousands)
Carrying amount at the beginning of the period	$	3,887		$	4,672
Reductions during the period		(2,651	)		(785	)
Carrying amount at the end of the period	$	1,236		$	3,887

Changes in the accretable yield for purchased loans were as follows:

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Accretable yield:	(In thousands)
Balance at the beginning of the period	$	1,259		$	2,261
Reclassification from nonaccretable difference		3,322			3,051
Accretion		(2,936	)		(4,053	)
Balance at the end of the period	$	1,645		$	1,259
Accretion	$	( 2,936	)	$	( 4,053	)
Change in FDIC indemnification		995			698
(Increase) in interest income	$	( 1,941	)	$	( 3,355	)

The following summarizes activity in the allowance for loan losses:

	Allowance for Loan Losses For the Three Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	10,402		$	3,912		$	127	$	1,601		$	6,616		$	1,044		$	66		$	5,142		$	28,910
Additions:
Provision		(3,638	)		(328	)		9		(193	)		1,651			(399	)		(4	)		(298	)		(3,200	)
Deductions:
Chargeoffs		(88	)		-			-		-			(1,736	)		(112	)		-			-			(1,936	)
Recoveries		1,735			15			-		-			337			498			-			-			2,585
Net loan recoveries (losses)		1,647			15			-		-			(1,399	)		386			-			-			649
Total allowance for loan losses	$	8,411		$	3,599		$	136	$	1,408		$	6,868		$	1,031		$	62		$	4,844		$	26,359

	Allowance for Loan Losses For the Nine Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	9,559		$	4,224		$	177		$	1,801		$	7,080		$	967		$	-	$	5,963		$	29,771
Additions:
Provision		(1,641	)		(670	)		(41	)		(393	)		2,074			(1,472	)		62		(1,119	)		(3,200	)
Deductions:
Chargeoffs		(2,024	)		-			-			-			(3,418	)		(150	)		-		-			(5,592	)
Recoveries		2,517			45			-			-			1,132			1,686			-		-			5,380
Net loan recoveries (losses)		493			45			-			-			(2,286	)		1,536			-		-			(212	)
Total allowance for loan losses	$	8,411		$	3,599		$	136		$	1,408		$	6,868		$	1,031		$	62	$	4,844		$	26,359

	Allowance for Loan Losses For the Three Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	7,107		$	4,896		$	403		$	2,058		$	7,248		$	1,244		$	-	$	7,872		$	30,828
Additions:
Provision		1,246			(96	)		(205	)		(50	)		367			(15	)		65		(1,312	)		-
Deductions:
Chargeoffs		(239	)		(449	)		-			-			(773	)		-			-		-			(1,461	)
Recoveries		300			27			-			-			336			6			-		-			669
Net loan recoveries (losses)		61			(422	)		-			-			(437	)		6			-		-			(792	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

	Allowance for Loan Losses For the Nine Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	5,460		$	4,245		$	644		$	2,241		$	7,717		$	2,120		$	-	$	9,058		$	31,485
Additions:
Provision		2,840			525			(446	)		(233	)		436			(689	)		65		(2,498	)		-
Deductions:
Chargeoffs		(700	)		(449	)		-			-			(2,344	)		(431	)		-		-			(3,924	)
Recoveries		814			57			-			-			1,369			235			-		-			2,475
Net loan recoveries (losses)		114			(392	)		-			-			(975	)		(196	)		-		-			(1,449	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

The allowance for loan losses and recorded investment in loans were evaluated for impairment as follows:

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	5,070	$	216	$	-	$	-	$	-	$	-	$	-	$	-	$	5,286
Collectively evaluated for impairment		3,341		3,383		136		1,408		6,868		1,031		62		4,844		21,073
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	8,411	$	3,599	$	136	$	1,408	$	6,868	$	1,031	$	62	$	4,844	$	26,359
Carrying value of loans:
Individually evaluated for impairment	$	11,210	$	5,270	$	-	$	-	$	-	$	6,125	$	-	$	-	$	22,605
Collectively evaluated for impairment		320,219		475,680		2,282		91,934		335,629		103,189		11,555		-		1,340,488
Purchased loans with evidence of credit deterioration		-		-		-		-		-		1,046		190		-		1,236
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360	$	11,745	$	-	$	1,364,329

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	4,942	$	585	$	-	$	-	$	-	$	-	$	-	$	-	$	5,527
Collectively evaluated for impairment		4,617		3,639		177		1,801		7,080		967		-		5,963		24,244
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	9,559	$	4,224	$	177	$	1,801	$	7,080	$	967	$	-	$	5,963	$	29,771
Carrying value of loans:
Individually evaluated for impairment	$	12,587	$	5,541	$	-	$	-	$	-	$	11,777	$	-	$	-	$	29,905
Collectively evaluated for impairment		355,530		511,529		2,978		117,631		346,043		152,038		13,855		-		1,499,604
Purchased loans with evidence of credit deterioration		-		-		-		-		-		3,681		206		-		3,887
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496	$	14,061	$	-	$	1,533,396

The Bank’s customers are small businesses, professionals and consumers. Given the scale of these borrowers, corporate credit rating agencies do not evaluate the borrowers’ financial condition. The Bank maintains a Loan Review Department which reports directly to the Board of Directors. The Loan Review Department performs independent evaluations of loans and assigns credit risk grades to evaluated loans using grading standards employed by bank regulatory agencies. Loans judged to carry lower-risk attributes are assigned a “pass” grade, with a minimal likelihood of loss. Loans judged to carry higher-risk attributes are referred to as “classified loans,” and are further disaggregated, with increasing expectations for loss recognition, as “substandard,” “doubtful,” and “loss.” Loan Review Department evaluations occur every calendar quarter. If the Bank becomes aware of deterioration in a borrower’s performance or financial condition between Loan Review Department examinations, assigned risk grades are re-evaluated promptly. Credit risk grades assigned by the Loan Review Department are subject to review by the Bank’s regulatory authorities during regulatory examinations.

The following summarizes the credit risk profile by internally assigned grade:

	Credit Risk Profile by Internally Assigned Grade At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)		Total
	(In thousands)
Grade:
Pass	$	318,077	$	466,364	$	2,282	$	88,920	$	334,163	$	101,295		$	10,126	$	1,321,227
Substandard		13,352		14,586		-		3,014		1,000		13,983			1,619		47,554
Doubtful		-		-		-		-		26		-			-		26
Loss		-		-		-		-		440		4			-		444
Purchased loan discount		-		-		-		-		-		(4,922	)		-		(4,922	)
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360		$	11,745	$	1,364,329

(1) Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

	Credit Risk Profile by Internally Assigned Grade At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)			Total
	(In thousands)
Grade:
Pass	$	353,474	$	496,744	$	2,978	$	114,525	$	344,876	$	149,100		$	12,563		$	1,474,260
Substandard		14,643		20,326		-		3,106		781		24,810			1,650			65,316
Doubtful		-		-		-		-		12		18			-			30
Loss		-		-		-		-		374		-			-			374
Purchased loan discount		-		-		-		-		-		(6,432	)		(152	)		(6,584	)
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496		$	14,061		$	1,533,396

(1) Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

The following tables summarize loans by delinquency and nonaccrual status:

	Summary of Loans by Delinquency and Nonaccrual Status At September 30, 2016
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	330,596	$	647	$	186	$	-	$	-	$	331,429
Commercial real estate		474,741		914		-		-		5,295		480,950
Construction		2,282		-		-		-		-		2,282
Residential real estate		90,713		908		-		-		313		91,934
Consumer installment and other		331,310		3,198		683		438		-		335,629
Total originated loans		1,229,642		5,667		869		438		5,608		1,242,224
Purchased non-covered loans		105,255		4,030		370		49		656		110,360
Purchased covered loans		11,716		-		-		-		29		11,745
Total	$	1,346,613	$	9,697	$	1,239	$	487	$	6,293	$	1,364,329

	Summary of Loans by Delinquency and Nonaccrual Status At December 31, 2015
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	365,450	$	1,777	$	122	$	-	$	768	$	368,117
Commercial real estate		504,970		5,930		726		-		5,444		517,070
Construction		2,978		-		-		-		-		2,978
Residential real estate		115,575		1,202		414		-		440		117,631
Consumer installment and other		341,566		3,263		919		295		-		346,043
Total originated loans		1,330,539		12,172		2,181		295		6,652		1,351,839
Purchased non-covered loans		158,554		589		7		-		8,346		167,496
Purchased covered loans		13,929		132		-		-		-		14,061
Total	$	1,503,022	$	12,893	$	2,188	$	295	$	14,998	$	1,533,396

The following is a summary of the effect of nonaccrual loans on interest income:

	For the Three Months Ended					For the Nine Months Ended
	September 30,
	2016			2015		2016			2015
	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	193		$	315	$	756		$	969
Less: Interest income (recognized) reversed on nonaccrual loans		(500	)		17		(1,033	)		(308	)
Total (addition) reduction of interest income	$	( 307	)	$	332	$	( 277	)	$	661

There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2016 and December 31, 2015.

The following summarizes impaired loans:

	Impaired Loans At September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	1,058	$	1,145	$	-
Commercial real estate		8,013		9,560		-
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-
Impaired loans with an allowance recorded:
Commercial		10,202		10,211		5,070
Commercial real estate		4,410		5,427		216
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	11,260	$	11,356	$	5,070
Commercial real estate		12,423		14,987		216
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-

	Impaired Loans At December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	2,917	$	2,979	$	-
Commercial real estate		16,309		21,168		-
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-
Impaired loans with an allowance recorded:
Commercial		10,170		10,170		4,942
Commercial real estate		4,660		5,109		585
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	13,087	$	13,149	$	4,942
Commercial real estate		20,969		26,277		585
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-

Impaired loans include troubled debt restructured loans. Impaired loans at September 30, 2016, included $

12,402

thousand of restructured loans, $

5,307

thousand of which were on nonaccrual status. Impaired loans at December 31, 2015, included $15,712 thousand of restructured loans, $7,464 thousand of which were on nonaccrual status.

	Impaired Loans
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2016				2015				2016				2015
	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
	(In thousands)
Commercial	$	12,858	$	126	$	12,750	$	147	$	13,454	$	394	$	12,513	$	440
Commercial real estate		14,486		188		21,923		142		17,991		549		19,985		546
Construction		-		-		-		-		136		-		306		-
Residential real estate		530		4		403		9		693		13		652		23
Consumer installment and other		545		6		516		6		435		18		856		19
Total	$	28,419	$	324	$	35,592	$	304	$	32,709	$	974	$	34,312	$	1,028

The following table provides information on troubled debt restructurings:

	Troubled Debt Restructurings At September 30, 2016
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		7	$	2,719	$	1,519	$	169
Commercial real estate		10		11,257		10,663		216
Residential real estate		1		241		220		-
Total		18	$	14,217	$	12,402	$	385

	Troubled Debt Restructurings At December 31, 2015
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		6	$	3,138	$	2,802	$	194
Commercial real estate		10		12,927		12,684		-
Residential real estate		1		242		226		-
Total		17	$	16,307	$	15,712	$	194

During the three and nine months ended September 30, 2016, the Company modified

zero

loans and

four

loans with a total carrying value of $

4,843

thousand, respectively, that were considered troubled debt restructurings. The concessions granted in the

four

restructurings completed in the first nine months of 2016 consisted of

three

modifications of payment terms to extend the maturity date to allow for deferred principal repayment and under-market terms and

one

court order requiring under-market terms.

During the three and nine months ended September 30, 2015, the Company modified one loan with a carrying value of $6,330 thousand and seven loans with an aggregate carrying value of $8,150 thousand, respectively, that were considered troubled debt restructurings. The concessions granted in the seven restructurings completed in the first nine months of 2015 consisted of modification of payment terms to extend the maturity date to allow for deferred principal repayment, under-market terms and court order.

During the three and nine months ended September 30, 2016 and 2015, no troubled debt restructured loans defaulted within 12 months of the modification date. A troubled debt restructuring is considered to be in default when payments are 90 days or more past due.

There were no loans restricted due to collateral requirements at September 30, 2016 and December 31, 2015.

There were no loans held for sale at September 30, 2016 and December 31, 2015.

At September 30, 2016 and December 31, 2015, the Company held total other real estate owned (OREO) of $

3,032

thousand net of reserve of $

2,238

thousand and $9,264 thousand net of reserve of $1,986 thousand, respectively, of which $

-0-

  thousand was foreclosed residential real estate properties at both dates. The amount of consumer mortgage loans outstanding secured by residential real estate properties for which formal foreclosure proceedings were in process was $

-0-

  thousand at September 30, 2016 and $-0- thousand at December 31, 2015.

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Note 5 - Concentration of Credit Risk

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note 5: Concentration of Credit Risk

Under the California Financial Code, credit extended to any one person owing to a commercial bank at any one time shall not exceed the following limitations: (a) unsecured loans shall not exceed 15 percent of the sum of the shareholders' equity, allowance for loan losses, capital notes, and debentures of the bank, or (b) secured and unsecured loans in all shall not exceed 25 percent of the sum of the shareholders' equity, allowance for loan losses, capital notes, and debentures of the bank. At September 30, 2016, Westamerica Bank did not have credit extended to any one entity exceeding these limits. At September 30, 2016, Westamerica Bank had

32

lending relationships with aggregate loans exceeding $5 million. The Company has significant credit arrangements that are secured by real estate collateral. In addition to real estate loans outstanding as disclosed in Note 4, the Company had loan commitments related to real estate loans of $

58,148

thousand and $61,190 thousand at September 30, 2016 and December 31, 2015, respectively. The Company requires collateral on all real estate loans with loan-to-value ratios at origination generally no greater than 75% on commercial real estate loans and no greater than 80% on residential real estate loans. At September 30, 2016, Westamerica Bank held corporate bonds in

51

issuing entities which exceeded $5 million of each issuer.

