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 September 30, 2014

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 October 31, 2014:  16,548,074

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — September 30, 2014 and December 31, 2013	1
	Consolidated Statements of Income — three months and nine months ended September 30, 2014 and 2013	2
	Consolidated Statements of Comprehensive Income — three months and nine months ended September 30, 2014 and 2013	3
	Consolidated Statements of Shareholders’ Equity — nine months ended September 30, 2014 and 2013	4
	Consolidated Statements of Cash Flows — nine months ended September 30, 2014 and 2013	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
SIGNATURES		52

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (in thousands except share data)
	September 30,	December 31,
	2014	2013
	(Unaudited)
ASSETS
Cash and due from banks	$           58,945	$             55,727
Short-term investments	11,257	7,378
Total cash and cash equivalents	70,202	63,105
Securities available for sale (carried at fair value)	473,075	468,967
Real estate mortgage loans held for sale	1,727	1,778
Loans, net of allowance for loan losses of $46,387 and $48,797	2,655,536	2,486,301
Land, premises and equipment, net	40,523	39,335
Bank owned life insurance	63,283	62,883
Federal Reserve and Federal Home Loan Bank stock	10,732	10,732
Accrued interest receivable	9,042	8,577
Goodwill	4,970	4,970
Other assets	26,813	29,116
Total assets	$     3,355,903	$        3,175,764
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest bearing deposits	$        515,696	$           479,606
Interest bearing deposits	2,373,976	2,066,462
Total deposits	2,889,672	2,546,068
Short-term borrowings
Federal funds purchased	8,000	11,000
Securities sold under agreements to repurchase	60,578	104,876
Other short-term borrowings	0	146,000
Total short-term borrowings	68,578	261,876
Long-term borrowings	35	37
Subordinated debentures	30,928	30,928
Accrued interest payable	2,748	2,918
Other liabilities	11,993	11,973
Total liabilities	3,003,954	2,853,800
STOCKHOLDERS' EQUITY
Common stock:  90,000,000 shares authorized, no par value
16,548,074 shares issued and 16,463,796 outstanding as of September 30, 2014
16,475,716 shares issued and 16,377,449 outstanding as of December 31, 2013	95,505	93,249
Retained earnings	255,751	233,108
Accumulated other comprehensive income/(loss)	2,587	(2,494)
Treasury stock, at cost (2014 - 84,278 shares, 2013 - 98,267 shares)	(1,983)	(1,988)
Total stockholders' equity	351,860	321,875
Noncontrolling interest	89	89
Total equity	351,949	321,964
Total liabilities and equity	$     3,355,903	$        3,175,764

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

1

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands except share and per share data)
	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
NET INTEREST INCOME
Interest and fees on loans
Taxable	$        26,713	$        24,595	$        78,317	$        73,469
Tax exempt	125	100	348	304
Interest and dividends on securities
Taxable	2,075	1,463	6,114	3,560
Tax exempt	820	802	2,455	2,307
Interest on short-term investments	12	10	31	46
Total interest income	29,745	26,970	87,265	79,686
Interest on deposits	3,424	3,589	9,946	12,365
Interest on borrowings
Short-term	96	146	351	349
Long-term	260	263	769	831
Total interest expense	3,780	3,998	11,066	13,545
NET INTEREST INCOME	25,965	22,972	76,199	66,141
Provision for loan losses	0	0	0	0
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES	25,965	22,972	76,199	66,141
NONINTEREST INCOME
Wealth advisory fees	1,030	980	3,046	2,895
Investment brokerage fees	699	1,503	2,739	3,449
Service charges on deposit accounts	2,474	2,325	6,973	6,548
Loan, insurance and service fees	1,972	1,524	5,187	4,792
Merchant card fee income	407	356	1,137	925
Bank owned life insurance income	372	373	1,082	1,184
Other income	881	483	2,442	1,753
Mortgage banking income	264	159	508	1,206
Net securities gains (losses)	(228)	106	(224)	107
Total noninterest income	7,871	7,809	22,890	22,859
NONINTEREST EXPENSE
Salaries and employee benefits	9,856	9,437	29,310	27,493
Net occupancy expense	872	813	2,885	2,532
Equipment costs	812	758	2,346	2,021
Data processing fees and supplies	1,557	1,443	4,541	4,115
Corporate and business development	474	443	1,371	1,292
FDIC insurance and other regulatory fees	481	463	1,446	1,384
Professional fees	705	1,018	2,241	2,366
Other expense	1,903	1,891	5,394	5,047
Total noninterest expense	16,660	16,266	49,534	46,250
INCOME BEFORE INCOME TAX EXPENSE	17,176	14,515	49,555	42,750
Income tax expense	5,665	4,746	16,820	14,499
NET INCOME	$        11,511	$          9,769	$        32,735	$        28,251
BASIC WEIGHTED AVERAGE COMMON SHARES	16,547,551	16,451,199	16,531,411	16,427,060
BASIC EARNINGS PER COMMON SHARE	$            0.70	$            0.59	$            1.98	$            1.72
DILUTED WEIGHTED AVERAGE COMMON SHARES	16,775,770	16,634,933	16,769,079	16,581,089
DILUTED EARNINGS PER COMMON SHARE	$            0.69	$            0.59	$            1.95	$            1.70

