10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

LAKELAND FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana	0-11487	35-1559596
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation or Organization)		Identification No.)

202 East Center Street, P.O. Box 1387, Warsaw, Indiana 46581-1387

(Address of Principal Executive Offices)(Zip Code)

(574) 267-6144

(Registrant’s Telephone Number, Including Area Code)

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 X     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 X    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 X      Non-accelerated filer __   (do not check if a smaller reporting company)   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 X

Number of shares of common stock outstanding at July 31, 2013:  16,449,756

LAKELAND FINANCIAL CORPORATION

Form 10-Q Quarterly Report

Table of Contents

PART I.

		Page Number
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of
	Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 4.	Controls and Procedures	68

PART II.

		Page Number
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	69
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	70
Form 10-Q	Signature Page	71

PART I

LAKELAND FINANCIAL CORPORATION

ITEM 1 – FINANCIAL STATEMENTS

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

As of June 30, 2013 and December 31, 2012

(in thousands except for share data)

(Page 1 of 2)

	June 30,	December 31,
	2013	2012
	(Unaudited)
ASSETS
Cash and due from banks	$             55,814	$           156,666
Short-term investments	7,741	75,571
Total cash and cash equivalents	63,555	232,237
Securities available for sale (carried at fair value)	472,976	467,021
Real estate mortgage loans held for sale	5,486	9,452
Loans, net of allowance for loan losses of $50,635 and $51,445	2,284,065	2,206,075
Land, premises and equipment, net	35,346	34,840
Bank owned life insurance	62,008	61,112
Accrued income receivable	9,214	8,491
Goodwill	4,970	4,970
Other intangible assets	24	47
Other assets	37,818	39,899
Total assets	$        2,975,462	$        3,064,144

(continued)

1

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

As of June 30, 2013 and December 31, 2012

(in thousands except for share data)

(Page 2 of 2)

	June 30,	December 31,
	2013	2012
	(Unaudited)
LIABILITIES AND EQUITY
LIABILITIES
Noninterest bearing deposits	$           397,610	$           407,926
Interest bearing deposits	2,085,882	2,173,830
Total deposits	2,483,492	2,581,756
Short-term borrowings
Federal funds purchased	37,000	0
Securities sold under agreements to repurchase	102,655	121,883
Total short-term borrowings	139,655	121,883
Accrued expenses payable	11,685	15,321
Other liabilities	2,057	1,390
Long-term borrowings	37	15,038
Subordinated debentures	30,928	30,928
Total liabilities	2,667,854	2,766,316
EQUITY
Common stock:  90,000,000 shares authorized, no par value
16,431,881 shares issued and 16,340,697 outstanding as of June 30, 2013
16,377,247 shares issued and 16,290,136 outstanding as of December 31, 2012	90,921	90,039
Retained earnings	219,002	203,654
Accumulated other comprehensive income (loss)	(625)	5,689
Treasury stock, at cost (2013 - 91,184 shares, 2012 - 87,111 shares)	(1,779)	(1,643)
Total stockholders' equity	307,519	297,739
Noncontrolling interest	89	89
Total equity	307,608	297,828
Total liabilities and equity	$        2,975,462	$        3,064,144

The accompanying notes are an integral part of these consolidated financial statements.

2

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months and Six Months Ended June 30, 2013 and 2012

(in thousands except for share and per share data)

(Unaudited)

(Page 1 of 2)

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
NET INTEREST INCOME
Interest and fees on loans
Taxable	$        24,388	$        25,795	$        48,874	$        51,986
Tax exempt	102	112	204	224
Interest and dividends on securities
Taxable	1,152	2,627	2,097	5,391
Tax exempt	770	699	1,505	1,396
Interest on short-term investments	12	16	36	27
Total interest income	26,424	29,249	52,716	59,024
Interest on deposits	4,139	6,602	8,776	13,363
Interest on borrowings
Short-term	112	104	203	217
Long-term	261	395	568	799
Total interest expense	4,512	7,101	9,547	14,379
NET INTEREST INCOME	21,912	22,148	43,169	44,645
Provision for loan losses	0	500	0	1,299
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES	21,912	21,648	43,169	43,346
NONINTEREST INCOME
Wealth advisory fees	971	897	1,915	1,811
Investment brokerage fees	997	940	1,946	1,740
Service charges on deposit accounts	2,252	2,011	4,223	3,892
Loan, insurance and service fees	1,812	1,452	3,268	2,641
Merchant card fee income	293	289	569	605
Other income	706	280	2,081	945
Mortgage banking income	538	392	1,047	984
Net securities gains	0	0	1	3
Other than temporary impairment loss on available-for-sale securities:
Total impairment losses recognized on securities	0	(475)	0	(985)
Loss recognized in other comprehensive income	0	26	0	26
Net impairment loss recognized in earnings	0	(449)	0	(959)
Total noninterest income	7,569	5,812	15,050	11,662

(continued)

3

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months and Six Months Ended June 30, 2013 and 2012

(in thousands except for share and per share data)

(Unaudited)

(Page 2 of 2)

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
NONINTEREST EXPENSE
Salaries and employee benefits	8,891	8,363	18,056	17,438
Net occupancy expense	873	831	1,719	1,716
Equipment costs	654	596	1,263	1,213
Data processing fees and supplies	1,379	1,060	2,672	1,901
Other expense	3,294	3,399	6,274	6,661
Total noninterest expense	15,091	14,249	29,984	28,929
INCOME BEFORE INCOME TAX EXPENSE	14,390	13,211	28,235	26,079
Income tax expense	5,154	4,392	9,753	8,634
NET INCOME	$          9,236	$          8,819	$        18,482	$        17,445
BASIC WEIGHTED AVERAGE COMMON SHARES	16,425,382	16,324,928	16,411,695	16,298,981
BASIC EARNINGS PER COMMON SHARE	$            0.56	$            0.54	$            1.13	$            1.07
DILUTED WEIGHTED AVERAGE COMMON SHARES	16,546,547	16,453,561	16,524,250	16,450,832
DILUTED EARNINGS PER COMMON SHARE	$            0.56	$            0.54	$            1.12	$            1.06

The accompanying notes are an integral part of these consolidated financial statements.

4

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three Months and Six Months Ended June 30, 2013 and 2012

(in thousands)

(Unaudited)

			Three months ended June 30,		Six months ended June 30,
			2013	2012	2013	2012
Net income			$            9,236	$            8,819	$          18,482	$          17,445
Other comprehensive income (loss)
	Change in securities available for sale:
		Unrealized holding gain (loss) on securities available for sale
		arising during the period	(9,358)	(181)	(10,399)	1,069
		Reclassification adjustment for (gains)  included in net income	0	0	(1)	(3)
		Reclassification adjustment for other than temporary impairment	0	449	0	959
		Net securities gain (loss) activity during the period	(9,358)	268	(10,400)	2,025
		Tax effect	3,705	(58)	4,104	(804)
		Net of tax amount	(5,653)	210	(6,296)	1,221
	Defined benefit pension plans:
		Net gain (loss) on defined benefit pension plans	0	0	(151)	110
		Amortization of net actuarial loss	66	66	121	110
		Net gain (loss) activity during the period	66	66	(30)	220
		Tax effect	(26)	(26)	12	(89)
		Net of tax amount	40	40	(18)	131
		Total other comprehensive income (loss), net of tax	(5,613)	250	(6,314)	1,352
Comprehensive income			$            3,623	$            9,069	$          12,168	$          18,797

The accompanying notes are an integral part of these consolidated financial statements.

5

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2013 and 2012

(in thousands except for share and per share data)

(Unaudited)

			Accumulated
			Other		Total
	Common	Retained	Comprehensive	Treasury	Stockholders'
	Stock	Earnings	Income (Loss)	Stock	Equity
Balance at January 1, 2012	$           87,380	$         181,903	$                    5,139	$           (1,222)	$          273,200
Net income		17,445			17,445
Other comprehensive income (loss), net of tax			1,352		1,352
Common stock cash dividends declared, $0.325 per share		(5,302)			(5,302)
Treasury shares purchased under deferred directors' plan
(7,204 shares)	186			(186)	0
Stock activity under stock compensation plans (114,928 shares)	185				185
Stock compensation expense	689				689
Balance at June 30, 2012	$           88,440	$         194,046	$                    6,491	$           (1,408)	$          287,569
Balance at January 1, 2013	$           90,039	$         203,654	$                    5,689	$           (1,643)	$          297,739
Net income		18,482			18,482
Other comprehensive income (loss), net of tax			(6,314)		(6,314)
Common stock cash dividends declared, $0.19 per share		(3,134)			(3,134)
Treasury shares purchased under deferred directors' plan
(7,091 shares)	190			(190)	0
Treasury stock sold and distributed under deferred directors' plan
(3,018 shares)	(54)			54	0
Stock activity under stock compensation plans, net of taxes (47,234 shares)	18				18
Stock compensation expense	728				728
Balance at June 30, 2013	$           90,921	$         219,002	$                      (625)	$           (1,779)	$          307,519

The accompanying notes are an integral part of these consolidated financial statements

6

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2013 and 2012

(in thousands)

(Unaudited)

(Page 1 of 2)

	2013	2012
Cash flows from operating activities:
Net income	$            18,482	$            17,445
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation	1,384	1,338
Provision for loan losses	0	1,299
Loss on sale and write down of other real estate owned	95	103
Amortization of intangible assets	23	26
Amortization of loan servicing rights	324	347
Net change in loan servicing rights valuation allowance	(39)	(22)
Loans originated for sale	(51,639)	(64,807)
Net gain on sales of loans	(1,676)	(1,140)
Proceeds from sale of loans	56,748	63,365
Net gain on sales of premises and equipment	(1)	0
Net (gain) loss  on sales and calls of securities available for sale	(1)	(3)
Impairment on available for sale securities	0	959
Net securities amortization	5,139	3,143
Stock compensation expense	728	689
Earnings on life insurance	(797)	(459)
Tax benefit of stock option exercises	(39)	(432)
Net change:
Accrued income receivable	(723)	166
Accrued expenses payable	(3,654)	1,383
Other assets	5,990	998
Other liabilities	857	(178)
Total adjustments	12,719	6,775
Net cash from operating activities	31,201	24,220
Cash flows from investing activities:
Proceeds from maturities, calls and principal paydowns of
securities available for sale	69,675	48,098
Purchases of securities available for sale	(91,167)	(61,221)
Purchase of life insurance	(99)	(14)
Net (increase) decrease in total loans	(77,990)	16,283
Proceeds from sales of land, premises and equipment	1	0
Purchases of land, premises and equipment	(1,890)	(1,564)
Proceeds from sales of other real estate	386	373
Net cash from investing activities	(101,084)	1,955

(Continued)

7

LAKELAND FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2013 and 2012

(in thousands)

(Unaudited)

(Page 2 of 2)

	2013	2012
Cash flows from financing activities:
Net increase (decrease) in total deposits	(98,264)	112,789
Net increase (decrease) in short-term borrowings	17,772	(43,294)
Payments on long-term borrowings	(15,001)	(2)
Common dividends paid	(3,121)	(5,289)
Preferred dividends paid	(13)	(13)
Proceeds from stock option exercise	18	185
Purchase of treasury stock	(190)	(186)
Net cash from financing activities	(98,799)	64,190
Net change in cash and cash equivalents	(168,682)	90,365
Cash and cash equivalents at beginning of the period	232,237	104,584
Cash and cash equivalents at end of the period	$            63,555	$          194,949
Cash paid during the period for:
Interest	$              9,900	$            12,560
Income taxes	8,330	7,050
Supplemental non-cash disclosures:
Loans transferred to other real estate	0	144

The accompanying notes are an integral part of these consolidated financial statements.

8

LAKELAND FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2013

(Table amounts in thousands except for share and per share data)

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the “Company”) and its wholly owned subsidiaries, Lake City Bank (the “Bank”), and LCB Risk Management, a captive insurance company. All significant inter-company balances and transactions have been eliminated in consolidation. Also included is the Bank’s wholly owned subsidiary, LCB Investments II, Inc. (“LCB Investments”). LCB Investments also owns LCB Funding, Inc. (“LCB Funding”), a real estate investment trust.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ending June 30, 2013 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2013. The 2012 Lakeland Financial Corporation Annual Report on Form 10-K should be read in conjunction with these statements.

NOTE 2. EARNINGS PER SHARE

Basic earnings per common share is net income available to common shareholders divided by the weighted average number of common shares outstanding during the period.  Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Weighted average shares outstanding for basic earnings per common share	16,425,382	16,324,928	16,411,695	16,298,981
Dilutive effect of stock options, awards and warrants	121,165	128,633	112,555	151,851
Weighted average shares outstanding for diluted earnings per common share	16,546,547	16,453,561	16,524,250	16,450,832
Basic earnings per common share	$              0.56	$              0.54	$              1.13	$              1.07
Diluted earnings per common share	$              0.56	$              0.54	$              1.12	$              1.06

9

NOTE 3. LOANS

	June 30,			December 31,
	2013			2012
Commercial and industrial loans:
Working capital lines of credit loans	$   462,137	19.8	%	$   439,638	19.5	%
Non-working capital loans	425,958	18.2		407,184	18.0
Total commercial and industrial loans	888,095	38.0		846,822	37.5
Commercial real estate and multi-family residential loans:
Construction and land development loans	108,695	4.7		82,494	3.7
Owner occupied loans	365,071	15.6		358,617	15.9
Nonowner occupied loans	373,696	16.0		314,889	13.9
Multifamily loans	37,422	1.6		45,011	2.0
Total commercial real estate and multi-family residential loans	884,884	37.9		801,011	35.5
Agri-business and agricultural loans:
Loans secured by farmland	100,571	4.3		109,147	4.8
Loans for agricultural production	97,729	4.2		115,572	5.1
Total agri-business and agricultural loans	198,300	8.5		224,719	10.0
Other commercial loans	46,501	2.0		56,807	2.5
Total commercial loans	2,017,780	86.4		1,929,359	85.5
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	116,247	5.0		109,823	4.9
Open end and junior lien loans	152,571	6.5		161,366	7.1
Residential construction and land development loans	5,263	0.2		11,541	0.5
Total consumer 1-4 family mortgage loans	274,081	11.7		282,730	12.5
Other consumer loans	43,470	1.9		45,755	2.0
Total consumer loans	317,551	13.6		328,485	14.5
Subtotal	2,335,331	100.0	%	2,257,844	100.0	%
Less:  Allowance for loan losses	(50,635)			(51,445)
Net deferred loan fees	(631)			(324)
Loans, net	$2,284,065			$2,206,075

10

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2013, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2013:

		Commercial
		Real Estate			Consumer
	Commercial	and Multifamily	Agri-business	Other	1-4 Family	Other
	and Industrial	Residential	and Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
Three Months Ended June 30, 2013
Balance April 1,	$               22,113	$               20,420	$                 1,263	$                    223	$                 2,866	$                    558	$                 3,375	$               50,818
Provision for loan losses	(348)	(336)	452	41	30	69	92	0
Loans charged-off	(10)	0	(200)	0	(81)	(78)	0	(369)
Recoveries	124	14	2	0	8	38	0	186
Net loans charged-off	114	14	(198)	0	(73)	(40)	0	(183)
Balance June 30,	$               21,879	$               20,098	$                 1,517	$                    264	$                 2,823	$                    587	$                 3,467	$               50,635
Six Months Ended June 30, 2013
Balance January 1,	$               22,342	$               20,812	$                 1,403	$                    240	$                 2,682	$                    609	$                 3,357	$               51,445
Provision for loan losses	(707)	(83)	310	24	300	46	110	0
Loans charged-off	(143)	(906)	(200)	0	(189)	(137)	0	(1,575)
Recoveries	387	275	4	0	30	69	0	765
Net loans charged-off	244	(631)	(196)	0	(159)	(68)	0	(810)
Balance June 30,	$               21,879	$               20,098	$                 1,517	$                    264	$                 2,823	$                    587	$                 3,467	$               50,635
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$                 4,469	$                 6,103	$                      40	$                        0	$                    445	$                      28	$                        0	$               11,085
Collectively evaluated for impairment	17,410	13,995	1,477	264	2,378	559	3,467	39,550
Total ending allowance balance	$               21,879	$               20,098	$                 1,517	$                    264	$                 2,823	$                    587	$                 3,467	$               50,635
Loans:
Loans individually evaluated for impairment	$               16,882	$               26,540	$                    757	$                        0	$                 2,654	$                      80	$                        0	$               46,913
Loans collectively evaluated for impairment	871,458	857,114	197,643	46,499	271,730	43,343	0	2,287,787
Total ending loans balance	$             888,340	$             883,654	$             198,400	$               46,499	$             274,384	$               43,423	$                        0	$          2,334,700

The recorded investment in loans does not include accrued interest.

11

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2012:

		Commercial
		Real Estate			Consumer
	Commercial	and Multifamily	Agri-business	Other	1-4 Family	Other
	and Industrial	Residential	and Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
Three Months Ended June 30, 2012
Balance April 1,	$               22,134	$               23,236	$                    538	$                    186	$                 2,527	$                    523	$                 3,613	$               52,757
Provision for loan losses	(1,048)	829	881	(12)	(110)	65	(105)	500
Loans charged-off	(1,676)	0	0	0	(78)	(97)	0	(1,851)
Recoveries	286	18	0	2	73	32	0	411
Net loans charged-off	(1,390)	18	0	2	(5)	(65)	0	(1,440)
Balance June 30,	$               19,696	$               24,083	$                 1,419	$                    176	$                 2,412	$                    523	$                 3,508	$               51,817
Six Months Ended June 30, 2012
Balance January 1,	$               22,830	$               23,489	$                    695	$                      65	$                 2,322	$                    645	$                 3,354	$               53,400
Provision for loan losses	(1,152)	1,394	724	107	61	11	154	1,299
Loans charged-off	(2,454)	(847)	0	0	(92)	(191)	0	(3,584)
Recoveries	472	47	0	4	121	58	0	702
Net loans charged-off	(1,982)	(800)	0	4	29	(133)	0	(2,882)
Balance June 30,	$               19,696	$               24,083	$                 1,419	$                    176	$                 2,412	$                    523	$                 3,508	$               51,817

The recorded investment in loans does not include accrued interest.

12

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2012:

		Commercial
		Real Estate			Consumer
	Commercial	and Multifamily	Agri-business	Other	1-4 Family	Other
	and Industrial	Residential	and Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$                 5,542	$                 8,559	$                      63	$                        0	$                    607	$                      34	$                        0	$               14,805
Collectively evaluated for impairment	16,800	12,253	1,340	240	2,075	575	3,357	36,640
Total ending allowance balance	$               22,342	$               20,812	$                 1,403	$                    240	$                 2,682	$                    609	$                 3,357	$               51,445
Loans:
Loans individually evaluated for impairment	$               18,281	$               36,919	$                    797	$                        0	$                 2,853	$                      92	$                        0	$               58,942
Loans collectively evaluated for impairment	828,728	763,279	224,008	56,810	280,141	45,612	0	2,198,578
Total ending loans balance	$             847,009	$             800,198	$             224,805	$               56,810	$             282,994	$               45,704	$                        0	$          2,257,520

The recorded investment in loans does not include accrued interest.

The allowance for loan losses to total loans at June 30, 2013 and 2012 was 2.17% and 2.34%, respectively.  The allowance for loan losses to total loans at December 31, 2012 was 2.28%.

13

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2013:

				Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
						Cash Basis			Cash Basis
	Unpaid		Allowance for	Average	Interest	Interest	Average	Interest	Interest
	Principal	Recorded	Loan Losses	Recorded	Income	Income	Recorded	Income	Income
	Balance	Investment	Allocated	Investment	Recognized	Recognized	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                      65	$                      65	$                        0	$                      65	$                        0	$                        0	$                      65	$                        0	$                        0
Non-working capital loans	0	0	0	0	0	0	17	0	0
Commercial real estate and multi-family residential loans:
Owner occupied loans	716	536	0	543	0	0	555	0	0
Agri-business and agricultural loans:
Loans secured by farmland	612	434	0	440	0	0	481	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	49	49	0	49	0	0	54	0	0
Open end and junior lien loans	0	0	0	0	0	0	21	0	0
Other consumer loans	1	1	0	1	0	0	1	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	5,492	2,883	1,123	2,898	14	14	3,034	27	27
Non-working capital loans	15,789	13,934	3,346	13,815	136	139	14,114	271	276
Commercial real estate and multi-family residential loans:
Construction and land development loans	3,459	3,070	653	4,203	7	(5)	4,366	52	47
Owner occupied loans	3,629	3,629	715	2,768	39	45	3,534	68	76
Nonowner occupied loans	19,296	19,305	4,735	19,399	84	85	21,849	168	172
Multifamily loans	0	0	0	0	0	0	96	0	0
Agri-business and agricultural loans:
Loans secured by farmland	644	323	40	391	0	0	359	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,570	2,571	436	2,537	23	18	2,518	23	37
Open end and junior lien loans	34	34	9	58	0	0	49	0	0
Other consumer loans	79	79	28	79	1	1	80	1	1
Total	$               53,435	$               46,913	$               11,085	$               47,246	$                    304	$                    297	$               51,193	$                    610	$                    636

The recorded investment in loans does not include accrued interest.

14

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2012:

				Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
						Cash Basis			Cash Basis
	Unpaid		Allowance for	Average	Interest	Interest	Average	Interest	Interest
	Principal	Recorded	Loan Losses	Recorded	Income	Income	Recorded	Income	Income
	Balance	Investment	Allocated	Investment	Recognized	Recognized	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$                    505	$                    166	$                        0	$                    168	$                        0	$                        0	$                    170	$                        0	$                        0
Commercial real estate and multi-family residential loans:
Owner occupied loans	654	629	0	637	0	0	464	0	0
Nonowner occupied loans	391	391	0	265	0	0	133	0	0
Agri-business and agricultural loans:
Loans secured by farmland	443	265	0	266	0	0	133	0	0
Loans for ag production	203	203	0	204	0	0	102	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	580	580	0	583	0	0	440	0	0
Open end and junior lien loans	20	20	0	20	0	0	30	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	5,598	2,989	1,450	4,395	13	13	5,100	29	28
Non-working capital loans	17,954	17,265	5,271	17,264	177	178	17,494	357	360
Commercial real estate and multi-family residential loans:
Construction and land development loans	2,386	1,996	510	2,036	17	17	1,503	17	17
Owner occupied loans	5,405	4,636	1,500	4,288	6	6	4,438	18	16
Nonowner occupied loans	28,184	27,582	6,936	27,561	104	105	28,481	202	204
Multifamily loans	0	0	0	0	0	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	1,735	341	75	345	0	0	484	0	0
Loans for agricultural production	0	0	0	0	0	0	105	0	0
Other commercial loans	0	0	0	0	0	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	1,875	1,877	312	1,833	9	11	1,815	20	22
Open end and junior lien loans	310	310	169	312	0	0	333	0	0
Residential construction loans	0	0	0	0	0	0	0	0	0
Other consumer loans	6	6	5	6	0	0	7	0	0
Total	$               66,249	$               59,256	$               16,228	$               59,378	$                    326	$                    330	$               60,596	$                    643	$                    647

The recorded investment in loans does not include accrued interest.

15

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2012:

	Unpaid		Allowance for
	Principal	Recorded	Loan Losses
	Balance	Investment	Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                      61	$                      61	$                        0
Non-working capital loans	0	0	0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans	754	574	0
Nonowner occupied loans	385	385	0
Multifamily loans	410	286	0
Agri-business and agricultural loans:
Loans secured by farmland	645	466	0
Loans for ag production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	59	59	0
Open end and junior lien loans	41	41	0
Residential construction loans
Other consumer loans	1	1	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	5,833	3,224	1,516
Non-working capital loans	16,763	14,996	4,026
Commercial real estate and multi-family residential loans:
Construction and land development loans	3,352	2,960	934
Owner occupied loans	5,869	5,869	1,476
Nonowner occupied loans	26,835	26,845	6,149
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	651	331	63
Loans for agricultural production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,387	2,403	415
Open end and junior lien loans	379	350	192
Residential construction loans	0	0	0
Other consumer loans	91	91	34
Total	$               65,516	$               58,942	$               14,805

The recorded investment in loans does not include accrued interest.

16

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2013 and December 31, 2012:

	June 30, 2013		December 31, 2012
		Loans Past Due		Loans Past Due
		Over 90 Days		Over 90 Days
		Still		Still
	Nonaccrual	Accruing	Nonaccrual	Accruing
Commercial and industrial loans:
Working capital lines of credit loans	$                 1,812	$                         0	$                 1,899	$                        0
Non-working capital loans	3,786	104	4,812	50
Commercial real estate and multi-family residential loans:
Construction and land development loans	383	0	398	0
Owner occupied loans	2,424	0	2,461	0
Nonowner occupied loans	11,718	0	19,200	0
Multifamily loans	0	0	286	0
Agri-business and agricultural loans:
Loans secured by farmland	757	0	797	0
Loans for agricultural production	0	0	0	0
Other commercial loans	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	560	0	504	0
Open end and junior lien loans	34	0	391	0
Residential construction loans	0	0	0	0
Other consumer loans	65	0	77	0
Total	$               21,539	$                     104	$               30,825	$                      50

The recorded investment in loans does not include accrued interest.

17

The following table presents the aging of the recorded investment in past due loans as of June 30, 2013 by class of loans:

	30-89	Greater than
	Days	90 Days	Total	Loans Not
	Past Due	Past Due	Past Due	Past Due	Total
Commercial and industrial loans:
Working capital lines of credit loans	$                   642	$                  1,812	$                2,454	$           459,931	$          462,385
Non-working capital loans	343	3,890	4,233	421,722	425,955
Commercial real estate and multi-family residential loans:
Construction and land development loans	0	383	383	107,907	108,290
Owner occupied loans	126	2,424	2,550	362,287	364,837
Nonowner occupied loans	1,406	11,718	13,124	360,038	373,162
Multifamily loans	0	0	0	37,365	37,365
Agri-business and agricultural loans:
Loans secured by farmland	0	757	757	99,818	100,575
Loans for agricultural production	18	0	18	97,807	97,825
Other commercial loans	0	0	0	46,499	46,499
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,399	560	2,959	113,031	115,990
Open end and junior lien loans	248	34	282	152,859	153,141
Residential construction loans	8	0	8	5,245	5,253
Other consumer loans	165	65	230	43,193	43,423
Total	$                5,355	$                21,643	$              26,998	$        2,307,702	$       2,334,700

The recorded investment in loans does not include accrued interest.

18

The following table presents the aging of the recorded investment in past due loans as of December 31, 2012 by class of loans:

	30-89	Greater than
	Days	90 Days	Total	Loans Not
	Past Due	Past Due	Past Due	Past Due	Total
Commercial and industrial loans:
Working capital lines of credit loans	$                   233	$                  1,899	$                2,132	$           437,705	$          439,837
Non-working capital loans	48	4,862	4,910	402,262	407,172
Commercial real estate and multi-family residential loans:
Construction and land development loans	998	398	1,396	80,954	82,350
Owner occupied loans	1,023	2,461	3,484	354,921	358,405
Nonowner occupied loans	38	19,200	19,238	295,243	314,481
Multifamily loans	0	286	286	44,676	44,962
Agri-business and agricultural loans:
Loans secured by farmland	0	797	797	108,359	109,156
Loans for agricultural production	0	0	0	115,649	115,649
Other commercial loans	0	0	0	56,810	56,810
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	1,475	504	1,979	107,583	109,562
Open end and junior lien loans	361	391	752	161,172	161,924
Residential construction loans	0	0	0	11,508	11,508
Other consumer loans	81	77	158	45,546	45,704
Total	$                4,257	$                30,875	$              35,132	$        2,222,388	$       2,257,520

The recorded investment in loans does not include accrued interest.

19

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $10.2 million and $12.5 million of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2013 and December 31, 2012. The Company is not committed to lending additional funds to customers whose loans have been modified in a troubled debt restructuring.

	June 30,	December 31,
	2013	2012
Accruing troubled debt restructured loans	$             23,017	$              22,332
Nonaccrual troubled debt restructured loans	19,398	28,506
Total troubled debt restructured loans	$             42,415	$              50,838

During the quarter ending June 30, 2013, loans totaling $328,000 were modified as troubled debt restructured loans. Concessions granted during the modifications included reduction in the interest rates to rates that would not be readily available in the marketplace for borrowers with a similar risk profile and/or capitalizing past due interest and other expenses into the principal balance of the loan. The troubled debt restructured loans during the quarter were all granted to consumer mortgage borrowers.

During the quarter ending March 31, 2013, loans totaling $2.2 million were modified as troubled debt restructurings. The modified terms of the loans included reductions in the interest rates to one that would not be readily available in the marketplace for borrowers with a similar risk profile and modifications of the repayment terms. These restructured loans were provided to related borrowers who are engaged in land development.

20

The following table presents loans by class modified as troubled debt restructurings that occurred during the three-month and six-month periods ending June 30, 2013:

		Modifications
		Three Months Ended June 30, 2013
		All Modifications
			Pre-Modification	Post-Modification
			Outstanding	Outstanding
		Number of	Recorded	Recorded
		Loans	Investment	Investment
Troubled Debt Restructurings
	Consumer 1-4 family loans:
	Closed end first mortgage loans	4	$                    317	$                       328
	Total	4	$                    317	$                       328

		Interest Rate Reductions			Principal and Interest Forgiveness					Modified Repayment Terms
			Interest at	Interest at				Interest at	Interest at		Extension
		Number of	Pre-Modification	Post-Modification	Number of	Principal at	Principal at	Pre-Modification	Post-Modification	Number of	Period or
		Loans	Rate	Rate	Loans	Pre-Modification	Post-Modification	Rate	Rate	Loans	Range
											(in months)
Troubled Debt Restructurings
	Consumer 1-4 family loans:
	Closed end first mortgage loans	2	$                     142	$                        158	2	$                        156	$                        161	$                        164	$                        149	0	0
	Total	2	$                     142	$                        158	2	$                        156	$                        161	$                        164	$                        149	0	0

21

		Modifications
		Six Months Ended June 30, 2013
		All Modifications
			Pre-Modification	Post-Modification
			Outstanding	Outstanding
		Number of	Recorded	Recorded
		Loans	Investment	Investment
Troubled Debt Restructurings
	Commercial real estate and multi-family residential loans:
	Construction and land development loans	6	$                 2,198	$                    2,198
	Consumer 1-4 family loans:
	Closed end first mortgage loans	4	317	328
	Total	10	$                 2,515	$                    2,526

		Interest Rate Reductions			Principal and Interest Forgiveness					Modified Repayment Terms
			Interest at	Interest at				Interest at	Interest at		Extension
		Number of	Pre-Modification	Post-Modification	Number of	Principal at	Principal at	Pre-Modification	Post-Modification	Number of	Period or
		Loans	Rate	Rate	Loans	Pre-Modification	Post-Modification	Rate	Rate	Loans	Range
											(in months)
Troubled Debt Restructurings
	Commercial real estate and
	multi-family residential loans:
	Construction and land development loans	6	$                       85	$                          63	0	$                            0	$                            0	$                            0	$                            0	0	0
	Consumer 1-4 family loans:
	Closed end first mortgage loans	2	142	158	2	156	161	164	149	0	0
	Total	8	$                     227	$                        221	2	$                        156	$                        161	$                        164	$                        149	0	0

For the three-month period ending June 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $86,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $42,000.

22

For the six-month period ending June 30, 2012, the commercial real estate and multi-family residential loan troubled debt restructurings described above decreased the allowance for loan losses by $373,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $65,000.