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Note 6 - Other Assets

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Other Assets Disclosure [Text Block]

Note 6: Other Assets

Other assets consisted of the following:

	At September 30, 2016		At December 31, 2015
	(In thousands)
Cost method equity investments:
Federal Reserve Bank stock (1)	$	14,069	$	14,069
Other investments		201		201
Total cost method equity investments		14,270		14,270
Life insurance cash surrender value		50,883		48,972
Net deferred tax asset		42,505		51,748
Limited partnership investments		13,188		15,259
Interest receivable		19,699		20,174
Prepaid assets		4,112		4,771
Other assets		9,804		10,660
Total other assets	$	154,461	$	165,854

(1)

A bank applying for membership in the Federal Reserve System is required to subscribe to stock in the Federal Reserve Bank (FRB) in its district in a sum equal to six percent of the bank’s paid-up capital stock and surplus. One-half of the amount of the bank's subscription shall be paid to the FRB and the remaining half will be subject to call when deemed necessary by the Board of Governors of the Federal Reserve System.

The Company invests in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for low-income housing tax credits. At September 30, 2016, this investment totaled $

13,188

thousand and $

2,299

thousand of this amount represents outstanding equity capital commitments that are included in other liabilities. At December 31, 2015, this investment totaled $15,259 thousand and $2,299 thousand of this amount represents outstanding equity capital commitments. At September 30, 2016, the $

2,299

thousand of outstanding equity capital commitments are expected to be paid as follows, $

453

thousand in 2016, $

763

thousand in 2017, and $

1,083

thousand in 2018 or thereafter.

The amounts recognized in net income for these investments include:

	For the Three Months Ended				For the Nine Months Ended
	September 30,
	2016		2015		2016		2015
	(In thousands)
Investment loss included in pre-tax income	$	675	$	750	$	2,025	$	2,175
Tax credits recognized in provision for income taxes		562		663		1,723		1,988

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Note 7 - Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 7: Goodwill and Identifiable Intangible Assets

The Company has recorded goodwill and other identifiable intangibles associated with purchase business combinations. Goodwill is not amortized, but is evaluated for impairment at least annually. The Company did not recognize impairment during the three and nine months ended September 30, 2016 and year ended December 31, 2015. Identifiable intangibles are amortized to their estimated residual values over their expected useful lives. Such lives and residual values are also periodically reassessed to determine if any amortization period adjustments are indicated. During the three and nine months ended September 30, 2016 and year ended December 31, 2015, no such adjustments were recorded.

The carrying values of goodwill were:

	At September 30, 2016		At December 31, 2015
	(In thousands)
Goodwill	$	121,673	$	121,673

The gross carrying amount of identifiable intangible assets and accumulated amortization was:

	At September 30, 2016					At December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Core Deposit Intangibles	$	56,808	$	(49,263	)	$	56,808	$	(46,782	)
Merchant Draft Processing Intangible		10,300		(10,056	)		10,300		(9,895	)
Total Identifiable Intangible Assets	$	67,108	$	(59,319	)	$	67,108	$	(56,677	)

As of September 30, 2016, the current period and estimated future amortization expense for identifiable intangible assets was:

	Core Deposit Intangibles		Merchant Draft Processing Intangible		Total
	(In thousands)
For the Nine Months ended September 30, 2016 (actual)	$	2,481	$	161	$	2,642
Estimate for the remainder of year ended December 31, 2016		811		51		862
Estimate for year ended December 31, 2017		2,913		164		3,077
2018		1,892		29		1,921
2019		538		-		538
2020		287		-		287
2021		269		-		269

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Note 8 - Deposits and Borrowed Funds

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Deposits and Borrowed Funds [Text Block]

Note 8: Deposits and Borrowed Funds

The following table provides additional detail regarding deposits.

	Deposits
	At September 30, 2016		At December 31, 2015
	(In thousands)
Noninterest-bearing	$	2,064,988	$	2,026,049
Interest-bearing:
Transaction		851,885		860,706
Savings		1,462,860		1,366,936
Time deposits less than $100 thousand		138,655		150,780
Time deposits $100 thousand through $250 thousand		88,666		96,971
Time deposits more than $250 thousand		37,816		39,217
Total deposits	$	4,644,870	$	4,540,659

Demand deposit overdrafts of $

2,880

 thousand and $3,038  thousand were included as loan balances at September 30, 2016 and December 31, 2015, respectively. Interest expense for aggregate time deposits with individual account balances in excess of $100 thousand was $

124

thousand and $

395

thousand for the three months and nine months ended September 30, 2016, respectively and $164 thousand and $543 thousand for the three months and nine months ended September 30, 2015, respectively.

The following table provides additional detail regarding short-term borrowed funds.

	Repurchase Agreements (Sweep) Accounted for as Secured Borrowings
	Remaining Contractual Maturity of the Agreements Overnight and Continuous
	At September 30, 2016		At December 31, 2015
Repurchase agreements:	(In thousands)
Collateral securing borrowings:
Securities of U.S. Government sponsored entities	$	86,034	$	98,969
Agency residential MBS		20,742		-
Obligations of states and political subdivisions		1,015		3,975
Corporate securities		91,160		54,681
Total collateral carrying value	$	198,951	$	157,625
Total short-term borrowed funds	$	56,358	$	53,028

The Company had a $35,000 thousand unsecured line of credit which expired March 18, 2016. There was no outstanding balance at December 31, 2015.

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Note 9 - Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 9: Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Available for sale investment securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as other real estate owned, impaired loans, certain loans held for investment, investment securities held to maturity, and other assets. These nonrecurring fair value adjustments typically involve the lower-of-cost or fair-value accounting of individual assets.

In accordance with the Fair Value Measurement and Disclosure topic of the Codification, the Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in the principal market or most advantageous market for an asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. A fair value measurement reflects all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance.

The Company groups its assets and liabilities measured at fair value into a three-level hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. When the valuation assumptions used to measure the fair value of the asset or liability are categorized within different levels of the fair value hierarchy, the asset or liability is categorized in its entirety within the lowest level of the hierarchy. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Level 1 includes U.S. Treasury and equity securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 includes federal agency securities, mortgage-backed securities, corporate securities, asset-backed securities, and municipal bonds.

Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The Company relies on independent vendor pricing services to measure fair value for investment securities available for sale and investment securities held to maturity. The Company employs three pricing services. To validate the pricing of these vendors, the Company compares vendors’ pricing for each of the securities for consistency; significant pricing differences, if any, are evaluated using all available independent quotes with the quote closely affecting the market generally used as the fair value estimate. In addition, the Company conducts “other than temporary impairment (OTTI)” analysis on a quarterly basis; securities selected for OTTI analysis include all securities at a market price below 95 percent of par value or with a market to book ratio below 95:100. As with any valuation technique used to estimate fair value, changes in underlying assumptions used could significantly affect the results of current and future values. Accordingly, these fair value estimates may not be realized in an actual sale of the securities.

The Company regularly reviews the valuation techniques and assumptions used by its vendors and determines which valuation techniques are utilized based on observable market inputs for the type of securities being measured. The Company uses the information to determine the placement in the fair value hierarchy as level 1, 2 or 3. When the Company changes its valuation assumptions for measuring financial assets and financial liabilities at fair value, either due to changes in current market conditions or other factors, or reevaluates the valuation techniques and assumptions used by its vendors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new information. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the nine months ended September 30, 2016, and three months ended March 31, 2015, there were no transfers in or out of levels 1, 2 or 3. During the three months ended June 30, 2015, the Company reevaluated the valuation techniques and assumptions used by its vendors in valuing the Company’s available for sale securities, and based on the evaluation, transferred $437,715 thousand out of level 1 and transferred $437,715 thousand into level 2. There were no transfers into level 1 or into or out of level 3 during this same period. Subsequent to June 30, 2015 and through the year ended December 31, 2015, there were no transfers into or out of levels 1, 2 or 3.

Assets Recorded at Fair Value on a Recurring Basis

The tables below present assets measured at fair value on a recurring basis on the dates indicated.

	At September 30, 2016
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,846	$	-	$	171,846	$	-
Agency residential MBS		499,689		-		499,689		-
Non-agency residential MBS		302		-		302		-
Non-agency commercial MBS		2,118		-		2,118		-
Obligations of states and political subdivisions		185,494		-		185,494		-
Asset-backed securities		1,000		-		1,000		-
FHLMC and FNMA stock		4,256		7		4,249		-
Corporate securities		895,232		-		895,232		-
Other securities		2,471		611		1,860		-
Total securities available for sale	$	1,762,408	$	618	$	1,761,790	$	-

	At December 31, 2015
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	301,882	$	-	$	301,882	$	-
Agency residential MBS		202,544		-		202,544		-
Non-agency residential MBS		370		-		370		-
Non-agency commercial MBS		2,379		-		2,379		-
Obligations of states and political subdivisions		157,509		-		157,509		-
Asset-backed securities		2,003		-		2,003		-
FHLMC and FNMA stock		4,329		7		4,322		-
Corporate securities		896,369		-		896,369		-
Other securities		2,831		991		1,840		-
Total securities available for sale	$	1,570,216	$	998	$	1,569,218	$	-

Assets Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost or fair-value accounting of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the balance sheet at September 30, 2016 and December 31, 2015, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets at period end.

	At September 30, 2016								For the Nine Months Ended September 30, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	3,032	$	-	$	-	$	3,032	$	( 705	)
Impaired loans		9,326		-		-		9,326		-
Total assets measured at fair value on a nonrecurring basis	$	12,358	$	-	$	-	$	12,358	$	( 705	)

	At December 31, 2015								For the Year Ended December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	9,264	$	-	$	-	$	9,264	$	( 320	)
Impaired loans		15,633		-		-		15,633		(449	)
Total assets measured at fair value on a nonrecurring basis	$	24,897	$	-	$	-	$	24,897	$	( 769	)

Level 3 – Valuation is based upon present value of expected future cash flows, independent market prices, estimated liquidation values of loan collateral or appraised value of the collateral as determined by third-party independent appraisers, less 10% for selling costs, generally. Level 3 includes other real estate owned that has been measured at fair value upon transfer to foreclosed assets and impaired loans collateralized by real property and other business asset collateral where a specific reserve has been established or a chargeoff has been recorded. Losses on other real estate owned represent losses recognized in earnings during the period subsequent to its initial classification as foreclosed assets. The unobservable inputs and qualitative information about the unobservable inputs are not presented due to the unavailability from third party evaluators.

Disclosures about Fair Value of Financial Instruments

The following section describes the valuation methodologies used by the Company for estimating fair value of financial instruments not recorded at fair value in the balance sheet.

Cash and Due from Banks

Cash and due from banks represent U.S. dollar denominated coin and currency, deposits at the Federal Reserve Bank and correspondent banks, and amounts being settled with other banks to complete the processing of customers’ daily transactions. Collectively, the Federal Reserve Bank and financial institutions operate in a market in which cash and due from banks transactions are processed continuously in significant daily volumes honoring the face value of the U.S. dollar.

Investment Securities Held to Maturity

The fair values of investment securities were estimated using quoted prices as described above for Level 2 valuation.

Loans

Loans were separated into two groups for valuation. Variable rate loans, except for those described below, which reprice frequently with changes in market rates were valued using historical cost. Fixed rate loans and variable rate loans that have reached their minimum contractual interest rates were valued by discounting the future cash flows expected to be received from the loans using current interest rates charged on loans with similar characteristics. Additionally, the allowance for loan losses of $

26,359

thousand at September 30, 2016 and $29,771 thousand at December 31, 2015 and the purchased loan discount associated with purchased covered and purchased non-covered loans of $-0- thousand and $

4,922

thousand, respectively at September 30, 2016 and $152 thousand and $6,432 thousand, respectively at December 31, 2015 were applied against the estimated fair values to recognize estimated future defaults of contractual cash flows. The Company does not consider these values to be a liquidation price for the loans.

Deposit Liabilities

Deposits with no stated maturity such as checking accounts, savings accounts and money market accounts can be readily converted to cash or used to settle transactions at face value through the broad financial system operated by the Federal Reserve Bank and financial institutions. The fair value of deposits with no stated maturity is equal to the amount payable on demand. The fair values of time deposits were estimated by discounting estimated future contractual cash flows using current market rates for financial instruments with similar characteristics.

Short-Term Borrowed Funds

The carrying amount of securities sold under agreement to repurchase and other short-term borrowed funds approximate fair value due to the relatively short period of time between their origination and their expected realization.

The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized, excluding financial instruments recorded at fair value on a recurring basis. The values assigned do not necessarily represent amounts which ultimately may be realized for assets or paid to settle liabilities. In addition, these values do not give effect to adjustments to fair value which may occur when financial instruments are sold or settled in larger quantities. The carrying amounts in the following table are recorded in the balance sheet under the indicated captions.

The Company has not included assets and liabilities that are not financial instruments, such as goodwill, long-term relationships with deposit, merchant processing and trust customers, other purchased intangibles, premises and equipment, deferred taxes and other assets and liabilities. The total estimated fair values do not represent, and should not be construed to represent, the underlying value of the Company.

	At September 30, 2016
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	471,367	$	471,367	$	471,367	$	-	$	-
Investment securities held to maturity		1,411,019		1,440,119		-		1,440,119		-
Loans		1,337,970		1,358,225		-		-		1,358,225
Financial Liabilities:
Deposits	$	4,644,870	$	4,643,754	$	-	$	4,379,733	$	264,021
Short-term borrowed funds		56,358		56,358		-		56,358		-

	At December 31, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	433,044	$	433,044	$	433,044	$	-	$	-
Investment securities held to maturity		1,316,075		1,325,699		-		1,325,699		-
Loans		1,503,625		1,517,394		-		-		1,517,394
Financial Liabilities:
Deposits	$	4,540,659	$	4,539,455	$	-	$	4,253,691	$	285,764
Short-term borrowed funds		53,028		53,028		-		53,028		-

The majority of the Company’s standby letters of credit and other commitments to extend credit carry current market interest rates if converted to loans. No premium or discount was ascribed to these commitments because virtually all funding would be at current market rates.