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

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - in thousands)
			Three months ended September 30,		Nine months ended September 30,
			2014	2013	2014	2013
Net income			$         11,511	$           9,769	$         32,735	$         28,251
Other comprehensive income (loss)
	Change in securities available for sale:
		Unrealized holding gain (loss) on securities available for sale
		arising during the period	(1,573)	(1,242)	7,979	(11,642)
		Reclassification adjustment for (gains) losses included in net income	228	(106)	224	(107)
		Net securities gain (loss) activity during the period	(1,345)	(1,348)	8,203	(11,749)
		Tax effect	551	484	(3,241)	4,589
		Net of tax amount	(794)	(864)	4,962	(7,160)
	Defined benefit pension plans:
		Net gain (loss) on defined benefit pension plans	0	0	64	(151)
		Amortization of net actuarial loss	49	62	148	183
		Net gain (loss) activity during the period	49	62	212	32
		Tax effect	(20)	(25)	(93)	(13)
		Net of tax amount	29	37	119	19
		Total other comprehensive income (loss), net of tax	(765)	(827)	5,081	(7,141)
Comprehensive income			$         10,746	$           8,942	$         37,816	$         21,110

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

3

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited - in thousands except share and per share data)
				Accumulated
				Other		Total
	Common Stock		Retained	Comprehensive	Treasury	Stockholders'
	Shares	Stock	Earnings	Income (Loss)	Stock	Equity
Balance at January 1, 2013	16,290,136	$    90,039	$    203,654	$                   5,689	$    (1,643)	$             297,739
Comprehensive income:
Net income			28,251			28,251
Other comprehensive income (loss), net of tax				(7,141)		(7,141)
Cash dividends declared, $0.38 per share			(6,257)			(6,257)
Treasury shares purchased under deferred
directors' plan	(13,652)	381			(381)	0
Treasury stock sold and distributed under deferred
directors' plan	3,018	(54)			54	0
Stock activity under equity compensation plans	81,909	498				498
Stock based compensation expense		1,365				1,365
Balance at September 30, 2013	16,361,411	$    92,229	$    225,648	$                 (1,452)	$    (1,970)	$             314,455
Balance at January 1, 2014	16,377,449	$    93,249	$    233,108	$                 (2,494)	$    (1,988)	$             321,875
Comprehensive income:
Net income			32,735			32,735
Other comprehensive income (loss), net of tax				5,081		5,081
Cash dividends declared, $0.61 per share			(10,092)			(10,092)
Treasury shares purchased under deferred
directors' plan	(11,042)	427			(427)	0
Treasury stock sold and distributed under deferred
directors' plan	25,031	(432)			432	0
Stock activity under equity compensation plans	72,358	(6)				(6)
Stock based compensation expense		2,267				2,267
Balance at September 30, 2014	16,463,796	$    95,505	$    255,751	$                   2,587	$    (1,983)	$             351,860