The troubled debt restructurings described above had charge-offs of $0 and $365,000, respectively, during the three-month and six-month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six-month and three-month periods ending June 30, 2012:

		Modifications
		Six Months Ended June 30, 2012
		All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification	Post-Modification
			Outstanding	Outstanding
		Number of	Recorded	Recorded
		Loans	Investment	Investment
Troubled Debt Restructurings
	Commercial and industrial loans:
	Non-working capital loans	1	$                    942	$                    1,060
	Commercial real estate and multi-family residential loans:
	Construction and land development loans	5	1,638	1,638
	Owner occupied loans	1	849	849
	Nonowner occupied loans	1	385	385
	Consumer 1-4 family loans:
	Closed end first mortgage loans	1	39	39
	Total	9	$                 3,853	$                    3,971

23

		Interest Rate Reductions			Principal and Interest Forgiveness					Modified Repayment Terms
			Interest at	Interest at				Interest at	Interest at		Extension
		Number of	Pre-Modification	Post-Modification	Number of	Principal at	Principal at	Pre-Modification	Post-Modification	Number of	Period or
		Loans	Rate	Rate	Loans	Pre-Modification	Post-Modification	Rate	Rate	Loans	Range
											(in months)
Troubled Debt Restructurings
	Commercial and industrial loans:
	Non-working capital loans	0	$                         0	$                          0	0	$                           0	$                         0	$                         0	$                            0	0	0
	Commercial real estate and
	multi-family residential loans:
	Construction and land development loans	0	0	0	0	0	0	0	0	0	0
	Owner occupied loans	1	440	117	0	0	0	0	0	0	0
	Nonowner occupied loans	0	0	0	0	0	0	0	0	1	14
	Consumer 1-4 family loans:
	Closed end first mortgage loans	1	76	15	0	0	0	0	0	0	0
	Total	2	$                     516	$                        132	0	$                          0	$                            0	$                          0	$                            0	1	14

24

		Modifications
		Three Months Ended June 30, 2012
		All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification	Post-Modification
			Outstanding	Outstanding
		Number of	Recorded	Recorded
		Loans	Investment	Investment
Troubled Debt Restructurings
	Commercial and industrial loans:
	Non-working capital loans	1	$                   942	$                     1,060
	Commercial real estate and multi-family residential loans:
	Owner occupied loans	1	849	849
	Nonowner occupied loans	1	385	385
	Consumer 1-4 family loans:
	Closed end first mortgage loans	1	39	39
	Total	4	$                 2,215	$                    2,333

25

		Interest Rate Reductions			Principal and Interest Forgiveness					Modified Repayment Terms
			Interest at	Interest at				Interest at	Interest at		Extension
		Number of	Pre-Modification	Post-Modification	Number of	Principal at	Principal at	Pre-Modification	Post-Modification	Number of	Period or
		Loans	Rate	Rate	Loans	Pre-Modification	Post-Modification	Rate	Rate	Loans	Range
											(in months)
Troubled Debt Restructurings
	Commercial and industrial loans:
	Non-working capital loans	0	$                         0	$                          0	0	$                         0	$                            0	$                          0	$                            0	0	0
	Commercial real estate and
	multi-family residential loans:	0	0	0	0	0	0	0	0	0	0
	Owner occupied loans	1	440	117	0	0	0	0	0	0	0
	Nonowner occupied loans	0	0	0	0	0	0	0	0	1	14
	Consumer 1-4 family loans:
	Closed end first mortgage loans	1	76	15	0	0	0	0	0	0	0
	Total	2	$                     516	$                        132	0	$                          0	$                            0	$                          0	$                            0	1	14

For the three month period ending June 30, 2012, the commercial and industrial troubled debt restructured loans described above increased the allowance for loan losses by $690,000, the commercial real estate and multi-family residential loan troubled debt restructurings described above increased the allowance for loan losses by $290,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $6,000.  For the six-month period ending June 30, 2012, the commercial and industrial troubled debt restructured loans described above increased the allowance for loan losses by $690,000, the commercial real estate and multi-family residential troubled debt restructured loans described above increased the allowance for loan losses by $790,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $6,000.

No charge offs resulted from any troubled debt restructurings described above during the three and six month periods ending June 30, 2012.

26

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2013:

		Modifications
		Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
		Number of	Recorded	Number of		Recorded
		Loans	Investment	Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
	Consumer 1-4 family loans:
	Closed end first mortgage loans	0	$                    0	1		$                946
	Total	0	$                    0	1		$                946

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings described above that subsequently defaulted made a large principal payment during the second quarter of 2013, which decreased the allowance for loan losses by $80,000 and did not result in any charge offs during the three and six month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2012:

		Number of	Recorded
		Loans	Investment
Troubled Debt Restructurings that Subsequently Defaulted
	Consumer 1-4 family loans:
	Closed end first mortgage loans	1	$                  65
	Total	1	$                  65

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above increased the allowance for loan losses by $1,000 and did not result in any charge offs during the three and six month periods ending June 30, 2012.

27

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

28

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans.  Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.  As of June 30, 2013 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

		Special			Not
	Pass	Mention	Substandard	Doubtful	Rated
Commercial and industrial loans:
Working capital lines of credit loans	$            424,540	$            23,755	$              14,090	$                        0	$                       0
Non-working capital loans	378,380	22,086	25,425	64	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	94,229	4,140	9,921	0	0
Owner occupied loans	325,524	22,302	17,011	0	0
Nonowner occupied loans	339,563	14,652	18,947	0	0
Multifamily loans	37,028	337	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	99,229	0	1,346	0	0
Loans for agricultural production	97,825	0	0	0	0
Other commercial loans	46,381	0	118	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	23,717	847	1,816	0	89,610
Open end and junior lien loans	5,820	2,124	0	0	145,197
Residential construction loans	0	0	0	0	5,253
Other consumer loans	8,261	460	293	0	34,409
Total	$         1,880,497	$            90,703	$              88,967	$                      64	$            274,469

The recorded investment in loans does not include accrued interest.

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Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans.  Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.  As of December 31, 2012 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

		Special			Not
	Pass	Mention	Substandard	Doubtful	Rated
			(in thousands)
Commercial and industrial loans:
Working capital lines of credit loans	$            403,778	$            22,591	$              13,468	$                        0	$                       0
Non-working capital loans	355,772	23,192	26,857	66	1,285
Commercial real estate and multi-family residential loans:
Construction and land development loans	67,002	4,595	10,753	0	0
Owner occupied loans	315,672	24,589	18,144	0	0
Nonowner occupied loans	282,108	6,345	26,028	0	0
Multifamily loans	43,425	345	1,192	0	0
Agri-business and agricultural loans:
Loans secured by farmland	107,734	0	1,404	0	18
Loans for agricultural production	115,649	0	0	0	0
Other commercial loans	56,692	0	118	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	18,685	343	729	0	89,805
Open end and junior lien loans	7,932	300	0	0	153,692
Residential construction loans	0	0	0	0	11,508
Other consumer loans	10,168	378	497	0	34,661
Total	$         1,784,617	$            82,678	$              99,190	$                      66	$            290,969

The recorded investment in loans does not include accrued interest.

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NOTE 5. SECURITIES

Information related to the fair value and amortized cost of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) is provided in the tables below.

		Gross	Gross
	Fair	Unrealized	Unrealized	Amortized
	Value	Gain	Losses	Cost
June 30, 2013
U.S. Treasury securities	$           1,027	$                26	$                  0	$           1,001
U.S. government sponsored agencies	5,224	202	0	5,022
Agency residential mortgage-backed securities	366,418	5,790	(6,555)	367,183
Non-agency residential mortgage-backed securities	5,392	167	0	5,225
State and municipal securities	94,915	3,730	(1,566)	92,751
Total	$       472,976	$           9,915	$         (8,121)	$       471,182
December 31, 2012
U.S. Treasury securities	$           1,037	$                35	$                  0	$           1,002
U.S. government sponsored agencies	5,304	278	0	5,026
Agency residential mortgage-backed securities	365,644	7,813	(1,495)	359,326
Non-agency residential mortgage-backed securities	6,453	242	0	6,211
State and municipal securities	88,583	5,509	(189)	83,263
Total	$       467,021	$         13,877	$         (1,684)	$       454,828

Information regarding the fair value and amortized cost of available for sale debt securities by maturity as of June 30, 2013 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized	Fair
	Cost	Value
Due in one year or less	$              3,192	$           3,259
Due after one year through five years	26,030	27,527
Due after five years through ten years	39,306	40,700
Due after ten years	30,246	29,680
	98,774	101,166
Mortgage-backed securities	372,408	371,810
Total debt securities	$          471,182	$       472,976

There were no securities sales during the first six months of 2013 and 2012.  All of the gains in 2013 and 2012 were from calls.

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Purchase premiums or discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives for mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $171.9 million and $216.5 million were pledged as of June 30, 2013 and 2012, as collateral for deposits of public funds, securities sold under agreements to repurchase, borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months		12 months or more		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
June 30, 2013
Agency residential mortgage-backed
securities	$        168,399	$         (6,118)	$      23,900	$          (437)	$       192,299	$         (6,555)
State and municipal securities	22,860	(1,566)	0	0	22,860	(1,566)
Total temporarily impaired	$        191,259	$         (7,684)	$      23,900	$          (437)	$       215,159	$         (8,121)
December 31, 2012
Agency residential mortgage-backed
securities	$          92,974	$         (1,066)	$      20,422	$          (429)	$       113,396	$         (1,495)
State and municipal securities	10,791	(188)	50	(1)	10,841	(189)
Total temporarily impaired	$        103,765	$         (1,254)	$      20,472	$          (430)	$       124,237	$         (1,684)

The number of securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below.

	Less than	12 months
	12 months	or more	Total
June 30, 2013
Agency residential mortgage-backed securities	43	10	53
State and municipal securities	49	0	49
Total temporarily impaired	92	10	102
	Less than	12 months
	12 months	or more	Total
December 31, 2012
Agency residential mortgage-backed securities	29	9	38
State and municipal securities	29	1	30
Total temporarily impaired	58	10	68

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The following factors are considered to determine whether or not the impairment of these securities is other-than-temporary. Ninety-eight percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are A- rated or better by Moody’s, S&P or Fitch, except for certain non-local or local municipal securities, which are not rated. Mortgage-backed securities, which are not issued by the U.S. government or government sponsored agencies (non-agency residential mortgage-backed securities), met specific criteria set by the Asset Liability Management Committee at their time of purchase, including having the highest rating available by either Moody’s, S&P or Fitch. None of the securities have call provisions (with the exception of the municipal securities) and all payments as originally agreed are being received on their original terms. For the government, government-sponsored agency and municipal securities, management did not have concerns of credit losses, and there was nothing to indicate that full principal will not be received. Management considered the unrealized losses on these securities to be primarily interest rate driven and does not expect material losses given current market conditions unless the securities are sold. However, at this time management does not have the intent to sell, and it is more likely than not that it will not be required to sell these securities before the recovery of their amortized cost basis.

As of June 30, 2013, the Company had $5.4 million of non-agency residential mortgage-backed securities which were not issued by the U.S. government or government sponsored agencies, but which were rated AAA by S&P or Fitch and/or Aaa by Moody’s at the time of purchase.  As of December 31, 2012, the Company had $6.5 million of non-agency residential mortgage-backed securities which were not issued by the federal government or government sponsored agencies, but which were rated AAA by S&P and/or Aaa by Moody’s at the time of purchase. None of the four non-agency residential mortgage-backed securities were still rated AAA/Aaa as of June 30, 2013 by at least one of the rating agencies and one had been downgraded to below investment grade by at least one of those rating agencies.

For these non-agency residential mortgage-backed securities, additional analysis is performed to determine if any impairment is temporary or other-than-temporary, in which case impairment would need to be recorded for these securities. The Company performs an independent analysis of the cash flows of the individual securities based upon assumptions as to collateral defaults, prepayment speeds, expected losses and the severity of potential losses. Based upon the initial review, securities may be identified for further analysis by computing the net present value using an appropriate discount rate (the current accounting yield) and comparing it to the book value of the security to determine if there is any other-than-temporary impairment that must be recorded. Based on this analysis of the non-agency residential mortgage-backed securities, none of the four non-agency mortgage-backed securities had any unrealized losses or other-than-temporary impairment at June 30, 2013.

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The following table provides information about debt securities for which only a credit loss was recognized in income and for which other losses are recorded in other comprehensive income.  There were no securities with other than temporary impairment during the three and six months ended June 30, 2013.  All securities with other than temporary impairment were sold during 2012.  The table represents the three months and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,
	2013	2012
Balance April 1,	$                      0	$                   869
Additions related to other-than-temporary impairment losses
not previously recognized	0	198
Additional increases to the amount of credit loss for which
other-than-temporary impairment was previously recognized	0	251
Reductions for previous credit losses realized on
securities sold during the year	0	0
Balance June 30,	$                      0	$                1,318

	Six Months Ended June 30,
	2013	2012
Balance January 1,	$                      0	$                   359
Additions related to other-than-temporary impairment losses
not previously recognized	0	747
Additional increases to the amount of credit loss for which
other-than-temporary impairment was previously recognized	0	212
Reductions for previous credit losses realized on
securities sold during the year	0	0
Balance June 30,	$                      0	$                1,318

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Information on securities with at least one rating below investment grade at June 30, 2013 is presented below.

							6/30/2013	1-Month	3-Month	6-Month
		Other Than	June 30, 2013				Lowest	Constant	Constant	Constant
		Temporary	Par	Amortized	Fair	Unrealized	Credit	Default	Default	Default	Credit
Description	CUSIP	Impairment	Value	Cost	Value	Gain/(Loss)	Rating	Rate	Rate	Rate	Support
RALI 2004-QS7 A3	76110HTX7	$               0	$             2,567	$             2,551	$               2,591	$                    40	BB+	2.97	3.30	3.21	9.99

This security is a super senior/senior tranche non-agency residential mortgage-backed security. The credit support is the credit support percentage for a tranche from other subordinated tranches, which is the amount of principal in the subordinated tranches expressed as a percentage of the remaining principal in the super senior/senior tranche. The super senior/senior tranches receive the prepayments and the subordinate tranches absorb the losses. The super senior/senior tranches do not absorb losses until the subordinate tranches are extinguished.

The Company does not have a history of actively trading securities but continues to hold securities available for sale should liquidity or other needs develop that would warrant the sale of securities. While these securities are held in the available for sale portfolio, it is management’s current intent to hold them until a recovery in fair value or maturity.

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NOTE 6. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Six Months Ended June 30,
	Pension Benefits		SERP Benefits
	2013	2012	2013	2012
Interest cost	$          58	$          64	$          23	$          26
Expected return on plan assets	(60)	(69)	(37)	(38)
Recognized net actuarial (gain) loss	75	68	46	42
Net pension expense (benefit)	$          73	$          63	$          32	$          30

	Three Months Ended June 30,
	Pension Benefits		SERP Benefits
	2013	2012	2013	2012
Interest cost	$          26	$          29	$          10	$          10
Expected return on plan assets	(25)	(29)	(18)	(18)
Recognized net actuarial (gain) loss	41	41	25	25
Net pension expense (benefit)	$          42	$          41	$          17	$          17

The Company previously disclosed in its financial statements for the year ended December 31, 2012 that it expected to contribute $211,000 to its pension plan and $80,000 to its SERP plan in 2013.  The Company has contributed $110,000 to its pension plan and $80,000 to its SERP plan as of June 30, 2013.  The Company expects to contribute an additional $101,000 to its pension plan during the remainder of 2013.  The Company does not expect to make any additional contributions to its SERP plan during the remainder of 2013.

NOTE 7.  NEW ACCOUNTING PRONOUNCEMENTS

In February 2013, the Financial Accounting Standards Board (FASB) issued updated guidance related to disclosure of reclassification amounts out of other comprehensive income. The standard requires that companies present, either in a single note or parenthetically on the face of their financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. The new requirements will take effect for public companies in fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company adopted this standard on January 1, 2013.  Adopting this standard did not have a significant impact on the Company’s financial condition or results of operations.

NOTE 8.  FAIR VALUE DISCLOSURES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1	Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2	Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3	Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  Securities available for sale are valued primarily by a third party pricing service. The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain non-agency residential mortgage-backed securities where observable inputs about the specific issuer are not available, fair values are estimated using observable data from other non-agency residential mortgage-backed securities presumed to be similar or other market data on other non-agency residential mortgage-backed securities (Level 3 inputs). For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs). There were no transfers between Level 1and Level 2 during the first six months of 2013.

Mortgage banking derivatives:  The fair value of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives:  The Company records all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Currently, none of the Company’s derivatives are designated in qualifying hedging relationships, as the derivatives are not used to manage risks within the Company’s assets or liabilities. As such, all changes in fair value of the Company’s derivatives are recognized directly in earnings.  The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Impaired loans:  Impaired loans with specific allocations of the allowance for loan losses are generally based on the fair value of the underlying collateral if repayment is expected solely from the collateral.  Fair value is determined using several methods.  Generally, the fair value of real estate is based on appraisals by qualified third party appraisers.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of impaired loans.  The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions.  Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral.  In addition to real estate, the Company’s management evaluates other types of collateral as follows: Raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods.  Finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope of use of the finished good.  Work in process inventory is typically discounted by 50-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base.  Equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons.  Marketable securities are discounted by 10-30%, depending on the type of investment, age of valuation report and general market conditions.  This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

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Mortgage servicing rights:  As of June 30, 2013 the fair value of the Company’s Level 3 servicing assets for residential mortgage loans was $3.0 million, some of which are not currently impaired and therefore carried at amortized cost.  These residential mortgage loans have a weighted average interest rate of 4.18%, a weighted average maturity of 19 years and are secured by homes generally within the Company’s market area, which is primarily Northern Indiana.  A valuation model is used to estimate fair value, which is based on an income approach.  The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees, and float income.  The most significant assumption used to value mortgage servicing rights is prepayment rate.  Prepayment rates are estimated based on published industry consensus prepayment rates.  The most significant unobservable assumption is the discount rate.  At June 30, 2013, the constant prepayment speed (PSA) used was 229 and the discount rate used was 9.3%.  At December 31, 2012, the constant prepayment speed (PSA) used was 392 and the discount rate used was 9.2%.

Other real estate owned:  Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer.  Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales.  Such adjustments are usually significant and result in a Level 3 classification.   In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions.  In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held for sale:  Real estate mortgage loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and results in a Level 2 classification.

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The table below presents the balances of assets measured at fair value on a recurring basis:

	June 30, 2013
	Fair Value Measurements Using			Assets
	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$             1,027	$                      0	$                     0	$              1,027
U.S. Government sponsored agencies	0	5,224	0	5,224
Mortgage-backed securities	0	366,418	0	366,418
Non-agency residential mortgage-backed securities	0	0	5,392	5,392
State and municipal securities	0	93,936	979	94,915
Total Securities	1,027	465,578	6,371	472,976
Mortgage banking derivative	0	417	0	417
Interest rate swap derivative	0	314	0	314
Total assets	$             1,027	$           466,309	$              6,371	$          473,707
Liabilities
Mortgage banking derivative	$                    0	$                    34	$                     0	$                    34
Interest rate swap derivative	0	242	0	242
Total liabilities	$                    0	$                 276	$                     0	$                 276

	December 31, 2012
	Fair Value Measurements Using			Assets
	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$             1,037	$                      0	$                     0	$              1,037
U.S. Government sponsored agencies	0	5,304	0	5,304
Mortgage-backed securities	0	365,644	0	365,644
Non-agency residential mortgage-backed securities	0	3,594	2,859	6,453
State and municipal securities	0	87,595	988	88,583
Total Securities	1,037	462,137	3,847	467,021
Mortgage banking derivative	0	739	0	739
Total assets	$             1,037	$           462,876	$              3,847	$          467,760
Liabilities
Mortgage banking derivative	$                    0	$                    12	$                     0	$                   12

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2013 and there were no transfers between Level 1 and Level 2 during 2012.

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The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2013 and 2012:

	Non-Agency Residential
	Mortgage-Backed Securities		State and Municipal Securities
	2013	2012	2013	2012
Balance of recurring Level 3 assets at January 1	$            2,859	$                   0	$               988	$               686
Transfers into Level 3	3,334	0	0	0
Changes in fair value of securities	(52)	0	(9)	0
Principal payments	(749)	0	0	(45)
Balance of recurring Level 3 assets at June 30	$            5,392	$                   0	$               979	$               641

The fair value of two non-agency residential mortgage-backed securities with a fair value of $3.3 million as of March 31, 2013 were transferred out of Level 2 and into Level 3 because of a lack of observable market data for these investments.  The Company’s policy is to recognize transfers as of the end of the reporting period. As a result, the fair value for these non-agency residential mortgage-backed securities and state and municipal securities was transferred into Level 3 on March 31, 2013.

The state and municipal securities measured at fair value included below are non-rated Indiana municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at			Range of Inputs
	June 30, 2013	Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$                  5,392	Discounted cash flow	Constant prepayment rate	5.00-30.00
				(9.56)
			Average life	0.57-2.66
				(1.44)
			Swap/EDSF spread	242-327
				(297)
State and municipal securities	$                     979	Price to type, par, call	Discount to benchmark index	1-7%
				(2.57%)

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Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at			Range of Inputs
	December 31, 2012	Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$                  2,859	Discounted cash flow	Constant prepayment rate	5.00-9.00
				(6.00)
			Average life (years)	0.20-2.86
				(2.70)
			Swap/EDSF spread	297-339
				(328)
State and municipal securities	$                     988	Price to type, par, call	Discount to benchmark index	1-11%
				(4%)

The Company’s Controlling Department, which is responsible for all accounting and SEC compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that decide the Company’s valuation policies and procedures.  Both of these areas report directly to the President and Chief Financial Officer of the Company.  For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration.  If there are assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board of Directors are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained from a third party pricing service and is tested at least annually against prices from another third party provider and reviewed with a market value tolerance variance of 3%.  If any securities fall above this tolerance threshold, they are reviewed in more detail to determine why the variance exists.  Changes in market value are reviewed monthly in aggregate yield by security type and any material differences are reviewed to determine why they exist.  At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

The significant unobservable inputs used in the fair value measurement of the Company’s non-agency residential mortgage-backed securities classified as Level 3 are constant prepayment rates, average life, and a Swap/EDSF spread. Significant increases/(decreases) in any of those inputs in isolation would result in a significantly lower/(higher) fair value measurement.

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The primary methodology used in the fair value measurement of the Company’s state and municipal securities classified as Level 3 is a discount to the AAA municipal benchmark index. Significant increases or (decreases) in this index as well as the degree to which the security differs in ratings, coupon, call and duration will result in a higher or (lower) fair value measurement for those securities that are not callable. For those securities that are continuously callable, a slight premium to par is used.

The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	June 30, 2013
	Fair Value Measurements Using			Assets
Assets	Level 1	Level 2	Level 3	at Fair Value
		(in thousands)
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$                    0	$                      0	$                 978	$                 978
Non-working capital loans	0	0	3,265	3,265
Commercial real estate and multi-family residential loans:
Construction and land development loans	0	0	2,417	2,417
Owner occupied loans	0	0	2,914	2,914
Nonowner occupied loans	0	0	12,450	12,450
Multifamily loans	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	0	0	283	283
Loans for agricultural production	0	0	0	0
Other commercial loans	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	404	404
Open end and junior lien loans	0	0	25	25
Residential construction loans	0	0	0	0
Other consumer loans	0	0	40	40
Total impaired loans	$                    0	$                      0	$            22,776	$            22,776
Mortgage servicing rights	0	0	8	8
Other real estate owned	0	0	75	75
Total assets	$                    0	$                      0	$            22,859	$            22,859

42

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2013:

	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired Loans:
Commercial and industrial	$       4,243	Collateral based	Discount to reflect	31%	(8% - 90%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	17,781	Collateral based	Discount to reflect	23%	(3% - 42%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	283	Collateral based	Discount to reflect	13%
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage	429	Collateral based	Discount to reflect	22%	(8% - 59%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	40	Collateral based	Discount to reflect	39%	(33% - 79%)
		measurements	current market conditions
			and ultimate collectability
Mortgage servicing rights	8	Discounted cash flows	Discount rate	9.50%
Other real estate owned	75	Appraisal	Discount to reflect	49%
			current market conditions

43

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2012:

	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired Loans:
Commercial and industrial	$     3,980	Collateral based	Discount to reflect	35%	(10% - 99%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	24,560	Collateral based	Discount to reflect	23%	(4% - 57%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	268	Collateral based	Discount to reflect	19%
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage	510	Collateral based	Discount to reflect	39%	(8% - 100%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	46	Collateral based	Discount to reflect	40%	(29% - 100%)
		measurements	current market conditions
			and ultimate collectability
Mortgage servicing rights	1,906	Discounted cash flows	Discount rate	9.20%	(9.10% - 9.50%)
Other real estate owned	75	Appraisals	Discount to reflect	49%
			current market conditions

44

	December 31, 2012
	Fair Value Measurements Using			Assets
Assets	Level 1	Level 2	Level 3	at Fair Value
		(in thousands)
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$                    0	$                      0	$                 990	$                 990
Non-working capital loans	0	0	2,990	2,990
Commercial real estate and multi-family residential loans:
Construction and land development loans	0	0	2,026	2,026
Owner occupied loans	0	0	3,892	3,892
Nonowner occupied loans	0	0	18,642	18,642
Multifamily loans	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	0	0	268	268
Loans for agricultural production	0	0	0	0
Other commercial loans	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	352	352
Open end and junior lien loans	0	0	158	158
Residential construction loans	0	0	0	0
Other consumer loans	0	0	46	46
Total impaired loans	$                    0	$                      0	$            29,364	$            29,364
Mortgage servicing rights	0	0	1,906	1,906
Other real estate owned	0	0	75	75
Total assets	$                    0	$                      0	$            31,345	$            31,345

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $30.3 million, with a valuation allowance of $7.5 million at June 30, 2013, resulting in a net recovery in the provision for loan losses of $2.5 million and $200,000, respectively, for the six months and three months ended June 30, 2013.  At June 30, 2012, impaired loans had a carrying amount of had a gross carrying amount of $47.6 million, with a valuation allowance of $14.7 million, resulting in a net recovery in the provision for loan losses of $1.8 million and $3.5 million, respectively, for the three months and six months ended June 30, 2012.

Mortgage servicing rights, which are carried at the lower of cost or fair value, included a portion carried at their fair value of $8,000, which is made up of the outstanding balance of $11,000, net of a valuation allowance of $3,000 at June 30, 2013, resulting in a net recovery of $39,000 in impairment for the six months ended June 30, 2013.  The Company realized a net recovery of impairment of $22,000 for the six months ended June 30, 2012.

45

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	June 30, 2013
	Carrying	Estimated Fair Value
	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$         63,555	$         63,555	$                  0	$                  0	$      63,555
Securities available for sale	472,976	1,027	465,578	6,371	472,976
Real estate mortgages held for sale	5,486	0	5,567	0	5,567
Loans, net	2,284,065	0	0	2,285,426	2,285,426
Federal Home Loan Bank stock	7,313	N/A	N/A	N/A	N/A
Federal Reserve Bank stock	3,420	N/A	N/A	N/A	N/A
Accrued interest receivable	9,208	6	2,266	6,936	9,208
Financial Liabilities:
Certificates of deposit	(804,564)	0	(815,860)	0	(815,860)
All other deposits	(1,678,928)	(1,678,928)	0	0	(1,678,928)
Securities sold under agreements to repurchase	(102,655)	0	(102,655)	0	(102,655)
Federal funds purchased	(37,000)	0	(37,000)	0	(37,000)
Long-term borrowings	(37)	0	(44)	0	(44)
Subordinated debentures	(30,928)	0	0	(31,230)	(31,230)
Standby letters of credit	(316)	0	0	(316)	(316)
Accrued interest payable	(4,405)	(135)	(4,267)	(3)	(4,405)

	December 31, 2012
	Carrying	Estimated Fair Value
	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$       232,237	$       232,237	$                  0	$                  0	$    232,237
Securities available for sale	467,021	1,037	462,137	3,847	467,021
Real estate mortgages held for sale	9,452	0	9,663	0	9,663
Loans, net	2,206,075	0	0	2,230,993	2,230,993
Federal Home Loan Bank stock	7,313	N/A	N/A	N/A	N/A
Federal Reserve Bank stock	3,420	N/A	N/A	N/A	N/A
Accrued interest receivable	8,485	6	2,215	6,264	8,485
Financial Liabilities:
Certificates of deposit	(907,505)	0	(922,397)	0	(922,397)
All other deposits	(1,674,251)	(1,674,251)	0	0	(1,674,251)
Securities sold under agreements to repurchase	(121,883)	0	(121,883)	0	(121,883)
Long-term borrowings	(15,038)	0	(15,607)	0	(15,607)
Subordinated debentures	(30,928)	0	0	(31,223)	(31,223)
Standby letters of credit	(262)	0	0	(262)	(262)
Accrued interest payable	(4,757)	(298)	(4,456)	(3)	(4,757)

46

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and cash equivalents - The carrying amount of cash and cash equivalents approximate fair value and are classified as Level 1.

Loans, net – Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans, fair values are based on carrying values resulting in a Level 3 classification.  Fair values for other loans are estimated using discounted cash flow analyses, using current market rates applied to the estimated life resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Federal Home Loan Bank stock and Federal Reserve Bank stock– It is not practical to determine the fair value of Federal Home Loan Bank stock and Federal Reserve Bank stock due to restrictions placed on its transferability.

Certificates of deposit - Fair values of certificates of deposit are estimated using discounted cash flow analyses using current market rates applied to the estimated life resulting in a Level 2 classification.

All other deposits- The fair values for all other deposits other than certificates of deposit are equal to the amount payable on demand (the carrying value) resulting in a Level 1 classification.

Securities sold under agreements to repurchase – The carrying amount of borrowings under repurchase agreements approximate their fair values resulting in a Level 2 classification.

Federal funds purchased – The carrying amount of federal funds purchased approximate their fair values resulting in a Level 2 classification.

Long-term borrowings – The fair value of long-term borrowings is estimated using discounted cash flow analyses based on current borrowing rates resulting in a Level 2 classification.

Subordinated debentures - The fair value of subordinated debentures is based on the rates currently available to the Company with similar term and remaining maturity and credit spread resulting in a Level 3 classification.

Standby letters of credit – The fair value of off-balance sheet items is based on the current fees and costs that would be charged to enter into or terminate such arrangements resulting in a Level 3 classification.

Accrued interest receivable/payable – The carrying amounts of accrued interest approximate fair value resulting in a Level 1, Level 2 or Level 3 classification which is consistent with its associated asset/liability.

47

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income for the six months ended June 30, 2013 and 2012:

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT(a)
	Unrealized
	Gains and
	Losses on	Defined
	Available-	Benefit
	for-Sales	Pension
	Securities	Items	Total
Balance at December 31, 2012	$                 7,517	$  (1,828)	$             5,689
Other comprehensive income
before reclassification	(6,295)	(90)	(6,385)
Amounts reclassified from
accumulated other
comprehensive income	(1)	72	71
Net current period other
comprehensive income	(6,296)	(18)	(6,314)
Balance at June 30, 2013	$                 1,221	$  (1,846)	$              (625)
(a) All amounts are net of tax.  Amounts in parenthesis indicate debits.

		Current
	Balance	Period	Balance
	at December 31, 2011	Change	at June 30, 2012
Unrealized loss on securities available for sale
without other than temporary impairment	$                           7,688	$                886	$                           8,574
Unrealized loss on securities available for sale
with other than temporary impairment	(523)	335	(188)
Total unrealized loss on securities available for sale	7,165	1,221	8,386
Unrealized loss on defined benefit pension plans	(2,026)	131	(1,895)
Total	$                           5,139	$             1,352	$                           6,491

48

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2013 are as follows:

RELCASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME(a)
Details about	Amount		Affected Line Item
Accumulated other	Reclassified From		in the Statement
Comprehensive	Accumulated Other		Where Net
Income Components	Comprehensive Income		Income is Presented
Unrealized gains and losses on
available-for-sale securities
	$                                 1		Net securities gains (losses)
	0		Income tax expense
	$                                 1		Net of tax
Amortization of defined benefit
pension items
	$                            (121)	(b)	Salaries and employee benefits
	49		Income tax expense
	$                              (72)		Net of tax
total reclassifications for the period	$                              (71)		Net of tax
(a) Amounts in parenthesis indicate debits to profit/loss.
(b) Included in the computation of net periodic benefit cost (see employee benefit plans footnote for additional details).