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Note 10 - Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 10: Commitments and Contingent Liabilities

Loan commitments are agreements to lend to a customer provided there is no violation of any condition established in the agreement. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements. Loan commitments are subject to the Company’s normal credit policies and collateral requirements. Unfunded loan commitments were $

312,592

thousand and $299,884 thousand at September 30, 2016 and December 31, 2015, respectively. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Standby letters of credit are primarily issued to support customers’ short-term financing requirements and must meet the Company’s normal credit policies and collateral requirements. Financial and performance standby letters of credit outstanding totaled $

21,131

thousand and $26,149 thousand at September 30, 2016 and December 31, 2015, respectively. The Company also had commitments for commercial and similar letters of credit of $

-0-

thousand at September 30, 2016 and $40 thousand at December 31, 2015. At September 30, 2016 and December 31, 2015, the Company had a reserve for unfunded commitments of $

2,593

thousand, included in other liabilities.

Due to the nature of its business, the Company is subject to various threatened or filed legal cases. Based on the advice of legal counsel, the Company does not expect such cases will have a material, adverse effect on its financial position or results of operations. Legal liabilities are accrued when obligations become probable and the amount is reasonably estimable.

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Note 11 - Earnings Per Common Share

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 11: Earnings Per Common Share

The table below shows earnings per common share and diluted earnings per common share. Basic earnings per common share are computed by dividing net income by the average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income by the average number of common shares outstanding during the period plus the impact of common stock equivalents.

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands, except per share data)
Net income applicable to common equity (numerator)	$	15,628	$	14,857	$	44,400	$	44,175
Basic earnings per common share
Weighted average number of common shares outstanding - basic (denominator)		25,641		25,530		25,558		25,565
Basic earnings per common share	$	0.61	$	0.58	$	1.74	$	1.73
Diluted earnings per common share
Weighted average number of common shares outstanding - basic		25,641		25,530		25,558		25,565
Add common stock equivalents for options		46		35		37		20
Weighted average number of common shares outstanding - diluted (denominator)		25,687		25,565		25,595		25,585
Diluted earnings per common share	$	0.61	$	0.58	$	1.73	$	1.73

For the three and nine months ended September 30, 2016, options to purchase

771

thousand and

948

thousand shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the option exercise price exceeded the fair value of the stock such that their inclusion would have had an anti-dilutive effect.

For the three and nine months ended September 30, 2015, options to purchase 1,043 thousand and 1,396 thousand shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the option exercise price exceeded the fair value of the stock such that their inclusion would have had an anti-dilutive effect.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards

FASB Accounting Standards Update (ASU) 2016-01

,

Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,

was issued January 2016. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, the ASU changes the income statement impact of equity investments held by the Company and the requirement for the Company to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

The Company will be required to adopt the ASU provisions on January 1, 2018. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements.

FASB Accounting Standards Update (ASU) 2016-02,

Leases (Topic 842),

was issued February 25, 2016. The provisions of the new standard require lessees to recognize most leases on-balance sheet, increasing reported assets and liabilities. Lessor accounting remains substantially similar to current U.S. GAAP.

The Company will be required to adopt the ASU provisions January 1, 2019, utilizing the modified retrospective transition approach. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

FASB ASU 2016-09,

Improvements to Employee Share-Based Payment Accounting,

was issued March 30, 2016. The provisions of the new standard changes several aspects of the accounting for share-based payment award transactions, including: (1) Accounting and Cash Flow Classification for Excess Tax Benefits, (2) Forfeitures, and (3) Tax Withholding Requirements and Cash Flow Classification.

The Company will be required to adopt the ASU provisions January 1, 2017. Management does not expect the adoption of the ASU to have a material effect on the Company’s financial statements. The most notable impact will be the effect of Excess Tax Benefits on the provision for income taxes.

FASB ASU 2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,

was issued on June 16, 2016. The ASU significantly changes estimates for credit losses related to financial assets measured at amortized cost and certain other contracts. For estimating credit losses, the FASB is replacing the incurred loss model with the current expected credit loss (CECL) model, which will accelerate recognition of credit losses. Additionally, credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses under the new standard. The Company will also be required to provide additional disclosures related to the financial assets within the scope of the new standard.

The Company will be required to adopt the ASU provisions on January 1, 2020. Management is evaluating the impact that the ASU will have on the Company’s financial statements.

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Note 3 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	Investment Securities Available for Sale At September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,579	$	300	$	( 33	)	$	171,846
Agency residential mortgage-backed securities (MBS)		499,860		1,712		(1,883	)		499,689
Non-agency residential MBS		301		1		-			302
Non-agency commercial MBS		2,127		1		(10	)		2,118
Obligations of states and political subdivisions		177,786		8,086		(378	)		185,494
Asset-backed securities		1,003		-		(3	)		1,000
FHLMC (1) and FNMA (2) stock		775		3,481		-			4,256
Corporate securities		891,335		5,808		(1,911	)		895,232
Other securities		2,034		577		(140	)		2,471
Total	$	1,746,800	$	19,966	$	( 4,358	)	$	1,762,408

	Investment Securities Available for Sale At December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	302,292	$	255	$	( 665	)	$	301,882
Agency residential MBS		208,046		1,407		(6,909	)		202,544
Non-agency residential MBS		354		16		-			370
Non-agency commercial MBS		2,383		5		(9	)		2,379
Obligations of states and political subdivisions		148,705		8,861		(57	)		157,509
Asset-backed securities		2,025		-		(22	)		2,003
FHLMC (1) and FNMA (2) stock		775		3,554		-			4,329
Corporate securities		902,308		882		(6,821	)		896,369
Other securities		2,039		952		(160	)		2,831
Total	$	1,568,927	$	15,932	$	( 14,643	)	$	1,570,216

Held-to-maturity Securities [Table Text Block]

	Investment Securities Held to Maturity At September 30, 2016
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	621	$	3	$	-		$	624
Agency residential MBS		712,470		10,210		(194	)		722,486
Non-agency residential MBS		5,678		54		(1	)		5,731
Agency commercial MBS		9,404		24		(163	)		9,265
Obligations of states and political subdivisions		682,846		19,508		(341	)		702,013
Total	$	1,411,019	$	29,799	$	( 699	)	$	1,440,119

	Investment Securities Held to Maturity At December 31, 2015
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In thousands)
Securities of U.S. government sponsored entities	$	764	$	-	$	-		$	764
Agency residential MBS		595,503		1,810		(4,966	)		592,347
Non-agency residential MBS		9,667		185		-			9,852
Agency commercial MBS		16,258		20		(274	)		16,004
Obligations of states and political subdivisions		693,883		13,638		(789	)		706,732
Total	$	1,316,075	$	15,653	$	( 6,029	)	$	1,325,699

Investments Classified by Contractual Maturity Date [Table Text Block]

	At September 30, 2016
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	159,685	$	160,009	$	18,809	$	19,437
Over 1 to 5 years		745,541		750,330		290,412		295,190
Over 5 to 10 years		301,266		308,276		308,222		319,417
Over 10 years		35,211		34,957		66,024		68,593
Subtotal		1,241,703		1,253,572		683,467		702,637
MBS		502,288		502,109		727,552		737,482
Other securities		2,809		6,727		-		-
Total	$	1,746,800	$	1,762,408	$	1,411,019	$	1,440,119

	At December 31, 2015
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	136,717	$	136,976	$	20,709	$	21,354
Over 1 to 5 years		1,049,786		1,044,453		259,556		262,163
Over 5 to 10 years		166,352		173,585		289,568		296,352
Over 10 years		2,475		2,749		124,814		127,627
Subtotal		1,355,330		1,357,763		694,647		707,496
MBS		210,783		205,293		621,428		618,203
Other securities		2,814		7,160		-		-
Total	$	1,568,927	$	1,570,216	$	1,316,075	$	1,325,699

Schedule of Unrealized Loss on Investments [Table Text Block]

	Investment Securities Available for Sale At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		3	$	39,965	$	( 33	)		-	$	-	$	-			3	$	39,965	$	( 33	)
Agency residential MBS		9		109,244		(222	)		28		133,665		(1,661	)		37		242,909		(1,883	)
Non-agency residential MBS		1		31		-			-		-		-			1		31		-
Non-agency commercial MBS		1		324		(4	)		1		794		(6	)		2		1,118		(10	)
Obligations of states and political subdivisions		30		42,214		(356	)		3		1,118		(22	)		33		43,332		(378	)
Asset-backed securities		-		-		-			1		1,000		(3	)		1		1,000		(3	)
Corporate securities		25		136,421		(704	)		26		102,085		(1,207	)		51		238,506		(1,911	)
Other securities		-		-		-			1		1,860		(140	)		1		1,860		(140	)
Total		69	$	328,199	$	( 1,319	)		60	$	240,522	$	( 3,039	)		129	$	568,721	$	( 4,358	)

	Investment Securities Held to Maturity At September 30, 2016
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		6	$	12,463	$	(79	)		3	$	11,615	$	( 115	)		9	$	24,078	$	( 194	)
Non-agency residential MBS		1		1,253		(1	)		-		-		-			1		1,253		(1	)
Agency commercial MBS		-		-		-			1		7,250		(163	)		1		7,250		(163	)
Obligations of states and political subdivisions		31		30,041		(182	)		9		6,779		(159	)		40		36,820		(341	)
Total		38	$	43,757	$	( 262	)		13	$	25,644	$	( 437	)		51	$	69,401	$	( 699	)

	Investment Securities Available for Sale At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses			Investment Positions		Fair Value		Unrealized Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		8	$	121,392	$	( 665	)		-	$	-	$	-			8	$	121,392	$	(665	)
Agency residential MBS		2		12,491		(366	)		31		161,296		(6,543	)		33		173,787		(6,909	)
Non-agency commercial MBS		1		1,071		-			1		855		(9	)		2		1,926		(9	)
Obligations of states and political subdivisions		3		2,728		(18	)		4		1,644		(39	)		7		4,372		(57	)
Asset-backed securities		-		-		-			1		2,003		(22	)		1		2,003		(22	)
Corporate securities		97		548,177		(5,442	)		25		86,762		(1,379	)		122		634,939		(6,821	)
Other securities		-		-		-			1		1,840		(160	)		1		1,840		(160	)
Total		111	$	685,859	$	( 6,491	)		63	$	254,400	$	( 8,152	)		174	$	940,259	$	( 14,643	)

	Investment Securities Held to Maturity At December 31, 2015
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses			Investment Positions		Fair Value		Unrecognized Losses
	($ in thousands)
Agency residential MBS		41	$	426,317	$	( 3,490	)		13	$	62,041	$	( 1,476	)		54	$	488,358	$	( 4,966	)
Agency commercial MBS		-		-		-			2		13,951		(274	)		2		13,951		(274	)
Obligations of states and political subdivisions		55		44,585		(249	)		54		42,081		(540	)		109		86,666		(789	)
Total		96	$	470,902	$	( 3,739	)		69	$	118,073	$	( 2,290	)		165	$	588,975	$	( 6,029	)

Interest Income from Investments [Table Text Block]

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands)
Taxable	$	11,024	$	9,120	$	31,256	$	25,067
Tax-exempt from regular federal income tax		5,476		5,801		16,682		17,931
Total interest income from investment securities	$	16,500	$	14,921	$	47,938	$	42,998

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Note 4 - Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Loans Receivable [Table Text Block]

	At September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	331,429		$	480,950		$	2,282	$	91,934		$	335,629		$	1,242,224
Purchased covered loans		-			-			-		2,233			9,512			11,745
Purchased non-covered loans :
Gross purchased non-covered loans		12,337			74,595			153		224			27,973			115,282
Purchased loan discount		(682	)		(3,197	)		-		(23	)		(1,020	)		(4,922	)
Total	$	343,084		$	552,348		$	2,435	$	94,368		$	372,094		$	1,364,329

	At December 31, 2015
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment & Other			Total
	(In thousands)
Originated loans	$	368,117		$	517,070		$	2,978	$	117,631		$	346,043		$	1,351,839
Purchased covered loans :
Gross purchased covered loans		-			-			-		2,385			11,828			14,213
Purchased loan discount		-			-			-		(133	)		(19	)		(152	)
Purchased non-covered loans :
Gross purchased non-covered loans		15,620			124,650			973		231			32,454			173,928
Purchased loan discount		(989	)		(4,264	)		-		(23	)		(1,156	)		(6,432	)
Total	$	382,748		$	637,456		$	3,951	$	120,091		$	389,150		$	1,533,396

Impaired Purchased Loans Roll Forward [Table Text Block]

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Impaired purchased loans	(In thousands)
Carrying amount at the beginning of the period	$	3,887		$	4,672
Reductions during the period		(2,651	)		(785	)
Carrying amount at the end of the period	$	1,236		$	3,887

Accretable Yield Reconciliation Schedule [Table Text Block]

	For the Nine Months Ended September 30, 2016			For the Year Ended December 31, 2015
Accretable yield:	(In thousands)
Balance at the beginning of the period	$	1,259		$	2,261
Reclassification from nonaccretable difference		3,322			3,051
Accretion		(2,936	)		(4,053	)
Balance at the end of the period	$	1,645		$	1,259
Accretion	$	( 2,936	)	$	( 4,053	)
Change in FDIC indemnification		995			698
(Increase) in interest income	$	( 1,941	)	$	( 3,355	)