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

4

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands)
Nine Months Ended September 30	2014	2013
Cash flows from operating activities:
Net income	$            32,735	$            28,251
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	2,507	2,174
Net (gain) loss on sale and write down of other real estate owned	(85)	8
Amortization of intangible assets	0	35
Amortization of loan servicing rights	392	453
Net change in loan servicing rights valuation allowance	0	(39)
Loans originated for sale	(38,682)	(68,378)
Net gain on sales of loans	(826)	(2,193)
Proceeds from sale of loans	39,254	78,221
Net gain on sales of premises and equipment	11	12
Net (gain) loss  on sales and calls of securities available for sale	224	(107)
Net securities amortization	4,199	7,097
Stock based compensation expense	2,267	1,365
Earnings on life insurance	(1,082)	(1,168)
Tax benefit of stock option exercises	(36)	(77)
Net change:
Interest receivable and other assets	(1,664)	5,898
Interest payable and other liabilities	436	(1,368)
Total adjustments	6,915	21,933
Net cash from operating activities	39,650	50,184
Cash flows from investing activities:
Proceeds from sale of securities available for sale	13,766	29,996
Proceeds from maturities, calls and principal paydowns of
securities available for sale	44,562	97,229
Purchases of securities available for sale	(58,655)	(142,011)
Purchase of life insurance	(157)	(117)
Proceeds from loans sold to others	4,307	0
Net increase in total loans	(174,553)	(136,944)
Proceeds from sales of land, premises and equipment	6	1
Purchases of land, premises and equipment	(3,712)	(5,861)
Proceeds from sales of other real estate	1,326	621
Proceeds from life insurance	778	0
Net cash from investing activities	(172,332)	(157,086)
Cash flows from financing activities:
Net increase (decrease) in total deposits	343,604	(136,930)
Net increase (decrease) in short-term borrowings	(193,298)	114,076
Payments on long-term borrowings	(2)	(15,001)
Common dividends paid	(10,079)	(6,244)
Preferred dividends paid	(13)	(13)
Proceeds (payments) related to equity incentive plans	(6)	498
Purchase of treasury stock	(427)	(381)
Net cash from financing activities	139,779	(43,995)
Net change in cash and cash equivalents	7,097	(150,897)
Cash and cash equivalents at beginning of the period	63,105	232,237
Cash and cash equivalents at end of the period	$            70,202	$            81,340
Cash paid during the period for:
Interest	$            11,235	$            14,673
Income taxes	16,535	13,180
Supplemental non-cash disclosures:
Loans transferred to other real estate owned	1,011	108

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

5

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 in this report is the Bank’s wholly owned subsidiary, LCB Investments II, Inc. (“LCB Investments”), which manages a portion of the Bank’s investment portfolio.  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 nine-month periods ending September 30, 2014 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2014. The 2013 Lakeland Financial Corporation Annual Report on Form 10-K should be read in conjunction with these statements.

NOTE 2. 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
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gain	Losses	Value
September 30, 2014
U.S. Treasury securities	$           985	$                 0	$                 0	$            985
Agency residential mortgage-backed securities	368,935	6,610	(3,799)	371,746
State and municipal securities	96,985	3,889	(530)	100,344
Total	$    466,905	$       10,499	$       (4,329)	$    473,075
December 31, 2013
U.S. Treasury securities	$           1,001	$                16	$                  0	$           1,017
Agency residential mortgage-backed securities	374,611	5,301	(7,935)	371,977
State and municipal securities	95,388	2,597	(2,012)	95,973
Total	$       471,000	$           7,914	$         (9,947)	$       468,967

There was no other-than-temporary impairment (“OTTI”) recognized in accumulated other comprehensive income (loss) for securities available for sale at September 30, 2014 and December 31, 2013.

Information regarding the fair value and amortized cost of available for sale debt securities by maturity as of September 30, 2014 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
(dollars in thousands)	Cost	Value
Due in one year or less	$            4,564	$         4,603
Due after one year through five years	18,257	19,273
Due after five years through ten years	45,045	46,872
Due after ten years	30,104	30,581
	97,970	101,329
Mortgage-backed securities	368,935	371,746
Total debt securities	$       466,905	$    473,075

6

Securities proceeds, gross gains and gross losses are presented below.

	Nine months ended September 30,		Three months ended September 30,
(dollars in thousands)	2014	2013	2014	2013
Sales of securities available for sale
Proceeds	$             13,766	$             29,995	$             13,766	$             29,995
Gross gains	3	1,077	3	1,077
Gross losses	231	972	231	972

The Company sold twelve securities with a total book value of $14.0 million and a total fair value of $13.8 million during the first nine months of 2014.  The remaining gains during the first nine months of 2014 were from calls.  The Company sold twelve securities with a total book value of $29.9 million and a total fair value of $30.0 million during the first nine months of 2013.  The sales in 2013 included four non-agency residential mortgage backed securities.