NOTE 10. OFFSETTING ASSETS AND LIABILITIES

On January 1, 2013, the Company adopted changes issued by the FASB to the disclosure of offsetting assets and liabilities. These changes require an entity to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The enhanced disclosures will enable users of an entity’s financial statements to understand and evaluate the effect or potential effect of master netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments. Other than the additional disclosure requirements, the adoption of these changes had no impact on the Consolidated Financial Statements.

Offsetting of Financial Assets and Derivative Assets
	June 30, 2013
	(in thousands)
				Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets	Gross Amounts Offset in the Statement of Financial Position	Net Amounts of Assets presented in the Statement of Financial Position	Financial Instruments	Cash Collateral Received	Net Amount
Description
Interest Rate Swap Derivatives	$              314	$                              0	$                          314	$                      0	$                    (290)	$          24
Total	$              314	$                              0	$                          314	$                      0	$                    (290)	$          24

49

Offsetting of Financial Liabilities and Derivative Liabilities
	June 30, 2013
	(in thousands)
				Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities	Gross Amounts Offset in the Statement of Financial Position	Net Amounts of Liabilities presented in the Statement of Financial Position	Financial Instruments	Cash Collateral Pledged	Net Amount
Description
Interest Rate Swap Derivatives	$              242	$                              0	$                        242	$                   0	$                           0	$        242
Repurchase Agreements	102,655	0	102,655	(102,655)	0	0
Total	$      102,897	$                              0	$                 102,897	$       (102,655)	$                           0	$        242

Offsetting of Financial Liabilities and Derivative Liabilities
	December 31, 2012
	(in thousands)
				Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities	Gross Amounts Offset in the Statement of Financial Position	Net Amounts of Liabilities presented in the Statement of Financial Position	Financial Instruments	Cash Collateral Pledged	Net Amount
Description
Repurchase Agreements	$      121,883	$                              0	$                 121,883	$       (121,883)	$                           0	$             0
Total	$      121,883	$                              0	$                 121,883	$       (121,883)	$                           0	$             0
There were no interest rate swap derivatives as of December 31, 2012.

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party.  If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

NOTE 11. SUBSEQUENT EVENTS

There were no subsequent events that would have a material impact on the financial statements presented in this Form 10-Q.

NOTE 12. RECLASSIFICATIONS

Certain amounts appearing in the financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassification had no effect on net income or stockholders’ equity as previously reported.

50

Part 1

LAKELAND FINANCIAL CORPORATION

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

and

RESULTS OF OPERATIONS

June 30, 2013

OVERVIEW

Lakeland Financial Corporation is the holding company for Lake City Bank. The Company is headquartered in Warsaw, Indiana and operates 45 offices in 13 counties in Northern and Central Indiana. The Company earned $18.5 million for the first six months of 2013, versus $17.4 million in the same period of 2012, an increase of 5.9%.  Net income was positively impacted by an increase in noninterest income of $3.4 million and a $1.3 million decrease in the provision for loan losses.  Offsetting these positive impacts were a decrease in net interest income of $1.5 million and an increase of $1.1 million in noninterest expense.  Basic earnings per common share for the first six months of 2013 were $1.13 per share versus $1.07 per share for the first six months of 2012, an increase of 5.6%.  Diluted earnings per common share reflect the potential dilutive impact of stock options, stock awards and warrants.  Diluted earnings per common share for the first six months of 2013 were $1.12 per share versus $1.06 for the first six months of 2012, an increase of 5.7%.

Net income for the second quarter of 2013 was $9.2 million, an increase of 4.7% versus $8.8 million for the comparable period of 2012.  The increase was driven by a $1.8 million increase in noninterest income and a $500,000 decrease in the provision for loan losses.  Offsetting this positive impact was an increase in noninterest expense of $842,000 and a decrease in net interest income of $236,000.  Basic earnings per common share for the second quarter of 2013 were $0.56 per share, versus $0.54 per share for the second quarter of 2012.  Diluted earnings per common share for the second quarter of 2013 were $0.56 per share, versus $0.54 per share for the second quarter of 2012, an increase of 3.7%.

Earnings for the three month and six month periods ended June 30, 2013 were negatively impacted by a $465,000 provision for state income tax expense due to a revaluation of the Company’s deferred tax items relating to state income tax.  During the second quarter of 2013, the Indiana legislature enacted new, lower tax rates for financial institutions which will take effect beginning in 2014.  One effect of the lower, future rates is to reduce the benefit which will be provided by the Company’s existing deferred tax items requiring the non-cash adjustment.  Excluding the effect of the adjustment, net income for the three months and six months ended June 30, 2013 would have been $9.7 million and $18.9 million, respectively, representing increases of 10% and 9% over the comparable periods of 2012.

RESULTS OF OPERATIONS

Net Interest Income

For the six-month period ended June 30, 2013, net interest income totaled $43.2 million, a decrease of 3.3%, or $1.5 million, versus the first six months of 2012.  This decrease was primarily due to a 24 basis point decrease in the Company’s net interest margin to 3.19% for the six month period ended June 30, 2013, versus 3.37% for the comparable period of 2012.  During the six-month period ended June 30, 2013, average earning assets increased by $65.2 million, or 2.4%, to $2.782 billion.  For the second quarter of 2013, net interest income totaled $21.9 million, a decrease of 1.1%, or $236,000, versus the second quarter of 2012.  This decrease was primarily due to a 12 basis point decrease in the Company’s net interest margin to 3.20% for the second quarter of 2013, versus 3.32% for the second quarter of 2012.  Average earning assets increased $65.5 million, or 2.4%, to $2.796 billion in the second quarter of 2013, versus the second quarter of 2012.

51

Given the Company’s mix of interest earning assets and interest bearing liabilities at June 30, 2013, the Company would generally be considered to have a relatively neutral balance sheet structure.  The Company’s balance sheet structure would normally be expected to produce a stable or declining net interest margin in a declining rate environment.  As the Company’s balance sheet has become more neutral in structure, management believes rate movements and other factors such as deposit mix, market deposit rate pricing and non-bank deposit products could have an impact on net interest margin.  As a result of the prolonged and unprecedented low interest rate environment, and given ongoing indications by the Federal Reserve Bank regarding its intentions to maintain current target rate levels, the Company expects to experience continued pressure on its net interest margin.  Also contributing to this net interest margin compression is a recent trend of aggressive loan pricing by the Company’s competitors in its markets on both variable and fixed rate commercial loans.  As a result of this competitive pricing influence, the Company believes that its yields on the commercial loan portfolio will continue to experience downward pressure.  Over time, the Company’s mix of deposits has shifted to more reliance on transaction accounts such as Rewards Checking, as well as Rewards Savings and corporate and public fund money market and repurchase agreements, which generally carry a higher interest rate cost than other types of interest bearing deposits.  The Company believes that this deposit strategy provides for an appropriate funding strategy.

During the first six months of 2013, total interest and dividend income decreased by $6.3 million, or 10.7%, to $52.7 million, versus $59.0 million during the first six months of 2012.  This decrease was primarily the result of a 55 basis point decrease in the tax equivalent yield on average earning assets to 3.9%, versus 4.4% for the same period of 2012.  Average earning assets increased by $65.2 million, or 2.4%, during the first six months of 2013 versus the same period of 2012.  During the second quarter of 2013, total interest and dividend income decreased by $2.8 million, or 9.7%, to $26.4 million, versus $29.2 million during the second quarter of 2012.  This decrease was primarily the result of a 52 basis point decrease in the tax equivalent yield on average earning assets to 3.9% in the second quarter of 2013, versus 4.4% for the same period of 2012.  Average earning assets increased by $65.5 million, or 2.4%, in the second quarter of 2013 versus the same period of 2012.

During the first six months of 2013, loan interest income decreased by $3.1 million, or 6.0%, to $49.1 million, versus $52.2 million during the first six months of 2012.  The decrease was driven by a 39 basis point decrease in the tax equivalent yield on loans, to 4.4%, versus 4.7% in the first three months of 2012.  During the second quarter of 2013, loan interest income decreased by $1.4 million, or 5.5%, to $24.5 million, versus $25.9 million during the second quarter of 2012.  The decrease was driven by a 43 basis point decrease in the tax equivalent yield on loans, to 4.3%, versus 4.7% in the second quarter of 2012.

The average daily securities balances for the first six months of 2013 increased $5.8 million, or 1.2%, to $480.4 million, versus $474.6 million for the same period of 2012. During the same periods, income from securities decreased by $3.2 million, or 46.9%, to $3.6 million versus $6.8 million during the first six months of 2012.  The decrease was primarily the result of a 134 basis point decrease in the tax equivalent yield on securities, to 1.8%, versus 3.2% in the first six months of 2012.  The average daily securities balances for the second quarter of 2013 increased $3.4 million, or 0.7%, to $482.6 million, versus $479.2 million for the same period of 2012.  During the same periods, income from securities decreased by $1.4 million, or 42.2%, to $1.9 million versus $3.3 million during the second quarter of 2012.  The decrease was primarily the result of a 116 basis point decrease in the tax equivalent yield on securities, to 1.9%, versus 3.1% in the second quarter of 2012.  The prolonged low interest rate environment has driven accelerated prepayments in the Company’s portfolio of mortgage backed securities.  Those prepayments must then be reinvested in securities at current, lower market yields, resulting in less income from securities despite the higher average securities balances.  In addition, the prepayments have the effect of accelerating premium amortization of those mortgage backed securities which were purchased at a premium.  Due to the unprecedented low interest rate environment, the Company is actively considering and implementing changes in its investment strategy.  The plan includes considering the purchase of good quality, higher yielding alternative investments.  Given the strength of the Company’s balance sheet and the likelihood of the low interest rate environment persisting into the future, the Company believes that this would be an appropriate and prudent strategy, although the Company does not expect this will result in a significant change in strategy.

52

Total interest expense decreased $4.8 million, or 33.6%, to $9.5 million for the six-month period ended June 30, 2013, from $14.4 million for the comparable period in 2012.  The decrease was primarily the result of a 36 basis point decrease in the Company’s daily cost of funds to 0.7%, versus 1.1% for the same period of 2012.  Total interest expense decreased $2.6 million, or 36.5%, to $4.5 million for the second quarter of 2013, versus $7.1 million for the second quarter of 2012.  The decrease was primarily the result of a 37 basis point decrease in the Company’s cost of funds to 0.7%, from 1.1% for the same period of 2012.

On an average daily basis, total deposits (including demand deposits) decreased $94.2 million, or 0.4%, to $2.482 billion for the six-month period ended June 30, 2013, versus $2.491 billion during the same period in 2012.  The average daily balances for the second quarter of 2013 decreased $63.9 million, or 2.5%, to $2.490 billion from $2.554 billion during the second quarter of 2012.  On an average daily basis, noninterest bearing demand deposits were $384.0 million for the six-month period ended June 30, 2013, versus $340.0 million for the same period in 2012.  The average daily noninterest bearing demand deposit balances for the second quarter of 2013 were $387.2 million, versus $345.7 million for the second quarter of 2012.  On an average daily basis, interest bearing transaction accounts increased $23.5 million, or 2.4%, to $1.021 billion for the six-month period ended June 30, 2013, versus the same period in 2012.  Average daily interest bearing transaction accounts decreased $568,000, or 0.1%, to $1.042 billion for the second quarter of 2013, versus $1.042 billion for the second quarter of 2012.  When comparing the six months ended June 30, 2013 with the same period of 2012, the average daily balance of time deposits, which pay a higher rate of interest compared to demand deposits and non-Rewards Checking transaction accounts, decreased $109.5 million.  The average rate paid on time deposit accounts decreased 41 basis points to 1.3% for the six-month period ended June 30, 2013, versus the same period in 2012.  During the second quarter of 2013, the average daily balance of time deposits decreased $141.5 million, and the rate paid decreased 41 basis points to 1.2%, versus the second quarter of 2012.  Despite the low interest rate environment, the Company has been able to attract and retain retail deposit customers through offering innovative deposit products such as Rewards Checking and Savings.  These products pay somewhat higher interest rates but also encourage certain customer behaviors such as using debit cards and electronic statements, which have the effect of generating additional related fee income and reducing the Company’s processing costs.

53

The Company’s funding strategy is generally focused on leveraging its retail branch network to grow traditional retail deposits and on its presence with commercial customers and public fund entities in its Indiana markets to generate deposits.  In addition, the Company has utilized the Certificate of Deposit Account Registry Service (CDARS) program and out-of-market brokered certificates of deposit.  Due to the Company’s historical loan growth, the Company sought these deposits and has expanded its funding strategy over time to include these types of non-core deposit programs although its reliance on these types of deposits has reduced significantly over the past several years.  The Company believes that these deposit programs represent an appropriate tool in the overall liquidity and funding strategy but will continue to focus on funding loan and investment growth with in-market deposits whenever possible.  On an average daily basis, total brokered certificates of deposit decreased $30.2 million to $18.4 million for the six-month period ended June 30, 2013, versus $48.6 million for the same period in 2012.  During the second quarter of 2013, average daily brokered certificates of deposit were $8.9 million, versus $42.7 million during the second quarter of 2012.  On an average daily basis, total public fund certificates of deposit increased $30.2 million to $122.8 million for the six-month period ended June 30, 2013, versus $92.6 million for the same period in 2012.  During the second quarter of 2013, average daily public fund certificates of deposit were $130.7 million, versus $102.0 million during the second quarter of 2012.  In addition, the Company had average public fund interest bearing transaction accounts of $192.7 million and $192.2 million, respectively, in the six months and three months ended June 30, 2013, versus $191.1 million and $189.5 million for the comparable periods of 2012.  Availability of public fund deposits can be cyclical, primarily due to the timing differences between when real estate property taxes are collected versus when those tax revenues are spent, as well as the intense competition for these funds.

Average daily balances of borrowings were $158.1 million during the six months ended June 30, 2013, versus $165.1 million during the same period of 2012, and the rate paid on borrowings decreased 26 basis points to 1.0%.  During the second quarter of 2013, the average daily balances of borrowings increased $7.6 million to $165.3 million, versus $157.7 million for the same period of 2012, and the rate paid on borrowings decreased 37 basis points to 0.9%.  On an average daily basis, total deposits (including demand deposits) and purchased funds decreased 0.4% and 1.9%, respectively, during the six-month and three-month periods ended June 30, 2013 versus the same periods in 2012.

The Board of Directors and management recognize the importance of liquidity during times of normal operations and in times of stress.  In 2010, the Company formalized and expanded upon its extensive Contingency Funding Plan (“CFP”).  The formal CFP was developed to help ensure that the multiple liquidity sources available to the Company are detailed. The CFP identifies the potential funding sources, which include the Federal Home Loan Bank of Indianapolis, The Federal Reserve Bank, brokered certificates of deposit, certificates of deposit available from the CDARS program, repurchase agreements, and Fed Funds. The CFP also addresses the role of the securities portfolio in liquidity.

Further, the plan identifies CFP team members and expressly details their respective roles. Potential risk scenarios are identified and the plan includes multiple scenarios, including short-term and long-term funding crisis situations. Under the long-term funding crisis, two additional scenarios are identified: a moderate risk scenario and a highly stressed scenario. The CFP indicates the responsibilities and the actions to be taken by the CFP team under each scenario. Monthly reports to management and the Board of Directors under the CFP include an early warning indicator matrix and pro forma cash flows for the various scenarios.  The Company will continue to carefully monitor its liquidity planning and will consider adjusting its plans as circumstances warrant.

The following tables set forth consolidated information regarding average balances and rates:

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DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(in thousands of dollars)
	Six Months Ended June 30,
		2013				2012
	Average	Interest			Average	Interest
	Balance	Income	Yield (1)		Balance	Income	Yield (1)
ASSETS
Earning assets:
Loans:
Taxable (2)(3)	$    2,271,373	$         48,874	4.34	%	$    2,208,374	$         51,986	4.73
Tax exempt (1)	8,750	308	7.09		9,749	334	6.89
Investments: (1)
Available for sale	480,376	4,359	1.83		474,555	7,492	3.17
Short-term investments	7,291	3	0.08		22,030	10	0.09
Interest bearing deposits	14,214	33	0.47		2,082	17	1.64
Total earning assets	2,782,004	53,577	3.88	%	2,716,790	59,839	4.43
Nonearning assets:
Cash and due from banks	86,994	0			160,696	0
Premises and equipment	34,645	0			34,941	0
Other nonearning assets	110,610	0			95,653	0
Less allowance for loan losses	(51,188)	0			(53,596)	0
Total assets	$    2,963,065	$         53,577			$    2,954,484	$         59,839

(1) Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2013 and 2012. The tax equivalent rate for tax exempt loans and tax exempt securities included the TEFRA adjustment applicable to nondeductible interest expenses.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the six months ended June 30, 2013 and 2012, are included as taxable loan interest income.

(3) Nonaccrual loans are included in the average balance of taxable loans.

55

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (Cont.)
(in thousands of dollars)
	Six Months Ended June 30,
		2013				2012
	Average	Interest			Average	Interest
	Balance	Expense	Yield		Balance	Expense	Yield
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest bearing liabilities:
Savings deposits	$       223,625	$              351	0.32	%	$       190,768	$              369	0.39	%
Interest bearing checking accounts	1,020,736	3,058	0.60		997,239	4,966	1.00
Time deposits:
In denominations under $100,000	344,720	2,498	1.46		399,492	3,700	1.86
In denominations over $100,000	508,607	2,869	1.14		563,321	4,328	1.55
Miscellaneous short-term borrowings	124,279	203	0.33		119,166	217	0.37
Long-term borrowings
and subordinated debentures	33,865	568	3.38		45,966	799	3.50
Total interest bearing liabilities	2,255,832	9,547	0.85	%	2,315,952	14,379	1.25	%
Noninterest bearing liabilities
and stockholders' equity:
Demand deposits	383,993	0			340,041	0
Other liabilities	16,901	0			17,578	0
Stockholders' equity	306,339	0			280,913	0
Total liabilities and stockholders'
equity	$    2,963,065	$           9,547			$    2,954,484	$         14,379
Net interest differential - yield on
average daily earning assets		$         44,030	3.19	%		$         45,460	3.37	%

56

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(in thousands of dollars)
	Three Months Ended June 30,
		2013				2012
	Average	Interest			Average	Interest
	Balance	Income	Yield (1)		Balance	Income	Yield (1)
ASSETS
Earning assets:
Loans:
Taxable (2)(3)	$    2,295,787	$         24,388	4.26	%	$    2,210,973	$         25,795	4.69	%
Tax exempt (1)	8,684	153	7.08		9,668	166	6.89
Investments: (1)
Available for sale	482,628	2,310	1.92		479,131	3,675	3.08
Short-term investments	5,446	1	0.07		27,996	7	0.10
Interest bearing deposits	3,380	11	1.31		2,588	9	1.40
Total earning assets	2,795,925	26,864	3.85	%	2,730,356	29,652	4.37	%
Nonearning assets:
Cash and due from banks	91,725	0			208,016	0
Premises and equipment	34,574	0			35,014	0
Other nonearning assets	110,662	0			95,329	0
Less allowance for loan losses	(50,736)	0			(53,074)	0
Total assets	$    2,982,150	$         26,864			$    3,015,641	$         29,652

(1) Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2013 and 2012. The tax equivalent rate for tax exempt loans and tax exempt securities included the TEFRA adjustment applicable to nondeductible interest expenses.

(2) Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended June 30, 2013 and 2012, are included as taxable loan interest income.

(3) Nonaccrual loans are included in the average balance of taxable loans.

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DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (Cont.)
(in thousands of dollars)
	Three Months Ended June 30,
		2013				2012
	Average	Interest			Average	Interest
	Balance	Expense	Yield		Balance	Expense	Yield
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest bearing liabilities:
Savings deposits	$       230,348	$              179	0.31	%	$       193,646	$              158	0.33	%
Interest bearing checking accounts	1,041,918	1,418	0.55		1,042,486	2,483	0.96
Time deposits:
In denominations under $100,000	337,016	1,198	1.43		401,574	1,830	1.83
In denominations over $100,000	493,642	1,344	1.09		570,586	2,131	1.50
Miscellaneous short-term borrowings	134,341	112	0.33		111,703	104	0.37
Long-term borrowings
and subordinated debentures	30,965	261	3.38		45,967	395	3.46
Total interest bearing liabilities	2,268,230	4,512	0.80	%	2,365,962	7,101	1.21	%
Noninterest bearing liabilities
and stockholders' equity:
Demand deposits	387,191	0			345,721	0
Other liabilities	17,312	0			19,320	0
Stockholders' equity	309,417	0			284,638	0
Total liabilities and stockholders'
equity	$    2,982,150	$           4,512			$    3,015,641	$           7,101
Net interest differential - yield on
average daily earning assets		$         22,352	3.20	%		$         22,551	3.32	%

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Provision for Loan Losses

Based on management’s review of the adequacy of the allowance for loan losses, no provisions for loan losses were recorded during the six-month and three-month periods ended June 30, 2013, versus provisions of $1.3 million and $500,000 recorded during the same periods of 2012.  Factors impacting the provision included the amount and status of classified and watch list credits, the level of charge-offs, management’s overall view on current credit quality and the regional and national economic conditions impacting credit quality, the amount and status of impaired loans, the amount and status of past due accruing loans (90 days or more), and overall loan growth as discussed in more detail below in the analysis relating to the Company’s financial condition.

Noninterest Income

Noninterest income categories for the six-month and three-month periods ended June 30, 2013 and 2012 are shown in the following table:

	Six Months Ended
	June 30,
			Percent
	2013	2012	Change
Wealth advisory fees	$   1,915	$   1,811	5.7	%
Investment brokerage fees	1,946	1,740	11.8
Service charges on deposit accounts	4,223	3,892	8.5
Loan, insurance and service fees	3,268	2,641	23.7
Merchant card fee income	569	605	(6.0)
Other income	2,081	945	120.2
Mortgage banking income	1,047	984	6.4
Net securities gains	1	3	(66.7)
Impairment on available-for-sale securities (includes total losses of $0 and $985,
net of $0 and $26 recognized in other comprehensive income, pre-tax)	0	(959)	N/A
Total noninterest income	$ 15,050	$ 11,662	29.1	%

	Three Months Ended
	June 30,
			Percent
	2013	2012	Change
Wealth advisory fees	$      971	$      897	8.2	%
Investment brokerage fees	997	940	6.1
Service charges on deposit accounts	2,252	2,011	12.0
Loan, insurance and service fees	1,812	1,452	24.8
Merchant card fee income	293	289	1.4
Other income	706	280	152.1
Mortgage banking income	538	392	37.2
Net securities gains	0	0	0
Impairment on available-for-sale securities (includes total losses of $0 and $475
net of $0 and $26 recognized in other comprehensive income, pre-tax)	0	(449)	N/A
Total noninterest income	$   7,569	$   5,812	30.2	%

Noninterest income increased $3.4 million and $1.7 million, respectively, for the six-month and three-month periods ended June 30, 2013 versus the same periods in 2012.  Other income increased by $1.1 million and $426,000, respectively, driven by income on bank owned life insurance as well as fees related to the Company’s interest rate swap program for clients.  During the first quarter, the Company introduced a new swap derivative product, which is offered to certain commercial banking customers.  Loan, insurance and service fees increased by $627,000 and $360,000, respectively, and were driven by higher fee income on increased debit card activity.  In addition, noninterest income in the six-months and three-months ended June 30, 2012 was negatively impacted by $959,000 and $449,000, respectively, in other-than-temporary impairment on several non-agency mortgage backed securities.

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Noninterest Expense

Noninterest expense categories for the six-month and three-month periods ended June 30, 2013 and 2012 are shown in the following table:

	Six Months Ended
	June 30,
			Percent
	2013	2012	Change
Salaries and employee benefits	$ 18,056	$ 17,438	3.5	%
Occupancy expense	1,719	1,716	0.2
Equipment costs	1,263	1,213	4.1
Data processing fees and supplies	2,672	1,901	40.6
Other expense	6,274	6,661	(5.8)
Total noninterest expense	$ 29,984	$ 28,929	3.6	%

	Three Months Ended
	June 30,
			Percent
	2013	2012	Change
Salaries and employee benefits	$   8,891	$   8,363	6.3	%
Occupancy expense	873	831	5.1
Equipment costs	654	596	9.7
Data processing fees and supplies	1,379	1,060	30.1
Other expense	3,294	3,399	(3.1)
Total noninterest expense	$ 15,091	$ 14,249	5.9	%

The Company's noninterest expense increased $1.1 million and $842,000, respectively, in the six-month and three-month periods ended June 30, 2013 versus the same periods of 2012.  Data processing fees increased by $771,000 and $319,000, respectively, driven by a larger customer base as well as greater utilization of services from the Company’s core processor, which the Company believes will improve marketing and cross-selling initiatives.  Salaries and employee benefits increased by $618,000 and $528,000, respectively, driven by normal merit increases and higher incentive based compensation costs.  Other expenses decreased by $387,000 and $105,000, respectively, driven by lower FDIC deposit insurance premiums as well as lower professional fees.

Income Tax Expense

Income tax expense increased $1.1 million, or 13.0%, for the first six months of 2013, compared to the same period in 2012.  The combined state franchise tax expense and the federal income tax expense, as a percentage of income before income tax expense, increased to 34.5% during the first six months of 2013 compared to 33.1% during the same period of 2012.  The combined tax expense increased to 35.8% in the second quarter of 2013, versus 33.2% during the same period of 2012.  The changes were driven by a $465,000 provision for state income tax expense due to a revaluation of the Company’s deferred tax items relating to state income tax.  During the second quarter of 2013, the Indiana legislature enacted new, lower tax rates for financial institutions, which will take effect beginning in 2014.  One effect of the lower, future rates is to reduce the benefit which will be provided by the Company’s existing deferred tax items requiring the non-cash adjustment.  Excluding the effect of the adjustment, income taxes for the six months and three months ended June 30, 2013 would have been $9.3 million and $4.7 million, respectively, representing 32.9% and 32.6%, of pretax net income.

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CRITICAL ACCOUNTING POLICIES

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Some of the facts and circumstances which could affect these judgments include changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses, the valuation of mortgage servicing rights and the valuation and other-than-temporary impairment of investment securities. The Company’s critical accounting policies are discussed in detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

FINANCIAL CONDITION

Total assets of the Company were $2.975 billion as of June 30, 2013, a decrease of $88.9 million, or 2.9%, when compared to $3.064 billion as of December 31, 2012.

Total cash and cash equivalents decreased by $168.7 million, or 72.3%, to $63.6 million at June 30, 2013 from $232.2 million at December 31, 2012.  The decrease resulted from a decrease in total deposits as well as loan growth.  Historically, the Company maintained higher compensating balances with correspondent financial institutions in order to avoid certain service fees.  During a periodic review of this strategy during the first quarter of 2013, the Company determined that it would be more beneficial to maintain lower compensating balances although this may result in paying slightly higher service fees.  The reduction in the compensating balances resulted in a lower level of cash and cash equivalents at June 30, 2013 compared to December 31, 2012.

Total securities available-for-sale increased by $6.0 million, or 1.3%, to $473.0 million at June 30, 2013 from $467.0 million at December 31, 2012. The increase was a result of a number of transactions in the securities portfolio.  Securities purchases totaled $91.2 million.  Offsetting this increase were securities paydowns totaling $65.5 million, maturities and calls of securities totaling $4.2 million and securities amortization net of accretion was $5.1 million.  In addition, the net unrealized gain of the securities portfolio decreased by $10.4 million.  The decrease in fair market value was primarily driven by rising interest rates during the second quarter, which led to lower market values for agency residential mortgage-backed securities and state and municipal securities.  The investment portfolio is generally managed to limit the Company’s exposure to credit risk by containing mostly mortgage-backed securities backed by the federal government, other securities which are either directly or indirectly backed by the federal government or a local municipal government and collateralized mortgage obligations rated AAA by S&P and/or Aaa by Moody’s at the time of purchase.  As of June 30, 2013, the Company had $5.4 million of non-agency residential mortgage-backed securities which were not backed by the federal government, but were rated AAA by S&P and/or Aaa by Moody’s at the time of purchase.

61

None of the four non-agency residential mortgage backed securities were still rated AAA/Aaa as of June 30, 2013 by at least one of the rating agencies, S&P, Moody’s and Fitch, and one had been downgraded to below investment grade by at least one rating agency.  The Company performs an analysis of the cash flows of these securities on a monthly basis based on assumptions as to collateral defaults, prepayment speeds, expected losses and the severity of potential losses. Based upon the initial review, securities may be identified for further analysis by computing the net present value using an appropriate discount rate (the current accounting yield) and comparing it to the book value to determine if there is any other-than-temporary impairment to be recorded. Based on this analysis of the non-agency residential mortgage-backed securities, there was no other-than-temporary impairment or any unrealized loss on any of the four remaining non-agency residential mortgage-backed securities at June 30, 2013.

Real estate mortgage loans held-for-sale decreased by $4.0 million, or 42.0%, to $5.5 million at June 30, 2013 from $9.5 million at December 31, 2012. The balance of this asset category is subject to a high degree of variability depending on, among other things, recent mortgage loan rates and the timing of loan sales into the secondary market. During the six months ended June 30, 2013, $51.6 million in real estate mortgages were originated for sale and $55.1 million in mortgages were sold.

Total loans, excluding real estate mortgage loans held for sale, increased by $77.2 million to $2.335 billion at June 30, 2013 from $2.258 billion at December 31, 2012.  Management expects loan growth to be moderate as the economic recovery moves along.  The loan portfolio at June 30, 2013 consisted of 86% commercial and industrial, including commercial real estate and agri-business, 12% residential real estate and home equity and 2% consumer loans, versus 85% commercial and industrial, including commercial real estate and agri-business, 13% residential real estate and home equity and 2% consumer loans at December 31, 2012.

The Company has a relatively high percentage of commercial and commercial real estate loans, most of which are extended to small or medium-sized businesses from a wide variety of industries. Commercial loans represent higher dollar amount loans to fewer customers and therefore higher credit risk than other types of loans. Pricing is adjusted to manage the higher credit risk associated with these types of loans. The majority of fixed-rate residential mortgage loans, which represent increased interest rate risk, are sold in the secondary market, as well as some variable rate residential mortgage loans. The remainder of the variable rate residential mortgage loans and a small number of fixed-rate residential mortgage loans are retained. Management believes the allowance for loan losses is at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions do not continue to improve, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require further increases in the provision for loan losses.

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Loans are charged against the allowance for loan losses when management believes that the principal is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb probable incurred credit losses relating to specifically identified loans based on an evaluation of the loans by management, as well as other probable incurred losses inherent in the loan portfolio. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect the borrower’s ability to repay. Management also considers trends in adversely classified loans based upon a monthly review of those credits. An appropriate level of general allowance is determined after considering the following factors:  application of historical loss percentages, emerging market risk, commercial loan focus and large credit concentrations, new industry lending activity and current economic conditions. Federal regulations require insured institutions to classify their own assets on a regular basis. The regulations provide for three categories of classified loans – Substandard, Doubtful and Loss. The regulations also contain a Special Mention category. Special Mention is defined as loans that do not currently expose an insured institution to a sufficient degree of risk to warrant classification as Substandard, Doubtful or Loss but do possess credit deficiencies or potential weaknesses deserving management’s close attention. The Company’s policy is to establish a specific allowance for loan losses for any assets where management has identified conditions or circumstances that indicate an asset is impaired. If an asset or portion thereof is classified as loss, the Company’s policy is to either establish specified allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount.