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

	Allowance for Loan Losses For the Three Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction		Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans			Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	10,402		$	3,912		$	127	$	1,601		$	6,616		$	1,044		$	66		$	5,142		$	28,910
Additions:
Provision		(3,638	)		(328	)		9		(193	)		1,651			(399	)		(4	)		(298	)		(3,200	)
Deductions:
Chargeoffs		(88	)		-			-		-			(1,736	)		(112	)		-			-			(1,936	)
Recoveries		1,735			15			-		-			337			498			-			-			2,585
Net loan recoveries (losses)		1,647			15			-		-			(1,399	)		386			-			-			649
Total allowance for loan losses	$	8,411		$	3,599		$	136	$	1,408		$	6,868		$	1,031		$	62		$	4,844		$	26,359

	Allowance for Loan Losses For the Nine Months Ended September 30, 2016
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	9,559		$	4,224		$	177		$	1,801		$	7,080		$	967		$	-	$	5,963		$	29,771
Additions:
Provision		(1,641	)		(670	)		(41	)		(393	)		2,074			(1,472	)		62		(1,119	)		(3,200	)
Deductions:
Chargeoffs		(2,024	)		-			-			-			(3,418	)		(150	)		-		-			(5,592	)
Recoveries		2,517			45			-			-			1,132			1,686			-		-			5,380
Net loan recoveries (losses)		493			45			-			-			(2,286	)		1,536			-		-			(212	)
Total allowance for loan losses	$	8,411		$	3,599		$	136		$	1,408		$	6,868		$	1,031		$	62	$	4,844		$	26,359

	Allowance for Loan Losses For the Three Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	7,107		$	4,896		$	403		$	2,058		$	7,248		$	1,244		$	-	$	7,872		$	30,828
Additions:
Provision		1,246			(96	)		(205	)		(50	)		367			(15	)		65		(1,312	)		-
Deductions:
Chargeoffs		(239	)		(449	)		-			-			(773	)		-			-		-			(1,461	)
Recoveries		300			27			-			-			336			6			-		-			669
Net loan recoveries (losses)		61			(422	)		-			-			(437	)		6			-		-			(792	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

	Allowance for Loan Losses For the Nine Months Ended September 30, 2015
	Commercial			Commercial Real Estate			Construction			Residential Real Estate			Consumer Installment and Other			Purchased Non-covered Loans			Purchased Covered Loans		Unallocated			Total
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	5,460		$	4,245		$	644		$	2,241		$	7,717		$	2,120		$	-	$	9,058		$	31,485
Additions:
Provision		2,840			525			(446	)		(233	)		436			(689	)		65		(2,498	)		-
Deductions:
Chargeoffs		(700	)		(449	)		-			-			(2,344	)		(431	)		-		-			(3,924	)
Recoveries		814			57			-			-			1,369			235			-		-			2,475
Net loan recoveries (losses)		114			(392	)		-			-			(975	)		(196	)		-		-			(1,449	)
Total allowance for loan losses	$	8,414		$	4,378		$	198		$	2,008		$	7,178		$	1,235		$	65	$	6,560		$	30,036

Schedule of Recorded Investment in Loans Evaluated for Impairment [Table Text Block]

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	5,070	$	216	$	-	$	-	$	-	$	-	$	-	$	-	$	5,286
Collectively evaluated for impairment		3,341		3,383		136		1,408		6,868		1,031		62		4,844		21,073
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	8,411	$	3,599	$	136	$	1,408	$	6,868	$	1,031	$	62	$	4,844	$	26,359
Carrying value of loans:
Individually evaluated for impairment	$	11,210	$	5,270	$	-	$	-	$	-	$	6,125	$	-	$	-	$	22,605
Collectively evaluated for impairment		320,219		475,680		2,282		91,934		335,629		103,189		11,555		-		1,340,488
Purchased loans with evidence of credit deterioration		-		-		-		-		-		1,046		190		-		1,236
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360	$	11,745	$	-	$	1,364,329

	Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans		Purchased Covered Loans		Unallocated		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	4,942	$	585	$	-	$	-	$	-	$	-	$	-	$	-	$	5,527
Collectively evaluated for impairment		4,617		3,639		177		1,801		7,080		967		-		5,963		24,244
Purchased loans with evidence of credit deterioration		-		-		-		-		-		-		-		-		-
Total	$	9,559	$	4,224	$	177	$	1,801	$	7,080	$	967	$	-	$	5,963	$	29,771
Carrying value of loans:
Individually evaluated for impairment	$	12,587	$	5,541	$	-	$	-	$	-	$	11,777	$	-	$	-	$	29,905
Collectively evaluated for impairment		355,530		511,529		2,978		117,631		346,043		152,038		13,855		-		1,499,604
Purchased loans with evidence of credit deterioration		-		-		-		-		-		3,681		206		-		3,887
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496	$	14,061	$	-	$	1,533,396

Financing Receivable Credit Quality Indicators [Table Text Block]

	Credit Risk Profile by Internally Assigned Grade At September 30, 2016
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)		Total
	(In thousands)
Grade:
Pass	$	318,077	$	466,364	$	2,282	$	88,920	$	334,163	$	101,295		$	10,126	$	1,321,227
Substandard		13,352		14,586		-		3,014		1,000		13,983			1,619		47,554
Doubtful		-		-		-		-		26		-			-		26
Loss		-		-		-		-		440		4			-		444
Purchased loan discount		-		-		-		-		-		(4,922	)		-		(4,922	)
Total	$	331,429	$	480,950	$	2,282	$	91,934	$	335,629	$	110,360		$	11,745	$	1,364,329

	Credit Risk Profile by Internally Assigned Grade At December 31, 2015
	Commercial		Commercial Real Estate		Construction		Residential Real Estate		Consumer Installment and Other		Purchased Non-covered Loans			Purchased Covered Loans (1)			Total
	(In thousands)
Grade:
Pass	$	353,474	$	496,744	$	2,978	$	114,525	$	344,876	$	149,100		$	12,563		$	1,474,260
Substandard		14,643		20,326		-		3,106		781		24,810			1,650			65,316
Doubtful		-		-		-		-		12		18			-			30
Loss		-		-		-		-		374		-			-			374
Purchased loan discount		-		-		-		-		-		(6,432	)		(152	)		(6,584	)
Total	$	368,117	$	517,070	$	2,978	$	117,631	$	346,043	$	167,496		$	14,061		$	1,533,396

Past Due Financing Receivables [Table Text Block]

	Summary of Loans by Delinquency and Nonaccrual Status At September 30, 2016
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	330,596	$	647	$	186	$	-	$	-	$	331,429
Commercial real estate		474,741		914		-		-		5,295		480,950
Construction		2,282		-		-		-		-		2,282
Residential real estate		90,713		908		-		-		313		91,934
Consumer installment and other		331,310		3,198		683		438		-		335,629
Total originated loans		1,229,642		5,667		869		438		5,608		1,242,224
Purchased non-covered loans		105,255		4,030		370		49		656		110,360
Purchased covered loans		11,716		-		-		-		29		11,745
Total	$	1,346,613	$	9,697	$	1,239	$	487	$	6,293	$	1,364,329

	Summary of Loans by Delinquency and Nonaccrual Status At December 31, 2015
	Current and Accruing		30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Loans
	(In thousands)
Commercial	$	365,450	$	1,777	$	122	$	-	$	768	$	368,117
Commercial real estate		504,970		5,930		726		-		5,444		517,070
Construction		2,978		-		-		-		-		2,978
Residential real estate		115,575		1,202		414		-		440		117,631
Consumer installment and other		341,566		3,263		919		295		-		346,043
Total originated loans		1,330,539		12,172		2,181		295		6,652		1,351,839
Purchased non-covered loans		158,554		589		7		-		8,346		167,496
Purchased covered loans		13,929		132		-		-		-		14,061
Total	$	1,503,022	$	12,893	$	2,188	$	295	$	14,998	$	1,533,396

Effect Of Nonaccrual Loans On Interest Income [Table Text Block]

	For the Three Months Ended					For the Nine Months Ended
	September 30,
	2016			2015		2016			2015
	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	193		$	315	$	756		$	969
Less: Interest income (recognized) reversed on nonaccrual loans		(500	)		17		(1,033	)		(308	)
Total (addition) reduction of interest income	$	( 307	)	$	332	$	( 277	)	$	661

Impaired Financing Receivables [Table Text Block]

	Impaired Loans At September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	1,058	$	1,145	$	-
Commercial real estate		8,013		9,560		-
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-
Impaired loans with an allowance recorded:
Commercial		10,202		10,211		5,070
Commercial real estate		4,410		5,427		216
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	11,260	$	11,356	$	5,070
Commercial real estate		12,423		14,987		216
Construction		-		-		-
Residential real estate		533		563		-
Consumer installment and other		611		718		-

	Impaired Loans At December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans with no related allowance recorded:
Commercial	$	2,917	$	2,979	$	-
Commercial real estate		16,309		21,168		-
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-
Impaired loans with an allowance recorded:
Commercial		10,170		10,170		4,942
Commercial real estate		4,660		5,109		585
Construction		-		-		-
Residential real estate		-		-		-
Consumer installment and other		-		-		-
Total:
Commercial	$	13,087	$	13,149	$	4,942
Commercial real estate		20,969		26,277		585
Construction		271		271		-
Residential real estate		666		697		-
Consumer installment and other		350		456		-

Impaired Financing Receivables Supplemental Schedule [Table Text Block]

	Impaired Loans
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2016				2015				2016				2015
	Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income		Average Recorded Investment		Recognized Interest Income
	(In thousands)
Commercial	$	12,858	$	126	$	12,750	$	147	$	13,454	$	394	$	12,513	$	440
Commercial real estate		14,486		188		21,923		142		17,991		549		19,985		546
Construction		-		-		-		-		136		-		306		-
Residential real estate		530		4		403		9		693		13		652		23
Consumer installment and other		545		6		516		6		435		18		856		19
Total	$	28,419	$	324	$	35,592	$	304	$	32,709	$	974	$	34,312	$	1,028

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Troubled Debt Restructurings At September 30, 2016
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		7	$	2,719	$	1,519	$	169
Commercial real estate		10		11,257		10,663		216
Residential real estate		1		241		220		-
Total		18	$	14,217	$	12,402	$	385

	Troubled Debt Restructurings At December 31, 2015
	Number of Contracts		Pre-Modification Carrying Value		Period-End Carrying Value		Period-End Individual Impairment Allowance
	($ in thousands)
Commercial		6	$	3,138	$	2,802	$	194
Commercial real estate		10		12,927		12,684		-
Residential real estate		1		242		226		-
Total		17	$	16,307	$	15,712	$	194

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Note 6 - Other Assets (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Other Assets [Table Text Block]

	At September 30, 2016		At December 31, 2015
	(In thousands)
Cost method equity investments:
Federal Reserve Bank stock (1)	$	14,069	$	14,069
Other investments		201		201
Total cost method equity investments		14,270		14,270
Life insurance cash surrender value		50,883		48,972
Net deferred tax asset		42,505		51,748
Limited partnership investments		13,188		15,259
Interest receivable		19,699		20,174
Prepaid assets		4,112		4,771
Other assets		9,804		10,660
Total other assets	$	154,461	$	165,854

Schedule of Amounts Recognized in Net Income [Table Text Block]

	For the Three Months Ended				For the Nine Months Ended
	September 30,
	2016		2015		2016		2015
	(In thousands)
Investment loss included in pre-tax income	$	675	$	750	$	2,025	$	2,175
Tax credits recognized in provision for income taxes		562		663		1,723		1,988

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Note 7 - Goodwill and Identifiable Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Goodwill [Table Text Block]

	At September 30, 2016		At December 31, 2015
	(In thousands)
Goodwill	$	121,673	$	121,673

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	At September 30, 2016					At December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Core Deposit Intangibles	$	56,808	$	(49,263	)	$	56,808	$	(46,782	)
Merchant Draft Processing Intangible		10,300		(10,056	)		10,300		(9,895	)
Total Identifiable Intangible Assets	$	67,108	$	(59,319	)	$	67,108	$	(56,677	)

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

	Core Deposit Intangibles		Merchant Draft Processing Intangible		Total
	(In thousands)
For the Nine Months ended September 30, 2016 (actual)	$	2,481	$	161	$	2,642
Estimate for the remainder of year ended December 31, 2016		811		51		862
Estimate for year ended December 31, 2017		2,913		164		3,077
2018		1,892		29		1,921
2019		538		-		538
2020		287		-		287
2021		269		-		269

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Note 8 - Deposits and Borrowed Funds (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Deposits [Table Text Block]

	Deposits
	At September 30, 2016		At December 31, 2015
	(In thousands)
Noninterest-bearing	$	2,064,988	$	2,026,049
Interest-bearing:
Transaction		851,885		860,706
Savings		1,462,860		1,366,936
Time deposits less than $100 thousand		138,655		150,780
Time deposits $100 thousand through $250 thousand		88,666		96,971
Time deposits more than $250 thousand		37,816		39,217
Total deposits	$	4,644,870	$	4,540,659

Schedule of Repurchase Agreements [Table Text Block]

	Repurchase Agreements (Sweep) Accounted for as Secured Borrowings
	Remaining Contractual Maturity of the Agreements Overnight and Continuous
	At September 30, 2016		At December 31, 2015
Repurchase agreements:	(In thousands)
Collateral securing borrowings:
Securities of U.S. Government sponsored entities	$	86,034	$	98,969
Agency residential MBS		20,742		-
Obligations of states and political subdivisions		1,015		3,975
Corporate securities		91,160		54,681
Total collateral carrying value	$	198,951	$	157,625
Total short-term borrowed funds	$	56,358	$	53,028