Purchase premiums or discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of 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 $196.3 million and $244.3 million were pledged as of September 30, 2014 and December 31, 2013, 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 September 30, 2014 and December 31, 2013 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
(dollars in thousands)	Value	Losses	Value	Losses	Value	Losses
September 30, 2014
Agency residential mortgage-backed
securities	$      65,582	$     (507)	$ 113,996	$  (3,292)	$   179,578	$  (3,799)
State and municipal securities	466	(15)	17,064	(515)	17,530	(530)
Total temporarily impaired	$      66,048	$     (522)	$ 131,060	$  (3,807)	$   197,108	$  (4,329)
December 31, 2013
Agency residential mortgage-backed
securities	$      177,779	$    (6,444)	$     34,093	$    (1,491)	$      211,872	$    (7,935)
State and municipal securities	24,610	(1,102)	8,037	(910)	32,647	(2,012)
Total temporarily impaired	$      202,389	$    (7,546)	$     42,130	$    (2,401)	$      244,519	$    (9,947)

7

The total number of securities with unrealized losses as of September 30, 2014 and December 31, 2013 is presented below.

	Less than	12 months
	12 months	or more	Total
September 30, 2014
Agency residential mortgage-backed securities	21	29	50
State and municipal securities	1	33	34
Total temporarily impaired	22	62	84
	Less than	12 months
	12 months	or more	Total
December 31, 2013
Agency residential mortgage-backed securities	49	10	59
State and municipal securities	59	12	71
Total temporarily impaired	108	22	130

The following factors are considered in determining whether or not the impairment of these securities is other-than-temporary. In making this determination, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income.  Credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings. Ninety-nine percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are A-rated or better, except for certain non-local or local municipal securities, which are not rated. For the government, government-sponsored agency and municipal securities, management did not believe that there would be credit losses or that full principal would 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.

8

NOTE 3. LOANS

	September 30,			December 31,
(dollars in thousands)	2014			2013
Commercial and industrial loans:
Working capital lines of credit loans	$       517,916	19.2	%	$       457,690	18.0	%
Non-working capital loans	513,525	19.0		443,877	17.5
Total commercial and industrial loans	1,031,441	38.2		901,567	35.6
Commercial real estate and multi-family residential loans:
Construction and land development loans	153,118	5.7		157,630	6.2
Owner occupied loans	396,207	14.7		370,386	14.6
Nonowner occupied loans	401,454	14.9		394,748	15.6
Multifamily loans	84,875	3.1		63,443	2.5
Total commercial real estate and multi-family residential loans	1,035,654	38.3		986,207	38.9
Agri-business and agricultural loans:
Loans secured by farmland	131,516	4.9		133,458	5.3
Loans for agricultural production	78,203	2.9		120,571	4.8
Total agri-business and agricultural loans	209,719	7.8		254,029	10.0
Other commercial loans	77,076	2.9		70,770	2.8
Total commercial loans	2,353,890	87.1		2,212,573	87.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	143,892	5.3		125,444	4.9
Open end and junior lien loans	150,859	5.6		146,946	5.8
Residential construction and land development loans	5,726	0.2		4,640	0.2
Total consumer 1-4 family mortgage loans	300,477	11.1		277,030	10.9
Other consumer loans	47,967	1.8		46,125	1.8
Total consumer loans	348,444	12.9		323,155	12.7
Subtotal	2,702,334	100.0	%	2,535,728	100.0	%
Less:  Allowance for loan losses	(46,387)			(48,797)
Net deferred loan fees	(411)			(630)
Loans, net	$    2,655,536			$    2,486,301

9

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended September 30, 2014 and 2013:

		Commercial
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
September 30, 2014
Beginning balance	$     20,922	$        15,975	$          1,404	$          234	$       3,275	$          487	$       3,308	$     45,605
Provision for loan losses	919	(1,274)	(34)	76	178	68	67	0
Loans charged-off	(147)	0	0	0	(60)	(62)	0	(269)
Recoveries	291	670	5	0	59	26	0	1,051
Net loans (charged-off)recovered	144	670	5	0	(1)	(36)	0	782
Ending balance	$     21,985	$        15,371	$          1,375	$          310	$       3,452	$          519	$       3,375	$     46,387
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
September 30, 2013
Beginning balance	$     21,879	$        20,098	$          1,517	$          264	$       2,823	$          587	$       3,467	$     50,635
Provision for loan losses	138	(544)	(185)	(23)	409	179	26	0
Loans charged-off	(595)	(455)	0	0	(126)	(120)	0	(1,296)
Recoveries	75	73	201	0	71	45	0	465
Net loans (charged-off)recovered	(520)	(382)	201	0	(55)	(75)	0	(831)
Ending balance	$     21,497	$        19,172	$          1,533	$          241	$       3,177	$          691	$       3,493	$     49,804

The following tables present the activity in the allowance for loan losses by portfolio segment for the nine-month periods ended September 30, 2014 and 2013:

		Commercial
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
September 30, 2014
Beginning balance	$     21,005	$        18,557	$          1,682	$          391	$       3,045	$          608	$       3,509	$     48,797
Provision for loan losses	1,296	(1,334)	(323)	(81)	587	(11)	(134)	0
Loans charged-off	(660)	(2,553)	0	0	(282)	(180)	0	(3,675)
Recoveries	344	701	16	0	102	102	0	1,265
Net loans (charged-off)recovered	(316)	(1,852)	16	0	(180)	(78)	0	(2,410)
Ending balance	$     21,985	$        15,371	$          1,375	$          310	$       3,452	$          519	$       3,375	$     46,387
		Commercial
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
September 30, 2013
Beginning balance	$     22,342	$        20,812	$          1,403	$          240	$       2,682	$          609	$       3,357	$     51,445
Provision for loan losses	(569)	(627)	125	1	709	225	136	0
Loans charged-off	(738)	(1,361)	(200)	0	(315)	(257)	0	(2,871)
Recoveries	462	348	205	0	101	114	0	1,230
Net loans (charged-off)recovered	(276)	(1,013)	5	0	(214)	(143)	0	(1,641)
Ending balance	$     21,497	$        19,172	$          1,533	$          241	$       3,177	$          691	$       3,493	$     49,804

10

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2014 and December 31, 2013:

		Commercial
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
September 30, 2014
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$         4,017	$          1,875	$               15	$              0	$          539	$            74	$              0	$        6,520
Collectively evaluated for impairment	17,968	13,496	1,360	310	2,913	445	3,375	39,867
Total ending allowance balance	$       21,985	$        15,371	$          1,375	$          310	$       3,452	$          519	$       3,375	$      46,387
Loans:
Loans individually evaluated for impairment	$       16,771	$        12,970	$             486	$              0	$       3,785	$          132	$              0	$      34,144
Loans collectively evaluated for impairment	1,014,911	1,021,391	209,322	77,075	297,316	47,764	0	2,667,779
Total ending loans balance	$  1,031,682	$   1,034,361	$      209,808	$     77,075	$   301,101	$     47,896	$              0	$ 2,701,923
		Commercial
		Real Estate
	Commercial	and	Agri-business		Consumer
	and	Multifamily	and	Other	1-4 Family	Other
(dollars in thousands)	Industrial	Residential	Agricultural	Commercial	Mortgage	Consumer	Unallocated	Total
December 31, 2013
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$         4,144	$          4,598	$               38	$              0	$          479	$            57	$              0	$        9,316
Collectively evaluated for impairment	16,861	13,959	1,644	391	2,566	551	3,509	39,481
Total ending allowance balance	$       21,005	$        18,557	$          1,682	$          391	$       3,045	$          608	$       3,509	$      48,797
Loans:
Loans individually evaluated for impairment	$       16,196	$        22,204	$          1,114	$              0	$       3,594	$          119	$              0	$      43,227
Loans collectively evaluated for impairment	885,651	962,673	253,011	70,766	273,812	45,958	0	2,491,871
Total ending loans balance	$     901,847	$      984,877	$      254,125	$     70,766	$   277,406	$     46,077	$              0	$ 2,535,098

The recorded investment in loans does not include accrued interest.

11

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2014:

	Unpaid		Allowance for
	Principal	Recorded	Loan Losses
(dollars in thousands)	Balance	Investment	Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                     22	$                     21	$                       0
Non-working capital loans	1,679	285	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	528	528	0
Owner occupied loans	337	157	0
Nonowner occupied loans	323	323	0
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	603	283	0
Loans for ag production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	706	708	0
Open end and junior lien loans	352	352	0
Residential construction loans	133	133	0
Other consumer loans	1	1	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	1,808	1,807	901
Non-working capital loans	16,821	14,658	3,116
Commercial real estate and multi-family residential loans:
Construction and land development loans	1,391	1,390	382
Owner occupied loans	4,452	4,411	867
Nonowner occupied loans	6,154	6,161	626
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	381	203	15
Loans for agricultural production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,640	2,544	534
Open end and junior lien loans	48	48	5
Residential construction loans	0	0	0
Other consumer loans	131	131	74
Total	$             38,510	$             34,144	$               6,520

The recorded investment in loans does not include accrued interest.