At June 30, 2013, on the basis of management’s review of the loan portfolio, the Company had 101 credits totaling $179.7 million on the classified loan list versus 104 credits totaling $181.9 million on December 31, 2012. As of June 30, 2013, the Company had $90.7 million of assets classified as Special Mention, $89.0 million classified as Substandard, $64,000 classified as Doubtful and $0 classified as Loss as compared to $82.7 million, $99.2 million, $66,000 and $0, respectively at December 31, 2012.  As of June 30, 2013, the Company had 38 loans totaling $42.4 million accounted for as troubled debt restructurings. Included in the classified loan amounts above were 17 mortgage loans totaling $1.6 million with total allocations of $280,000, and 21 commercial loans totaling $40.8 million with total allocations of $9.9 million. The Company has no commitments to lend additional funds to any of the borrowers. At December 31, 2012, the Company had 41 loans totaling $50.8 million accounted for as troubled debt restructurings - one installment loan totaling $16,000 with an allocation of $4,000, 12 mortgage loans totaling $1.4 million with total allocations of $247,000, and 28 commercial loans totaling $49.4 million with total allocations of $12.2 million. The $8.4 million decrease of loans accounted for as troubled debt restructurings at June 30, 2013, as compared to December 31, 2012, was primarily due to the removal of two commercial credits totaling $8.4 million since these loans were modified at a market rate and were performing as of December 31, 2012.  Offsetting this decrease was the addition of a $920,000 commercial credit to the impaired category.

Allowance estimates are developed by management taking into account actual loss experience, adjusted for current economic conditions. The Company generally has regular discussions regarding this methodology with regulatory authorities.  Allowance estimates are considered a prudent measurement of the risk in the Company’s loan portfolio and are applied to individual loans based on loan type. In accordance with current accounting guidance, the allowance is provided for losses that have been incurred as of the balance sheet date and is based on past events and current economic conditions, and does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions.

Net charge-offs totaled $183,000 in the second quarter of 2013, versus net charge-offs of $1.4 million during the second quarter of 2012 and $626,000 during the first quarter of 2013.

63

The allowance for loan losses decreased 1.6%, or $810,000, from $51.4 million at December 31, 2012 to $50.6 million at June 30, 2013.  Pooled loan allocations increased from $36.6 million at December 31, 2012 to $39.6 million at June 30, 2013, which was primarily a result of management’s overall view on current credit quality and the current economic environment, which included a change at March 31, 2013 in the lookback period for the determination of the qualitative factors from a three year lookback to a higher of a three year or five year lookback.  Management believes it is prudent when determining the qualitative factors to consider the higher historical loss periods included in the five year lookback period that are now running off in the three year lookback period.  Impaired loan allocations decreased $3.8 million from $14.8 million at December 31, 2012 to $11.0 million at June 30, 2013.  This decrease in impaired allocations was primarily due to decreases in the allocations of existing impaired loans as well as reductions to the impaired loans category.  The unallocated component of the allowance for loan losses was $3.5 million at June 30, 2013 compared to $3.4 million at December 31, 2012primarily due to stabilization in the current economic conditions and improvement in our borrowers’ performance and future prospects. While general trends in credit quality were stable or favorable, the Company believes that the unallocated component is appropriate given the uncertainty that exists regarding near term economic conditions, including the slow economic recovery.  Management believes the allowance for loan losses at June 30, 2013 was at a level commensurate with the overall risk exposure of the loan portfolio. However, if economic conditions do not continue to improve, certain borrowers may experience difficulty and the level of nonperforming loans, charge-offs and delinquencies could rise and require further increases in the provision for loan losses.

Total impaired loans decreased by $12.0 million, or 20.4%, to $46.9 million at June 30, 2013 from $58.9 million at December 31, 2012.  A loan is impaired when full payment under the original loan terms is not expected. Impairment is evaluated in the aggregate for smaller-balance loans of similar nature such as residential mortgage, and consumer loans, and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance may be allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  The decrease in the impaired loans category was primarily due to the removal of three commercial credits totaling $10.5 million from the impaired category.  The following table summarizes nonperforming assets at June 30, 2013 and December 31, 2012.

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	June 30,	December 31,
	2013	2012
	(in thousands)
NONPERFORMING ASSETS:
Nonaccrual loans including nonaccrual troubled debt restructured loans	$         21,542	$         30,829
Loans past due over 90 days and still accruing	104	50
Total nonperforming loans	$         21,646	$         30,879
Other real estate owned	171	667
Repossessions	5	23
Total nonperforming assets	$         21,822	$         31,569
Impaired loans including troubled debt restructurings	$         46,906	$         58,935
Nonperforming loans to total loans	0.93%	1.37%
Nonperforming assets to total assets	0.73%	1.03%
Nonperforming troubled debt restructured loans (included in nonaccrual loans)	$          19,398	$          28,506
Performing troubled debt restructured loans	23,017	22,332
Total troubled debt restructured loans	$         42,415	$          50,838

Total nonperforming assets decreased by $9.7 million, or 30.8%, to $21.8 million during the six-month period ended June 30, 2013.  The decrease was primarily due to the aforementioned reclassification of three commercial credits from impaired to non-impaired.  The loan upgrades also shifted two of the loans from the troubled debt restructured loan category.  The third loan was never a troubled debt restructuring.  In addition, the Company sold $496,000 in other real estate owned during the second quarter of 2013.

Three commercial relationships represented 72.4% of total nonperforming loans.  A commercial relationship consisting of three loans totaling $6.8 million represented the largest exposure in the nonperforming category.  These loans were classified as nonperforming in the fourth quarter of 2011.  The borrower is engaged in commercial real estate development.  Borrower collateral, including real estate and the personal guarantees of its principals, support the credit.  The Company has not taken any charge-offs related to this credit.

A $5.2 million commercial relationship consisting of three loans represents the second largest exposure in the nonperforming category.  These loans were classified as nonperforming in the fourth quarter of 2009.  The borrower is engaged in real estate development.   Borrower collateral, including real estate and the personal guarantees of its principals, support the credit.  The Company took a $1.7 million charge-off related to this credit in the fourth quarter of 2009, and no charge-offs were taken in 2010 or 2011.  The Company took a $601,000 charge-off related to this credit in the first quarter of 2012.

65

A $3.7 million credit to a manufacturer tied to the housing industry represented the third largest exposure in the nonperforming category.  This loan was classified as nonperforming in the second quarter of 2008.  The credit is accounted for as a troubled debt restructuring.  Borrower collateral including real estate, receivables, inventory and equipment support the credit, however, there are no guarantors.  The Company took a $906,000 charge-off related to this credit in 2008, a $1.7 million charge-off related to this credit in 2012 and an $88,000 charge-off related to this credit in the first quarter of 2013.

There can be no assurances that full repayment of the loans discussed above will occur.  Although economic conditions in the Company’s markets have stabilized and in some areas improved, management has not observed a rapid recovery in certain industries, including residential and commercial real estate development and recreational vehicle and mobile home manufacturing, although each of these sectors has improved.  The Company’s growth strategy has promoted diversification among industries as well as a continued focus on enforcement of a strong credit environment and an aggressive position on loan work-out situations.  While the Company believes that the impact on the Company of these industry-specific issues will be somewhat mitigated by the Company’s overall growth strategy, the economic factors impacting its entire geographic market will continue to present challenges.  Additionally, the Company’s overall asset quality position can be influenced by a small number of credits due to the focus on commercial lending activity and the granularity inherent in this strategy.

The Company has begun offering a new derivative product to certain commercial banking customers. This product allows the commercial banking customers to enter into an agreement with the Company to swap a variable rate loan to a fixed rate. These derivative products are designed to reduce, eliminate or modify the borrower's interest rate exposure.  The extension of credit incurred in connection with these derivative products is subject to the same approval and underwriting standards as traditional credit products. The Company limits its risk exposure by simultaneously entering into a similar, offsetting swap agreement with a separate, well-capitalized and highly rated counterparty previously approved by the Asset Liability Committee. By using these interest rate swap arrangements, the Company is also better insulated from the interest rate risk associated with underwriting fixed-rate loans and is better able to meet customer demand for fixed rate loans. These derivative contracts are not designated against specific assets or liabilities and, therefore, do not qualify for hedge accounting. The derivatives are recorded as assets and liabilities on the balance sheet at fair value with changes in fair value recorded in non-interest income for both the commercial banking customer swaps and the related offsetting swaps.

Total deposits decreased by $98.3 million, or 3.8%, to $2.483 billion at June 30, 2013 from $2.582 billion at December 31, 2012. The decrease resulted from decreases of $48.0 million in interest bearing transaction accounts, $32.3 million in other certificates of deposit, $30.8 million in certificates of deposit of $100,000 and over, $28.0 million in brokered certificates of deposit, $10.3 million in demand deposits, $9.8 in CDARS certificates of deposit and $2.1 million in public fund certificates of deposit of $100,000 or more.  Offsetting these decreases were increases of $ 42.1 million in money market accounts and $20.9 million in savings accounts.

Total short-term borrowings increased by $17.8 million, or 14.6%, to $139.7 million at June 30, 2013 from $121.9 million at December 31, 2012.  The increase resulted from increases of $37.0 million in federal funds purchased offset by decreases of $19.2 million in securities sold under agreements to repurchase.

66

Total equity increased by $9.8 million, or 3.3%, to $307.6 million at June 30, 2013 from $297.8 million at December 31, 2012.  The increase in total equity resulted from net income of $18.5 million, minus the decrease in the accumulated other comprehensive income of $6.3 million, minus dividends of $3.1 million, plus $728,000 in stock compensation expense, plus $18,000 related to stock options exercises (including tax benefit).

The FDIC’s risk-based capital regulations require that all insured banking organizations maintain an 8.0% total risk-based capital ratio. The FDIC has also established definitions of “well capitalized” as a 5.0% Tier I leverage capital ratio, a 6.0% Tier I risk-based capital ratio and a 10.0% total risk-based capital ratio.  As of June 30, 2013, the Bank had regulatory capital in excess of these minimum requirements with a Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio of 10.8%, 13.1% and 14.4%, respectively.  The Federal Reserve also has established minimum “well capitalized” regulatory capital requirements for bank holding companies.  As of June 30, 2013, the Company had a Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio of 11.0%, 13.4% and 14.7%, respectively.  These ratios exceeded the Federal Reserve’s “well capitalized” minimums of 5.0%, 6.0% and 10.0%, respectively

Beginning January 1, 2015 the Company and Bank will be subject to the new capital regulations of Basel III.  The new regulations establish higher minimum risk-based capital ratio requirements, a new common equity Tier 1 risk-based capital ratio and a new capital conservation buffer.  The new regulations also include revisions to the definition of capital and changes in the risk-weighting of certain assets.  The new regulations establish definitions of “well capitalized” including the capital conservation buffer as a 7.0%  common equity Tier 1 risk-based capital ratio, an 8.5% Tier 1 risk-based capital ratio and a 10.5% total risk-based capital ratio.  The Tier 1 leverage ratio is unchanged from current regulations.  Management has completed a preliminary analysis of the impact of these new regulations to the capital ratios of both the Company and the Bank and estimates that the ratios for both the Company and the Bank will comfortably exceed the new minimum capital ratio requirements for “well-capitalized” including the capital conservation buffer under Basel III when effective.

FORWARD-LOOKING STATEMENTS

This document (including information incorporated by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. The factors, which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries, are detailed in the “Risk Factors” section included under Item 1A. of Part I of our Form 10-K. In addition to the risk factors described in that section, there are other factors that may impact any public company, including ours, which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries.  These additional factors include, but are not limited to, the following:

67

·   Legislative or regulatory changes or actions, including the “Dodd-Frank Wall Street Reform and Consumer Protection Act” and the regulations required to be promulgated thereunder, as well as rules recently implemented by the federal banking regulatory agencies concerning certain increased capital requirements, among other items, which may adversely affect the business of the Company and its subsidiaries.

·   The costs, effects and outcomes of existing or future litigation.

·   Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board.

·   The ability of the Company to manage risks associated with the foregoing as well as anticipated.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk represents the Company’s primary market risk exposure. The Company does not have a material exposure to foreign currency exchange risk, does not have any material amount of derivative financial instruments and does not maintain a trading portfolio. The board of directors annually reviews and approves the policy used to manage interest rate risk. The policy was last reviewed and approved in May 2013. The policy sets guidelines for balance sheet structure, which are designed to protect the Company from the impact that interest rate changes could have on net income, but does not necessarily indicate the effect on future net interest income. The Company, through its Asset and Liability Committee, manages interest rate risk by monitoring the computer simulated earnings impact of various rate scenarios and general market conditions. The Company then modifies its long-term risk parameters by attempting to generate the types of loans, investments, and deposits that currently fit the Company’s needs, as determined by the Asset and Liability Committee. This computer simulation analysis measures the net interest income impact of various interest rate scenario changes during the next twelve months. If the change in net interest income is less than 3% of primary capital, the balance sheet structure is considered to be within acceptable risk levels. As of June 30, 2013, the Company’s potential pretax exposure was within the Company’s policy limit and not significantly different from the potential pretax exposure from December 31, 2012.

ITEM 4 – CONTROLS AND PROCEDURES

As required by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of June 30, 2013.  Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.  These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

During the quarter ended June 30, 2013, there were no changes to the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

68

LAKELAND FINANCIAL CORPORATION

FORM 10-Q

June 30, 2013

Part II - Other Information

Item 1. Legal proceedings

There are no material pending legal proceedings to which the Company or its subsidiaries is a party other than ordinary routinelitigation incidental to their respective businesses.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A. of Part I of the Company’s 2012 Form 10-K.  Please refer to that section of the Company’s Form 10-K for disclosures regarding the risks and uncertainties related to the Company’s business.

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

The following table provides information as of June 30, 2013 with respect to shares of common stock repurchased by the Company during the quarter then ended:

Issuer Purchases of Equity Securities(a)

				Maximum Number (or
			Total Number of	Appropriate Dollar
			Shares Purchased as	Value) of Shares that
			Part of Publicly	May Yet Be Purchased
	Total Number of	Average Price	Announced Plans or	Under the Plans or
Period	Shares Purchased	Paid per Share	Programs	Programs
April 1-30	0	$                       0	0	$                                          0
May 1-31	625	27.51	0	0
June 1-30	0	0	0	0
Total	625	$                27.51	0	$                                          0

(a)	The shares purchased during the periods were credited to the deferred share accounts of
	non-employee directors under the Company’s directors’ deferred compensation plan.  These shares were purchased in the ordinary course of business and consistent with past practice.

Item 3. Defaults Upon Senior Securities

69

            None

Item 4. Mine Safety Disclosures

 N/A

Item 5. Other Information

            None

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
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.
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.
101*	Interactive Data File
	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012; (ii) Consolidated Statements of Income for the three and six months ended June 30, 2013 and June 30, 2012; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and June 30, 2012; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012; and (v) Notes to Unaudited Consolidated Financial Statements.
	*As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under those sections.

70

LAKELAND FINANCIAL CORPORATION

FORM 10-Q

June 30, 2013

Part II - Other Information

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 thereunto duly authorized.

LAKELAND FINANCIAL CORPORATION

(Registrant)

Date: August 9, 2013	/s/ Michael L. Kubacki
	Michael L. Kubacki – Chief Executive Officer

Date: August 9, 2013	/s/ David M. Findlay
	David M. Findlay –President
	and Chief Financial Officer

Date: August 9, 2013	/s/ Teresa A. Bartman
	Teresa A. Bartman – Senior Vice President-
	Finance and Controller

71

EX-31.1

Exhibit 31.1

I, Michael L. Kubacki, Chief Executive Officer of Lakeland Financial Corporation, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Lakeland Financial Corporation;

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 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 purpose 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 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 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 function):

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

Date:  August 9, 2013	/s/Michael L. Kubacki
	Michael L. Kubacki
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, David M. Findlay, Chief Financial Officer of Lakeland Financial Corporation, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Lakeland Financial Corporation;

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 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 purpose 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 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 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 function):

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

Date:  August 9, 2013	/s/ David M. Findlay
	David M. Findlay
	Chief Financial Officer

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 Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Michael L. Kubacki, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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 result of operations of the Company.

/s/ Michael L. Kubacki

Michael L. Kubacki

Chief Executive Officer

August 9, 2013

A signed original of this written statement required by Section 906 has been provided to Lakeland Financial Corporation and will be retained by Lakeland Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

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 Lakeland Financial Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, David M. Findlay, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 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 M. Findlay

David M. Findlay

Chief Financial Officer

August 9, 2013

A signed original of this written statement required by Section 906 has been provided to Lakeland Financial Corporation and will be retained by Lakeland Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables summarize the changes within each classification of accumulated other comprehensive income for the six months ended June 30, 2013 and 2012:

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT^(a)

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
	Securities		Items		Total
Balance at December 31, 2012	$	7,517	$	(1,828)	$	5,689
Other comprehensive income before reclassification		(6,295)		(90)		(6,385)
Amounts reclassified from accumulated other comprehensive income		(1)		72		71
Net current period other comprehensive income		(6,296)		(18)		(6,314)
Balance at June 30, 2013	$	1,221	$	(1,846)	$	(625)

(a) All amounts are net of tax. Amounts in parenthesis indicate debits.

			Current
	Balance		Period		Balance
	at December 31, 2011		Change		at June 30, 2012
Unrealized loss on securities available for sale     without other than temporary impairment	$	7,688	$	886	$	8,574
Unrealized loss on securities available for sale     with other than temporary impairment		(523)		335		(188)
Total unrealized loss on securities available for sale		7,165		1,221		8,386
Unrealized loss on defined benefit pension plans		(2,026)		131		(1,895)
Total	$	5,139	$	1,352	$	6,491

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2013 are as follows:

RELCASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME^(a)

Details about	Amount			Affected Line Item
Accumulated other	Reclassified From			in the Statement
Comprehensive	Accumulated Other			Where Net
Income Components	Comprehensive Income			Income is Presented
Unrealized gains and losses on     available-for-sale securities
	$	1		Net securities gains (losses)
		0		Income tax expense
	$	1		Net of tax
Amortization of defined benefit     pension items
	$	(121)	(b)	Salaries and employee benefits
		49		Income tax expense
	$	(72)		Net of tax
total reclassifications for the period	$	(71)		Net of tax

(a) Amounts in parenthesis indicate debits to profit/loss.

(b) Included in the computation of net periodic benefit cost (see employee benefit plans footnote for additional details).

XML

FAIR VALUE DISCLOSURES (Valuation Methodology and Unobservable Inputs for Level 3 Assets) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Mortgage servicing rights	$ 3,000
Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	22,776	29,364
Mortgage servicing rights	8	1,906
Other real estate owned	75	75
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	4,243	3,980
Valuation Technique	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	8.00%	10.00%
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	90.00%	99.00%
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	31.00%	35.00%
Commercial Real Estate and Multi-Family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	17,781	24,560
Valuation Technique	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Commercial Real Estate and Multi-Family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	3.00%	4.00%
Commercial Real Estate and Multi-Family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	42.00%	57.00%
Commercial Real Estate and Multi-Family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	23.00%	23.00%
Agri-business and Agricultural Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	283	268
Valuation Technique	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Agri-business and Agricultural Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	13.00%	19.00%
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	429	510
Valuation Technique	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	8.00%	8.00%
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	59.00%	100.00%
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	22.00%	39.00%
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	40	46
Valuation Technique	Collateral based measurements	Collateral based measurements
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	Discount to reflect current market conditions and ultimate collectability
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	33.00%	29.00%
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	79.00%	100.00%
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	39.00%	40.00%
Mortgage Servicing Rights [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Mortgage servicing rights	8	1,906
Valuation Technique	Discounted cash flows	Discounted cash flows
Unobservable Inputs	Discount rate	Discount rate
Mortgage Servicing Rights [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs		9.10%
Mortgage Servicing Rights [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs		9.50%
Mortgage Servicing Rights [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	9.50%	9.20%
Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Other real estate owned	$ 75	$ 75
Valuation Technique	Appraisal	Appraisals
Unobservable Inputs	Discount to reflect current market conditions	Discount to reflect current market conditions
Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member] | Weighted Average [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs	49.00%	49.00%

XML

CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest and fees on loans
Taxable	$ 24,388	$ 25,795	$ 48,874	$ 51,986
Tax exempt	102	112	204	224
Interest and dividends on securities
Taxable	1,152	2,627	2,097	5,391
Tax exempt	770	699	1,505	1,396
Interest on short-term investments	12	16	36	27
Total interest income	26,424	29,249	52,716	59,024
Interest on deposits	4,139	6,602	8,776	13,363
Interest on borrowings
Short-term	112	104	203	217
Long-term	261	395	568	799
Total interest expense	4,512	7,101	9,547	14,379
NET INTEREST INCOME	21,912	22,148	43,169	44,645
Provision for loan losses	0	500	0	1,299
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	21,912	21,648	43,169	43,346
NONINTEREST INCOME
Wealth advisory fees	971	897	1,915	1,811
Investment brokerage fees	997	940	1,946	1,740
Service charges on deposit accounts	2,252	2,011	4,223	3,892
Loan, insurance and service fees	1,812	1,452	3,268	2,641
Merchant card fee income	293	289	569	605
Other income	706	280	2,081	945
Mortgage banking income	538	392	1,047	984
Net securities gains	0	0	1	3
Other than temporary impairment loss on available-for-sale securities:
Total impairment losses recognized on securities	0	(475)	0	(985)
Loss recognized in other comprehensive income	0	26	0	26
Net impairment loss recognized in earnings	0	(449)	0	(959)
Total noninterest income	7,569	5,812	15,050	11,662
NONINTEREST EXPENSE
Salaries and employee benefits	8,891	8,363	18,056	17,438
Net occupancy expense	873	831	1,719	1,716
Equipment costs	654	596	1,263	1,213
Data processing fees and supplies	1,379	1,060	2,672	1,901
Other expense	3,294	3,399	6,274	6,661
Total noninterest expense	15,091	14,249	29,984	28,929
INCOME BEFORE INCOME TAX EXPENSE	14,390	13,211	28,235	26,079
Income tax expense	5,154	4,392	9,753	8,634
NET INCOME	$ 9,236	$ 8,819	$ 18,482	$ 17,445
BASIC WEIGHTED AVERAGE COMMON SHARES	16,425,382	16,324,928	16,411,695	16,298,981
BASIC EARNINGS PER COMMON SHARE	$ 0.56	$ 0.54	$ 1.13	$ 1.07
DILUTED WEIGHTED AVERAGE COMMON SHARES	16,546,547	16,453,561	16,524,250	16,450,832
DILUTED EARNINGS PER COMMON SHARE	$ 0.56	$ 0.54	$ 1.12	$ 1.06

XML

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 2. EARNINGS PER SHARE

Basic earnings per common share is net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants. 

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Weighted average shares outstanding for basic earnings per    common share		16,425,382		16,324,928		16,411,695		16,298,981
Dilutive effect of stock options, awards and warrants		121,165		128,633		112,555		151,851
Weighted average shares outstanding for diluted earnings per    common share		16,546,547		16,453,561		16,524,250		16,450,832
Basic earnings per common share	$	0.56	$	0.54	$	1.13	$	1.07
Diluted earnings per common share	$	0.56	$	0.54	$	1.12	$	1.06

XML

SECURITIES (Tables)

6 Months Ended

Jun. 30, 2013

Securities [Abstract]

Summary of available-for-sale securities

Information related to the fair value and amortized cost of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) is provided in the tables below.

			Gross		Gross
	Fair		Unrealized		Unrealized		Amortized
	Value		Gain		Losses		Cost
June 30, 2013
U.S. Treasury securities	$	1,027	$	26	$	0	$	1,001
U.S. government sponsored agencies		5,224		202		0		5,022
Agency residential mortgage-backed securities		366,418		5,790		(6,555)		367,183
Non-agency residential mortgage-backed securities		5,392		167		0		5,225
State and municipal securities		94,915		3,730		(1,566)		92,751
Total	$	472,976	$	9,915	$	(8,121)	$	471,182
December 31, 2012
U.S. Treasury securities	$	1,037	$	35	$	0	$	1,002
U.S. government sponsored agencies		5,304		278		0		5,026
Agency residential mortgage-backed securities		365,644		7,813		(1,495)		359,326
Non-agency residential mortgage-backed securities		6,453		242		0		6,211
State and municipal securities		88,583		5,509		(189)		83,263
Total	$	467,021	$	13,877	$	(1,684)	$	454,828

Schedule of available-for-sale securities by maturity

Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3,192	$	3,259
Due after one year through five years		26,030		27,527
Due after five years through ten years		39,306		40,700
Due after ten years		30,246		29,680
		98,774		101,166
Mortgage-backed securities		372,408		371,810
Total debt securities	$	471,182	$	472,976

Schedule of available-for-sale securities continuous unrealized loss position

Information regarding securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
June 30, 2013
Agency residential mortgage-backed securities	$	168,399	$	(6,118)	$	23,900	$	(437)	$	192,299	$	(6,555)
State and municipal securities		22,860		(1,566)		0		0		22,860		(1,566)
Total temporarily impaired	$	191,259	$	(7,684)	$	23,900	$	(437)	$	215,159	$	(8,121)
December 31, 2012
Agency residential mortgage-backed securities	$	92,974	$	(1,066)	$	20,422	$	(429)	$	113,396	$	(1,495)
State and municipal securities		10,791		(188)		50		(1)		10,841		(189)
Total temporarily impaired	$	103,765	$	(1,254)	$	20,472	$	(430)	$	124,237	$	(1,684)

Quantitative disclosure of available-for-sale securities

The number of securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below.

	Less than		12 months
	12 months		or more		Total
June 30, 2013
Agency residential mortgage-backed securities		43		10		53
State and municipal securities		49		0		49
Total temporarily impaired		92		10		102

	Less than		12 months
	12 months		or more		Total
December 31, 2012
Agency residential mortgage-backed securities		29		9		38
State and municipal securities		29		1		30
Total temporarily impaired		58		10		68

Schedule of debt securities credit loss recognized

The table represents the three months and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,
	2013		2012
Balance April 1,	$	0	$	869
Additions related to other-than-temporary impairment losses not previously recognized		0		198
Additional increases to the amount of credit loss for which other-than-temporary     impairment was previously recognized		0		251
Reductions for previous credit losses realized on securities sold during the year		0		0
Balance June 30,	$	0	$	1,318

	Six Months Ended June 30,
	2013		2012
Balance January 1,	$	0	$	359
Additions related to other-than-temporary impairment losses not previously recognized		0		747
Additional increases to the amount of credit loss for which other-than-temporary     impairment was previously recognized		0		212
Reductions for previous credit losses realized on securities sold during the year		0		0
Balance June 30,	$	0	$	1,318

Securities with at least one rating below investment grade

Information on securities with at least one rating below investment grade at June 30, 2013 is presented below.

6/30/2013

1-Month

3-Month

6-Month

Other Than

June 30, 2013

Lowest

Constant

Constant

Constant

Temporary

Par

Amortized

Fair

Unrealized

Credit

Default

Default

Default

Credit

Description

CUSIP

Impairment

Value

Cost

Value

Gain/(Loss)

Rating

Rate

Rate

Rate

Support

RALI 2004-QS7 A3

76110HTX7

$

0

$

2,567

$

2,551

$

2,591

$

40

BB+

2.97

3.30

3.21

9.99

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (Changes in Accumulated Other Comprehensive Income By Component) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax [Abstract]
Unrealized Gains and Losses on Available- for-Sales Securities, Opening Balance				$ 7,517	[1]
Unrealized Gains and Losses on Available- for-Sales Securities, Other comprehensive income before reclassification				(6,295)	[1]
Unrealized Gains and Losses on Available- for-Sales Securities, Amounts reclassified from accumulated other comprehensive income				(1)	[1]
Unrealized Gains and Losses on Available- for-Sales Securities,Net current period other comprehensive income				(6,296)	[1]
Unrealized Gains and Losses on Available- for-Sales Securities, Ending Balance	1,221	[1]		1,221	[1]
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax [Abstract]
Defined Benefit Pension Items, Opening Balance				(1,828)	[1]
Defined Benefit Pension Items, Other comprehensive income before reclassification				(90)	[1]
Defined Benefit Pension Items, Amounts reclassified from accumulated other comprehensive income				72	[1]
Defined Benefit Pension Items, Net current period other comprehensive income				(18)	[1]
Defined Benefit Pension Items, Ending Balance	(1,846)	[1]		(1,846)	[1]
Accumulated other comprehensive income, Opening Balance				5,689	[1]	5,139
Other comprehensive income before reclassification				(6,385)	[1]
Amounts reclassified from accumulated other comprehensive income				71	[1]
Net current period other comprehensive income	(5,613)		250	(6,314)	[1]	1,352
Accumulated other comprehensive income, Ending Balance	(625)	[1]	6,491	(625)	[1]	6,491
Unrealized loss on securities available for sale without other than temporary impairment Balance						7,688
Unrealized loss on securities available for sale without other than temporary impairment Current Period Change						886
Unrealized gain on securities available for sale without other than temporary impairment, Balance			8,574			8,574
Unrealized loss on securities available for sale with other than temporary impairment, Balance						(523)
Unrealized loss on securities available for sale with other than temporary impairment, Current Period Change						335
Unrealized loss on securities available for sale with other than temporary impairment, Balance			(188)			(188)
Total unrealized gain on securities available for sale, Opening Balance						7,165
Total unrealized gain on securities available for sale, Current Period Change						1,221
Total unrealized gain on securities available for sale, Ending Balance			8,386			8,386
Unrealized loss on defined benefit pension plans, Opening Balance						(2,026)
Unrealized loss on defined benefit pension plans, Current Period Change						131
Unrealized loss on defined benefit pension plans, Ending Balance			$ (1,895)			$ (1,895)

[1] All amounts are net of tax. Amounts in parenthesis indicate debits.

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OFFSETTING ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2013

Offsetting Assets and Liabilities [Abstract]

OFFSETTING ASSETS AND LIABILITIES

NOTE 10. OFFSETTING ASSETS AND LIABILITIES

On January 1, 2013, the Company adopted changes issued by the FASB to the disclosure of offsetting assets and liabilities. These changes require an entity to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The enhanced disclosures will enable users of an entity’s financial statements to understand and evaluate the effect or potential effect of master netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments. Other than the additional disclosure requirements, the adoption of these changes had no impact on the Consolidated Financial Statements.

Offsetting of Financial Assets and Derivative Assets

	June 30, 2013
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of  Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Description
Interest Rate Swap Derivatives	$	314	$	0	$	314	$	0	$	(290)	$	24
Total	$	314	$	0	$	314	$	0	$	(290)	$	24

Offsetting of Financial Liabilities and Derivative Liabilities

	June 30, 2013
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Pledged		Net Amount
Description
Interest Rate Swap Derivatives	$	242	$	0	$	242	$	0	$	0	$	242
Repurchase Agreements		102,655		0		102,655		(102,655)		0		0
Total	$	102,897	$	0	$	102,897	$	(102,655)	$	0	$	242

Offsetting of Financial Liabilities and Derivative Liabilities

	December 31, 2012
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Pledged		Net Amount
Description
Repurchase Agreements	$	121,883	$	0	$	121,883	$	(121,883)	$	0	$	0
Total	$	121,883	$	0	$	121,883	$	(121,883)	$	0	$	0

There were no interest rate swap derivatives as of December 31, 2012.

If an event of default occurs causing an early termination of an interest rate swap derivative, any early termination amount payable to one party by the other party may be reduced by set-off against any other amount payable by the one party to the other party. If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.

XML

EMPLOYEE BENEFIT PLANS (Additional Information) (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Additional contributions to benefit plan	$ 101,000
Pension Plan, Defined Benefit [Member]
Estimated future employer contributions in next fiscal year	110,000	211,000
Supplemental Employee Retirement Plan, Defined Benefit [Member]
Estimated future employer contributions in next fiscal year	$ 80,000	$ 80,000

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (Reclassification Adjustment) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
Unrealized gains and losses on available-for-sale securities
Income tax expense	$ (6,295)	[1]
Net of tax			1,221
Amount Reclassified From Accumulated Other Comprehensive Income [Member]
Unrealized gains and losses on available-for-sale securities
Net securities gains (losses)	1	[2]
Income tax expense	0	[2]
Net of tax	1	[2]
Amortization of defined benefit pension items
Salaries and employee benefits	(121)	[3]
Income tax expense	49	[2]
Net of tax	(72)	[2]
Total reclassifications for the period	$ (71)	[2]

[1] All amounts are net of tax. Amounts in parenthesis indicate debits.