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Note 9 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	At September 30, 2016
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	171,846	$	-	$	171,846	$	-
Agency residential MBS		499,689		-		499,689		-
Non-agency residential MBS		302		-		302		-
Non-agency commercial MBS		2,118		-		2,118		-
Obligations of states and political subdivisions		185,494		-		185,494		-
Asset-backed securities		1,000		-		1,000		-
FHLMC and FNMA stock		4,256		7		4,249		-
Corporate securities		895,232		-		895,232		-
Other securities		2,471		611		1,860		-
Total securities available for sale	$	1,762,408	$	618	$	1,761,790	$	-

	At December 31, 2015
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2 )		Significant Unobservable Inputs (Level 3 )
	(In thousands)
Securities of U.S. Government sponsored entities	$	301,882	$	-	$	301,882	$	-
Agency residential MBS		202,544		-		202,544		-
Non-agency residential MBS		370		-		370		-
Non-agency commercial MBS		2,379		-		2,379		-
Obligations of states and political subdivisions		157,509		-		157,509		-
Asset-backed securities		2,003		-		2,003		-
FHLMC and FNMA stock		4,329		7		4,322		-
Corporate securities		896,369		-		896,369		-
Other securities		2,831		991		1,840		-
Total securities available for sale	$	1,570,216	$	998	$	1,569,218	$	-

Fair Value Measurements, Nonrecurring [Table Text Block]

	At September 30, 2016								For the Nine Months Ended September 30, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	3,032	$	-	$	-	$	3,032	$	( 705	)
Impaired loans		9,326		-		-		9,326		-
Total assets measured at fair value on a nonrecurring basis	$	12,358	$	-	$	-	$	12,358	$	( 705	)

	At December 31, 2015								For the Year Ended December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total Losses
	(In thousands)
Other real estate owned	$	9,264	$	-	$	-	$	9,264	$	( 320	)
Impaired loans		15,633		-		-		15,633		(449	)
Total assets measured at fair value on a nonrecurring basis	$	24,897	$	-	$	-	$	24,897	$	( 769	)

Fair Value, by Balance Sheet Grouping [Table Text Block]

	At September 30, 2016
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	471,367	$	471,367	$	471,367	$	-	$	-
Investment securities held to maturity		1,411,019		1,440,119		-		1,440,119		-
Loans		1,337,970		1,358,225		-		-		1,358,225
Financial Liabilities:
Deposits	$	4,644,870	$	4,643,754	$	-	$	4,379,733	$	264,021
Short-term borrowed funds		56,358		56,358		-		56,358		-

	At December 31, 2015
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:	(In thousands)
Cash and due from banks	$	433,044	$	433,044	$	433,044	$	-	$	-
Investment securities held to maturity		1,316,075		1,325,699		-		1,325,699		-
Loans		1,503,625		1,517,394		-		-		1,517,394
Financial Liabilities:
Deposits	$	4,540,659	$	4,539,455	$	-	$	4,253,691	$	285,764
Short-term borrowed funds		53,028		53,028		-		53,028		-

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Note 11 - Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months				For the Nine Months
	Ended September 30,
	2016		2015		2016		2015
	(In thousands, except per share data)
Net income applicable to common equity (numerator)	$	15,628	$	14,857	$	44,400	$	44,175
Basic earnings per common share
Weighted average number of common shares outstanding - basic (denominator)		25,641		25,530		25,558		25,565
Basic earnings per common share	$	0.61	$	0.58	$	1.74	$	1.73
Diluted earnings per common share
Weighted average number of common shares outstanding - basic		25,641		25,530		25,558		25,565
Add common stock equivalents for options		46		35		37		20
Weighted average number of common shares outstanding - diluted (denominator)		25,687		25,565		25,595		25,585
Diluted earnings per common share	$	0.61	$	0.58	$	1.73	$	1.73

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Note 3 - Investment Securities (Details Textual) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
High Risk Collateralized Mortgage Obligations	$ 0	$ 0
Pledged Financial Instruments, Not Separately Reported, Securities	$ 755,762,000	$ 738,865,000

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Note 3 - Amortized Cost, Unrealized Gains and Losses, and Estimated Fair Value of Available for Sale Investment Securities Portfolio (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member]
Investment securities available for sale, amortized cost		$ 171,579	$ 302,292
Investment securities available for sale, gross unrealized gains		300	255
Investment securities available for sale, gross unrealized losses		(33)	(665)
Investment securities available for sale		171,846	301,882
Agency Residential MBS [Member]
Investment securities available for sale, amortized cost		499,860	208,046
Investment securities available for sale, gross unrealized gains		1,712	1,407
Investment securities available for sale, gross unrealized losses		(1,883)	(6,909)
Investment securities available for sale		499,689	202,544
Non-agency Residential MBS [Member]
Investment securities available for sale, amortized cost		301	354
Investment securities available for sale, gross unrealized gains		1	16
Investment securities available for sale, gross unrealized losses
Investment securities available for sale		302	370
Non-agency Commercial MBS [Member]
Investment securities available for sale, amortized cost		2,127	2,383
Investment securities available for sale, gross unrealized gains		1	5
Investment securities available for sale, gross unrealized losses		(10)	(9)
Investment securities available for sale		2,118	2,379
US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale, amortized cost		177,786	148,705
Investment securities available for sale, gross unrealized gains		8,086	8,861
Investment securities available for sale, gross unrealized losses		(378)	(57)
Investment securities available for sale		185,494	157,509
Asset-backed Securities [Member]
Investment securities available for sale, amortized cost		1,003	2,025
Investment securities available for sale, gross unrealized gains
Investment securities available for sale, gross unrealized losses		(3)	(22)
Investment securities available for sale		1,000	2,003
FHLMC and FNMA Stock [Member]
Investment securities available for sale, amortized cost	[1],[2]	775	775
Investment securities available for sale, gross unrealized gains	[1],[2]	3,481	3,554
Investment securities available for sale, gross unrealized losses	[1],[2]
Investment securities available for sale	[1],[2]	4,256	4,329
Domestic Corporate Debt Securities [Member]
Investment securities available for sale, amortized cost		891,335	902,308
Investment securities available for sale, gross unrealized gains		5,808	882
Investment securities available for sale, gross unrealized losses		(1,911)	(6,821)
Investment securities available for sale		895,232	896,369
Other Securities [Member]
Investment securities available for sale, amortized cost		2,034	2,039
Investment securities available for sale, gross unrealized gains		577	952
Investment securities available for sale, gross unrealized losses		(140)	(160)
Investment securities available for sale		2,471	2,831
Investment securities available for sale, amortized cost		1,746,800	1,568,927
Investment securities available for sale, gross unrealized gains		19,966	15,932
Investment securities available for sale, gross unrealized losses		(4,358)	(14,643)
Investment securities available for sale		$ 1,762,408	$ 1,570,216

[1] Federal Home Loan Mortgage Corporation

[2] Federal National Mortgage Association

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Note 3 - Amortized Cost, Unrealized Gains and Losses, and Estimated Market Value of Held to Maturity Investment Securities Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member]
Investment securities held to maturity, amortized cost	$ 621	$ 764
Investment securities held to maturity, gross unrecognized gains	3
Investment securities held to maturity, gross unrecognized losses
Investment securities held to maturity, fair values	624	764
Agency Residential MBS [Member]
Investment securities held to maturity, amortized cost	712,470	595,503
Investment securities held to maturity, gross unrecognized gains	10,210	1,810
Investment securities held to maturity, gross unrecognized losses	(194)	(4,966)
Investment securities held to maturity, fair values	722,486	592,347
Non-agency Residential MBS [Member]
Investment securities held to maturity, amortized cost	5,678	9,667
Investment securities held to maturity, gross unrecognized gains	54	185
Investment securities held to maturity, gross unrecognized losses	(1)
Investment securities held to maturity, fair values	5,731	9,852
Agency Commercial MBS [Member]
Investment securities held to maturity, amortized cost	9,404	16,258
Investment securities held to maturity, gross unrecognized gains	24	20
Investment securities held to maturity, gross unrecognized losses	(163)	(274)
Investment securities held to maturity, fair values	9,265	16,004
US States and Political Subdivisions Debt Securities [Member]
Investment securities held to maturity, amortized cost	682,846	693,883
Investment securities held to maturity, gross unrecognized gains	19,508	13,638
Investment securities held to maturity, gross unrecognized losses	(341)	(789)
Investment securities held to maturity, fair values	702,013	706,732
Investment securities held to maturity, amortized cost	1,411,019	1,316,075
Investment securities held to maturity, gross unrecognized gains	29,799	15,653
Investment securities held to maturity, gross unrecognized losses	(699)	(6,029)
Investment securities held to maturity, fair values	$ 1,440,119	$ 1,325,699

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Note 3 - Amortized Cost and Estimated Market Value of Securities by Contractual Maturity (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Mortgage Backed Securities [Member]
Investment securities available for sale, amortized cost	$ 502,288,000	$ 210,783,000
Investment securities available for sale	502,109,000	205,293,000
Investment securities held to maturity, amortized cost	727,552,000	621,428
Investment securities held to maturity, fair value	737,482,000	618,203
Other Securities [Member]
Investment securities available for sale, amortized cost	2,809,000	2,814,000
Investment securities available for sale	6,727,000	7,160,000
Investment securities held to maturity, amortized cost
Investment securities held to maturity, fair value
Investment securities available for sale, amortized cost	2,034,000	2,039,000
Investment securities available for sale	2,471,000	2,831,000
Investment securities available for sale, amortized cost, 1 year or less	159,685,000	136,717,000
Investment securities available for sale, fair value, 1 year or less	160,009,000	136,976,000
Investment securities held to maturity, amortized cost, 1 year or less	18,809,000	20,709,000
Investment securities held to maturity, fair value, 1 year or less	19,437,000	21,354,000
Investment securities available for sale, amortized cost, over 1 to 5 years	745,541,000	1,049,786,000
Investment securities available for sale, fair value, over 1 to 5 years	750,330,000	1,044,453,000
Investment securities held to maturity, amortized cost, over 1 to 5 years	290,412,000	259,556,000
Investment securities held to maturity, fair value, over 1 to 5 years	295,190,000	262,163,000
Investment securities available for sale, amortized cost, over 5 to 10 years	301,266,000	166,352,000
Investment securities available for sale, fair value, over 5 to 10 years	308,276,000	173,585,000
Investment securities held to maturity, amortized cost, over 5 to 10 years	308,222,000	289,568,000
Investment securities held to maturity, fair value, over 5 to 10 years	319,417,000	296,352,000
Investment securities available for sale, amortized cost, over 10 years	35,211,000	2,475,000
Investment securities available for sale, fair value, over 10 years	34,957,000	2,749,000
Investment securities held to maturity, amortized cost, over 10 years	66,024,000	124,814,000
Investment securities held to maturity, fair value, over 10 years	68,593,000	127,627,000
Investment securities available for sale, amortized cost, subtotal	1,241,703,000	1,355,330,000
Investment securities available for sale, fair value, subtotal	1,253,572,000	1,357,763,000
Investment securities held to maturity, amortized cost, subtotal	683,467,000	694,647,000
Investment securities held to maturity, fair value, subtotal	702,637,000	707,496,000
Investment securities available for sale, amortized cost	1,746,800,000	1,568,927,000
Investment securities available for sale	1,762,408,000	1,570,216,000
Investment securities held to maturity, amortized cost	1,411,019,000	1,316,075,000
Investment securities held to maturity, fair values	$ 1,440,119,000	$ 1,325,699,000