12

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2013:

	Unpaid		Allowance for
	Principal	Recorded	Loan Losses
(dollars in thousands)	Balance	Investment	Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                      63	$                      63	$                        0
Commercial real estate and multi-family residential loans:
Owner occupied loans	377	196	0
Agri-business and agricultural loans:
Loans secured by farmland	604	604	0
Other commercial loans
Consumer 1-4 family loans:
Closed end first mortgage loans	688	689	0
Open end and junior lien loans	81	81	0
Residential construction loans	150	150	0
Other consumer loans	1	1	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	5,251	2,641	984
Non-working capital loans	15,345	13,492	3,160
Commercial real estate and multi-family residential loans:
Construction and land development loans	2,795	2,795	585
Owner occupied loans	5,553	4,681	723
Nonowner occupied loans	15,163	14,532	3,290
Agri-business and agricultural loans:
Loans secured by farmland	1,008	510	38
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,469	2,463	442
Open end and junior lien loans	211	211	37
Other consumer loans	118	118	57
Total	$               50,877	$               43,227	$                 9,316

The recorded investment in loans does not include accrued interest.

13

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended September 30, 2014:

			Cash Basis
	Average	Interest	Interest
	Recorded	Income	Income
(dollars in thousands)	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                     22	$                       0	$                       0
Non-working capital loans	290	0	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	533	0	0
Owner occupied loans	160	0	0
Nonowner occupied loans	327	0	0
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	284	0	0
Loans for ag production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	695	0	0
Open end and junior lien loans	286	0	0
Residential construction loans	135	0	0
Other consumer loans	1	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	1,680	22	18
Non-working capital loans	13,662	127	126
Commercial real estate and multi-family residential loans:
Construction and land development loans	1,679	7	5
Owner occupied loans	3,241	26	29
Nonowner occupied loans	6,485	35	36
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	203	0	0
Loans for agricultural production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,568	17	17
Open end and junior lien loans	48	0	0
Residential construction loans	0	0	0
Other consumer loans	89	1	1
Total	$             32,388	$                  235	$                  232

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 period ended September 30, 2013:

			Cash Basis
	Average	Interest	Interest
	Recorded	Income	Income
(dollars in thousands)	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                      64	$                        0	$                        0
Non-working capital loans	0	0	0
Commercial real estate and multi-family residential loans:
Owner occupied loans	616	0	0
Agri-business and agricultural loans:
Loans secured by farmland	479	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	719	0	0
Open end and junior lien loans	27	0	0
Other consumer loans	1	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	2,988	12	14
Non-working capital loans	14,017	120	126
Commercial real estate and multi-family residential loans:
Construction and land development loans	2,848	11	20
Owner occupied loans	3,707	20	20
Nonowner occupied loans	19,183	87	86
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	536	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,347	5	6
Open end and junior lien loans	22	0	0
Other consumer loans	99	0	0
Total	$               47,653	$                    255	$                    272

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 and for the nine-month period ended September 30, 2014:

			Cash Basis
	Average	Interest	Interest
	Recorded	Income	Income
(dollars in thousands)	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                  186	$                       1	$                       1
Non-working capital loans	133	0	0
Commercial real estate and multi-family residential loans:
Construction and land development loans	178	0	0
Owner occupied loans	215	0	0
Nonowner occupied loans	341	0	0
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	226	0	0
Loans for ag production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	691	0	0
Open end and junior lien loans	170	0	0
Residential construction loans	141	0	0
Other consumer loans	1	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	1,893	55	47
Non-working capital loans	13,762	387	388
Commercial real estate and multi-family residential loans:
Construction and land development loans	2,341	37	36
Owner occupied loans	2,956	45	43
Nonowner occupied loans	8,507	104	105
Multifamily loans	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland	411	0	0
Loans for agricultural production	0	0	0
Other commercial loans	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,740	50	53
Open end and junior lien loans	66	0	0
Residential construction loans	0	0	0
Other consumer loans	87	1	1
Total	$             35,045	$                  680	$                  674

The recorded investment in loans does not include accrued interest.

16

The following table presents loans individually evaluated for impairment by class of loans as of and for the nine-month period ended September 30, 2013:

			Cash Basis
	Average	Interest	Interest
	Recorded	Income	Income
(dollars in thousands)	Investment	Recognized	Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$                      65	$                        0	$                        0
Non-working capital loans	11	0	0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans	575	0	0
Agri-business and agricultural loans:
Loans secured by farmland	480	0	0
Consumer 1-4 family loans:
Closed end first mortgage loans	275	0	0
Open end and junior lien loans	23	0	0
Other consumer loans	1	0	0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	3,019	39	41
Non-working capital loans	14,081	391	402
Commercial real estate and multi-family residential loans:
Construction and land development loans	3,860	63	67
Owner occupied loans	3,592	88	96
Nonowner occupied loans	20,960	255	258
Multifamily loans	64	0	0
Agri-business and agricultural loans:
Loans secured by farmland	418	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,461	28	43
Open end and junior lien loans	40	0	0
Other consumer loans	86	1	1
Total	$               50,010	$                    865	$                    908