[2] Amounts in parenthesis indicate debits to profit/loss

[3] Included in the computation of net periodic benefit cost (see employee benefit plans footnote for additional details)

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	$ 2,334,700	$ 2,257,520
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	888,340	847,009
Commercial Real Estate and Multi-family Residential Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	883,654	800,198
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	198,400	224,805
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	274,384	282,994
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	1,880,497	1,784,617
Pass [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	46,381	56,692
Pass [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	8,261	10,168
Pass [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	424,540	403,778
Pass [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	378,380	355,772
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	94,229	67,002
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	325,524	315,672
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	339,563	282,108
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	37,028	43,425
Pass [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	99,229	107,734
Pass [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	97,825	115,649
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	23,717	18,685
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	5,820	7,932
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	90,703	82,678
Special Mention [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Special Mention [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	460	378
Special Mention [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	23,755	22,591
Special Mention [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	22,086	23,192
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	4,140	4,595
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	22,302	24,589
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	14,652	6,345
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	337	345
Special Mention [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Special Mention [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Special Mention [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	847	343
Special Mention [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	2,124	300
Special Mention [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	88,967	99,190
Substandard [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	118	118
Substandard [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	293	497
Substandard [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	14,090	13,468
Substandard [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	25,425	26,857
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	9,921	10,753
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	17,011	18,144
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	18,947	26,028
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	1,192
Substandard [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	1,346	1,404
Substandard [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	1,816	729
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	64	66
Doubtful [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	64	66
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Doubtful [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	274,469	290,969
Not Rated [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	34,409	34,661
Not Rated [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	1,285
Not Rated [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	18
Not Rated [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	0	0
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	89,610	89,805
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	145,197	153,692
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total ending loan balance	$ 5,253	$ 11,508

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

Schedule of changes in accumulated other comprehensive income

The following tables summarize the changes within each classification of accumulated other comprehensive income for the six months ended June 30, 2013 and 2012:

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT^(a)

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
	Securities		Items		Total
Balance at December 31, 2012	$	7,517	$	(1,828)	$	5,689
Other comprehensive income before reclassification		(6,295)		(90)		(6,385)
Amounts reclassified from accumulated other comprehensive income		(1)		72		71
Net current period other comprehensive income		(6,296)		(18)		(6,314)
Balance at June 30, 2013	$	1,221	$	(1,846)	$	(625)

(a) All amounts are net of tax. Amounts in parenthesis indicate debits.

			Current
	Balance		Period		Balance
	at December 31, 2011		Change		at June 30, 2012
Unrealized loss on securities available for sale     without other than temporary impairment	$	7,688	$	886	$	8,574
Unrealized loss on securities available for sale     with other than temporary impairment		(523)		335		(188)
Total unrealized loss on securities available for sale		7,165		1,221		8,386
Unrealized loss on defined benefit pension plans		(2,026)		131		(1,895)
Total	$	5,139	$	1,352	$	6,491

Reclassification Accumulated Other Comprehensive Income

Reclassifications out of accumulated comprehensive income for the six months ended June 30, 2013 are as follows:

RELCASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME^(a)

Details about	Amount			Affected Line Item
Accumulated other	Reclassified From			in the Statement
Comprehensive	Accumulated Other			Where Net
Income Components	Comprehensive Income			Income is Presented
Unrealized gains and losses on     available-for-sale securities
	$	1		Net securities gains (losses)
		0		Income tax expense
	$	1		Net of tax
Amortization of defined benefit     pension items
	$	(121)	(b)	Salaries and employee benefits
		49		Income tax expense
	$	(72)		Net of tax
total reclassifications for the period	$	(71)		Net of tax

(a) Amounts in parenthesis indicate debits to profit/loss.

(b) Included in the computation of net periodic benefit cost (see employee benefit plans footnote for additional details).

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FAIR VALUE DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on a recurring basis

                     The table below presents the balances of assets measured at fair value on a recurring basis:

	June 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,027	$	0	$	0	$	1,027
U.S. Government sponsored agencies		0		5,224		0		5,224
Mortgage-backed securities		0		366,418		0		366,418
Non-agency residential mortgage-backed securities		0		0		5,392		5,392
State and municipal securities		0		93,936		979		94,915
Total Securities		1,027		465,578		6,371		472,976
Mortgage banking derivative		0		417		0		417
Interest rate swap derivative		0		314		0		314
Total assets	$	1,027	$	466,309	$	6,371	$	473,707
Liabilities
Mortgage banking derivative	$	0	$	34	$	0	$	34
Interest rate swap derivative		0		242		0		242
Total liabilities	$	0	$	276	$	0	$	276

	December 31, 2012
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,037	$	0	$	0	$	1,037
U.S. Government sponsored agencies		0		5,304		0		5,304
Mortgage-backed securities		0		365,644		0		365,644
Non-agency residential mortgage-backed securities		0		3,594		2,859		6,453
State and municipal securities		0		87,595		988		88,583
Total Securities		1,037		462,137		3,847		467,021
Mortgage banking derivative		0		739		0		739
Total assets	$	1,037	$	462,876	$	3,847	$	467,760
Liabilities
Mortgage banking derivative	$	0	$	12	$	0	$	12

Schedule of reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs

                The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2013 and 2012:

	Non-Agency Residential
	Mortgage-Backed Securities					State and Municipal Securities
	2013			2012		2013			2012
Balance of recurring Level 3 assets at January 1	$	2,859		$	0	$	988		$	686
Transfers into Level 3		3,334			0		0			0
Changes in fair value of securities		(52	)		0		(9	)		0
Principal payments		(749	)		0		0			(45	)
Balance of recurring Level 3 assets at June 30	$	5,392		$	0	$	979		$	641

Fair Value Measurements, Recurring, Valuation Techniques

The state and municipal securities measured at fair value included below are non-rated Indiana municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	June 30, 2013		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	5,392	Discounted cash flow	Constant prepayment rate		5.00-30.00
						(9.56)
				Average life		0.57-2.66
						(1.44)
				Swap/EDSF spread		242-327
						(297)
State and municipal securities	$	979	Price to type, par, call	Discount to benchmark index		1-7%
						(2.57%)

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	December 31, 2012		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	2,859	Discounted cash flow	Constant prepayment rate		5.00-9.00
						(6.00)
				Average life (years)		0.20-2.86
						(2.70)
				Swap/EDSF spread		297-339
						(328)
State and municipal securities	$	988	Price to type, par, call	Discount to benchmark index		1-11%
						(4%)

Schedule of assets measured at fair value on a nonrecurring basis

The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	June 30, 2013
	Fair Value Measurements Using						Assets
Assets	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	978	$	978
Non-working capital loans		0		0		3,265		3,265
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,417		2,417
Owner occupied loans		0		0		2,914		2,914
Nonowner occupied loans		0		0		12,450		12,450
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		283		283
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		404		404
Open end and junior lien loans		0		0		25		25
Residential construction loans		0		0		0		0
Other consumer loans		0		0		40		40
Total impaired loans	$	0	$	0	$	22,776	$	22,776
Mortgage servicing rights		0		0		8		8
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	22,859	$	22,859

December 31, 2012
	Fair Value Measurements Using						Assets
Assets	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	990	$	990
Non-working capital loans		0		0		2,990		2,990
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,026		2,026
Owner occupied loans		0		0		3,892		3,892
Nonowner occupied loans		0		0		18,642		18,642
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		268		268
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		352		352
Open end and junior lien loans		0		0		158		158
Residential construction loans		0		0		0		0
Other consumer loans		0		0		46		46
Total impaired loans	$	0	$	0	$	29,364	$	29,364
Mortgage servicing rights		0		0		1,906		1,906
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	31,345	$	31,345

Fair Value Measured On Nonrecurring Basis Valuation Techniques

                         The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	June 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	978	$	978
Non-working capital loans		0		0		3,265		3,265
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,417		2,417
Owner occupied loans		0		0		2,914		2,914
Nonowner occupied loans		0		0		12,450		12,450
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		283		283
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		404		404
Open end and junior lien loans		0		0		25		25
Residential construction loans		0		0		0		0
Other consumer loans		0		0		40		40
Total impaired loans	$	0	$	0	$	22,776	$	22,776
Mortgage servicing rights		0		0		8		8
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	22,859	$	22,859

                   The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2013:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired Loans:
Commercial and industrial	$	4,243	Collateral based	Discount to reflect		31	%		(8% - 90%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		17,781	Collateral based	Discount to reflect		23	%		(3% - 42%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		283	Collateral based	Discount to reflect		13	%
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		429	Collateral based	Discount to reflect		22	%		(8% - 59%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		40	Collateral based	Discount to reflect		39	%		(33% - 79%)
			measurements	current market conditions
				and ultimate collectability
Mortgage servicing rights		8	Discounted cash flows	Discount rate		9.50	%
Other real estate owned		75	Appraisal	Discount to reflect		49	%
				current market conditions

Schedule of fair values and the related carrying values of financial instruments

                  The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	June 30, 2013
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	63,555		$	63,555		$	0		$	0		$	63,555
Securities available for sale		472,976			1,027			465,578			6,371			472,976
Real estate mortgages held for sale		5,486			0			5,567			0			5,567
Loans, net		2,284,065			0			0			2,285,426			2,285,426
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		9,208			6			2,266			6,936			9,208
Financial Liabilities:
Certificates of deposit		(804,564	)		0			(815,860	)		0			(815,860	)
All other deposits		(1,678,928	)		(1,678,928	)		0			0			(1,678,928	)
Securities sold under agreements to repurchase		(102,655	)		0			(102,655	)		0			(102,655	)
Federal funds purchased		(37,000	)		0			(37,000	)		0			(37,000	)
Long-term borrowings		(37	)		0			(44	)		0			(44	)
Subordinated debentures		(30,928	)		0			0			(31,230	)		(31,230	)
Standby letters of credit		(316	)		0			0			(316	)		(316	)
Accrued interest payable		(4,405	)		(135	)		(4,267	)		(3	)		(4,405	)

	December 31, 2012
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	232,237		$	232,237		$	0		$	0		$	232,237
Securities available for sale		467,021			1,037			462,137			3,847			467,021
Real estate mortgages held for sale		9,452			0			9,663			0			9,663
Loans, net		2,206,075			0			0			2,230,993			2,230,993
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		8,485			6			2,215			6,264			8,485
Financial Liabilities:
Certificates of deposit		(907,505	)		0			(922,397	)		0			(922,397	)
All other deposits		(1,674,251	)		(1,674,251	)		0			0			(1,674,251	)
Securities sold under agreements to repurchase		(121,883	)		0			(121,883	)		0			(121,883	)
Long-term borrowings		(15,038	)		0			(15,607	)		0			(15,607	)
Subordinated debentures		(30,928	)		0			0			(31,223	)		(31,223	)
Standby letters of credit		(262	)		0			0			(262	)		(262	)
Accrued interest payable		(4,757	)		(298	)		(4,456	)		(3	)		(4,757	)

XML

SECURITIES (Addiotional information) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2012
Information related to available for sale securities [Abstract]
Available-for-sale Securities pledged as collateral	$ 171.9	$ 216.5
Non-agency residential mortgage backed securities not issued by the federal government or government sponsored agencies	$ 5.4	$ 6.5

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Aging Of The Recorded Investment In Past Due Loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	$ 5,355	$ 4,257
Greater than 90 Days Past Due	21,643	30,875
Total Past Due	26,998	35,132
Loans Not Past Due	2,307,702	2,222,388
Total ending loan balance	2,334,700	2,257,520
Other Commerical Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Past Due	0	0
Loans Not Past Due	46,499	56,810
Total ending loan balance	46,499	56,810
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	888,340	847,009
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	642	233
Greater than 90 Days Past Due	1,812	1,899
Total Past Due	2,454	2,132
Loans Not Past Due	459,931	437,705
Total ending loan balance	462,385	439,837
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	343	48
Greater than 90 Days Past Due	3,890	4,862
Total Past Due	4,233	4,910
Loans Not Past Due	421,722	402,262
Total ending loan balance	425,955	407,172
Commercial Real Estate and Multi-Family Residential Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	883,654	800,198
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	0	998
Greater than 90 Days Past Due	383	398
Total Past Due	383	1,396
Loans Not Past Due	107,907	80,954
Total ending loan balance	108,290	82,350
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	126	1,023
Greater than 90 Days Past Due	2,424	2,461
Total Past Due	2,550	3,484
Loans Not Past Due	362,287	354,921
Total ending loan balance	364,837	358,405
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	1,406	38
Greater than 90 Days Past Due	11,718	19,200
Total Past Due	13,124	19,238
Loans Not Past Due	360,038	295,243
Total ending loan balance	373,162	314,481
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	0	286
Total Past Due	0	286
Loans Not Past Due	37,365	44,676
Total ending loan balance	37,365	44,962
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	198,400	224,805
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	757	797
Total Past Due	757	797
Loans Not Past Due	99,818	108,359
Total ending loan balance	100,575	109,156
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	18	0
Greater than 90 Days Past Due	0	0
Total Past Due	18	0
Loans Not Past Due	97,807	115,649
Total ending loan balance	97,825	115,649
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	274,384	282,994
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	2,399	1,475
Greater than 90 Days Past Due	560	504
Total Past Due	2,959	1,979
Loans Not Past Due	113,031	107,583
Total ending loan balance	115,990	109,562
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	248	361
Greater than 90 Days Past Due	34	391
Total Past Due	282	752
Loans Not Past Due	152,859	161,172
Total ending loan balance	153,141	161,924
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	8	0
Greater than 90 Days Past Due	0	0
Total Past Due	8	0
Loans Not Past Due	5,245	11,508
Total ending loan balance	5,253	11,508
Other consumer loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	165	81
Greater than 90 Days Past Due	65	77
Total Past Due	230	158
Loans Not Past Due	43,193	45,546
Total ending loan balance	$ 43,423	$ 45,704

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SECURITIES (Summary Of Available Sale Of Securities) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Information related to available for sale securities [Abstract]
Fair Value	$ 472,976	$ 467,021
Gross Unrealized Gain	9,915	13,877
Gross Unrealized Losses	(8,121)	(1,684)
Amortized Cost	471,182	454,828
Us Treasury Securities [Member]
Information related to available for sale securities [Abstract]
Fair Value	1,027	1,037
Gross Unrealized Gain	26	35
Gross Unrealized Losses	0	0
Amortized Cost	1,001	1,002
Us Government Sponsored Agencies [Member]
Information related to available for sale securities [Abstract]
Fair Value	5,224	5,304
Gross Unrealized Gain	202	278
Gross Unrealized Losses	0	0
Amortized Cost	5,022	5,026
Agency Residential Mortgage-Backed Securities [Member]
Information related to available for sale securities [Abstract]
Fair Value	366,418	365,644
Gross Unrealized Gain	5,790	7,813
Gross Unrealized Losses	(6,555)	(1,495)
Amortized Cost	367,183	359,326
Non-Agency Residential Mortgage Backed Securities [Member]
Information related to available for sale securities [Abstract]
Fair Value	5,392	6,453
Gross Unrealized Gain	167	242
Gross Unrealized Losses	0	0
Amortized Cost	5,225	6,211
State and Municipal Securities [Member]
Information related to available for sale securities [Abstract]
Fair Value	94,915	88,583
Gross Unrealized Gain	3,730	5,509
Gross Unrealized Losses	(1,566)	(189)
Amortized Cost	$ 92,751	$ 83,263

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FAIR VALUE DISCLOSURES (Assets and Liabilities Measured At Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets [Abstract]
Mortgage-backed securities	$ 371,810
Total Securities	472,976	467,021
Mortgage banking derivative	24
Liabilities
Mortgage banking derivative	242	0
Fair Value, Measurements, Recurring [Member]
Assets [Abstract]
U.S. Treasury securities	1,027	1,037
U.S. Government sponsored agencies	5,224	5,304
Mortgage-backed securities	366,418	365,644
Non-agency residential mortgage-backed securities	5,392	6,453
State and municipal securities	94,915	88,583
Total Securities	472,976	467,021
Mortgage banking derivative	417	739
Interest rate swap derivative	314
Total assets	473,707	467,760
Liabilities
Mortgage banking derivative	34	12
Interest rate swap derivative	242
Total liabilities	276
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets [Abstract]
U.S. Treasury securities	1,027	1,037
U.S. Government sponsored agencies	0	0
Mortgage-backed securities	0	0
Non-agency residential mortgage-backed securities	0	0
State and municipal securities	0	0
Total Securities	1,027	1,037
Mortgage banking derivative	0	0
Interest rate swap derivative	0
Total assets	1,027	1,037
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0
Total liabilities	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets [Abstract]
U.S. Treasury securities	0	0
U.S. Government sponsored agencies	5,224	5,304
Mortgage-backed securities	366,418	365,644
Non-agency residential mortgage-backed securities	0	3,594
State and municipal securities	93,936	87,595
Total Securities	465,578	462,137
Mortgage banking derivative	417	739
Interest rate swap derivative	314
Total assets	466,309	462,876
Liabilities
Mortgage banking derivative	34	12
Interest rate swap derivative	242
Total liabilities	276
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets [Abstract]
U.S. Treasury securities	0	0
U.S. Government sponsored agencies	0	0
Mortgage-backed securities	0	0
Non-agency residential mortgage-backed securities	5,392	2,859
State and municipal securities	979	988
Total Securities	6,371	3,847
Mortgage banking derivative	0	0
Interest rate swap derivative	0
Total assets	6,371	3,847
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0
Total liabilities	$ 0

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Balance In The Allowance For Loan Losses And The Recorded Investment In Loans By Portfolio Management) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	$ 50,818	$ 52,757	$ 51,445	$ 53,400
Provision for loan losses	0	500	0	(1,299)
Loans charged-off	(369)	(1,851)	(1,575)	(3,584)
Recoveries	186	411	765	702
Net loans charged-off	(183)	(1,440)	(810)	(2,882)
Balance, closing	50,635	51,817	50,635	51,817
Ending allowance balance attributable to loans:
Individually evaluated for impairment	11,085	16,228	11,085	16,228	14,805
Collectively evaluated for impairment	39,550		39,550		36,640
Total ending allowance balance	50,635	51,817	50,635	51,817
Loans:
Loans individually evaluated for impairment	46,913		46,913		58,942
Loans collectively evaluated for impairment	2,287,787		2,287,787		2,198,578
Total ending loan balance	2,334,700		2,334,700		2,257,520
Commercial and Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	22,113	22,134	22,342	22,830
Provision for loan losses	(348)	(1,048)	(707)	(1,152)
Loans charged-off	(10)	(1,676)	(143)	(2,454)
Recoveries	124	286	387	472
Net loans charged-off	114	(1,390)	244	(1,982)
Balance, closing	21,879	19,696	21,879	19,696
Ending allowance balance attributable to loans:
Individually evaluated for impairment	4,469		4,469		5,542
Collectively evaluated for impairment	17,410		17,410		16,800
Total ending allowance balance	21,879	19,696	21,879	19,696
Loans:
Loans individually evaluated for impairment	16,882		16,882		18,281
Loans collectively evaluated for impairment	871,458		871,458		828,728
Total ending loan balance	888,340		888,340		847,009
Commercial Real Estate and Multi-Family Residential Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	20,420	23,236	20,812	23,489
Provision for loan losses	(336)	829	(83)	1,394
Loans charged-off	0	0	(906)	(847)
Recoveries	14	18	275	47
Net loans charged-off	14	18	(631)	(800)
Balance, closing	20,098	24,083	20,098	24,083
Ending allowance balance attributable to loans:
Individually evaluated for impairment	6,103		6,103		8,559
Collectively evaluated for impairment	13,995		13,995		12,253
Total ending allowance balance	20,098	24,083	20,098	24,083
Loans:
Loans individually evaluated for impairment	26,540		26,540		36,919
Loans collectively evaluated for impairment	857,114		857,114		763,279
Total ending loan balance	883,654		883,654		800,198
Agri-business and Agricultural Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	1,263	538	1,403	695
Provision for loan losses	452	881	310	724
Loans charged-off	(200)	0	(200)	0
Recoveries	2	0	4	0
Net loans charged-off	(198)	0	(196)	0
Balance, closing	1,517	1,419	1,517	1,419
Ending allowance balance attributable to loans:
Individually evaluated for impairment	40		40		63
Collectively evaluated for impairment	1,477		1,477		1,340
Total ending allowance balance	1,517	1,419	1,517	1,419
Loans:
Loans individually evaluated for impairment	757		757		797
Loans collectively evaluated for impairment	197,643		197,643		224,008
Total ending loan balance	198,400		198,400		224,805
Other Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	223	186	240	65
Provision for loan losses	41	(12)	24	107
Loans charged-off	0	0	0	0
Recoveries	0	2	0	4
Net loans charged-off	0	2	0	4
Balance, closing	264	176	264	176
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	264		264		240
Total ending allowance balance	264	176	264	176
Loans:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	46,499		46,499		56,810
Total ending loan balance	46,499		46,499		56,810
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	2,866	2,527	2,682	2,322
Provision for loan losses	30	(110)	300	61
Loans charged-off	(81)	(78)	(189)	(92)
Recoveries	8	73	30	121
Net loans charged-off	(73)	(5)	(159)	29
Balance, closing	2,823	2,412	2,823	2,412
Ending allowance balance attributable to loans:
Individually evaluated for impairment	445		445		607
Collectively evaluated for impairment	2,378		2,378		2,075
Total ending allowance balance	2,823	2,412	2,823	2,412
Loans:
Loans individually evaluated for impairment	2,654		2,654		2,853
Loans collectively evaluated for impairment	271,730		271,730		280,141
Total ending loan balance	274,384		274,384		282,994
Other Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	558	523	609	645
Provision for loan losses	69	65	46	11
Loans charged-off	(78)	(97)	(137)	(191)
Recoveries	38	32	69	58
Net loans charged-off	(40)	(65)	(68)	(133)
Balance, closing	587	523	587	523
Ending allowance balance attributable to loans:
Individually evaluated for impairment	28		28		34
Collectively evaluated for impairment	559		559		575
Total ending allowance balance	587	523	587	523
Loans:
Loans individually evaluated for impairment	80		80		92
Loans collectively evaluated for impairment	43,343		43,343		45,612
Total ending loan balance	43,423		43,423		45,704
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, opening	3,375	3,613	3,357	3,354
Provision for loan losses	92	(105)	110	154
Loans charged-off	0	0	0	0
Recoveries	0	0	0	0
Net loans charged-off	0	0	0	0
Balance, closing	3,467	3,508	3,467	3,508
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	3,467		3,467		3,357
Total ending allowance balance	3,467	3,508	3,467	3,508
Loans:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	0		0		0
Total ending loan balance	$ 0		$ 0		$ 0

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SECURITIES (Quantitative Disclosure Of Available Sale Of Securities) (Details)	Jun. 30, 2013	Dec. 31, 2012
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, Less than 12 months	92	58
Number of available-for-sale securities in unrealized loss positions, 12 months or more	10	10
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	102	68
Agency Residential Mortgage-Backed Securities [Member]
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, Less than 12 months	43	29
Number of available-for-sale securities in unrealized loss positions, 12 months or more	10	9
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	53	38
State and Municipal Securities [Member]
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, Less than 12 months	49	29
Number of available-for-sale securities in unrealized loss positions, 12 months or more	0	1
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	49	30

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2013

Employee Benefit Plans [Abstract]

Components of net periodic benefit cost

Components of net periodic benefit cost:

	Six Months Ended June 30,
	Pension Benefits				SERP Benefits
	2013		2012		2013		2012
Interest cost	$	58	$	64	$	23	$	26
Expected return on plan assets		(60)		(69)		(37)		(38)
Recognized net actuarial (gain) loss		75		68		46		42
Net pension expense (benefit)	$	73	$	63	$	32	$	30

	Three Months Ended June 30,
	Pension Benefits				SERP Benefits
	2013		2012		2013		2012
Interest cost	$	26	$	29	$	10	$	10
Expected return on plan assets		(25)		(29)		(18)		(18)
Recognized net actuarial (gain) loss		41		41		25		25
Net pension expense (benefit)	$	42	$	41	$	17	$	17

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Balance at Dec. 31, 2011	$ 273,200	$ 87,380	$ 181,903	$ 5,139	$ (1,222)
Net income	17,445		17,445
Other comprehensive income (loss), net of tax	1,352			1,352
Common stock cash dividends declared	(5,302)		(5,302)
Treasury shares purchased under deferred directors' plan	0	186			(186)
Stock activity under stock compensation plans, net of taxes	185	185
Stock compensation expense	689	689
Balance at Jun. 30, 2012	287,569	88,440	194,046	6,491	(1,408)
Balance at Dec. 31, 2012	297,739	90,039	203,654	5,689	(1,643)
Net income	18,482		18,482
Other comprehensive income (loss), net of tax	(6,314)			(6,314)
Common stock cash dividends declared	(3,134)		(3,134)
Treasury shares purchased under deferred directors' plan	0	190			(190)
Treasury stock sold and distributed under deferred directors' plan	0	(54)			54
Stock activity under stock compensation plans, net of taxes	18	18
Stock compensation expense	728	728
Balance at Jun. 30, 2013	$ 307,519	$ 90,921	$ 219,002	$ (625)	$ (1,779)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 18,482	$ 17,445
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	1,384	1,338
Provision for loan losses	0	1,299
Loss on sale and write down of other real estate owned	95	103
Amortization of intangible assets	23	26
Amortization of loan servicing rights	324	347
Net change in loan servicing rights valuation allowance	(39)	(22)
Loans originated for sale	(51,639)	(64,807)
Net gain on sales of loans	(1,676)	(1,140)
Proceeds from sale of loans	56,748	63,365
Net gain on sales of premises and equipment	(1)	0
Net (gain) loss on sales and calls of securities available for sale	(1)	(3)
Impairment on available for sale securities	0	959
Net securities amortization	5,139	3,143
Stock compensation expense	728	689
Earnings on life insurance	(797)	(459)
Tax benefit of stock option exercises	(39)	(432)
Net change:
Accrued income receivable	(723)	166
Accrued expenses payable	(3,654)	1,383
Other assets	5,990	998
Other liabilities	857	(178)
Total adjustments	12,719	6,775
Net cash from operating activities	31,201	24,220
Cash flows from investing activities:
Proceeds from maturities, calls and principal paydowns of securities available for sale	69,675	48,098
Purchases of securities available for sale	(91,167)	(61,221)
Purchase of life insurance	(99)	(14)
Net (increase) decrease in total loans	(77,990)	16,283
Proceeds from sales of land, premises and equipment	1	0
Purchases of land, premises and equipment	(1,890)	(1,564)
Proceeds from sales of other real estate	386	373
Net cash from investing activities	(101,084)	1,955
Cash flows from financing activities:
Net increase (decrease) in total deposits	(98,264)	112,789
Net increase (decrease) in short-term borrowings	17,772	(43,294)
Payments on long-term borrowings	(15,001)	(2)
Common dividends paid	(3,121)	(5,289)
Preferred dividends paid	(13)	(13)
Proceeds From Stock Option Exercise	18	185
Purchase of treasury stock	(190)	(186)
Net cash from financing activities	(98,799)	64,190
Net change in cash and cash equivalents	(168,682)	90,365
Cash and cash equivalents at beginning of the period	232,237	104,584
Cash and cash equivalents at end of the period	63,555	194,949
Cash paid during the period for:
Interest	9,900	12,560
Income taxes	8,330	7,050
Supplemental non-cash disclosures:
Loans transferred to other real estate	$ 0	$ 144

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LOANS

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

LOANS

NOTE 3. LOANS

	June 30,				December 31,
	2013				2012
Commercial and industrial loans:
Working capital lines of credit loans	$	462,137	19.8	%	$	439,638	19.5	%
Non-working capital loans		425,958	18.2			407,184	18.0
Total commercial and industrial loans		888,095	38.0			846,822	37.5
Commercial real estate and multi-family residential loans:
Construction and land development loans		108,695	4.7			82,494	3.7
Owner occupied loans		365,071	15.6			358,617	15.9
Nonowner occupied loans		373,696	16.0			314,889	13.9
Multifamily loans		37,422	1.6			45,011	2.0
Total commercial real estate and multi-family residential loans		884,884	37.9			801,011	35.5
Agri-business and agricultural loans:
Loans secured by farmland		100,571	4.3			109,147	4.8
Loans for agricultural production		97,729	4.2			115,572	5.1
Total agri-business and agricultural loans		198,300	8.5			224,719	10.0
Other commercial loans		46,501	2.0			56,807	2.5
Total commercial loans		2,017,780	86.4			1,929,359	85.5
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		116,247	5.0			109,823	4.9
Open end and junior lien loans		152,571	6.5			161,366	7.1
Residential construction and land development loans		5,263	0.2			11,541	0.5
Total consumer 1-4 family mortgage loans		274,081	11.7			282,730	12.5
Other consumer loans		43,470	1.9			45,755	2.0
Total consumer loans		317,551	13.6			328,485	14.5
Subtotal		2,335,331	100.0	%		2,257,844	100.0	%
Less: Allowance for loan losses		(50,635)				(51,445)
Net deferred loan fees		(631)				(324)
Loans, net	$	2,284,065			$	2,206,075

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE 1. BASIS OF PRESENTATION

This report is filed for Lakeland Financial Corporation (the “Company”) and its wholly owned subsidiaries, Lake City Bank (the “Bank”), and LCB Risk Management, a captive insurance company. All significant inter-company balances and transactions have been eliminated in consolidation. Also included is the Bank’s wholly owned subsidiary, LCB Investments II, Inc. (“LCB Investments”). LCB Investments also owns LCB Funding, Inc. (“LCB Funding”), a real estate investment trust.

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and are unaudited. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ending June 30, 2013 are not necessarily indicative of the results that may be expected forany subsequent reporting periods, including the year ending December 31, 2013. The 2012 Lakeland Financial Corporation Annual Report on Form 10-K should be read in conjunction with these statements.

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SECURITIES (Schedule Of Available Sale Of Securities By Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Maturities of Available-for-sale Debt Securities [Abstract]
Due in one year or less	$ 3,192
Due after one year through five years	26,030
Due after five years through ten years	39,306
Due after ten years	30,246
Available for sale securities with maturities amortized cost	98,774
Mortgage-backed securities	372,408
Total debt securities	471,182
Due in one year or less	3,259
Due after one year through five years	27,527
Due after five years through ten years	40,700
Due after ten years	29,680
Available for sale securities with maturities fair value	101,166
Mortgage-backed securities	371,810
Securities available for sale (carried at fair value)	$ 472,976	$ 467,021

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OFFSETTING ASSETS AND LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2013

Offsettings [Abstract]

Offsetting Assets and Liability

Offsetting of Financial Assets and Derivative Assets

	June 30, 2013
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets presented in the Statement of  Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Description
Interest Rate Swap Derivatives	$	314	$	0	$	314	$	0	$	(290)	$	24
Total	$	314	$	0	$	314	$	0	$	(290)	$	24

Offsetting of Financial Liabilities and Derivative Liabilities

	June 30, 2013
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Pledged		Net Amount
Description
Interest Rate Swap Derivatives	$	242	$	0	$	242	$	0	$	0	$	242
Repurchase Agreements		102,655		0		102,655		(102,655)		0		0
Total	$	102,897	$	0	$	102,897	$	(102,655)	$	0	$	242

Offsetting of Financial Liabilities and Derivative Liabilities

	December 31, 2012
	(in thousands)
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Pledged		Net Amount
Description
Repurchase Agreements	$	121,883	$	0	$	121,883	$	(121,883)	$	0	$	0
Total	$	121,883	$	0	$	121,883	$	(121,883)	$	0	$	0

There were no interest rate swap derivatives as of December 31, 2012.