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Note 3 - Gross Unrealized Losses, Investment Securities Portfolio (Details) $ in Thousands	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
US Government-sponsored Enterprises Debt Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	3	8
Available for sale securities, less than 12 months, fair value	$ 39,965	$ 121,392
Available for sale securities, less than 12 months, unrealized losses	$ (33)	$ (665)
Available for sale securities, 12 months or longer, number of investment positions
Available for sale securities, 12 months or longer, fair value
Available for sale securities, 12 months or longer, unrealized losses
Available for sale securities, total, number of investment positions	3	8
Available for sale securities, total, fair value	$ 39,965	$ 121,392
Available for sale securities, total, unrealized losses	$ (33)	$ (665)
Residential Mortgage Backed Securities [Member] | Agency Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	9	2
Available for sale securities, less than 12 months, fair value	$ 109,244	$ 12,491
Available for sale securities, less than 12 months, unrealized losses	$ (222)	$ (366)
Available for sale securities, 12 months or longer, number of investment positions	28	31
Available for sale securities, 12 months or longer, fair value	$ 133,665	$ 161,296
Available for sale securities, 12 months or longer, unrealized losses	$ (1,661)	$ (6,543)
Available for sale securities, total, number of investment positions	37	33
Available for sale securities, total, fair value	$ 242,909	$ 173,787
Available for sale securities, total, unrealized losses	$ (1,883)	$ (6,909)
Held to Maturity securities, less than 12 months, number of investment positions	6	41
Held to Maturity securities, less than 12 months, fair value	$ 12,463	$ 426,317
Held to Maturity securities, less than 12 months, unrecognized losses	$ (79)	$ (3,490)
Held to Maturity securities, 12 months or longer, number of investment positions	3	13
Held to Maturity securities, 12 months or longer, fair value	$ 11,615	$ 62,041
Held to Maturity securities, 12 months or longer, unrecognized losses	$ (115)	$ (1,476)
Held to Maturity securities, total, number of investment positions	9	54
Held to Maturity securities, total, fair value	$ 24,078	$ 488,358
Held to Maturity securities, total, unrecognized losses	$ (194)	$ (4,966)
Residential Mortgage Backed Securities [Member] | Non-agency Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	1
Available for sale securities, less than 12 months, fair value	$ 31
Available for sale securities, less than 12 months, unrealized losses
Available for sale securities, 12 months or longer, number of investment positions
Available for sale securities, 12 months or longer, fair value
Available for sale securities, 12 months or longer, unrealized losses
Available for sale securities, total, number of investment positions	1
Available for sale securities, total, fair value	$ 31
Available for sale securities, total, unrealized losses
Held to Maturity securities, less than 12 months, number of investment positions	1
Held to Maturity securities, less than 12 months, fair value	$ 1,253
Held to Maturity securities, less than 12 months, unrecognized losses	$ (1)
Held to Maturity securities, 12 months or longer, number of investment positions
Held to Maturity securities, 12 months or longer, fair value
Held to Maturity securities, 12 months or longer, unrecognized losses
Held to Maturity securities, total, number of investment positions	1
Held to Maturity securities, total, fair value	$ 1,253
Held to Maturity securities, total, unrecognized losses	$ (1)
Commercial Mortgage Backed Securities [Member] | Agency Securities [Member]
Held to Maturity securities, less than 12 months, number of investment positions
Held to Maturity securities, less than 12 months, fair value
Held to Maturity securities, less than 12 months, unrecognized losses
Held to Maturity securities, 12 months or longer, number of investment positions	1	2
Held to Maturity securities, 12 months or longer, fair value	$ 7,250	$ 13,951
Held to Maturity securities, 12 months or longer, unrecognized losses	$ (163)	$ (274)
Held to Maturity securities, total, number of investment positions	1	2
Held to Maturity securities, total, fair value	$ 7,250	$ 13,951
Held to Maturity securities, total, unrecognized losses	$ (163)	$ (274)
Commercial Mortgage Backed Securities [Member] | Non-agency Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	1	1
Available for sale securities, less than 12 months, fair value	$ 324	$ 1,071
Available for sale securities, less than 12 months, unrealized losses	$ (4)
Available for sale securities, 12 months or longer, number of investment positions	1	1
Available for sale securities, 12 months or longer, fair value	$ 794	$ 855
Available for sale securities, 12 months or longer, unrealized losses	$ (6)	$ (9)
Available for sale securities, total, number of investment positions	2	2
Available for sale securities, total, fair value	$ 1,118	$ 1,926
Available for sale securities, total, unrealized losses	$ (10)	$ (9)
US States and Political Subdivisions Debt Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	30	3
Available for sale securities, less than 12 months, fair value	$ 42,214	$ 2,728
Available for sale securities, less than 12 months, unrealized losses	$ (356)	$ (18)
Available for sale securities, 12 months or longer, number of investment positions	3	4
Available for sale securities, 12 months or longer, fair value	$ 1,118	$ 1,644
Available for sale securities, 12 months or longer, unrealized losses	$ (22)	$ (39)
Available for sale securities, total, number of investment positions	33	7
Available for sale securities, total, fair value	$ 43,332	$ 4,372
Available for sale securities, total, unrealized losses	$ (378)	$ (57)
Held to Maturity securities, less than 12 months, number of investment positions	31	55
Held to Maturity securities, less than 12 months, fair value	$ 30,041	$ 44,585
Held to Maturity securities, less than 12 months, unrecognized losses	$ (182)	$ (249)
Held to Maturity securities, 12 months or longer, number of investment positions	9	54
Held to Maturity securities, 12 months or longer, fair value	$ 6,779	$ 42,081
Held to Maturity securities, 12 months or longer, unrecognized losses	$ (159)	$ (540)
Held to Maturity securities, total, number of investment positions	40	109
Held to Maturity securities, total, fair value	$ 36,820	$ 86,666
Held to Maturity securities, total, unrecognized losses	$ (341)	$ (789)
Asset-backed Securities [Member]
Available for sale securities, less than 12 months, number of investment positions
Available for sale securities, less than 12 months, fair value
Available for sale securities, less than 12 months, unrealized losses
Available for sale securities, 12 months or longer, number of investment positions	1	1
Available for sale securities, 12 months or longer, fair value	$ 1,000	$ 2,003
Available for sale securities, 12 months or longer, unrealized losses	$ (3)	$ (22)
Available for sale securities, total, number of investment positions	1	1
Available for sale securities, total, fair value	$ 1,000	$ 2,003
Available for sale securities, total, unrealized losses	$ (3)	$ (22)
Domestic Corporate Debt Securities [Member]
Available for sale securities, less than 12 months, number of investment positions	25	97
Available for sale securities, less than 12 months, fair value	$ 136,421	$ 548,177
Available for sale securities, less than 12 months, unrealized losses	$ (704)	$ (5,442)
Available for sale securities, 12 months or longer, number of investment positions	26	25
Available for sale securities, 12 months or longer, fair value	$ 102,085	$ 86,762
Available for sale securities, 12 months or longer, unrealized losses	$ (1,207)	$ (1,379)
Available for sale securities, total, number of investment positions	51	122
Available for sale securities, total, fair value	$ 238,506	$ 634,939
Available for sale securities, total, unrealized losses	$ (1,911)	$ (6,821)
Other Securities [Member]
Available for sale securities, less than 12 months, number of investment positions
Available for sale securities, less than 12 months, fair value
Available for sale securities, less than 12 months, unrealized losses
Available for sale securities, 12 months or longer, number of investment positions	1	1
Available for sale securities, 12 months or longer, fair value	$ 1,860	$ 1,840
Available for sale securities, 12 months or longer, unrealized losses	$ (140)	$ (160)
Available for sale securities, total, number of investment positions	1	1
Available for sale securities, total, fair value	$ 1,860	$ 1,840
Available for sale securities, total, unrealized losses	$ (140)	$ (160)
Available for sale securities, less than 12 months, number of investment positions	69	111
Available for sale securities, less than 12 months, fair value	$ 328,199	$ 685,859
Available for sale securities, less than 12 months, unrealized losses	$ (1,319)	$ (6,491)
Available for sale securities, 12 months or longer, number of investment positions	60	63
Available for sale securities, 12 months or longer, fair value	$ 240,522	$ 254,400
Available for sale securities, 12 months or longer, unrealized losses	$ (3,039)	$ (8,152)
Available for sale securities, total, number of investment positions	129	174
Available for sale securities, total, fair value	$ 568,721	$ 940,259
Available for sale securities, total, unrealized losses	$ (4,358)	$ (14,643)
Held to Maturity securities, less than 12 months, number of investment positions	38	96
Held to Maturity securities, less than 12 months, fair value	$ 43,757	$ 470,902
Held to Maturity securities, less than 12 months, unrecognized losses	$ (262)	$ (3,739)
Held to Maturity securities, 12 months or longer, number of investment positions	13	69
Held to Maturity securities, 12 months or longer, fair value	$ 25,644	$ 118,073
Held to Maturity securities, 12 months or longer, unrecognized losses	$ (437)	$ (2,290)
Held to Maturity securities, total, number of investment positions	51	165
Held to Maturity securities, total, fair value	$ 69,401	$ 588,975
Held to Maturity securities, total, unrecognized losses	$ (699)	$ (6,029)

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Note 3 - Interest Income from Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Taxable	$ 11,024	$ 9,120	$ 31,256	$ 25,067
Tax-exempt from regular federal income tax	5,476	5,801	16,682	17,931
Total interest income from investment securities	$ 16,500	$ 14,921	$ 47,938	$ 42,998

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Note 4 - Loans and Allowance for Loan Losses (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Court Order [Member]
Troubled Debt Restructurings During Period			1
Under Market Modification to Payment Terms, Extended Maturity Date, and Court Order [Member]
Troubled Debt Restructurings During Period				7
Under-market Modification to Payment Terms and Extended Maturity Date [Member]
Troubled Debt Restructurings During Period			4
Restructured Loans [Member]
Financing Receivable, Modifications, Recorded Investment	$ 12,402,000		$ 12,402,000		$ 15,712,000
Impaired Loans, Restructured, Nonaccrual Status	5,307,000		5,307,000		7,464,000
Four Loans [Member]
Financing Receivable, Modifications, Recorded Investment	4,843,000		4,843,000
One Loan [Member]
Financing Receivable, Modifications, Recorded Investment		$ 6,330,000		$ 6,330,000
Seven Loans [Member]
Financing Receivable, Modifications, Recorded Investment		$ 8,150,000		$ 8,150,000
Residential Real Estate Included in OREO [Member]
Real Estate Acquired Through Foreclosure	$ 0		$ 0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0	0	0
Loans and Leases Receivable, Nonaccrual, Commitment to Lend	$ 0		$ 0		0
Troubled Debt Restructurings During Period	0	1	4	7
Pledged Financial Instruments, Not Separately Reported, Loans Receivable Pledged as Collateral	$ 0		$ 0		0
Loans Receivable Held-for-sale, Amount	0		0		0
Financing Receivable, Modifications, Recorded Investment	12,402,000		12,402,000		15,712,000
Other Real Estate	3,032,000		3,032,000		9,264,000
Other Real Estate, Reserve	2,238,000		2,238,000		1,986,000
Mortgage Loans in Process of Foreclosure, Amount	$ 0		$ 0		$ 0

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Note 4 - Loans Receivable at Carrying Amount (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member]
Originated loans	$ 331,429	$ 368,117
Purchased covered loans
Gross purchased non-covered loans	12,337	15,620
Purchased loan discount	(682)	(989)
Total	343,084	382,748
Purchased loan discount
Commercial Real Estate Portfolio Segment [Member]
Originated loans	480,950	517,070
Purchased covered loans
Gross purchased non-covered loans	74,595	124,650
Purchased loan discount	(3,197)	(4,264)
Total	552,348	637,456
Purchased loan discount
Construction Portfolio Segment [Member]
Originated loans	2,282	2,978
Purchased covered loans
Gross purchased non-covered loans	153	973
Purchased loan discount
Total	2,435	3,951
Purchased loan discount
Residential Portfolio Segment [Member]
Originated loans	91,934	117,631
Purchased covered loans	2,233	2,385
Gross purchased non-covered loans	224	231
Purchased loan discount	(23)	(23)
Total	94,368	120,091
Purchased loan discount		(133)
Consumer Portfolio Segment [Member]
Originated loans	335,629	346,043
Purchased covered loans	9,512	11,828
Gross purchased non-covered loans	27,973	32,454
Purchased loan discount	(1,020)	(1,156)
Total	372,094	389,150
Purchased loan discount		(19)
Originated loans	1,242,224	1,351,839
Purchased covered loans	11,745	14,213
Gross purchased non-covered loans	115,282	173,928
Purchased loan discount	(4,922)	(6,432)
Total	$ 1,364,329	1,533,396
Purchased loan discount		$ (152)

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Note 4 - Changes in the Carrying Amount of Impaired Purchased Loans (Details) - Receivables Acquired with Deteriorated Credit Quality [Member] - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Carrying amount at the beginning of the period	$ 3,887	$ 4,672
Reductions during the period	(2,651)	(785)
Carrying amount at the end of the period	$ 1,236	$ 3,887

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Note 4 - Changes in the Accretable Yield for Purchased Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Balance at the beginning of the period	$ 1,259	$ 2,261
Reclassification from nonaccretable difference	3,322	3,051
Accretion	(2,936)	(4,053)
Balance at the end of the period	1,645	1,259
Change in FDIC indemnification	995	698
(Increase) in interest income	$ (1,941)	$ (3,355)

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Note 4 - Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Originated Loans [Member] | Commercial Portfolio Segment [Member]
Balance at beginning of period	$ 10,402	$ 7,107	$ 9,559	$ 5,460
Provision	(3,638)	1,246	(1,641)	2,840
Chargeoffs	(88)	(239)	(2,024)	(700)
Recoveries	1,735	300	2,517	814
Net loan recoveries (losses)	1,647	61	493	114
Total allowance for loan losses	8,411	8,414	8,411	8,414
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Balance at beginning of period	3,912	4,896	4,224	4,245
Provision	(328)	(96)	(670)	525
Chargeoffs		(449)		(449)
Recoveries	15	27	45	57
Net loan recoveries (losses)	15	(422)	45	(392)
Total allowance for loan losses	3,599	4,378	3,599	4,378
Originated Loans [Member] | Construction Portfolio Segment [Member]
Balance at beginning of period	127	403	177	644
Provision	9	(205)	(41)	(446)
Chargeoffs
Recoveries
Net loan recoveries (losses)
Total allowance for loan losses	136	198	136	198
Originated Loans [Member] | Residential Portfolio Segment [Member]
Balance at beginning of period	1,601	2,058	1,801	2,241
Provision	(193)	(50)	(393)	(233)
Chargeoffs
Recoveries
Net loan recoveries (losses)
Total allowance for loan losses	1,408	2,008	1,408	2,008
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Balance at beginning of period	6,616	7,248	7,080	7,717
Provision	1,651	367	2,074	436
Chargeoffs	(1,736)	(773)	(3,418)	(2,344)
Recoveries	337	336	1,132	1,369
Net loan recoveries (losses)	(1,399)	(437)	(2,286)	(975)
Total allowance for loan losses	6,868	7,178	6,868	7,178
Purchased Non-Covered Loans [Member]
Balance at beginning of period	1,044	1,244	967	2,120
Provision	(399)	(15)	(1,472)	(689)
Chargeoffs	(112)		(150)	(431)
Recoveries	498	6	1,686	235
Net loan recoveries (losses)	386	6	1,536	(196)
Total allowance for loan losses	1,031	1,235	1,031	1,235
Purchased Covered Loans [Member]
Balance at beginning of period	66
Provision	(4)	65	62	65
Chargeoffs
Recoveries
Net loan recoveries (losses)
Total allowance for loan losses	62	65	62	65
Unallocated Financing Receivable [Member]
Balance at beginning of period	5,142	7,872	5,963	9,058
Provision	(298)	(1,312)	(1,119)	(2,498)
Chargeoffs
Recoveries
Net loan recoveries (losses)
Total allowance for loan losses	4,844	6,560	4,844	6,560
Balance at beginning of period	28,910	30,828	29,771	31,485
Provision	(3,200)		(3,200)
Chargeoffs	(1,936)	(1,461)	(5,592)	(3,924)
Recoveries	2,585	669	5,380	2,475
Net loan recoveries (losses)	649	(792)	(212)	(1,449)
Total allowance for loan losses	$ 26,359	$ 30,036	$ 26,359	$ 30,036

