FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Fair Value Measurements of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of December 31, 2012 and 2011:

	Fair Value Measurements on a Recurring Basis As of December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
U.S. government sponsored agencies	$	6,870	$	-	$	6,870	$	-
State, county and municipal securities		114,390		4,854		109,536		-
Corporate debt securities		10,328		-		8,328		2,000
Mortgage backed securities		215,321		23,893		191,428		-
Mortgage loans held for sale		48,786		-		48,786		-
Total recurring assets at fair value	$	395,695	$	28,747	$	364,948	$	2,000
Derivative financial instruments	$	2,978	$	-	$	2,978	$	-
Total recurring liabilities at fair value	$	2,978	$	-	$	2,978	$	-

	Fair Value Measurements on a Recurring Basis As of December 31, 2011
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
U.S. government sponsored agencies	$	14,937	$	-	$	14,937	$	-
State, county and municipal securities		79,133		2,966		76,167		-
Corporate debt securities		11,401		-		9,401		2,000
Mortgage backed securities		234,496		3,302		231,194		-
Total recurring assets at fair value	$	339,967	$	6,268	$	331,699	$	2,000
Derivative financial instruments	$	2,049	$	-	$	2,049	$	-
Total recurring liabilities at fair value	$	2,049	$	-	$	2,049	$	-

Summary of Fair Value Measurements of Assets Measured at Fair Value on Non-Recurring Basis

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of December 31, 2012 and 2011:

	Fair Value Measurements on a Nonrecurring Basis As of December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans carried at fair value	$	52,514	$	-	$	-	$	52,514
Other real estate owned		39,850		-		-		39,850
Covered loans		507,712		-		-		507,712
Covered other real estate owned		88,273		-		-		88,273
Total nonrecurring assets at fair value	$	688,349	$	-	$	-	$	688,349

	Fair Value Measurements on a Nonrecurring Basis As of December 31, 2011
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans carried at fair value	$	70,296	$	-	$	-	$	70,296
Other real estate owned		50,301		-		-		50,301
Covered loans		571,489		-		-		571,489
Covered other real estate owned		78,617		-		-		78,617
Total nonrecurring assets at fair value	$	770,703	$	-	$	-	$	770,703

Schedule of Company's Reconciliation of Level 3 assets

The following is the Company’s reconciliation of Level 3 assets as of December 31, 2012 and 2011. Gains or losses on impaired loans are recorded in the provision for loan losses:

	Investment Securities Available for Sale			Impaired Loans Carried at Fair Value			Other Real Estate Owned			Covered Loans			Covered Other Real Estate Owned
	(Dollars in Thousands)
Beginning balance, January 1, 2011	$	4,745		$	84,573		$	57,915		$	554,991		$	54,931
Total losses included in operations		-			-			(14,570	)		-			(28	)
Purchases, sales, issuances, and settlements, net		-			-			(26,323	)		48,734			(8,522	)
Transfers in or out of Level 3		(2,745	)		(14,277	)		33,279			(32,236	)		32,236
Ending balance, December 31, 2011	$	2,000		$	70,296		$	50,301		$	571,489		$	78,617
Total gains (losses) included in operations		-			-			(11,843	)		-			2,892
Purchases, sales, issuances, and settlements, net		-			-			(20,428	)		(20,479	)		(36,534	)
Transfers in or out of Level 3		-			(17,782	)		21,820			(43,298	)		43,298
Ending balance, December 31, 2012	$	2,000		$	52,514		$	39,850		$	507,712		$	88,273

Summary of Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements, were as follows:

			Fair Value Measurements at December 31, 2012 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	1,934,754	$	-	$	1,966,592	$	-	$	1,966,592
Financial liabilities:
Deposits		2,624,663		-		2,624,883		-		2,624,883
			Fair Value Measurements at December 31, 2011 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	1,868,419	$	-	$	1,877,320	$	-	$	1,877,320
Financial liabilities:
Deposits		2,591,566		-		2,593,113		-		2,593,113
Other borrowings		20,000		-		20,936		-		20,936