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Loans Individualy Evaluated For Impairment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Loans Individually Evaluated for Impairment [Abstract]
Unpaid Principal Balance	$ 53,435	$ 66,249	$ 53,435	$ 66,249	$ 65,516
Recorded Investment	46,913	59,256	46,913	59,256	58,942
Allowance for loans losses allocated	11,085	16,228	11,085	16,228	14,805
Average Recorded Investment	47,246	59,378	51,285	60,596
Interest Income Recognized	304	326	610	643
Cash Basis Interest Income Recogonized	297	330	636	647
Other Commerical Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded					0
Unpaid principal balance with an allowance recorded		0		0	0
Recorded Investment with no related allowance recorded					0
Recorded investment with an allowance recorded		0		0	0
Allowance for loan losses allocated with no related allowance recorded					0
Allowance for loans losses allocated with an allowance recorded		0		0	0
Average recorded investment with an allowance recorded		0		0
Interest income recognized with an allowance recorded		0		0
Cash basis interest income recognized with an allowance recorded		0		0
Other Consumer Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	1		1		1
Unpaid principal balance with an allowance recorded	79	6	79	6	91
Recorded Investment with no related allowance recorded	1		1		1
Recorded investment with an allowance recorded	79	6	79	6	91
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	28	5	28	5	34
Average recorded investment with no related allowance recorded	1		1
Average recorded investment with an allowance recorded	79	6	80	7
Interest income recognized with no related allowance recorded	0		0
Interest income recognized with an allowance recorded	1	0	1	0
Cash basis interest income recognized with no related allowance recorded	0		0
Cash basis interest income recognized with an allowance recorded	1	0	1	0
Commercial and Industrial Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for loans losses allocated	4,469		4,469		5,542
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	65		65		61
Unpaid principal balance with an allowance recorded	5,492	5,598	5,492	5,598	5,833
Recorded Investment with no related allowance recorded	65		65		61
Recorded investment with an allowance recorded	2,883	2,989	2,883	2,989	3,224
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	1,123	1,450	1,123	1,450	1,516
Average recorded investment with no related allowance recorded	65		65
Average recorded investment with an allowance recorded	2,898	4,395	3,034	5,100
Interest income recognized with no related allowance recorded	0		0
Interest income recognized with an allowance recorded	14	13	27	29
Cash basis interest income recognized with no related allowance recorded	0		0
Cash basis interest income recognized with an allowance recorded	14	13	27	28
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	0	505	0	505	0
Unpaid principal balance with an allowance recorded	15,789	17,954	15,789	17,954	16,763
Recorded Investment with no related allowance recorded	0	166	0	166	0
Recorded investment with an allowance recorded	13,934	17,265	13,934	17,265	14,996
Allowance for loan losses allocated with no related allowance recorded	0	0	0	0	0
Allowance for loans losses allocated with an allowance recorded	3,346	5,271	3,346	5,271	4,026
Average recorded investment with no related allowance recorded	0	168	17	170
Average recorded investment with an allowance recorded	13,815	17,264	14,114	17,494
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	136	177	271	357
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	139	178	276	360
Commercial Real Estate and Multi-Family Residential Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for loans losses allocated	6,103		6,103		8,559
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded	3,459	2,386	3,459	2,386	3,352
Recorded investment with an allowance recorded	3,070	1,996	3,070	1,996	2,960
Allowance for loans losses allocated with an allowance recorded	653	510	653	510	934
Average recorded investment with an allowance recorded	4,203	2,036	4,366	1,503
Interest income recognized with an allowance recorded	7	17	52	17
Cash basis interest income recognized with an allowance recorded	(5)	17	47	17
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	716	654	716	654	754
Unpaid principal balance with an allowance recorded	3,629	5,405	3,629	5,405	5,869
Recorded Investment with no related allowance recorded	536	629	536	629	574
Recorded investment with an allowance recorded	3,629	4,636	3,629	4,636	5,869
Allowance for loan losses allocated with no related allowance recorded	0	0	0	0	0
Allowance for loans losses allocated with an allowance recorded	715	1,500	715	1,500	1,476
Average recorded investment with no related allowance recorded	543	637	555	464
Average recorded investment with an allowance recorded	2,768	4,288	3,534	4,438
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	39	6	68	18
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	45	6	76	16
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded		391		391	385
Unpaid principal balance with an allowance recorded	19,296	28,184	19,296	28,184	26,835
Recorded Investment with no related allowance recorded		391		391	385
Recorded investment with an allowance recorded	19,305	27,582	19,305	27,582	26,845
Allowance for loan losses allocated with no related allowance recorded		0		0	0
Allowance for loans losses allocated with an allowance recorded	4,735	6,936	4,735	6,936	6,149
Average recorded investment with no related allowance recorded		265		133
Average recorded investment with an allowance recorded	19,399	27,561	21,849	28,481
Interest income recognized with no related allowance recorded		0		0
Interest income recognized with an allowance recorded	84	104	168	202
Cash basis interest income recognized with no related allowance recorded		0		0
Cash basis interest income recognized with an allowance recorded	85	105	172	204
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded					410
Unpaid principal balance with an allowance recorded		0		0	0
Recorded Investment with no related allowance recorded					286
Recorded investment with an allowance recorded		0		0	0
Allowance for loan losses allocated with no related allowance recorded					0
Allowance for loans losses allocated with an allowance recorded		0		0	0
Average recorded investment with an allowance recorded		0		0
Interest income recognized with an allowance recorded		0		0
Cash basis interest income recognized with an allowance recorded		0		0
Agri-business and Agricultural Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for loans losses allocated	40		40		63
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	612	443	612	443	645
Unpaid principal balance with an allowance recorded	644	1,735	644	1,735	651
Recorded Investment with no related allowance recorded	434	265	434	265	466
Recorded investment with an allowance recorded	323	341	323	341	331
Allowance for loan losses allocated with no related allowance recorded	0	0	0	0	0
Allowance for loans losses allocated with an allowance recorded	40	75	40	75	63
Average recorded investment with no related allowance recorded	440	266	481	133
Average recorded investment with an allowance recorded	391	345	359	484
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	0	0	0	0
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	0	0	0	0
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded		203		203	0
Unpaid principal balance with an allowance recorded		0		0	0
Recorded Investment with no related allowance recorded		203		203	0
Recorded investment with an allowance recorded		0		0	0
Allowance for loan losses allocated with no related allowance recorded		0		0	0
Allowance for loans losses allocated with an allowance recorded		0		0	0
Average recorded investment with no related allowance recorded		204		102
Average recorded investment with an allowance recorded		0		105
Interest income recognized with no related allowance recorded		0		0
Interest income recognized with an allowance recorded		0		0
Cash basis interest income recognized with no related allowance recorded		0		0
Cash basis interest income recognized with an allowance recorded		0		0
Consumer 1-4 Family Mortgage Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Allowance for loans losses allocated	445		445		607
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with an allowance recorded		0		0	0
Recorded investment with an allowance recorded		0		0	0
Allowance for loans losses allocated with an allowance recorded		0		0	0
Average recorded investment with an allowance recorded		0		0
Interest income recognized with an allowance recorded		0		0
Cash basis interest income recognized with an allowance recorded		0		0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	49	580	49	580	59
Unpaid principal balance with an allowance recorded	3,570	1,875	3,570	1,875	3,387
Recorded Investment with no related allowance recorded	49	580	49	580	59
Recorded investment with an allowance recorded	2,571	1,877	2,571	1,877	2,403
Allowance for loan losses allocated with no related allowance recorded	0	0	0	0	0
Allowance for loans losses allocated with an allowance recorded	436	312	436	312	415
Average recorded investment with no related allowance recorded	49	583	54	440
Average recorded investment with an allowance recorded	2,537	1,833	2,518	1,815
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	23	9	23	20
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	18	11	37	22
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member]
Loans Individually Evaluated for Impairment [Abstract]
Unpaid principal balance with no related allowance recorded	0	20	0	20	41
Unpaid principal balance with an allowance recorded	34	310	34	310	379
Recorded Investment with no related allowance recorded	0	20	0	20	41
Recorded investment with an allowance recorded	34	310	34	310	350
Allowance for loan losses allocated with no related allowance recorded	0	0	0	0	0
Allowance for loans losses allocated with an allowance recorded	9	169	9	169	192
Average recorded investment with no related allowance recorded	0	20	21	30
Average recorded investment with an allowance recorded	58	312	49	333
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	0	0	0	0
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	$ 0	$ 0	$ 0	$ 0

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Troubled Debt Restructuring Subsequently Defaulted) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Troubled Debt Restructurings that Subsequently Defaulted [Abstract]
Number of Loans	0	1	1	1
Recorded Investment	$ 0	$ 65	$ 946	$ 65
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Troubled Debt Restructurings that Subsequently Defaulted [Abstract]
Number of Loans	0	1	1	1
Recorded Investment	$ 0	$ 65	$ 946	$ 65

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FAIR VALUE DISCLOSURES (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Mortgage servicing rights	$ 3,000		$ 3,000
Weighted average interest rate, residential mortgages (in hundredths)			4.18%
Weighted average maturity of residential mortgages			19 years
Discount rate used to estimate fair value (in hundredths)			9.30%		9.20%
Subtotal	2,335,331		2,335,331		2,257,844
Valuation allowance	50,635	51,817	50,635	51,817	51,445	50,818	52,757	53,400
Recoveries	186	411	765	702
Prepayment Speed used in unobservable assumptions			229		392
Commercial Real Estates [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			0.00%
Commercial Real Estates [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			50.00%
Inventory Finished Goods [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			35.00%
Inventory Finished Goods [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			65.00%
Finished Goods [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			30.00%
Finished Goods [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			60.00%
Inventory Work In Process [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			50.00%
Inventory Work In Process [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			100.00%
Equipment [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			30.00%
Equipment [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			70.00%
Marketable Securities [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Loans at fair value	8		8
Subtotal	11		11
Valuation allowance	3		3
Recoveries			39	22
Marketable Securities [Member] | Minimum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			10.00%
Marketable Securities [Member] | Maximum [Member] | Fair Value, Inputs, Level 3 [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Percentage of discount from appraised value (in hundredths)			30.00%
Impaired Loans [Member]
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Subtotal	30,300	47,600	30,300	47,600
Valuation allowance	7,500	14,700	7,500	14,700
Recoveries	$ 200	$ 1,800	$ 2,500	$ 3,500

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FAIR VALUE DISCLOSURES (Reconciliation of All Assets Measured at Fair Value on a Recurring Basis using Significant Unobservable Inputs (Level 3) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	$ 2,859	$ 0
Transfers into Level 3	3,334	0
Changes in fair value of securities	(52)	0
Principal payments	(749)	0
Balance	5,392	0
State and Municipal Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	988	686
Transfers into Level 3	0	0
Changes in fair value of securities	(9)	0
Principal payments	0	(45)
Balance	$ 979	$ 641

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SECURITIES (Information On Securities With At Least One Rating) (Details) (USD $) In Thousands, unless otherwise specified							6 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2013 Rali2004Qs73 [Member]
Committee On Uniform Securities Identification Procedures							76110HTX7
Other Than Temporary Impairment	$ 0	$ 0	$ 0	$ 1,318	$ 869	$ 359	$ 0
Par Value							2,567
Amortized Cost							2,551
Fair Value							2,591
Unrealized Gain(Loss)							$ 40
Debt Instrument, Credit Rating							BB+
Constant Default Rate 30 Days							2.97%
Constant Default Rate 90 Days							3.30%
Constant Default Rate 180 Days							3.21%
Credit Support							9.99%

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Valuation allowance	$ 50,635	$ 51,445
EQUITY
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued (in shares)	16,431,881	16,377,247
Common stock, shares outstanding (in shares)	16,340,697	16,290,136
Treasury stock, at cost	91,184	87,111

XML

EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2013

Employee Benefit Plans [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 6. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Six Months Ended June 30,
	Pension Benefits				SERP Benefits
	2013		2012		2013		2012
Interest cost	$	58	$	64	$	23	$	26
Expected return on plan assets		(60)		(69)		(37)		(38)
Recognized net actuarial (gain) loss		75		68		46		42
Net pension expense (benefit)	$	73	$	63	$	32	$	30

	Three Months Ended June 30,
	Pension Benefits				SERP Benefits
	2013		2012		2013		2012
Interest cost	$	26	$	29	$	10	$	10
Expected return on plan assets		(25)		(29)		(18)		(18)
Recognized net actuarial (gain) loss		41		41		25		25
Net pension expense (benefit)	$	42	$	41	$	17	$	17

The Company previously disclosed in its financial statements for the year ended December 31, 2012 that it expected to contribute $211,000 to its pension plan and $80,000 to its SERP plan in 2013. The Company has contributed $110,000 to its pension plan and $80,000 to its SERP plan as of June 30, 2013. The Company expects to contribute an additional $101,000 to its pension plan during the remainder of 2013. The Company does not expect to make any additional contributions to its SERP plan during the remainder of 2013.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012
Net income	$ 9,236	$ 8,819	$ 18,482		$ 17,445
Change in securities available for sale:
Unrealized holding gain (loss) on securities available for sale arising during the period	(9,358)	(181)	(10,399)		1,069
Reclassification adjustment for (gains) included in net income	0	0	(1)		(3)
Reclassification adjustment for other than temporary impairment	0	449	0		959
Net securities gain (loss) activity during the period	(9,358)	268	(10,400)		2,025
Tax effect	3,705	(58)	4,104		(804)
Net of tax amount	(5,653)	210	(6,296)		1,221
Defined benefit pension plans:
Net gain (loss) on defined benefit pension plans	0	0	(151)		110
Amortization of net actuarial loss	66	66	121		110
Net gain (loss) activity during the period	66	66	(30)		220
Tax effect	(26)	(26)	12		(89)
Net of tax amount	40	40	(18)		131
Total other comprehensive income (loss), net of tax	(5,613)	250	(6,314)	[1]	1,352
Comprehensive income	$ 3,623	$ 9,069	$ 12,168		$ 18,797

[1] All amounts are net of tax. Amounts in parenthesis indicate debits.

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OFFSETTING ASSETS AND LIABILITIES (Derivatives Assets And Liability) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Off Setting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	$ 314
Gross Amounts Offset in the Statement of Financial Position	0
Net Amounts of Assets presented in the Statement of Financial Position	314
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	(290)
Net Amount	24
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	102,897	121,883
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	102,897	121,883
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	(102,655)	(121,883)
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0	0
Net Amount	242	0
Interest Rate Swap [Member]
Off Setting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	314
Gross Amounts Offset in the Statement of Financial Position	0
Net Amounts of Assets presented in the Statement of Financial Position	314
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	(290)
Net Amount	24
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	242
Gross Amounts Offset in the Statement of Financial Position	0
Net Amounts of Liabilities presented in the Statement of Financial Position	242
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0
Net Amount	242
Repurchase Agreements [Member]
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	102,655	121,883
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	102,655	121,883
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	(102,655)	(121,883)
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0	0
Net Amount	$ 0	$ 0

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
ASSETS
Cash and due from banks	$ 55,814		$ 156,666
Short-term investments	7,741		75,571
Total cash and cash equivalents	63,555		232,237
Securities available for sale (carried at fair value)	472,976		467,021
Real estate mortgage loans held for sale	5,486		9,452
Loans, net of allowance for loan losses of $50,635 and $51,445	2,284,065		2,206,075
Land, premises and equipment, net	35,346		34,840
Bank owned life insurance	62,008		61,112
Accrued income receivable	9,214		8,491
Goodwill	4,970		4,970
Other intangible assets	24		47
Other assets	37,818		39,899
Total assets	2,975,462		3,064,144
LIABILITIES
Noninterest bearing deposits	397,610		407,926
Interest bearing deposits	2,085,882		2,173,830
Total deposits	2,483,492		2,581,756
Short-term borrowings
Federal Funds Purchased	37,000		0
Securities sold under agreements to repurchase	102,655		121,883
Total short-term borrowings	139,655		121,883
Accrued expenses payable	11,685		15,321
Other liabilities	2,057		1,390
Long-term borrowings	37		15,038
Subordinated debentures	30,928		30,928
Total liabilities	2,667,854		2,766,316
EQUITY
Common stock:90,000,000 shares authorized, no par value 16,431,881 shares issued and 16,340,697 outstanding as of June 30, 2013 16,377,247 shares issued and 16,290,136 outstanding as of December 31, 2012	90,921		90,039
Retained earnings	219,002		203,654
Accumulated other comprehensive income	(625)	[1]	5,689	[1]
Treasury stock, at cost (2013 - 91,184 shares, 2012 - 87,111 shares)	(1,779)		(1,643)
Total stockholders' equity	307,519		297,739
Noncontrolling interest	89		89
Total equity	307,608		297,828
Total liabilities and equity	$ 2,975,462		$ 3,064,144

[1] All amounts are net of tax. Amounts in parenthesis indicate debits.

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FAIR VALUE DISCLOSURES (Quantitative Information about Level 3 Fair Value Measurements) (Details) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Non Agency Residential Mortgage Backed Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	$ 5,392	$ 2,859
Valuation Technique	Discounted cash flow	Discounted cash flow
Non Agency Residential Mortgage Backed Securities [Member] | Constant Prepayment Rate [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	5.00%	5.00%
Non Agency Residential Mortgage Backed Securities [Member] | Constant Prepayment Rate [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	30.00%	9.00%
Non Agency Residential Mortgage Backed Securities [Member] | Constant Prepayment Rate [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	9.56%	6.00%
Non Agency Residential Mortgage Backed Securities [Member] | Average Life [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	0.57%	0.20%
Non Agency Residential Mortgage Backed Securities [Member] | Average Life [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	2.66%	2.86%
Non Agency Residential Mortgage Backed Securities [Member] | Average Life [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	1.44%	2.70%
Non Agency Residential Mortgage Backed Securities [Member] | Swap/EDSF Spread [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	242.00%	297.00%
Non Agency Residential Mortgage Backed Securities [Member] | Swap/EDSF Spread [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	327.00%	339.00%
Non Agency Residential Mortgage Backed Securities [Member] | Swap/EDSF Spread [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	297.00%	328.00%
State and Municipal Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	$ 979	$ 988
Valuation Technique	Price to type, par, call	Price to type, par, call
State and Municipal Securities [Member] | Discount To Benchmark Index [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	1.00%	1.00%
State and Municipal Securities [Member] | Discount To Benchmark Index [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	7.00%	11.00%
State and Municipal Securities [Member] | Discount To Benchmark Index [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	2.57%	4.00%

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EARNINGS PER SHARE (Earnings Per Share Computations) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Weighted average shares outstanding for basic earnings per common share	16,425,382	16,324,928	16,411,695	16,298,981
Dilutive effect of stock options, awards and warrants	121,165	128,633	112,555	151,851
Weighted average shares outstanding for diluted earnings per common share	16,546,547	16,453,561	16,524,250	16,450,832
Basic earnings per common share	$ 0.56	$ 0.54	$ 1.13	$ 1.07
Diluted earnings per common share	$ 0.56	$ 0.54	$ 1.12	$ 1.06

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Tables)

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

In Allowance For Loan Losses and Recorded Investment In Loans By Portfolio Segment

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2013, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2013:

			Commercial
			Real Estate						Consumer
	Commercial		and Multifamily		Agri-business		Other		1-4 Family		Other
	and Industrial		Residential		and Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended June 30, 2013
Balance April 1,	$	22,113	$	20,420	$	1,263	$	223	$	2,866	$	558	$	3,375	$	50,818
Provision for loan losses		(348)		(336)		452		41		30		69		92		0
Loans charged-off		(10)		0		(200)		0		(81)		(78)		0		(369)
Recoveries		124		14		2		0		8		38		0		186
Net loans charged-off		114		14		(198)		0		(73)		(40)		0		(183)
Balance June 30,	$	21,879	$	20,098	$	1,517	$	264	$	2,823	$	587	$	3,467	$	50,635
Six Months Ended June 30, 2013
Balance January 1,	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Provision for loan losses		(707)		(83)		310		24		300		46		110		0
Loans charged-off		(143)		(906)		(200)		0		(189)		(137)		0		(1,575)
Recoveries		387		275		4		0		30		69		0		765
Net loans charged-off		244		(631)		(196)		0		(159)		(68)		0		(810)
Balance June 30,	$	21,879	$	20,098	$	1,517	$	264	$	2,823	$	587	$	3,467	$	50,635
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,469	$	6,103	$	40	$	0	$	445	$	28	$	0	$	11,085
Collectively evaluated for impairment		17,410		13,995		1,477		264		2,378		559		3,467		39,550
Total ending allowance balance	$	21,879	$	20,098	$	1,517	$	264	$	2,823	$	587	$	3,467	$	50,635
Loans:
Loans individually evaluated for impairment	$	16,882	$	26,540	$	757	$	0	$	2,654	$	80	$	0	$	46,913
Loans collectively evaluated for impairment		871,458		857,114		197,643		46,499		271,730		43,343		0		2,287,787
Total ending loans balance	$	888,340	$	883,654	$	198,400	$	46,499	$	274,384	$	43,423	$	0	$	2,334,700

The recorded investment in loans does not include accrued interest.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2012:

			Commercial
			Real Estate						Consumer
	Commercial		and Multifamily		Agri-business		Other		1-4 Family		Other
	and Industrial		Residential		and Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Three Months Ended June 30, 2012
Balance April 1,	$	22,134	$	23,236	$	538	$	186	$	2,527	$	523	$	3,613	$	52,757
Provision for loan losses		(1,048)		829		881		(12)		(110)		65		(105)		500
Loans charged-off		(1,676)		0		0		0		(78)		(97)		0		(1,851)
Recoveries		286		18		0		2		73		32		0		411
Net loans charged-off		(1,390)		18		0		2		(5)		(65)		0		(1,440)
Balance June 30,	$	19,696	$	24,083	$	1,419	$	176	$	2,412	$	523	$	3,508	$	51,817
Six Months Ended June 30, 2012
Balance January 1,	$	22,830	$	23,489	$	695	$	65	$	2,322	$	645	$	3,354	$	53,400
Provision for loan losses		(1,152)		1,394		724		107		61		11		154		1,299
Loans charged-off		(2,454)		(847)		0		0		(92)		(191)		0		(3,584)
Recoveries		472		47		0		4		121		58		0		702
Net loans charged-off		(1,982)		(800)		0		4		29		(133)		0		(2,882)
Balance June 30,	$	19,696	$	24,083	$	1,419	$	176	$	2,412	$	523	$	3,508	$	51,817

The recorded investment in loans does not include accrued interest.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2012:

			Commercial
			Real Estate						Consumer
	Commercial		and Multifamily		Agri-business		Other		1-4 Family		Other
	and Industrial		Residential		and Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,542	$	8,559	$	63	$	0	$	607	$	34	$	0	$	14,805
Collectively evaluated for impairment		16,800		12,253		1,340		240		2,075		575		3,357		36,640
Total ending allowance balance	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Loans:
Loans individually evaluated for impairment	$	18,281	$	36,919	$	797	$	0	$	2,853	$	92	$	0	$	58,942
Loans collectively evaluated for impairment		828,728		763,279		224,008		56,810		280,141		45,612		0		2,198,578
Total ending loans balance	$	847,009	$	800,198	$	224,805	$	56,810	$	282,994	$	45,704	$	0	$	2,257,520

The recorded investment in loans does not include accrued interest.

Loans individually evaluated for impairment

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2013:

							Three Months Ended June 30, 2013							Six Months Ended June 30, 2013
											Cash Basis							Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest			Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income			Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized			Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	65	$	65	$	0	$	65	$	0	$	0		$	65	$	0	$	0
Non-working capital loans		0		0		0		0		0		0			17		0		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		716		536		0		543		0		0			555		0		0
Agri-business and agricultural loans:
Loans secured by farmland		612		434		0		440		0		0			481		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		49		49		0		49		0		0			54		0		0
Open end and junior lien loans		0		0		0		0		0		0			21		0		0
Other consumer loans		1		1		0		1		0		0			1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,492		2,883		1,123		2,898		14		14			3,034		27		27
Non-working capital loans		15,789		13,934		3,346		13,815		136		139			14,114		271		276
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,459		3,070		653		4,203		7		(5	)		4,366		52		47
Owner occupied loans		3,629		3,629		715		2,768		39		45			3,534		68		76
Nonowner occupied loans		19,296		19,305		4,735		19,399		84		85			21,849		168		172
Multifamily loans		0		0		0		0		0		0			96		0		0
Agri-business and agricultural loans:
Loans secured by farmland		644		323		40		391		0		0			359		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,570		2,571		436		2,537		23		18			2,518		23		37
Open end and junior lien loans		34		34		9		58		0		0			49		0		0
Other consumer loans		79		79		28		79		1		1			80		1		1
Total	$	53,435	$	46,913	$	11,085	$	47,246	$	304	$	297		$	51,193	$	610	$	636

The recorded investment in loans does not include accrued interest.

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2012:

							Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
											Cash Basis						Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest		Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income		Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	505	$	166	$	0	$	168	$	0	$	0	$	170	$	0	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		654		629		0		637		0		0		464		0		0
Nonowner occupied loans		391		391		0		265		0		0		133		0		0
Agri-business and agricultural loans:
Loans secured by farmland		443		265		0		266		0		0		133		0		0
Loans for ag production		203		203		0		204		0		0		102		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		580		580		0		583		0		0		440		0		0
Open end and junior lien loans		20		20		0		20		0		0		30		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,598		2,989		1,450		4,395		13		13		5,100		29		28
Non-working capital loans		17,954		17,265		5,271		17,264		177		178		17,494		357		360
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,386		1,996		510		2,036		17		17		1,503		17		17
Owner occupied loans		5,405		4,636		1,500		4,288		6		6		4,438		18		16
Nonowner occupied loans		28,184		27,582		6,936		27,561		104		105		28,481		202		204
Multifamily loans		0		0		0		0		0		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		1,735		341		75		345		0		0		484		0		0
Loans for agricultural production		0		0		0		0		0		0		105		0		0
Other commercial loans		0		0		0		0		0		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,875		1,877		312		1,833		9		11		1,815		20		22
Open end and junior lien loans		310		310		169		312		0		0		333		0		0
Residential construction loans		0		0		0		0		0		0		0		0		0
Other consumer loans		6		6		5		6		0		0		7		0		0
Total	$	66,249	$	59,256	$	16,228	$	59,378	$	326	$	330	$	60,596	$	643	$	647

The recorded investment in loans does not include accrued interest.

                The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2012:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	61	$	61	$	0
Non-working capital loans		0		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans		754		574		0
Nonowner occupied loans		385		385		0
Multifamily loans		410		286		0
Agri-business and agricultural loans:
Loans secured by farmland		645		466		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		59		59		0
Open end and junior lien loans		41		41		0
Residential construction loans
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,833		3,224		1,516
Non-working capital loans		16,763		14,996		4,026
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,352		2,960		934
Owner occupied loans		5,869		5,869		1,476
Nonowner occupied loans		26,835		26,845		6,149
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		651		331		63
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,387		2,403		415
Open end and junior lien loans		379		350		192
Residential construction loans		0		0		0
Other consumer loans		91		91		34
Total	$	65,516	$	58,942	$	14,805

The recorded investment in loans does not include accrued interest.

Schedule of Impaired loans

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2013 and December 31, 2012:

	June 30, 2013				December 31, 2012
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Nonaccrual		Accruing		Nonaccrual		Accruing
Commercial and industrial loans:
Working capital lines of credit loans	$	1,812	$	0	$	1,899	$	0
Non-working capital loans		3,786		104		4,812		50
Commercial real estate and multi-family residential loans:
Construction and land development loans		383		0		398		0
Owner occupied loans		2,424		0		2,461		0
Nonowner occupied loans		11,718		0		19,200		0
Multifamily loans		0		0		286		0
Agri-business and agricultural loans:
Loans secured by farmland		757		0		797		0
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		560		0		504		0
Open end and junior lien loans		34		0		391		0
Residential construction loans		0		0		0		0
Other consumer loans		65		0		77		0
Total	$	21,539	$	104	$	30,825	$	50

Aging of the recorded investment in past due loans

The following table presents the aging of the recorded investment in past due loans as of June 30, 2013 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	642	$	1,812	$	2,454	$	459,931	$	462,385
Non-working capital loans		343		3,890		4,233		421,722		425,955
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		383		383		107,907		108,290
Owner occupied loans		126		2,424		2,550		362,287		364,837
Nonowner occupied loans		1,406		11,718		13,124		360,038		373,162
Multifamily loans		0		0		0		37,365		37,365
Agri-business and agricultural loans:
Loans secured by farmland		0		757		757		99,818		100,575
Loans for agricultural production		18		0		18		97,807		97,825
Other commercial loans		0		0		0		46,499		46,499
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,399		560		2,959		113,031		115,990
Open end and junior lien loans		248		34		282		152,859		153,141
Residential construction loans		8		0		8		5,245		5,253
Other consumer loans		165		65		230		43,193		43,423
Total	$	5,355	$	21,643	$	26,998	$	2,307,702	$	2,334,700

The recorded investment in loans does not include accrued interest.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2012 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	233	$	1,899	$	2,132	$	437,705	$	439,837
Non-working capital loans		48		4,862		4,910		402,262		407,172
Commercial real estate and multi-family residential loans:
Construction and land development loans		998		398		1,396		80,954		82,350
Owner occupied loans		1,023		2,461		3,484		354,921		358,405
Nonowner occupied loans		38		19,200		19,238		295,243		314,481
Multifamily loans		0		286		286		44,676		44,962
Agri-business and agricultural loans:
Loans secured by farmland		0		797		797		108,359		109,156
Loans for agricultural production		0		0		0		115,649		115,649
Other commercial loans		0		0		0		56,810		56,810
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,475		504		1,979		107,583		109,562
Open end and junior lien loans		361		391		752		161,172		161,924
Residential construction loans		0		0		0		11,508		11,508
Other consumer loans		81		77		158		45,546		45,704
Total	$	4,257	$	30,875	$	35,132	$	2,222,388	$	2,257,520

The recorded investment in loans does not include accrued interest.

Troubled debt restructuring

The Company is not committed to lending additional funds to customers whose loans have been modified in a troubled debt restructuring.

	June 30,		December 31,
	2013		2012
Accruing troubled debt restructured loans	$	23,017	$	22,332
Nonaccrual troubled debt restructured loans		19,398		28,506
Total troubled debt restructured loans	$	42,415	$	50,838

Loans by class modified as troubled debt restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the three-month and six-month periods ending June 30, 2013:

	Modifications
	Three Months Ended June 30, 2013
	All Modifications
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Consumer 1-4 family loans:
Closed end first mortgage loans		4	$	317	$	328
Total		4	$	317	$	328

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Consumer 1-4 family loans:
Closed end first mortgage loans		2	$	142	$	158		2	$	156	$	161	$	164	$	149		0		0
Total		2	$	142	$	158		2	$	156	$	161	$	164	$	149		0		0

	Modifications
	Six Months Ended June 30, 2013
	All Modifications
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		6	$	2,198	$	2,198
Consumer 1-4 family loans:
Closed end first mortgage loans		4		317		328
Total		10	$	2,515	$	2,526

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		6	$	85	$	63		0	$	0	$	0	$	0	$	0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		2		142		158		2		156		161		164		149		0		0
Total		8	$	227	$	221		2	$	156	$	161	$	164	$	149		0		0

For the three-month period ending June 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $86,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $42,000.

For the six-month period ending June 30, 2012, the commercial real estate and multi-family residential loan troubled debt restructurings described above decreased the allowance for loan losses by $373,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $65,000.