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Note 4 - Recorded Investment in Loans Evaluated for Impairment (Details) - USD ($)		Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Originated Loans [Member] | Commercial Portfolio Segment [Member]
Individually evaluated for impairment		$ 5,070,000		$ 4,942,000
Collectively evaluated for impairment		3,341,000		4,617,000
Total		8,411,000	$ 10,402,000	9,559,000	$ 8,414,000	$ 7,107,000	$ 5,460,000
Individually evaluated for impairment		11,210,000		12,587,000
Collectively evaluated for impairment		320,219,000		355,530,000
Total loans		331,429,000		368,117,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Individually evaluated for impairment		216,000		585,000
Collectively evaluated for impairment		3,383,000		3,639,000
Total		3,599,000	3,912,000	4,224,000	4,378,000	4,896,000	4,245,000
Individually evaluated for impairment		5,270,000		5,541,000
Collectively evaluated for impairment		475,680,000		511,529,000
Total loans		480,950,000		517,070,000
Originated Loans [Member] | Construction Portfolio Segment [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		136,000		177,000
Total		136,000	127,000	177,000	198,000	403,000	644,000
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		2,282,000		2,978,000
Total loans		2,282,000		2,978,000
Originated Loans [Member] | Residential Portfolio Segment [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		1,408,000		1,801,000
Total		1,408,000	1,601,000	1,801,000	2,008,000	2,058,000	2,241,000
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		91,934,000		117,631,000
Total loans		91,934,000		117,631,000
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		6,868,000		7,080,000
Total		6,868,000	6,616,000	7,080,000	7,178,000	7,248,000	7,717,000
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		335,629,000		346,043,000
Total loans		335,629,000		346,043,000
Originated Loans [Member]
Total loans		1,242,224,000		1,351,839,000
Purchased Non-Covered Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		1,046,000		3,681,000
Purchased Non-Covered Loans [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		1,031,000		967,000
Total		1,031,000	1,044,000	967,000	1,235,000	1,244,000	2,120,000
Individually evaluated for impairment		6,125,000		11,777,000
Collectively evaluated for impairment		103,189,000		152,038,000
Total loans		110,360,000		167,496,000
Purchased Covered Loans [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		190,000		206,000
Purchased Covered Loans [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		62,000
Total		62,000	66,000		65,000
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		11,555,000		13,855,000
Total loans	[1]	11,745,000		14,061,000
Unallocated Financing Receivable [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Unallocated Financing Receivable [Member]
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		4,844,000		5,963,000
Total		4,844,000	5,142,000	5,963,000	6,560,000	7,872,000	9,058,000
Individually evaluated for impairment		0		0
Collectively evaluated for impairment		0		0
Total loans		0		0
Commercial Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Commercial Portfolio Segment [Member]
Total loans		343,084,000		382,748,000
Commercial Real Estate Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Commercial Real Estate Portfolio Segment [Member]
Total loans		552,348,000		637,456,000
Construction Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Construction Portfolio Segment [Member]
Total loans		2,435,000		3,951,000
Residential Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Residential Portfolio Segment [Member]
Total loans		94,368,000		120,091,000
Consumer Portfolio Segment [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		0		0
Consumer Portfolio Segment [Member]
Total loans		372,094,000		389,150,000
Receivables Acquired with Deteriorated Credit Quality [Member]
Total loans		1,236,000		3,887,000
Individually evaluated for impairment		5,286,000		5,527,000
Collectively evaluated for impairment		21,073,000		24,244,000
Total		26,359,000	$ 28,910,000	29,771,000	$ 30,036,000	$ 30,828,000	$ 31,485,000
Individually evaluated for impairment		22,605,000		29,905,000
Collectively evaluated for impairment		1,340,488,000		1,499,604,000
Total loans		$ 1,364,329,000		$ 1,533,396,000

[1] Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

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Note 4 - Credit Risk Profile by Internally Assigned Grade (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Loans, before purchased loan discount		$ 318,077,000	$ 353,474,000
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Loans, before purchased loan discount		13,352,000	14,643,000
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Commercial Portfolio Segment [Member]
Loans		331,429,000	368,117,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Pass [Member]
Loans, before purchased loan discount		466,364,000	496,744,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]
Loans, before purchased loan discount		14,586,000	20,326,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans		480,950,000	517,070,000
Originated Loans [Member] | Construction Portfolio Segment [Member] | Pass [Member]
Loans, before purchased loan discount		2,282,000	2,978,000
Originated Loans [Member] | Construction Portfolio Segment [Member] | Substandard [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member] | Doubtful [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member]
Loans		2,282,000	2,978,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Pass [Member]
Loans, before purchased loan discount		88,920,000	114,525,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Substandard [Member]
Loans, before purchased loan discount		3,014,000	3,106,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Doubtful [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Residential Portfolio Segment [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		0	0
Originated Loans [Member] | Residential Portfolio Segment [Member]
Loans		91,934,000	117,631,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Loans, before purchased loan discount		334,163,000	344,876,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Loans, before purchased loan discount		1,000,000	781,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Doubtful [Member]
Loans, before purchased loan discount		26,000	12,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		440,000	374,000
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Loans		335,629,000	346,043,000
Originated Loans [Member]
Loans		1,242,224,000	1,351,839,000
Purchased Non-Covered Loans [Member] | Pass [Member]
Loans, before purchased loan discount		101,295,000	149,100,000
Purchased Non-Covered Loans [Member] | Substandard [Member]
Loans, before purchased loan discount		13,983,000	24,810,000
Purchased Non-Covered Loans [Member] | Doubtful [Member]
Loans, before purchased loan discount		0	18,000
Purchased Non-Covered Loans [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		4,000	0
Purchased Non-Covered Loans [Member]
Purchased loan discount		(4,922,000)	(6,432,000)
Loans		110,360,000	167,496,000
Purchased Covered Loans [Member] | Pass [Member]
Loans, before purchased loan discount	[1]	10,126,000	12,563,000
Purchased Covered Loans [Member] | Substandard [Member]
Loans, before purchased loan discount	[1]	1,619,000	1,650,000
Purchased Covered Loans [Member] | Doubtful [Member]
Loans, before purchased loan discount	[1]	0	0
Purchased Covered Loans [Member] | Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount	[1]	0	0
Purchased Covered Loans [Member]
Purchased loan discount	[1]	0	(152,000)
Loans	[1]	11,745,000	14,061,000
Purchased Non-covered and Covered Loans [Member]
Purchased loan discount		(4,922,000)	(6,584,000)
Commercial Portfolio Segment [Member]
Purchased loan discount		0	0
Loans		343,084,000	382,748,000
Commercial Real Estate Portfolio Segment [Member]
Purchased loan discount		0	0
Loans		552,348,000	637,456,000
Construction Portfolio Segment [Member]
Purchased loan discount		0	0
Loans		2,435,000	3,951,000
Residential Portfolio Segment [Member]
Purchased loan discount		0	0
Loans		94,368,000	120,091,000
Consumer Portfolio Segment [Member]
Purchased loan discount		0	0
Loans		372,094,000	389,150,000
Pass [Member]
Loans, before purchased loan discount		1,321,227,000	1,474,260,000
Substandard [Member]
Loans, before purchased loan discount		47,554,000	65,316,000
Doubtful [Member]
Loans, before purchased loan discount		26,000	30,000
Unlikely to be Collected Financing Receivable [Member]
Loans, before purchased loan discount		444,000	374,000
Loans		$ 1,364,329,000	$ 1,533,396,000

[1] Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

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Note 4 - Loans by Delinquency and Nonaccrual Status (Details) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		$ 647,000	$ 1,777,000
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		186,000	122,000
Originated Loans [Member] | Commercial Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Commercial Portfolio Segment [Member]
Current and accruing		330,596,000	365,450,000
Nonaccrual			768,000
Total loans		331,429,000	368,117,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		914,000	5,930,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing			726,000
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Current and accruing		474,741,000	504,970,000
Nonaccrual		5,295,000	5,444,000
Total loans		480,950,000	517,070,000
Originated Loans [Member] | Construction Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Construction Portfolio Segment [Member]
Current and accruing		2,282,000	2,978,000
Nonaccrual		0	0
Total loans		2,282,000	2,978,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		908,000	1,202,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing			414,000
Originated Loans [Member] | Residential Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		0	0
Originated Loans [Member] | Residential Portfolio Segment [Member]
Current and accruing		90,713,000	115,575,000
Nonaccrual		313,000	440,000
Total loans		91,934,000	117,631,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		3,198,000	3,263,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		683,000	919,000
Originated Loans [Member] | Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		438,000	295,000
Originated Loans [Member] | Consumer Portfolio Segment [Member]
Current and accruing		331,310,000	341,566,000
Nonaccrual			0
Total loans		335,629,000	346,043,000
Originated Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		5,667,000	12,172,000
Originated Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		869,000	2,181,000
Originated Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		438,000	295,000
Originated Loans [Member]
Current and accruing		1,229,642,000	1,330,539,000
Nonaccrual		5,608,000	6,652,000
Total loans		1,242,224,000	1,351,839,000
Purchased Non-Covered Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		4,030,000	589,000
Purchased Non-Covered Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		370,000	7,000
Purchased Non-Covered Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		49,000	0
Purchased Non-Covered Loans [Member]
Current and accruing		105,255,000	158,554,000
Nonaccrual		656,000	8,346,000
Total loans		110,360,000	167,496,000
Purchased Covered Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing			132,000
Purchased Covered Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing			0
Purchased Covered Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		0	0
Purchased Covered Loans [Member]
Current and accruing		11,716,000	13,929,000
Nonaccrual		29,000	0
Total loans	[1]	11,745,000	14,061,000
Commercial Portfolio Segment [Member]
Total loans		343,084,000	382,748,000
Commercial Real Estate Portfolio Segment [Member]
Total loans		552,348,000	637,456,000
Construction Portfolio Segment [Member]
Total loans		2,435,000	3,951,000
Residential Portfolio Segment [Member]
Total loans		94,368,000	120,091,000
Consumer Portfolio Segment [Member]
Total loans		372,094,000	389,150,000
Financing Receivables, 30 to 59 Days Past Due [Member]
Past due and accruing		9,697,000	12,893,000
Financing Receivables, 60 to 89 Days Past Due [Member]
Past due and accruing		1,239,000	2,188,000
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due and accruing		487,000	295,000
Current and accruing		1,346,613,000	1,503,022,000
Nonaccrual		6,293,000	14,998,000
Total loans		$ 1,364,329,000	$ 1,533,396,000

[1] Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification.

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Note 4 - Effect of Nonaccrual Loans on Interest Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income that would have been recognized had the loans performed in accordance with their original terms	$ 193	$ 315	$ 756	$ 969
Less: Interest income (recognized) reversed on nonaccrual loans	(500)	17	(1,033)	(308)
Total (addition) reduction of interest income	$ (307)	$ 332	$ (277)	$ 661

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Note 4 - Impaired Loans (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Commercial Portfolio Segment [Member]
Impaired loans with no related allowance recorded, Recorded Investment	$ 1,058,000	$ 2,917,000
Impaired loans with no related allowance recorded, Unpaid Principal Balance	1,145,000	2,979,000
Impaired loans with an allowance recorded, Recorded Investment	10,202,000	10,170,000
Impaired loans with an allowance recorded, Unpaid Principal Balance	10,211,000	10,170,000
Total Impaired loans, Related Allowance	5,070,000	4,942,000
Total Impaired loans, Recorded Investment	11,260,000	13,087,000
Total Impaired loans, Unpaid Principal Balance	11,356,000	13,149,000
Commercial Real Estate Portfolio Segment [Member]
Impaired loans with no related allowance recorded, Recorded Investment	8,013,000	16,309,000
Impaired loans with no related allowance recorded, Unpaid Principal Balance	9,560,000	21,168,000
Impaired loans with an allowance recorded, Recorded Investment	4,410,000	4,660,000
Impaired loans with an allowance recorded, Unpaid Principal Balance	5,427,000	5,109,000
Total Impaired loans, Related Allowance	216,000	585,000
Total Impaired loans, Recorded Investment	12,423,000	20,969,000
Total Impaired loans, Unpaid Principal Balance	14,987,000	26,277,000
Construction Portfolio Segment [Member]
Impaired loans with no related allowance recorded, Recorded Investment		271,000
Impaired loans with no related allowance recorded, Unpaid Principal Balance		271,000
Impaired loans with an allowance recorded, Recorded Investment	0	0
Impaired loans with an allowance recorded, Unpaid Principal Balance	0	0
Total Impaired loans, Related Allowance	0	0
Total Impaired loans, Recorded Investment		271,000
Total Impaired loans, Unpaid Principal Balance		271,000
Residential Portfolio Segment [Member]
Impaired loans with no related allowance recorded, Recorded Investment	533,000	666,000
Impaired loans with no related allowance recorded, Unpaid Principal Balance	563,000	697,000
Impaired loans with an allowance recorded, Recorded Investment	0	0
Impaired loans with an allowance recorded, Unpaid Principal Balance	0	0
Total Impaired loans, Related Allowance	0	0
Total Impaired loans, Recorded Investment	533,000	666,000
Total Impaired loans, Unpaid Principal Balance	563,000	697,000
Consumer Portfolio Segment [Member]
Impaired loans with no related allowance recorded, Recorded Investment	611,000	350,000
Impaired loans with no related allowance recorded, Unpaid Principal Balance	718,000	456,000
Impaired loans with an allowance recorded, Recorded Investment	0	0
Impaired loans with an allowance recorded, Unpaid Principal Balance	0	0
Total Impaired loans, Related Allowance	0	0
Total Impaired loans, Recorded Investment	611,000	350,000
Total Impaired loans, Unpaid Principal Balance	$ 718,000	$ 456,000