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 September 30, 2014 by class of loans:

		30-89	Greater than
	Loans Not	Days	90 Days		Total
(dollars in thousands)	Past Due	Past Due	Past Due	Nonaccrual	Past Due	Total
Commercial and industrial loans:
Working capital lines of credit loans	$    517,009	$          0	$              0	$      1,105	$    1,105	$    518,114
Non-working capital loans	508,354	102	0	5,112	5,214	513,568
Commercial real estate and multi-family
residential loans:
Construction and land development loans	152,197	0	0	529	529	152,726
Owner occupied loans	393,498	414	0	2,013	2,427	395,925
Nonowner occupied loans	397,246	0	0	3,732	3,732	400,978
Multifamily loans	84,732	0	0	0	0	84,732
Agri-business and agricultural loans:
Loans secured by farmland	131,034	0	0	485	485	131,519
Loans for agricultural production	78,289	0	0	0	0	78,289
Other commercial loans	77,075	0	0	0	0	77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	140,719	1,699	0	1,204	2,903	143,622
Open end and junior lien loans	151,229	139	0	399	538	151,767
Residential construction loans	5,579	0	0	133	133	5,712
Other consumer loans	47,758	83	0	55	138	47,896
Total	$ 2,684,719	$  2,437	$              0	$    14,767	$  17,204	$ 2,701,923

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, 2013 by class of loans:

		30-89	Greater than
	Loans Not	Days	90 Days		Total
(dollars in thousands)	Past Due	Past Due	Past Due	Nonaccrual	Past Due	Total
Commercial and industrial loans:
Working capital lines of credit loans	$       456,136	$           0	$               0	$        1,819	$      1,819	$       457,955
Non-working capital loans	440,050	46	0	3,796	3,842	443,892
Commercial real estate and multi-family
residential loans:
Construction and land development loans	156,594	0	0	544	544	157,138
Owner occupied loans	366,955	0	0	3,156	3,156	370,111
Nonowner occupied loans	382,478	0	0	11,758	11,758	394,236
Multifamily loans	63,392	0	0	0	0	63,392
Agri-business and agricultural loans:
Loans secured by farmland	132,347	0	0	1,113	1,113	133,460
Loans for agricultural production	120,665	0	0	0	0	120,665
Other commercial loans	70,766	0	0	0	0	70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	122,370	1,645	0	1,165	2,810	125,180
Open end and junior lien loans	147,123	135	46	291	472	147,595
Residential construction loans	4,481	0	0	150	150	4,631
Other consumer loans	45,826	145	0	106	251	46,077
Total	$    2,509,183	$    1,971	$             46	$      23,898	$    25,915	$    2,535,098

The recorded investment in loans does not include accrued interest.

18

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $4.5 million and $8.3 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2014 and December 31, 2013. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	September 30,	December 31,
(dollars in thousands)	2014	2013
Accruing troubled debt restructured loans	$           17,650	$              17,714
Nonaccrual troubled debt restructured loans	9,841	18,531
Total troubled debt restructured loans	$           27,491	$              36,245

During the nine months ending September 30, 2014 certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

During the quarter ending June 30, 2014 one loan previously identified as a troubled debt restructure was rewritten under terms that are not readily available in the marketplace.  Terms in the current loan agreement include an amortization period that exceeds those of similar type loans for a borrower enduring financial hardship.  This concession was granted without additional compensation.  This loan had a balance of $173,000 as of June 30, 2014.

During the quarter ending March 31, 2014, there were restructure terms offered to one borrower under financial duress which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing similar risk profiles. In this instance, it was determined that a concession had been granted. It is difficult to quantify the concession granted due to an absence of readily available market terms to be used for comparison. The restructure was granted to a borrower engaged in retail sales where the collateral and cash flow did not support the loan with a recorded investment of $159,000.