The troubled debt restructurings described above had charge-offs of $0 and $365,000, respectively, during the three-month and six-month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six-month and three-month periods ending June 30, 2012:

	Modifications
	Six Months Ended June 30, 2012
	All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		1	$	942	$	1,060
Commercial real estate and multi-family residential loans:
Construction and land development loans		5		1,638		1,638
Owner occupied loans		1		849		849
Nonowner occupied loans		1		385		385
Consumer 1-4 family loans:
Closed end first mortgage loans		1		39		39
Total		9	$	3,853	$	3,971

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		0	$	0	$	0		0	$	0	$	0	$	0	$	0		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		0		0		0		0		0		0		0		0
Owner occupied loans		1		440		117		0		0		0		0		0		0		0
Nonowner occupied loans		0		0		0		0		0		0		0		0		1		14
Consumer 1-4 family loans:
Closed end first mortgage loans		1		76		15		0		0		0		0		0		0		0
Total		2	$	516	$	132		0	$	0	$	0	$	0	$	0		1		14

	Modifications
	Three Months Ended June 30, 2012
	All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		1	$	942	$	1,060
Commercial real estate and multi-family residential loans:
Owner occupied loans		1		849		849
Nonowner occupied loans		1		385		385
Consumer 1-4 family loans:
Closed end first mortgage loans		1		39		39
Total		4	$	2,215	$	2,333

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		0	$	0	$	0		0	$	0	$	0	$	0	$	0		0		0
Commercial real estate and multi-family residential loans:		0		0		0		0		0		0		0		0		0		0
Owner occupied loans		1		440		117		0		0		0		0		0		0		0
Nonowner occupied loans		0		0		0		0		0		0		0		0		1		14
Consumer 1-4 family loans:
Closed end first mortgage loans		1		76		15		0		0		0		0		0		0		0
Total		2	$	516	$	132		0	$	0	$	0	$	0	$	0		1		14

Troubled debt restructurings subsequently defaulted

 The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2013:

	Modifications
	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Number of		Recorded		Number of		Recorded
	Loans		Investment		Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		0	$	0		1	$	946
Total		0	$	0		1	$	946

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings described above that subsequently defaulted made a large principal payment during the second quarter of 2013, which decreased the allowance for loan losses by $80,000 and did not result in any charge offs during the three and six month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2012:

	Number of		Recorded
	Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		1	$	65
Total		1	$	65

Credit quality indicators

                Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of June 30, 2013 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial and industrial loans:
Working capital lines of credit loans	$	424,540	$	23,755	$	14,090	$	0	$	0
Non-working capital loans		378,380		22,086		25,425		64		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		94,229		4,140		9,921		0		0
Owner occupied loans		325,524		22,302		17,011		0		0
Nonowner occupied loans		339,563		14,652		18,947		0		0
Multifamily loans		37,028		337		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		99,229		0		1,346		0		0
Loans for agricultural production		97,825		0		0		0		0
Other commercial loans		46,381		0		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		23,717		847		1,816		0		89,610
Open end and junior lien loans		5,820		2,124		0		0		145,197
Residential construction loans		0		0		0		0		5,253
Other consumer loans		8,261		460		293		0		34,409
Total	$	1,880,497	$	90,703	$	88,967	$	64	$	274,469

The recorded investment in loans does not include accrued interest.

                 Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of December 31, 2012 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
					(in thousands)
Commercial and industrial loans:
Working capital lines of credit loans	$	403,778	$	22,591	$	13,468	$	0	$	0
Non-working capital loans		355,772		23,192		26,857		66		1,285
Commercial real estate and multi-family residential loans:
Construction and land development loans		67,002		4,595		10,753		0		0
Owner occupied loans		315,672		24,589		18,144		0		0
Nonowner occupied loans		282,108		6,345		26,028		0		0
Multifamily loans		43,425		345		1,192		0		0
Agri-business and agricultural loans:
Loans secured by farmland		107,734		0		1,404		0		18
Loans for agricultural production		115,649		0		0		0		0
Other commercial loans		56,692		0		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		18,685		343		729		0		89,805
Open end and junior lien loans		7,932		300		0		0		153,692
Residential construction loans		0		0		0		0		11,508
Other consumer loans		10,168		378		497		0		34,661
Total	$	1,784,617	$	82,678	$	99,190	$	66	$	290,969

The recorded investment in loans does not include accrued interest.

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SECURITIES (Schedule Of Debt Securities Credit Loss Recognised) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Other Than Temporary Impairment, Credit Losses Recognized In Earnings [Roll Forward]
Balance, Opening	$ 0	$ 869	$ 0	$ 359
Additions related to other-than-temporary impairment losses not previously recognized	0	198	0	747
Additional increases to the amount of credit loss for which other-than-temporary impairment was previously recognized	0	251	0	212
Reductions for previous credit losses realized on securities sold during the year	0	0	0	0
Balance, Closing	$ 0	$ 1,318	$ 0	$ 1,318

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FAIR VALUE DISCLOSURES (Estimated Fair Values And The Related Carrying Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial Assets:
Securities available for sale (carried at fair value)	$ 472,976	$ 467,021
Financial Liabilities:
Federal funds purchased	37,000	0
Carrying Value [Member]
Financial Assets:
Cash and cash equivalents	63,555	232,237
Securities available for sale (carried at fair value)	472,976	467,021
Real estate mortgages held for sale	5,486	9,452
Loans, net	2,284,065	2,206,075
Federal Home Loan Bank stock	7,313	7,313
Federal Reserve Bank stock	3,420	3,420
Accrued interest receivable	9,208	8,485
Financial Liabilities:
Certificates of deposit	(804,564)	(907,505)
All other deposits	(1,678,928)	(1,674,251)
Securities sold under agreements to repurchase	(102,655)	(121,883)
Federal funds purchased	(37,000)
Long-term borrowings	(37)	(15,038)
Subordinated debentures	(30,928)	(30,928)
Standby letters of credit	(316)	(262)
Accrued interest payable	(4,405)	(4,757)
Estimated Fair Value [Member]
Financial Assets:
Cash and cash equivalents	63,555	232,237
Securities available for sale (carried at fair value)	472,976	467,021
Real estate mortgages held for sale	5,567	9,663
Loans, net	2,285,426	2,230,993
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	9,208	8,485
Financial Liabilities:
Certificates of deposit	(815,860)	(922,397)
All other deposits	(1,678,928)	(1,674,251)
Securities sold under agreements to repurchase	(102,655)	(121,883)
Federal funds purchased	(37,000)
Long-term borrowings	(44)	(15,607)
Subordinated debentures	(31,230)	(31,223)
Standby letters of credit	(316)	(262)
Accrued interest payable	(4,405)	(4,757)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and cash equivalents	63,555	232,237
Securities available for sale (carried at fair value)	1,027	1,037
Real estate mortgages held for sale	0	0
Loans, net	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	6	6
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	(1,678,928)	(1,674,251)
Securities sold under agreements to repurchase	0	0
Federal funds purchased	0
Long-term borrowings	0	0
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(135)	(298)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Securities available for sale (carried at fair value)	465,578	462,137
Real estate mortgages held for sale	5,567	9,663
Loans, net	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	2,266	2,215
Financial Liabilities:
Certificates of deposit	(815,860)	(922,397)
All other deposits	0	0
Securities sold under agreements to repurchase	(102,655)	(121,883)
Federal funds purchased	(37,000)
Long-term borrowings	(44)	(15,607)
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(4,267)	(4,456)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Securities available for sale (carried at fair value)	6,371	3,847
Real estate mortgages held for sale	0	0
Loans, net	2,285,426	2,230,993
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	6,936	6,264
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	0	0
Securities sold under agreements to repurchase	0	0
Federal funds purchased	0
Long-term borrowings	0	0
Subordinated debentures	(31,230)	(31,223)
Standby letters of credit	(316)	(262)
Accrued interest payable	$ (3)	$ (3)

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Troubled Debt Restructuring [Abstract]
Ratio Of Allowance Of Loan Losses To Total Loans			2.17%	2.34%	2.28%
Loans Modified In Troubled Debt Restructured Loans	$ 10,200,000		$ 10,200,000		$ 12,500,000
Amount added to total troubled debt restructured loans	328,000		328,000			2,200,000
Charge Off	0	1,000	365,000	1,000
Loan amount of credit quality analysis			250,000
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	80,000		80,000
Commercial and Industrial Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss		690,000		690,000
Commercial Real Estate and Multi-Family Residential Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss	86,000	290,000	373,000	790,000
Consumer 1-4 Family Mortgage Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss	$ 42,000	$ 6,000	$ 65,000	$ 6,000

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Troubled Debt Restructuring) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Troubled Debt Restructuring [Abstract]
Accruing troubled debt restructured loans	$ 23,017	$ 22,332
Nonaccrual troubled debt restructured loans	19,398	28,506
Total troubled debt restructured loans	$ 42,415	$ 50,838

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Loans By Class Modified As Troubled Debt Restructuring) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Numbers	Jun. 30, 2012 Number	Jun. 30, 2013 Number	Jun. 30, 2012 Number
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	4	4	10	9
Pre-Modification Outstanding Recorded Investment	$ 317	$ 2,215	$ 2,515	$ 3,853
Post-Modification Outstanding Recorded Investment	328	2,333	2,526	3,971
Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	2	2	8	2
Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	142	516	227	516
Post-Modification Outstanding Recorded Investment	158	132	221	132
Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	2	0	2	0
Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	164	0	164	0
Post-Modification Outstanding Recorded Investment	149	0	149	0
Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	156	0	156	0
Post-Modification Outstanding Recorded Investment	161	0	161	0
Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	0	1	0	1
Extension period for modified repayment terms	0 months	14 months	0 months	14 months
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1		1
Pre-Modification Outstanding Recorded Investment		942		942
Post-Modification Outstanding Recorded Investment		1,060		1,060
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Extension period for modified repayment terms		0 months		0 months
Commercial Real Estate and Multi-Family Residential Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0
Post-Modification Outstanding Recorded Investment		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0
Post-Modification Outstanding Recorded Investment		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0
Post-Modification Outstanding Recorded Investment		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0
Extension period for modified repayment terms		0 months
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans			6	5
Pre-Modification Outstanding Recorded Investment			2,198	1,638
Post-Modification Outstanding Recorded Investment			2,198	1,638
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans			6	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment			85	0
Post-Modification Outstanding Recorded Investment			63	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans			0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment			0	0
Post-Modification Outstanding Recorded Investment			0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment			0	0
Post-Modification Outstanding Recorded Investment			0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans				0
Extension period for modified repayment terms				0 months
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1		1
Pre-Modification Outstanding Recorded Investment		849		849
Post-Modification Outstanding Recorded Investment		849		849
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1		1
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		440		440
Post-Modification Outstanding Recorded Investment		117		117
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Extension period for modified repayment terms		0 months		0 months
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1		1
Pre-Modification Outstanding Recorded Investment		385		385
Post-Modification Outstanding Recorded Investment		385		385
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment		0		0
Post-Modification Outstanding Recorded Investment		0		0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1		1
Extension period for modified repayment terms		14 months		14 months
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	4	1	4	1
Pre-Modification Outstanding Recorded Investment	317	39	317	39
Post-Modification Outstanding Recorded Investment	328	39	328	39
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	2	1	2	1
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Interest Rate Reductions [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	142	76	142	76
Post-Modification Outstanding Recorded Investment	158	15	158	15
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	2	0	2	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	164	0	164	0
Post-Modification Outstanding Recorded Investment	149	0	149	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment	156	0	156	0
Post-Modification Outstanding Recorded Investment	$ 161	$ 0	$ 161	$ 0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	0	0	0	0
Extension period for modified repayment terms	0 months	0 months	0 months	0 months

XML

SECURITIES

6 Months Ended

Jun. 30, 2013

Securities [Abstract]

SECURITIES

NOTE 5. SECURITIES

Information related to the fair value and amortized cost of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) is provided in the tables below.

			Gross		Gross
	Fair		Unrealized		Unrealized		Amortized
	Value		Gain		Losses		Cost
June 30, 2013
U.S. Treasury securities	$	1,027	$	26	$	0	$	1,001
U.S. government sponsored agencies		5,224		202		0		5,022
Agency residential mortgage-backed securities		366,418		5,790		(6,555)		367,183
Non-agency residential mortgage-backed securities		5,392		167		0		5,225
State and municipal securities		94,915		3,730		(1,566)		92,751
Total	$	472,976	$	9,915	$	(8,121)	$	471,182
December 31, 2012
U.S. Treasury securities	$	1,037	$	35	$	0	$	1,002
U.S. government sponsored agencies		5,304		278		0		5,026
Agency residential mortgage-backed securities		365,644		7,813		(1,495)		359,326
Non-agency residential mortgage-backed securities		6,453		242		0		6,211
State and municipal securities		88,583		5,509		(189)		83,263
Total	$	467,021	$	13,877	$	(1,684)	$	454,828

Information regarding the fair value and amortized cost of available for sale debt securities by maturity as of June 30, 2013 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3,192	$	3,259
Due after one year through five years		26,030		27,527
Due after five years through ten years		39,306		40,700
Due after ten years		30,246		29,680
		98,774		101,166
Mortgage-backed securities		372,408		371,810
Total debt securities	$	471,182	$	472,976

There were no securities sales during the first six months of 2013 and 2012. All of the gains in 2013 and 2012 were from calls.

Purchase premiums or discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives for mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $171.9 million and $216.5 million were pledged as of June 30, 2013 and 2012, as collateral for deposits of public funds, securities sold under agreements to repurchase, borrowings from the Federal Home Loan Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
June 30, 2013
Agency residential mortgage-backed securities	$	168,399	$	(6,118)	$	23,900	$	(437)	$	192,299	$	(6,555)
State and municipal securities		22,860		(1,566)		0		0		22,860		(1,566)
Total temporarily impaired	$	191,259	$	(7,684)	$	23,900	$	(437)	$	215,159	$	(8,121)
December 31, 2012
Agency residential mortgage-backed securities	$	92,974	$	(1,066)	$	20,422	$	(429)	$	113,396	$	(1,495)
State and municipal securities		10,791		(188)		50		(1)		10,841		(189)
Total temporarily impaired	$	103,765	$	(1,254)	$	20,472	$	(430)	$	124,237	$	(1,684)

The number of securities with unrealized losses as of June 30, 2013 and December 31, 2012 is presented below.

	Less than		12 months
	12 months		or more		Total
June 30, 2013
Agency residential mortgage-backed securities		43		10		53
State and municipal securities		49		0		49
Total temporarily impaired		92		10		102

	Less than		12 months
	12 months		or more		Total
December 31, 2012
Agency residential mortgage-backed securities		29		9		38
State and municipal securities		29		1		30
Total temporarily impaired		58		10		68

The following factors are considered to determine whether or not the impairment of these securities is other-than-temporary. Ninety-eight percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are A- rated or better by Moody’s, S&P or Fitch, except for certain non-local or local municipal securities, which are not rated. Mortgage-backed securities, which are not issued by the U.S. government or government sponsored agencies (non-agency residential mortgage-backed securities), met specific criteria set by the Asset Liability Management Committee at their time of purchase, including having the highest rating available by either Moody’s, S&P or Fitch. None of the securities have call provisions (with the exception of the municipal securities) and all payments as originally agreed are being received on their original terms. For the government, government-sponsored agency and municipal securities, management did not have concerns of credit losses, and there was nothing to indicate that full principal will not be received. Management considered the unrealized losses on these securities to be primarily interest rate driven and does not expect material losses given current market conditions unless the securities are sold. However, at this time management does not have the intent to sell, and it is more likely than not that it will not be required to sell these securities before the recovery of their amortized cost basis.

As of June 30, 2013, the Company had $5.4 million of non-agency residential mortgage-backed securities which were not issued by the U.S. government or government sponsored agencies, but which were rated AAA by S&P or Fitch and/or Aaa by Moody’s at the time of purchase. As of December 31, 2012, the Company had $6.5 million of non-agency residential mortgage-backed securities which were not issued by the federal government or government sponsored agencies, but which were rated AAA by S&P and/or Aaa by Moody’s at the time of purchase. None of the four non-agency residential mortgage-backed securities were still rated AAA/Aaa as of June 30, 2013 by at least one of the rating agencies and one had been downgraded to below investment grade by at least one of those rating agencies.

For these non-agency residential mortgage-backed securities, additional analysis is performed to determine if any impairment is temporary or other-than-temporary, in which case impairment would need to be recorded for these securities. The Company performs an independent analysis of the cash flows of the individual securities based upon assumptions as to collateral defaults, prepayment speeds, expected losses and the severity of potential losses. Based upon the initial review, securities may be identified for further analysis by computing the net present value using an appropriate discount rate (the current accounting yield) and comparing it to the book value of the security to determine if there is any other-than-temporary impairment that must be recorded. Based on this analysis of the non-agency residential mortgage-backed securities, none of the four non-agency mortgage-backed securities had any unrealized losses or other-than-temporary impairment at June 30, 2013.

The following table provides information about debt securities for which only a credit loss was recognized in income and for which other losses are recorded in other comprehensive income. There were no securities with other than temporary impairment during the three and six months ended June 30, 2013. All securities with other than temporary impairment were sold during 2012. The table represents the three months and six months ended June 30, 2013 and 2012.

	Three Months Ended June 30,
	2013		2012
Balance April 1,	$	0	$	869
Additions related to other-than-temporary impairment losses not previously recognized		0		198
Additional increases to the amount of credit loss for which other-than-temporary     impairment was previously recognized		0		251
Reductions for previous credit losses realized on securities sold during the year		0		0
Balance June 30,	$	0	$	1,318

	Six Months Ended June 30,
	2013		2012
Balance January 1,	$	0	$	359
Additions related to other-than-temporary impairment losses not previously recognized		0		747
Additional increases to the amount of credit loss for which other-than-temporary     impairment was previously recognized		0		212
Reductions for previous credit losses realized on securities sold during the year		0		0
Balance June 30,	$	0	$	1,318

Information on securities with at least one rating below investment grade at June 30, 2013 is presented below.

6/30/2013

1-Month

3-Month

6-Month

Other Than

June 30, 2013

Lowest

Constant

Constant

Constant

Temporary

Par

Amortized

Fair

Unrealized

Credit

Default

Default

Default

Credit

Description

CUSIP

Impairment

Value

Cost

Value

Gain/(Loss)

Rating

Rate

Rate

Rate

Support

RALI 2004-QS7 A3

76110HTX7

$

0

$

2,567

$

2,551

$

2,591

$

40

BB+

2.97

3.30

3.21

9.99

This security is a super senior/senior tranche non-agency residential mortgage-backed security. The credit support is the credit support percentage for a tranche from other subordinated tranches, which is the amount of principal in the subordinated tranches expressed as a percentage of the remaining principal in the super senior/senior tranche. The super senior/senior tranches receive the prepayments and the subordinate tranches absorb the losses. The super senior/senior tranches do not absorb losses until the subordinate tranches are extinguished.

The Company does not have a history of actively trading securities but continues to hold securities available for sale should liquidity or other needs develop that would warrant the sale of securities. While these securities are held in the available for sale portfolio, it is management’s current intent to hold them until a recovery in fair value or maturity.

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LOANS (Total Loans Outstanding) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Mar. 31, 2013	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	$ 2,017,780	$ 1,929,359
Total consumer loans	317,551	328,485
Subtotal	2,335,331	2,257,844
Less: Allowance for loan losses	(50,635)	(51,445)	(50,818)	(51,817)	(52,757)	(53,400)
Net deferred loan fees	(631)	(324)
Loans, net	2,284,065	2,206,075
Percentage of Total commercial loans	86.40%	85.50%
Percentage of Total consumer loans	13.60%	14.50%
Percentage of Subtotal	100.00%	100.00%
Commercial and Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	888,095	846,822
Less: Allowance for loan losses	(21,879)	(22,342)	(22,113)	(19,696)	(22,134)	(22,830)
Percentage of Total commercial loans	38.00%	37.50%
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	462,137	439,638
Percentage of Total commercial loans	19.80%	19.50%
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	425,958	407,184
Percentage of Total commercial loans	18.20%	18.00%
Commercial Real Estate and Multi-family Residential Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	884,884	801,011
Percentage of Total commercial loans	37.90%	35.50%
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	108,695	82,494
Percentage of Total commercial loans	4.70%	3.70%
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	365,071	358,617
Percentage of Total commercial loans	15.60%	15.90%
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	373,696	314,889
Percentage of Total commercial loans	16.00%	13.90%
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	37,422	45,011
Percentage of Total commercial loans	1.60%	2.00%
Agri-business and Agricultural Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	198,300	224,719
Less: Allowance for loan losses	(1,517)	(1,403)	(1,263)	(1,419)	(538)	(695)
Percentage of Total commercial loans	8.50%	10.00%
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	100,571	109,147
Percentage of Total commercial loans	4.30%	4.80%
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	97,729	115,572
Percentage of Total commercial loans	4.20%	5.10%
Other Commerical Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	46,501	56,807
Percentage of Total commercial loans	2.00%	2.50%
Consumer 1-4 Family Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	274,081	282,730
Percentage of Total consumer loans	11.70%	12.50%
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	116,247	109,823
Percentage of Total consumer loans	5.00%	4.90%
Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	152,571	161,366
Percentage of Total consumer loans	6.50%	7.10%
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction and Land Development Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	5,263	11,541
Percentage of Total consumer loans	0.20%	0.50%
Other Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	$ 43,470	$ 45,755
Percentage of Total consumer loans	1.90%	2.00%

XML

SECURITIES (Schedule Of Available Sale Of Securities Continous Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	$ 191,259	$ 103,765
Less than 12 months, Unrealized Losses	(7,684)	(1,254)
12 months or more, Fair Value	23,900	20,472
12 months or more, Unrealized Losses	(437)	(430)
Total Fair Value	215,159	124,237
Total Unrealized Losses	(8,121)	(1,684)
Agency Residential Mortgage-Backed Securities [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	168,399	92,974
Less than 12 months, Unrealized Losses	(6,118)	(1,066)
12 months or more, Fair Value	23,900	20,422
12 months or more, Unrealized Losses	(437)	(429)
Total Fair Value	192,299	113,396
Total Unrealized Losses	(6,555)	(1,495)
State and Municipal Securities [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	22,860	10,791
Less than 12 months, Unrealized Losses	(1,566)	(188)
12 months or more, Fair Value	0	50
12 months or more, Unrealized Losses	0	(1)
Total Fair Value	22,860	10,841
Total Unrealized Losses	$ (1,566)	$ (189)

XML

FAIR VALUE DISCLOSURES

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

NOTE 8. FAIR VALUE DISCLOSURES

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2	Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3	Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities: Securities available for sale are valued primarily by a third party pricing service. The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or pricing models which utilize significant observable inputs such as matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). These models utilize the market approach with standard inputs that include, but are not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain non-agency residential mortgage-backed securities where observable inputs about the specific issuer are not available, fair values are estimated using observable data from other non-agency residential mortgage-backed securities presumed to be similar or other market data on other non-agency residential mortgage-backed securities (Level 3 inputs). For certain municipal securities that are not rated and observable inputs about the specific issuer are not available, fair values are estimated using observable data from other municipal securities presumed to be similar or other market data on other non-rated municipal securities (Level 3 inputs). There were no transfers between Level 1and Level 2 during the first six months of 2013.

Mortgage banking derivatives: The fair value of mortgage banking derivatives are based on observable market data as of the measurement date (Level 2).

Interest rate swap derivatives: The Company records all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Currently, none of the Company’s derivatives are designated in qualifying hedging relationships, as the derivatives are not used to manage risks within the Company’s assets or liabilities. As such, all changes in fair value of the Company’s derivatives are recognized directly in earnings. The fair value of interest rate swap derivatives is determined by pricing or valuation models using observable market data as of the measurement date (Level 2).

Impaired loans: Impaired loans with specific allocations of the allowance for loan losses are generally based on the fair value of the underlying collateral if repayment is expected solely from the collateral. Fair value is determined using several methods. Generally, the fair value of real estate is based on appraisals by qualified third party appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company’s management routinely applies internal discount factors to the value of appraisals used in the fair value evaluation of impaired loans. The deductions to the appraisals take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. Commercial real estate is generally discounted from its appraised value by 0-50% with the higher discounts applied to real estate that is determined to have a thin trading market or to be specialized collateral. In addition to real estate, the Company’s management evaluates other types of collateral as follows: Raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods. Finished goods are generally discounted by 30-60%, depending on the ease of marketability, cost of transportation or scope of use of the finished good. Work in process inventory is typically discounted by 50-100%, depending on the length of manufacturing time, types of components used in the completion process, and the breadth of the user base. Equipment is valued at a percentage of depreciated book value or recent appraised value, if available, and is typically discounted at 30-70% after various considerations including age and condition of the equipment, marketability, breadth of use, and whether the equipment includes unique components or add-ons. Marketable securities are discounted by 10-30%, depending on the type of investment, age of valuation report and general market conditions. This methodology is based on a market approach and typically results in a Level 3 classification of the inputs for determining fair value.

Mortgage servicing rights: As of June 30, 2013 the fair value of the Company’s Level 3 servicing assets for residential mortgage loans was $3.0 million, some of which are not currently impaired and therefore carried at amortized cost. These residential mortgage loans have a weighted average interest rate of 4.18%, a weighted average maturity of 19 years and are secured by homes generally within the Company’s market area, which is primarily Northern Indiana. A valuation model is used to estimate fair value, which is based on an income approach. The inputs used include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, late fees, and float income. The most significant assumption used to value mortgage servicing rights is prepayment rate. Prepayment rates are estimated based on published industry consensus prepayment rates. The most significant unobservable assumption is the discount rate. At June 30, 2013, the constant prepayment speed (PSA) used was 229 and the discount rate used was 9.3%. At December 31, 2012, the constant prepayment speed (PSA) used was 392 and the discount rate used was 9.2%.

Other real estate owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property and are reviewed by the Company’s internal appraisal officer. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales. Such adjustments are usually significant and result in a Level 3 classification. In addition, the Company’s management may apply discount factors to the appraisals to take into account changing business factors and market conditions, as well as value impairment in cases where the appraisal date predates a likely change in market conditions. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Real estate mortgage loans held for sale: Real estate mortgage loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments, from third party investors, and results in a Level 2 classification.

                     The table below presents the balances of assets measured at fair value on a recurring basis:

	June 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,027	$	0	$	0	$	1,027
U.S. Government sponsored agencies		0		5,224		0		5,224
Mortgage-backed securities		0		366,418		0		366,418
Non-agency residential mortgage-backed securities		0		0		5,392		5,392
State and municipal securities		0		93,936		979		94,915
Total Securities		1,027		465,578		6,371		472,976
Mortgage banking derivative		0		417		0		417
Interest rate swap derivative		0		314		0		314
Total assets	$	1,027	$	466,309	$	6,371	$	473,707
Liabilities
Mortgage banking derivative	$	0	$	34	$	0	$	34
Interest rate swap derivative		0		242		0		242
Total liabilities	$	0	$	276	$	0	$	276

	December 31, 2012
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,037	$	0	$	0	$	1,037
U.S. Government sponsored agencies		0		5,304		0		5,304
Mortgage-backed securities		0		365,644		0		365,644
Non-agency residential mortgage-backed securities		0		3,594		2,859		6,453
State and municipal securities		0		87,595		988		88,583
Total Securities		1,037		462,137		3,847		467,021
Mortgage banking derivative		0		739		0		739
Total assets	$	1,037	$	462,876	$	3,847	$	467,760
Liabilities
Mortgage banking derivative	$	0	$	12	$	0	$	12

There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2013 and there were no transfers between Level 1 and Level 2 during 2012.

                The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2013 and 2012:

	Non-Agency Residential
	Mortgage-Backed Securities					State and Municipal Securities
	2013			2012		2013			2012
Balance of recurring Level 3 assets at January 1	$	2,859		$	0	$	988		$	686
Transfers into Level 3		3,334			0		0			0
Changes in fair value of securities		(52	)		0		(9	)		0
Principal payments		(749	)		0		0			(45	)
Balance of recurring Level 3 assets at June 30	$	5,392		$	0	$	979		$	641

The fair value of two non-agency residential mortgage-backed securities with a fair value of $3.3 million as of March 31, 2013 were transferred out of Level 2 and into Level 3 because of a lack of observable market data for these investments. The Company’s policy is to recognize transfers as of the end of the reporting period. As a result, the fair value for these non-agency residential mortgage-backed securities and state and municipal securities was transferred into Level 3 on March 31, 2013.

The state and municipal securities measured at fair value included below are non-rated Indiana municipal revenue bonds and are not actively traded.

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	June 30, 2013		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	5,392	Discounted cash flow	Constant prepayment rate		5.00-30.00
						(9.56)
				Average life		0.57-2.66
						(1.44)
				Swap/EDSF spread		242-327
						(297)
State and municipal securities	$	979	Price to type, par, call	Discount to benchmark index		1-7%
						(2.57%)

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Inputs
	December 31, 2012		Valuation Technique	Unobservable Input	(Average)
Non-agency residential mortgage-backed securities	$	2,859	Discounted cash flow	Constant prepayment rate		5.00-9.00
						(6.00)
				Average life (years)		0.20-2.86
						(2.70)
				Swap/EDSF spread		297-339
						(328)
State and municipal securities	$	988	Price to type, par, call	Discount to benchmark index		1-11%
						(4%)

The Company’s Controlling Department, which is responsible for all accounting and SEC compliance, and the Company’s Treasury Department, which is responsible for investment portfolio management and asset/liability modeling, are the two areas that decide the Company’s valuation policies and procedures. Both of these areas report directly to the President and Chief Financial Officer of the Company. For assets or liabilities that may be considered for Level 3 fair value measurement on a recurring basis, these two departments and the President and Chief Financial Officer determine the appropriate level of the assets or liabilities under consideration. If there are assets or liabilities that are determined to be Level 3 by this group, the Risk Management Committee of the Company and the Audit Committee of the Board of Directors are made aware of such assets at their next scheduled meeting.

Securities pricing is obtained from a third party pricing service and is tested at least annually against prices from another third party provider and reviewed with a market value tolerance variance of 3%. If any securities fall above this tolerance threshold, they are reviewed in more detail to determine why the variance exists. Changes in market value are reviewed monthly in aggregate yield by security type and any material differences are reviewed to determine why they exist. At least annually, the pricing methodology of the pricing service is received and reviewed to support the fair value levels used by the Company. A detailed pricing evaluation is requested and reviewed on any security determined to be fair valued using unobservable inputs by the pricing service.

The significant unobservable inputs used in the fair value measurement of the Company’s non-agency residential mortgage-backed securities classified as Level 3 are constant prepayment rates, average life, and a Swap/EDSF spread. Significant increases/(decreases) in any of those inputs in isolation would result in a significantly lower/(higher) fair value measurement.

The primary methodology used in the fair value measurement of the Company’s state and municipal securities classified as Level 3 is a discount to the AAA municipal benchmark index. Significant increases or (decreases) in this index as well as the degree to which the security differs in ratings, coupon, call and duration will result in a higher or (lower) fair value measurement for those securities that are not callable. For those securities that are continuously callable, a slight premium to par is used.

                         The table below presents the balances of assets measured at fair value on a nonrecurring basis:

	June 30, 2013
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	978	$	978
Non-working capital loans		0		0		3,265		3,265
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,417		2,417
Owner occupied loans		0		0		2,914		2,914
Nonowner occupied loans		0		0		12,450		12,450
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		283		283
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		404		404
Open end and junior lien loans		0		0		25		25
Residential construction loans		0		0		0		0
Other consumer loans		0		0		40		40
Total impaired loans	$	0	$	0	$	22,776	$	22,776
Mortgage servicing rights		0		0		8		8
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	22,859	$	22,859

                   The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2013:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired Loans:
Commercial and industrial	$	4,243	Collateral based	Discount to reflect		31	%		(8% - 90%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		17,781	Collateral based	Discount to reflect		23	%		(3% - 42%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		283	Collateral based	Discount to reflect		13	%
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		429	Collateral based	Discount to reflect		22	%		(8% - 59%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		40	Collateral based	Discount to reflect		39	%		(33% - 79%)
			measurements	current market conditions
				and ultimate collectability
Mortgage servicing rights		8	Discounted cash flows	Discount rate		9.50	%
Other real estate owned		75	Appraisal	Discount to reflect		49	%
				current market conditions

                  The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2012:

	Fair Value		Valuation Methodology	Unobservable Inputs	Average			Range of Inputs
Impaired Loans:
Commercial and industrial	$	3,980	Collateral based	Discount to reflect		35	%		(10% - 99%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		24,560	Collateral based	Discount to reflect		23	%		(4% - 57%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		268	Collateral based	Discount to reflect		19	%
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		510	Collateral based	Discount to reflect		39	%		(8% - 100%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		46	Collateral based	Discount to reflect		40	%		(29% - 100%)
			measurements	current market conditions
				and ultimate collectability
Mortgage servicing rights		1,906	Discounted cash flows	Discount rate		9.20	%		(9.10% - 9.50%)
Other real estate owned		75	Appraisals	Discount to reflect		49	%
				current market conditions

	December 31, 2012
	Fair Value Measurements Using						Assets
	Level 1		Level 2		Level 3		at Fair Value
			(in thousands)
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	990	$	990
Non-working capital loans		0		0		2,990		2,990
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		2,026		2,026
Owner occupied loans		0		0		3,892		3,892
Nonowner occupied loans		0		0		18,642		18,642
Multifamily loans		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		0		0		268		268
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		352		352
Open end and junior lien loans		0		0		158		158
Residential construction loans		0		0		0		0
Other consumer loans		0		0		46		46
Total impaired loans	$	0	$	0	$	29,364	$	29,364
Mortgage servicing rights		0		0		1,906		1,906
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	31,345	$	31,345

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $30.3 million, with a valuation allowance of $7.5 million at June 30, 2013, resulting in a net recovery in the provision for loan losses of $2.5 million and $200,000, respectively, for the six months and three months ended June 30, 2013. At June 30, 2012, impaired loans had a carrying amount of had a gross carrying amount of $47.6 million, with a valuation allowance of $14.7 million, resulting in a net recovery in the provision for loan losses of $1.8 million and $3.5 million, respectively, for the three months and six months ended June 30, 2012.