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Note 4 - Impaired Loans, Supplemental Schedule (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commercial Portfolio Segment [Member]
Average Recorded Investment	$ 12,858	$ 12,750	$ 13,454	$ 12,513
Recognized Interest Income	126	147	394	440
Commercial Real Estate Portfolio Segment [Member]
Average Recorded Investment	14,486	21,923	17,991	19,985
Recognized Interest Income	188	142	549	546
Construction Portfolio Segment [Member]
Average Recorded Investment			136	306
Recognized Interest Income
Residential Portfolio Segment [Member]
Average Recorded Investment	530	403	693	652
Recognized Interest Income	4	9	13	23
Consumer Portfolio Segment [Member]
Average Recorded Investment	545	516	435	856
Recognized Interest Income	6	6	18	19
Average Recorded Investment	28,419	35,592	32,709	34,312
Recognized Interest Income	$ 324	$ 304	$ 974	$ 1,028

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Note 4 - Troubled Debt Restructurings (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Commercial Portfolio Segment [Member]
Number of Contracts	7	6
Pre-Modification Carrying Value	$ 2,719	$ 3,138
Financing Receivable, Modifications, Recorded Investment	1,519	2,802
Period-End Individual Impairment Allowance	$ 169	$ 194
Commercial Real Estate Portfolio Segment [Member]
Number of Contracts	10	10
Pre-Modification Carrying Value	$ 11,257	$ 12,927
Financing Receivable, Modifications, Recorded Investment	10,663	12,684
Period-End Individual Impairment Allowance	$ 216
Residential Portfolio Segment [Member]
Number of Contracts	1	1
Pre-Modification Carrying Value	$ 241	$ 242
Financing Receivable, Modifications, Recorded Investment	220	226
Period-End Individual Impairment Allowance
Number of Contracts	18	17
Pre-Modification Carrying Value	$ 14,217	$ 16,307
Financing Receivable, Modifications, Recorded Investment	12,402	15,712
Period-End Individual Impairment Allowance	$ 385	$ 194

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Note 5 - Concentration of Credit Risk (Details Textual) $ in Thousands	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Aggregate Loans [Member] | Customer Concentration Risk [Member]
Concentration Risk, Borrowing Relationships	32
Concentration Risk, Aggregate Loans Amount	$ 5,000
Commercial Real Estate Loans [Member]
Loan To Value Ratio Requirement	75.00%
Residential Real Estate Loans [Member]
Loan To Value Ratio Requirement	80.00%
Unsecured Loan Limit, Percentage of Shareholders' Equity, California Financial Code	15.00%
Secured and Unsecured Loan Limit Percentage, California Financial Code	25.00%
Loan Commitments and Standby Letters of Credit Related to Real Estate Loans	$ 58,148	$ 61,190
Concentration Risk, Issuer Relationships	51
Concentration Risk, Aggregate Securities Amount	$ 5,000

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Note 6 - Other Assets (Details Textual) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Contingent Commitment, Year 1 [Member]
Qualified Affordable Housing Project Investments, Commitment		$ 453
Contingent Commitment, Year 2 [Member]
Qualified Affordable Housing Project Investments, Commitment		763
Contingent Commitment, Year 3 and Beyond [Member]
Qualified Affordable Housing Project Investments, Commitment		1,083
FRB Membership, Stock Subscription, Percent of Paid-Up Capital Stock and Surplus Requirement	6.00%
LIHTC Investments		13,188	$ 15,259
Qualified Affordable Housing Project Investments, Commitment		$ 2,299	$ 2,299

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Note 6 - Summary of Other Assets (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Cost method equity investments:
Federal Reserve Bank stock	[1]	$ 14,069	$ 14,069
Other investments		201	201
Total cost method equity investments		14,270	14,270
Life insurance cash surrender value		50,883	48,972
Net deferred tax asset		42,505	51,748
LIHTC Investments		13,188	15,259
Interest receivable		19,699	20,174
Prepaid assets		4,112	4,771
Other assets		9,804	10,660
Total other assets		$ 154,461	$ 165,854

[1] A bank applying for membership in the Federal Reserve System is required to subscribe to stock in the Federal Reserve Bank (FRB) in its district in a sum equal to six percent of the bank's paid-up capital stock and surplus. One-half of the amount of the bank's subscription shall be paid to the FRB and the remaining half will be subject to call when deemed necessary by the Board of Governors of the Federal Reserve System.

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Note 6 - Amounts Recognized in Net Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Investment loss included in pre-tax income	$ 675	$ 750	$ 2,025	$ 2,175
Tax credits recognized in provision for income taxes	$ 562	$ 663	$ 1,723	$ 1,988

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Note 7 - Goodwill and Identifiable Intangible Assets (Details Textual) - USD ($)	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Amortization Expense, Adjustment Resulting from a Change in Estimates of Useful Lives or Residual Values	$ 0		$ 0	$ 0
Goodwill and Intangible Asset Impairment		$ 0	$ 0	$ 0

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Note 7 - Carrying Values of Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Goodwill	$ 121,673	$ 121,673

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Note 7 - Gross Carrying Amount of Intangible Assets and Accumulated Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Core Deposits [Member]
Gross Carrying Amount	$ 56,808	$ 56,808
Accumulated Amortization	(49,263)	(46,782)
Mechant Draft Processing [Member]
Gross Carrying Amount	10,300	10,300
Accumulated Amortization	(10,056)	(9,895)
Gross Carrying Amount	67,108	67,108
Accumulated Amortization	$ (59,319)	$ (56,677)

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Note 7 - Estimated Future Amortization Expense for Identifiable Intangible Assets (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Core Deposits [Member]
For the Nine Months ended September 30, 2016 (actual)			$ 2,481,000
Estimate for the remainder of year ended December 31, 2016	$ 811,000		811,000
Estimate for year ended December 31, 2017	2,913,000		2,913,000
2018	1,892,000		1,892,000
2019	538,000		538,000
2020	287,000		287,000
2021	269,000		269,000
Mechant Draft Processing [Member]
For the Nine Months ended September 30, 2016 (actual)			161,000
Estimate for the remainder of year ended December 31, 2016	51,000		51,000
Estimate for year ended December 31, 2017	164,000		164,000
2018	29,000		29,000
2019
2020
2021
For the Nine Months ended September 30, 2016 (actual)	867,000	$ 952,000	2,642,000	$ 2,908,000
Estimate for the remainder of year ended December 31, 2016	862,000		862,000
Estimate for year ended December 31, 2017	3,077,000		3,077,000
2018	1,921,000		1,921,000
2019	538,000		538,000
2020	287,000		287,000
2021	$ 269,000		$ 269,000

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Note 8 - Deposits and Borrowed Funds (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 18, 2016	Dec. 31, 2015
Unsecured Line of Credit [Member]
Long-term Line of Credit						$ 0
Line of Credit Facility, Maximum Borrowing Capacity, Expired					$ 35,000,000
Demand Deposit Overdrafts	$ 2,880,000		$ 2,880,000			$ 3,038,000
Interest Expense, Time Deposits, $100,000 or More	$ 124,000	$ 164,000	$ 395,000	$ 543,000

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Note 8 - Deposits Detail (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Noninterest bearing deposits	$ 2,064,988	$ 2,026,049
Transaction	851,885	860,706
Savings	1,462,860	1,366,936
Time deposits less than $100 thousand	138,655	150,780
Time deposits $100 thousand through $250 thousand	88,666	96,971
Time deposits more than $250 thousand	37,816	39,217
Total deposits	$ 4,644,870	$ 4,540,659

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Note 8 - Short-term Borrowed Funds (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member]
Collateral Carrying Value	$ 86,034	$ 98,969
Agency Residential MBS [Member]
Collateral Carrying Value	20,742
US States and Political Subdivisions Debt Securities [Member]
Collateral Carrying Value	1,015	3,975
Corporate Debt Securities [Member]
Collateral Carrying Value	91,160	54,681
Collateral Carrying Value	198,951	157,625
Short-term borrowed funds	$ 56,358	$ 53,028

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Note 9 - Fair Value Measurements (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Inputs, Level 3 [Member]
Fair Value Inputs, Appraisal Rate	10.00%
Purchased Covered Loans [Member]
Fair Value Discount, Credit Default Risk, Purchased Loans	$ 0	$ 152,000
Purchased Non-Covered Loans [Member]
Fair Value Discount, Credit Default Risk, Purchased Loans	$ 4,922,000	6,432,000
Securities Selected for OTTI Analysis, Market Price, Threshold	95.00%
Securities Selected for OTTI Analysis, Market to Book Ratio, Threshold	95
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount			$ 437,715,000
Loans and Leases Receivable, Allowance	$ 26,359,000	$ 29,771,000

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Note 9 - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		171,846	301,882
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		171,846	301,882
US Government-sponsored Enterprises Debt Securities [Member]
Investment securities available for sale		171,846	301,882
Agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
Agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		499,689	202,544
Agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		499,689	202,544
Agency Residential MBS [Member]
Investment securities available for sale		499,689	202,544
Non-agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
Non-agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		302	370
Non-agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Non-agency Residential MBS [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		302	370
Non-agency Residential MBS [Member]
Investment securities available for sale		302	370
Non-agency Commercial MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
Non-agency Commercial MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		2,118	2,379
Non-agency Commercial MBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Non-agency Commercial MBS [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		2,118	2,379
Non-agency Commercial MBS [Member]
Investment securities available for sale		2,118	2,379
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		185,494	157,509
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		185,494	157,509
US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale		185,494	157,509
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		1,000	2,003
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		1,000	2,003
Asset-backed Securities [Member]
Investment securities available for sale		1,000	2,003
FHLMC and FNMA Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale		7	7
FHLMC and FNMA Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		4,249	4,322
FHLMC and FNMA Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
FHLMC and FNMA Stock [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		4,256	4,329
FHLMC and FNMA Stock [Member]
Investment securities available for sale	[1],[2]	4,256	4,329
Domestic Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale
Domestic Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		895,232	896,369
Domestic Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Domestic Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		895,232	896,369
Domestic Corporate Debt Securities [Member]
Investment securities available for sale		895,232	896,369
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale		611	991
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		1,860	1,840
Other Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Other Securities [Member] | Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		2,471	2,831
Other Securities [Member]
Investment securities available for sale		2,471	2,831
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investment securities available for sale		618	998
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investment securities available for sale		1,761,790	1,569,218
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investment securities available for sale
Fair Value, Measurements, Recurring [Member]
Investment securities available for sale		1,762,408	1,570,216
Investment securities available for sale		$ 1,762,408	$ 1,570,216

[1] Federal Home Loan Mortgage Corporation

[2] Federal National Mortgage Association

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Note 9 - Assets Measured at Fair Value on a Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value	3,032	9,264
Other Real Estate Owned [Member]
Fair Value	3,032	9,264
Total Losses	(705)	(320)
Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value
Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value	9,326	15,633
Impaired Loans [Member]
Fair Value	9,326	15,633
Total Losses		(449)
Fair Value, Inputs, Level 1 [Member]
Fair Value
Fair Value, Inputs, Level 2 [Member]
Fair Value
Fair Value, Inputs, Level 3 [Member]
Fair Value	12,358	24,897
Fair Value	12,358	24,897
Total Losses	$ (705)	$ (769)

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Note 9 - Fair Value Estimates for Financial Instruments, Excluding Financial Instruments Recorded at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Reported Value Measurement [Member]
Cash and due from banks	$ 471,367	$ 433,044
Investment securities held to maturity	1,411,019	1,316,075
Loans	1,337,970	1,503,625
Deposits	4,644,870	4,540,659
Short-term borrowed funds	56,358	53,028
Estimate of Fair Value Measurement [Member]
Cash and due from banks	471,367	433,044
Investment securities held to maturity	1,440,119	1,325,699
Loans	1,358,225	1,517,394
Deposits	4,643,754	4,539,455
Short-term borrowed funds	56,358	53,028
Fair Value, Inputs, Level 1 [Member]
Cash and due from banks	471,367	433,044
Investment securities held to maturity
Loans
Deposits
Short-term borrowed funds
Fair Value, Inputs, Level 2 [Member]
Cash and due from banks
Investment securities held to maturity	1,440,119	1,325,699
Loans
Deposits	4,379,733	4,253,691
Short-term borrowed funds	56,358	53,028
Fair Value, Inputs, Level 3 [Member]
Cash and due from banks
Investment securities held to maturity
Loans	1,358,225	1,517,394
Deposits	264,021	285,764
Short-term borrowed funds
Investment securities held to maturity	$ 1,440,119	$ 1,325,699

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Note 10 - Commitments and Contingent Liabilities (Details Textual) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Other Liabilities [Member]
Reserve for Unfunded Commitments	$ 2,593,000	$ 2,593,000
Financial Standby Letter of Credit [Member]
Letters of Credit Outstanding, Amount	21,131,000	26,149,000
Commercial Standby Letters of Credit [Member]
Letters of Credit Outstanding, Amount	0	40,000
Unfunded Loan Commitments	$ 312,592,000	$ 299,884,000

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Note 11 - Earnings Per Common Share (Details Textual) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	771	1,043	948	1,396

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Note 11 - Earnings Per Common Share and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net income applicable to common equity (numerator)	$ 15,628,000	$ 14,857,000	$ 44,400,000	$ 44,175,000
Average Common Shares Outstanding (in shares)	25,641	25,530	25,558	25,565
Basic earnings (in dollars per share)	$ 0.61	$ 0.58	$ 1.74	$ 1.73
Add common stock equivalents for options (in shares)	46	35	37	20
Weighted average number of common shares outstanding - diluted (denominator) (in shares)	25,687	25,565	25,595	25,585
Diluted earnings (in dollars per share)	$ 0.61	$ 0.58	$ 1.73	$ 1.73