Mortgage servicing rights, which are carried at the lower of cost or fair value, included a portion carried at their fair value of $8,000, which is made up of the outstanding balance of $11,000, net of a valuation allowance of $3,000 at June 30, 2013, resulting in a net recovery of $39,000 in impairment for the six months ended June 30, 2013. The Company realized a net recovery of impairment of $22,000 for the six months ended June 30, 2012.

                  The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Items which are not financial instruments are not included.

	June 30, 2013
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	63,555		$	63,555		$	0		$	0		$	63,555
Securities available for sale		472,976			1,027			465,578			6,371			472,976
Real estate mortgages held for sale		5,486			0			5,567			0			5,567
Loans, net		2,284,065			0			0			2,285,426			2,285,426
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		9,208			6			2,266			6,936			9,208
Financial Liabilities:
Certificates of deposit		(804,564	)		0			(815,860	)		0			(815,860	)
All other deposits		(1,678,928	)		(1,678,928	)		0			0			(1,678,928	)
Securities sold under agreements to repurchase		(102,655	)		0			(102,655	)		0			(102,655	)
Federal funds purchased		(37,000	)		0			(37,000	)		0			(37,000	)
Long-term borrowings		(37	)		0			(44	)		0			(44	)
Subordinated debentures		(30,928	)		0			0			(31,230	)		(31,230	)
Standby letters of credit		(316	)		0			0			(316	)		(316	)
Accrued interest payable		(4,405	)		(135	)		(4,267	)		(3	)		(4,405	)

	December 31, 2012
	Carrying			Estimated Fair Value
	Value			Level 1			Level 2			Level 3			Total
Financial Assets:
Cash and cash equivalents	$	232,237		$	232,237		$	0		$	0		$	232,237
Securities available for sale		467,021			1,037			462,137			3,847			467,021
Real estate mortgages held for sale		9,452			0			9,663			0			9,663
Loans, net		2,206,075			0			0			2,230,993			2,230,993
Federal Home Loan Bank stock		7,313			N/A			N/A			N/A			N/A
Federal Reserve Bank stock		3,420			N/A			N/A			N/A			N/A
Accrued interest receivable		8,485			6			2,215			6,264			8,485
Financial Liabilities:
Certificates of deposit		(907,505	)		0			(922,397	)		0			(922,397	)
All other deposits		(1,674,251	)		(1,674,251	)		0			0			(1,674,251	)
Securities sold under agreements to repurchase		(121,883	)		0			(121,883	)		0			(121,883	)
Long-term borrowings		(15,038	)		0			(15,607	)		0			(15,607	)
Subordinated debentures		(30,928	)		0			0			(31,223	)		(31,223	)
Standby letters of credit		(262	)		0			0			(262	)		(262	)
Accrued interest payable		(4,757	)		(298	)		(4,456	)		(3	)		(4,757	)

                 The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and cash equivalents - The carrying amount of cash and cash equivalents approximate fair value and are classified as Level 1.

Loans, net – Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using current market rates applied to the estimated life resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Federal Home Loan Bank stock and Federal Reserve Bank stock– It is not practical to determine the fair value of Federal Home Loan Bank stock and Federal Reserve Bank stock due to restrictions placed on its transferability.

Certificates of deposit - Fair values of certificates of deposit are estimated using discounted cash flow analyses using current market rates applied to the estimated life resulting in a Level 2 classification.

All other deposits- The fair values for all other deposits other than certificates of deposit are equal to the amount payable on demand (the carrying value) resulting in a Level 1 classification.

Securities sold under agreements to repurchase – The carrying amount of borrowings under repurchase agreements approximate their fair values resulting in a Level 2 classification.

Federal funds purchased – The carrying amount of federal funds purchased approximate their fair values resulting in a Level 2 classification.

Long-term borrowings – The fair value of long-term borrowings is estimated using discounted cash flow analyses based on current borrowing rates resulting in a Level 2 classification.

Subordinated debentures - The fair value of subordinated debentures is based on the rates currently available to the Company with similar term and remaining maturity and credit spread resulting in a Level 3 classification.

Standby letters of credit – The fair value of off-balance sheet items is based on the current fees and costs that would be charged to enter into or terminate such arrangements resulting in a Level 3 classification.

Accrued interest receivable/payable – The carrying amounts of accrued interest approximate fair value resulting in a Level 1, Level 2 or Level 3 classification which is consistent with its associated asset/liability.

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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2013, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2013:

				Commercial
				Real Estate								Consumer
	Commercial			and Multifamily			Agri-business			Other		1-4 Family			Other
	and Industrial			Residential			and Agricultural			Commercial		Mortgage			Consumer			Unallocated		Total
Three Months Ended June 30, 2013
Balance April 1,	$	22,113		$	20,420		$	1,263		$	223	$	2,866		$	558		$	3,375	$	50,818
Provision for loan losses		(348	)		(336	)		452			41		30			69			92		0
Loans charged-off		(10	)		0			(200	)		0		(81	)		(78	)		0		(369	)
Recoveries		124			14			2			0		8			38			0		186
Net loans charged-off		114			14			(198	)		0		(73	)		(40	)		0		(183	)
Balance June 30,	$	21,879		$	20,098		$	1,517		$	264	$	2,823		$	587		$	3,467	$	50,635
Six Months Ended June 30, 2013
Balance January 1,	$	22,342		$	20,812		$	1,403		$	240	$	2,682		$	609		$	3,357	$	51,445
Provision for loan losses		(707	)		(83	)		310			24		300			46			110		0
Loans charged-off		(143	)		(906	)		(200	)		0		(189	)		(137	)		0		(1,575	)
Recoveries		387			275			4			0		30			69			0		765
Net loans charged-off		244			(631	)		(196	)		0		(159	)		(68	)		0		(810	)
Balance June 30,	$	21,879		$	20,098		$	1,517		$	264	$	2,823		$	587		$	3,467	$	50,635
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,469		$	6,103		$	40		$	0	$	445		$	28		$	0	$	11,085
Collectively evaluated for impairment		17,410			13,995			1,477			264		2,378			559			3,467		39,550
Total ending allowance balance	$	21,879		$	20,098		$	1,517		$	264	$	2,823		$	587		$	3,467	$	50,635
Loans:
Loans individually evaluated for impairment	$	16,882		$	26,540		$	757		$	0	$	2,654		$	80		$	0	$	46,913
Loans collectively evaluated for impairment		871,458			857,114			197,643			46,499		271,730			43,343			0		2,287,787
Total ending loans balance	$	888,340		$	883,654		$	198,400		$	46,499	$	274,384		$	43,423		$	0	$	2,334,700

The recorded investment in loans does not include accrued interest.

                The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month and six-month periods ended June 30, 2012:

				Commercial
				Real Estate								Consumer
	Commercial			and Multifamily			Agri-business		Other			1-4 Family			Other
	and Industrial			Residential			and Agricultural		Commercial			Mortgage			Consumer			Unallocated			Total
Three Months Ended June 30, 2012
Balance April 1,	$	22,134		$	23,236		$	538	$	186		$	2,527		$	523		$	3,613		$	52,757
Provision for loan losses		(1,048	)		829			881		(12	)		(110	)		65			(105	)		500
Loans charged-off		(1,676	)		0			0		0			(78	)		(97	)		0			(1,851	)
Recoveries		286			18			0		2			73			32			0			411
Net loans charged-off		(1,390	)		18			0		2			(5	)		(65	)		0			(1,440	)
Balance June 30,	$	19,696		$	24,083		$	1,419	$	176		$	2,412		$	523		$	3,508		$	51,817
Six Months Ended June 30, 2012
Balance January 1,	$	22,830		$	23,489		$	695	$	65		$	2,322		$	645		$	3,354		$	53,400
Provision for loan losses		(1,152	)		1,394			724		107			61			11			154			1,299
Loans charged-off		(2,454	)		(847	)		0		0			(92	)		(191	)		0			(3,584	)
Recoveries		472			47			0		4			121			58			0			702
Net loans charged-off		(1,982	)		(800	)		0		4			29			(133	)		0			(2,882	)
Balance June 30,	$	19,696		$	24,083		$	1,419	$	176		$	2,412		$	523		$	3,508		$	51,817

The recorded investment in loans does not include accrued interest.

                The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2012:

			Commercial
			Real Estate						Consumer
	Commercial		and Multifamily		Agri-business		Other		1-4 Family		Other
	and Industrial		Residential		and Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,542	$	8,559	$	63	$	0	$	607	$	34	$	0	$	14,805
Collectively evaluated for impairment		16,800		12,253		1,340		240		2,075		575		3,357		36,640
Total ending allowance balance	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Loans:
Loans individually evaluated for impairment	$	18,281	$	36,919	$	797	$	0	$	2,853	$	92	$	0	$	58,942
Loans collectively evaluated for impairment		828,728		763,279		224,008		56,810		280,141		45,612		0		2,198,578
Total ending loans balance	$	847,009	$	800,198	$	224,805	$	56,810	$	282,994	$	45,704	$	0	$	2,257,520

The recorded investment in loans does not include accrued interest.

The allowance for loan losses to total loans at June 30, 2013 and 2012 was 2.17% and 2.34%, respectively. The allowance for loan losses to total loans at December 31, 2012 was 2.28%.

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2013:

							Three Months Ended June 30, 2013							Six Months Ended June 30, 2013
											Cash Basis							Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest			Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income			Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized			Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	65	$	65	$	0	$	65	$	0	$	0		$	65	$	0	$	0
Non-working capital loans		0		0		0		0		0		0			17		0		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		716		536		0		543		0		0			555		0		0
Agri-business and agricultural loans:
Loans secured by farmland		612		434		0		440		0		0			481		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		49		49		0		49		0		0			54		0		0
Open end and junior lien loans		0		0		0		0		0		0			21		0		0
Other consumer loans		1		1		0		1		0		0			1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,492		2,883		1,123		2,898		14		14			3,034		27		27
Non-working capital loans		15,789		13,934		3,346		13,815		136		139			14,114		271		276
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,459		3,070		653		4,203		7		(5	)		4,366		52		47
Owner occupied loans		3,629		3,629		715		2,768		39		45			3,534		68		76
Nonowner occupied loans		19,296		19,305		4,735		19,399		84		85			21,849		168		172
Multifamily loans		0		0		0		0		0		0			96		0		0
Agri-business and agricultural loans:
Loans secured by farmland		644		323		40		391		0		0			359		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,570		2,571		436		2,537		23		18			2,518		23		37
Open end and junior lien loans		34		34		9		58		0		0			49		0		0
Other consumer loans		79		79		28		79		1		1			80		1		1
Total	$	53,435	$	46,913	$	11,085	$	47,246	$	304	$	297		$	51,193	$	610	$	636

The recorded investment in loans does not include accrued interest.

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month and six-month periods ended June 30, 2012:

							Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
											Cash Basis						Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest		Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income		Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	505	$	166	$	0	$	168	$	0	$	0	$	170	$	0	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		654		629		0		637		0		0		464		0		0
Nonowner occupied loans		391		391		0		265		0		0		133		0		0
Agri-business and agricultural loans:
Loans secured by farmland		443		265		0		266		0		0		133		0		0
Loans for ag production		203		203		0		204		0		0		102		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		580		580		0		583		0		0		440		0		0
Open end and junior lien loans		20		20		0		20		0		0		30		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,598		2,989		1,450		4,395		13		13		5,100		29		28
Non-working capital loans		17,954		17,265		5,271		17,264		177		178		17,494		357		360
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,386		1,996		510		2,036		17		17		1,503		17		17
Owner occupied loans		5,405		4,636		1,500		4,288		6		6		4,438		18		16
Nonowner occupied loans		28,184		27,582		6,936		27,561		104		105		28,481		202		204
Multifamily loans		0		0		0		0		0		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		1,735		341		75		345		0		0		484		0		0
Loans for agricultural production		0		0		0		0		0		0		105		0		0
Other commercial loans		0		0		0		0		0		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,875		1,877		312		1,833		9		11		1,815		20		22
Open end and junior lien loans		310		310		169		312		0		0		333		0		0
Residential construction loans		0		0		0		0		0		0		0		0		0
Other consumer loans		6		6		5		6		0		0		7		0		0
Total	$	66,249	$	59,256	$	16,228	$	59,378	$	326	$	330	$	60,596	$	643	$	647

The recorded investment in loans does not include accrued interest.

                The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2012:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	61	$	61	$	0
Non-working capital loans		0		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans		754		574		0
Nonowner occupied loans		385		385		0
Multifamily loans		410		286		0
Agri-business and agricultural loans:
Loans secured by farmland		645		466		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		59		59		0
Open end and junior lien loans		41		41		0
Residential construction loans
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,833		3,224		1,516
Non-working capital loans		16,763		14,996		4,026
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,352		2,960		934
Owner occupied loans		5,869		5,869		1,476
Nonowner occupied loans		26,835		26,845		6,149
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		651		331		63
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,387		2,403		415
Open end and junior lien loans		379		350		192
Residential construction loans		0		0		0
Other consumer loans		91		91		34
Total	$	65,516	$	58,942	$	14,805

The recorded investment in loans does not include accrued interest.

                The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2013 and December 31, 2012:

	June 30, 2013				December 31, 2012
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Nonaccrual		Accruing		Nonaccrual		Accruing
Commercial and industrial loans:
Working capital lines of credit loans	$	1,812	$	0	$	1,899	$	0
Non-working capital loans		3,786		104		4,812		50
Commercial real estate and multi-family residential loans:
Construction and land development loans		383		0		398		0
Owner occupied loans		2,424		0		2,461		0
Nonowner occupied loans		11,718		0		19,200		0
Multifamily loans		0		0		286		0
Agri-business and agricultural loans:
Loans secured by farmland		757		0		797		0
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		560		0		504		0
Open end and junior lien loans		34		0		391		0
Residential construction loans		0		0		0		0
Other consumer loans		65		0		77		0
Total	$	21,539	$	104	$	30,825	$	50

The recorded investment in loans does not include accrued interest.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2013 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	642	$	1,812	$	2,454	$	459,931	$	462,385
Non-working capital loans		343		3,890		4,233		421,722		425,955
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		383		383		107,907		108,290
Owner occupied loans		126		2,424		2,550		362,287		364,837
Nonowner occupied loans		1,406		11,718		13,124		360,038		373,162
Multifamily loans		0		0		0		37,365		37,365
Agri-business and agricultural loans:
Loans secured by farmland		0		757		757		99,818		100,575
Loans for agricultural production		18		0		18		97,807		97,825
Other commercial loans		0		0		0		46,499		46,499
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,399		560		2,959		113,031		115,990
Open end and junior lien loans		248		34		282		152,859		153,141
Residential construction loans		8		0		8		5,245		5,253
Other consumer loans		165		65		230		43,193		43,423
Total	$	5,355	$	21,643	$	26,998	$	2,307,702	$	2,334,700

The recorded investment in loans does not include accrued interest.

               The following table presents the aging of the recorded investment in past due loans as of December 31, 2012 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	233	$	1,899	$	2,132	$	437,705	$	439,837
Non-working capital loans		48		4,862		4,910		402,262		407,172
Commercial real estate and multi-family residential loans:
Construction and land development loans		998		398		1,396		80,954		82,350
Owner occupied loans		1,023		2,461		3,484		354,921		358,405
Nonowner occupied loans		38		19,200		19,238		295,243		314,481
Multifamily loans		0		286		286		44,676		44,962
Agri-business and agricultural loans:
Loans secured by farmland		0		797		797		108,359		109,156
Loans for agricultural production		0		0		0		115,649		115,649
Other commercial loans		0		0		0		56,810		56,810
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,475		504		1,979		107,583		109,562
Open end and junior lien loans		361		391		752		161,172		161,924
Residential construction loans		0		0		0		11,508		11,508
Other consumer loans		81		77		158		45,546		45,704
Total	$	4,257	$	30,875	$	35,132	$	2,222,388	$	2,257,520

The recorded investment in loans does not include accrued interest.

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $10.2 million and $12.5 million of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2013 and December 31, 2012. The Company is not committed to lending additional funds to customers whose loans have been modified in a troubled debt restructuring.

	June 30,		December 31,
	2013		2012
Accruing troubled debt restructured loans	$	23,017	$	22,332
Nonaccrual troubled debt restructured loans		19,398		28,506
Total troubled debt restructured loans	$	42,415	$	50,838

During the quarter ending June 30, 2013, loans totaling $328,000 were modified as troubled debt restructured loans. Concessions granted during the modifications included reduction in the interest rates to rates that would not be readily available in the marketplace for borrowers with a similar risk profile and/or capitalizing past due interest and other expenses into the principal balance of the loan. The troubled debt restructured loans during the quarter were all granted to consumer mortgage borrowers.

During the quarter ending March 31, 2013, loans totaling $2.2 million were modified as troubled debt restructurings. The modified terms of the loans included reductions in the interest rates to one that would not be readily available in the marketplace for borrowers with a similar risk profile and modifications of the repayment terms. These restructured loans were provided to related borrowers who are engaged in land development.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three-month and six-month periods ending June 30, 2013:

	Modifications
	Three Months Ended June 30, 2013
	All Modifications
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Consumer 1-4 family loans:
Closed end first mortgage loans		4	$	317	$	328
Total		4	$	317	$	328

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Consumer 1-4 family loans:
Closed end first mortgage loans		2	$	142	$	158		2	$	156	$	161	$	164	$	149		0		0
Total		2	$	142	$	158		2	$	156	$	161	$	164	$	149		0		0

	Modifications
	Six Months Ended June 30, 2013
	All Modifications
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		6	$	2,198	$	2,198
Consumer 1-4 family loans:
Closed end first mortgage loans		4		317		328
Total		10	$	2,515	$	2,526

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		6	$	85	$	63		0	$	0	$	0	$	0	$	0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		2		142		158		2		156		161		164		149		0		0
Total		8	$	227	$	221		2	$	156	$	161	$	164	$	149		0		0

For the three-month period ending June 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $86,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $42,000.

For the six-month period ending June 30, 2012, the commercial real estate and multi-family residential loan troubled debt restructurings described above decreased the allowance for loan losses by $373,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $65,000.

The troubled debt restructurings described above had charge-offs of $0 and $365,000, respectively, during the three-month and six-month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six-month and three-month periods ending June 30, 2012:

	Modifications
	Six Months Ended June 30, 2012
	All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		1	$	942	$	1,060
Commercial real estate and multi-family residential loans:
Construction and land development loans		5		1,638		1,638
Owner occupied loans		1		849		849
Nonowner occupied loans		1		385		385
Consumer 1-4 family loans:
Closed end first mortgage loans		1		39		39
Total		9	$	3,853	$	3,971

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		0	$	0	$	0		0	$	0	$	0	$	0	$	0		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		0		0		0		0		0		0		0		0		0
Owner occupied loans		1		440		117		0		0		0		0		0		0		0
Nonowner occupied loans		0		0		0		0		0		0		0		0		1		14
Consumer 1-4 family loans:
Closed end first mortgage loans		1		76		15		0		0		0		0		0		0		0
Total		2	$	516	$	132		0	$	0	$	0	$	0	$	0		1		14

	Modifications
	Three Months Ended June 30, 2012
	All Modifications Classified as Troubled Debt Restructurings
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		1	$	942	$	1,060
Commercial real estate and multi-family residential loans:
Owner occupied loans		1		849		849
Nonowner occupied loans		1		385		385
Consumer 1-4 family loans:
Closed end first mortgage loans		1		39		39
Total		4	$	2,215	$	2,333

	Interest Rate Reductions						Principal and Interest Forgiveness										Modified Repayment Terms
			Interest at		Interest at								Interest at		Interest at				Extension
	Number of		Pre-Modification		Post-Modification		Number of		Principal at		Principal at		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Rate		Rate		Loans		Pre-Modification		Post-Modification		Rate		Rate		Loans		Range
																			(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans		0	$	0	$	0		0	$	0	$	0	$	0	$	0		0		0
Commercial real estate and multi-family residential loans:		0		0		0		0		0		0		0		0		0		0
Owner occupied loans		1		440		117		0		0		0		0		0		0		0
Nonowner occupied loans		0		0		0		0		0		0		0		0		1		14
Consumer 1-4 family loans:
Closed end first mortgage loans		1		76		15		0		0		0		0		0		0		0
Total		2	$	516	$	132		0	$	0	$	0	$	0	$	0		1		14

For the three month period ending June 30, 2012, the commercial and industrial troubled debt restructured loans described above increased the allowance for loan losses by $690,000, the commercial real estate and multi-family residential loan troubled debt restructurings described above increased the allowance for loan losses by $290,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $6,000. For the six-month period ending June 30, 2012, the commercial and industrial troubled debt restructured loans described above increased the allowance for loan losses by $690,000, the commercial real estate and multi-family residential troubled debt restructured loans described above increased the allowance for loan losses by $790,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $6,000.

No charge offs resulted from any troubled debt restructurings described above during the three and six month periods ending June 30, 2012.

 The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2013:

	Modifications
	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Number of		Recorded		Number of		Recorded
	Loans		Investment		Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		0	$	0		1	$	946
Total		0	$	0		1	$	946

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings described above that subsequently defaulted made a large principal payment during the second quarter of 2013, which decreased the allowance for loan losses by $80,000 and did not result in any charge offs during the three and six month periods ending June 30, 2013.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month and six month periods ending June 30, 2012:

	Number of		Recorded
	Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		1	$	65
Total		1	$	65

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above increased the allowance for loan losses by $1,000 and did not result in any charge offs during the three and six month periods ending June 30, 2012.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

                Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of June 30, 2013 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial and industrial loans:
Working capital lines of credit loans	$	424,540	$	23,755	$	14,090	$	0	$	0
Non-working capital loans		378,380		22,086		25,425		64		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		94,229		4,140		9,921		0		0
Owner occupied loans		325,524		22,302		17,011		0		0
Nonowner occupied loans		339,563		14,652		18,947		0		0
Multifamily loans		37,028		337		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		99,229		0		1,346		0		0
Loans for agricultural production		97,825		0		0		0		0
Other commercial loans		46,381		0		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		23,717		847		1,816		0		89,610
Open end and junior lien loans		5,820		2,124		0		0		145,197
Residential construction loans		0		0		0		0		5,253
Other consumer loans		8,261		460		293		0		34,409
Total	$	1,880,497	$	90,703	$	88,967	$	64	$	274,469

The recorded investment in loans does not include accrued interest.

                 Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of December 31, 2012 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
					(in thousands)
Commercial and industrial loans:
Working capital lines of credit loans	$	403,778	$	22,591	$	13,468	$	0	$	0
Non-working capital loans		355,772		23,192		26,857		66		1,285
Commercial real estate and multi-family residential loans:
Construction and land development loans		67,002		4,595		10,753		0		0
Owner occupied loans		315,672		24,589		18,144		0		0
Nonowner occupied loans		282,108		6,345		26,028		0		0
Multifamily loans		43,425		345		1,192		0		0
Agri-business and agricultural loans:
Loans secured by farmland		107,734		0		1,404		0		18
Loans for agricultural production		115,649		0		0		0		0
Other commercial loans		56,692		0		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		18,685		343		729		0		89,805
Open end and junior lien loans		7,932		300		0		0		153,692
Residential construction loans		0		0		0		0		11,508
Other consumer loans		10,168		378		497		0		34,661
Total	$	1,784,617	$	82,678	$	99,190	$	66	$	290,969

The recorded investment in loans does not include accrued interest.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Common stock cash dividends declared, per share (in dollars per share)	$ 0.19	$ 0.325
Treasury shares purchased under deferred directors' plan (in shares)	7,091	7,204
Treasury stock sold and distributed under deferred directors' plan (in shares)	3,018
Stock activity under stock compensation plans (in shares)	47,234	114,928

XML

FAIR VALUE DISCLOSURES (Assets Measured at Fair Value on a Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Mortgage servicing rights	$ 3,000
Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	22,776	29,364
Mortgage servicing rights	8	1,906
Other real estate owned	75	75
Total assets	22,859	31,345
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Mortgage servicing rights	0	0
Other real estate owned	0	0
Total assets	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Mortgage servicing rights	0	0
Other real estate owned	0	0
Total assets	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	22,776	29,364
Mortgage servicing rights	8	1,906
Other real estate owned	75	75
Total assets	22,859	31,345
Non Working Capital Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	3,265
Non Working Capital Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0
Non Working Capital Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0
Non Working Capital Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	3,265
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	4,243	3,980
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	978	990
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	978	990
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		2,990
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		0
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		2,990
Commercial Real Estate and Multi-Family Residential Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	17,781	24,560
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	2,417	2,026
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	2,417	2,026
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	2,914	3,892
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	2,914	3,892
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	12,450	18,642
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	12,450	18,642
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	283	268
Agri-business and Agricultural Loans [Member] | Loans Secured by Farmland [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	283	268
Agri-business and Agricultural Loans [Member] | Loans Secured by Farmland [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Loans Secured by Farmland [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Loans Secured by Farmland [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	283	268
Agri-business and Agricultural Loans [Member] | Loans for Agricultural Production [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Loans for Agricultural Production [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Loans for Agricultural Production [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Agri-business and Agricultural Loans [Member] | Loans for Agricultural Production [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Commerical Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Commerical Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Commerical Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Commerical Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	429	510
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	404	352
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	404	352
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	25	158
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	25	158
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	40	46
Other Consumer Loans [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Consumer Loans [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Consumer Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	$ 40	$ 46

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EMPLOYEE BENEFIT PLANS (Components of Net Periodic Benefit Cost) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Pension Plans, Defined Benefit [Member]
Interest cost	$ 26	$ 29	$ 58	$ 64
Expected return on plan assets	(25)	(29)	(60)	(69)
Recognized net actuarial (gain) loss	41	41	75	68
Net pension expense (benefit)	42	41	73	63
Supplemental Employee Retirement Plans, Defined Benefit [Member]
Interest cost	10	10	23	26
Expected return on plan assets	(18)	(18)	(37)	(38)
Recognized net actuarial (gain) loss	25	25	46	42
Net pension expense (benefit)	$ 17	$ 17	$ 32	$ 30

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Recorded Investment In Non Accrual And Loans Past Due Over 90 Days Still On Accrual By Class Of Loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	$ 21,539	$ 30,825
Loans Past Due Over 90 Days and Still Accruing	104	50
Other Commerical Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	0	0
Loans Past Due Over 90 Days and Still Accruing	0	0
Other Consumer Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	65	77
Loans Past Due Over 90 Days and Still Accruing	0	0
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	1,812	1,899
Loans Past Due Over 90 Days and Still Accruing	0	0
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	3,786	4,812
Loans Past Due Over 90 Days and Still Accruing	104	50
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	383	398
Loans Past Due Over 90 Days and Still Accruing	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	2,424	2,461
Loans Past Due Over 90 Days and Still Accruing	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	11,718	19,200
Loans Past Due Over 90 Days and Still Accruing	0	0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	0	286
Loans Past Due Over 90 Days and Still Accruing	0	0
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	757	797
Loans Past Due Over 90 Days and Still Accruing	0	0
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	0	0
Loans Past Due Over 90 Days and Still Accruing	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	0	0
Loans Past Due Over 90 Days and Still Accruing	0
Consumer 1-4 Family Mortgage Loans [Member] | Construction and Land Development Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Loans Past Due Over 90 Days and Still Accruing		0
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	560	504
Loans Past Due Over 90 Days and Still Accruing	0	0
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans [Abstract]
Nonaccrual	34	391
Loans Past Due Over 90 Days and Still Accruing	$ 0	$ 0

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 11. SUBSEQUENT EVENTS

There were no subsequent events that would have a material impact on the financial statements presented in this Form 10-Q.

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NEW ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2013

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NOTE 7. NEW ACCOUNTING PRONOUNCEMENTS

In February 2013, the Financial Accounting Standards Board (FASB) issued updated guidance related to disclosure of reclassification amounts out of other comprehensive income. The standard requires that companies present, either in a single note or parenthetically on the face of their financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. The new requirements will take effect for public companies in fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company adopted this standard on January 1, 2013. Adopting this standard did not have a significant impact on the Company’s financial condition or results of operations.

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LOANS (Tables)

6 Months Ended

Jun. 30, 2013

Loans [Abstract]

Schedule of loans

	June 30,				December 31,
	2013				2012
Commercial and industrial loans:
Working capital lines of credit loans	$	462,137	19.8	%	$	439,638	19.5	%
Non-working capital loans		425,958	18.2			407,184	18.0
Total commercial and industrial loans		888,095	38.0			846,822	37.5
Commercial real estate and multi-family residential loans:
Construction and land development loans		108,695	4.7			82,494	3.7
Owner occupied loans		365,071	15.6			358,617	15.9
Nonowner occupied loans		373,696	16.0			314,889	13.9
Multifamily loans		37,422	1.6			45,011	2.0
Total commercial real estate and multi-family residential loans		884,884	37.9			801,011	35.5
Agri-business and agricultural loans:
Loans secured by farmland		100,571	4.3			109,147	4.8
Loans for agricultural production		97,729	4.2			115,572	5.1
Total agri-business and agricultural loans		198,300	8.5			224,719	10.0
Other commercial loans		46,501	2.0			56,807	2.5
Total commercial loans		2,017,780	86.4			1,929,359	85.5
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		116,247	5.0			109,823	4.9
Open end and junior lien loans		152,571	6.5			161,366	7.1
Residential construction and land development loans		5,263	0.2			11,541	0.5
Total consumer 1-4 family mortgage loans		274,081	11.7			282,730	12.5
Other consumer loans		43,470	1.9			45,755	2.0
Total consumer loans		317,551	13.6			328,485	14.5
Subtotal		2,335,331	100.0	%		2,257,844	100.0	%
Less: Allowance for loan losses		(50,635)				(51,445)
Net deferred loan fees		(631)				(324)
Loans, net	$	2,284,065			$	2,206,075

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RECLASSIFICATIONS

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

RECLASSIFICATIONS

NOTE 12. RECLASSIFICATIONS

Certain amounts appearing in the financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassification had no effect on net income or stockholders’ equity as previously reported.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document Information [Line Items]
Entity Registrant Name	LAKELAND FINANCIAL CORP
Entity Central Index Key	0000721994
Trading Symbol	LKFN
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Entity Common Stock, Shares Outstanding		16,449,756

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of weighted average number of shares

Basic earnings per common share is net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants. 

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Weighted average shares outstanding for basic earnings per    common share		16,425,382		16,324,928		16,411,695		16,298,981
Dilutive effect of stock options, awards and warrants		121,165		128,633		112,555		151,851
Weighted average shares outstanding for diluted earnings per    common share		16,546,547		16,453,561		16,524,250		16,450,832
Basic earnings per common share	$	0.56	$	0.54	$	1.13	$	1.07
Diluted earnings per common share	$	0.56	$	0.54	$	1.12	$	1.06