An additional concession was granted to a borrower with a previously restructured loan.  The new concession includes further forgiveness of principal if the terms of the restructured loan are met during the life of the loan. This borrower had a recorded investment of $2.7 million as of March 31, 2014.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three-months ending September 30, 2014:

	All Modifications			Modified Repayment Terms
		Pre-Modification	Post-Modification		Extension
		Outstanding	Outstanding		Period or
	Number of	Recorded	Recorded	Number of	Range
(dollars in thousands)	Loans	Investment	Investment	Loans	(in months)
Troubled Debt Restructurings
Commercial real estate and
Multi-family residential loans:
Owner occupied loans	1	$                  929	$                  1,000	1	24
Total	1	$                  929	$                  1,000	1	24

19

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine-months ending September 30, 2014:

	All Modifications			Interest Rate Reductions			Modified Repayment Terms
		Pre-Modification	Post-Modification					Extension
		Outstanding	Outstanding		Interest at	Interest at		Period or
	Number of	Recorded	Recorded	Number of	Pre-Modification	Post-Modification	Number of	Range
(dollars in thousands)	Loans	Investment	Investment	Loans	Rate	Rate	Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	2	$                   433	$                     433	0	$                        0	$                          0	2	12-15
Commercial real estate and multi-
family residential loans:
Owner occupied loans	3	2,639	2,710	1	89	95	2	12-24
Total	5	$               3,072	$                  3,143	1	$                      89	$                        95	4	12-24

For the quarter ending September 30, 2014, the commercial and industrial troubled debt restructurings described above increased the allowance for loan losses by $74,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $53,000.  For the nine month period ending September 30, 2014, the commercial and industrial troubled debt restructurings described above increased the allowance for loan losses by $211,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $152,000.

No charge-offs resulted from any of the troubled debt restructurings described above during the three-month and nine-month periods ending September 30, 2014.

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 $1.8 million were modified as troubled debt restructured loans. The modified terms of the loans included reductions in the interest rates to rates 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.

No loans were modified as troubled debt restructurings during the third quarter of 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2013:

	All Modifications			Interest Rate Reductions
		Pre-Modification	Post-Modification
		Outstanding	Outstanding		Interest at	Interest at
	Number of	Recorded	Recorded	Number of	Pre-Modification	Post-Modification
(dollars in thousands)	Loans	Investment	Investment	Loans	Rate	Rate
Troubled Debt Restructurings
Commercial real estate and:
multi-family residential loans
Construction and land development loans	6	$                 2,198	$                    2,198	6	$                       85	$                          63
Consumer 1-4 family loans:
Closed end first mortgage loans	4	317	328	2	142	158
Total	10	$                 2,515	$                    2,526	8	$                     227	$                        221

20

	Principal and Interest Forgiveness
				Interest at	Interest at
	Number of	Principal at	Principal at	Pre-Modification	Post-Modification
(dollars in thousands)	Loans	Pre-Modification	Post-Modification	Rate	Rate
Troubled Debt Restructurings
Commercial real estate and
multi-family residential loans:
Construction and land development loans	0	$                             0	$                             0	$                             0	$                             0
Consumer 1-4 family loans:
Closed end first mortgage loans	2	156	161	164	149
Total	2	$                        156	$                        161	$                        164	$                        149

For the quarter ending September 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $11,000 and the consumer 1-4 family loan troubled debt restructurings described above decreased the allowance for loan losses by $4,000

For the nine month period ending September 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructurings described above decreased the allowance for loan losses by $384,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $61,000.

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

There were no troubled debt restructurings which had payment defaults within the twelve months following modification during the three or nine months ended September 30, 2014.  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 nine month periods ending September 30, 2013:

		Modifications
		Three Months Ended September 30, 2013		Nine Months Ended September 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	$                        912
	Total	0	$                            0	1	$                        912

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 nine month periods ending September 30, 2013.

During the first quarter of 2014 the Company sold, to an independent party, three loans totaling $6.7 million, representing a single commercial relationship.  The three loans were accounted for as troubled debt restructurings.  The Company received proceeds of $4.3 million and recognized charge offs of $2.4 million as a result of the sale.  The amount charged-off had previously been reserved for by the Company.

21

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.

22

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 and consumer nonaccrual loans which are evaluated individually and listed with Not Rated 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 September 30, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

		Special			Not
(dollars in thousands)	Pass	Mention	Substandard	Doubtful	Rated	Total
Commercial and industrial loans:
Working capital lines of credit loans	$    477,113	$       28,236	$       12,765	$                 0	$                 0	$    518,114
Non-working capital loans	458,676	31,335	21,199	0	2,358	513,568
Commercial real estate and multi-
family residential loans:
Construction and land development loans	145,217	558	6,951	0	0	152,726
Owner occupied loans	361,482	21,638	12,805	0	0	395,925
Nonowner occupied loans	382,386	12,616	5,976	0	0	400,978
Multifamily loans	84,732	0	0	0	0	84,732
Agri-business and agricultural loans:
Loans secured by farmland	131,034	0	485	0	0	131,519
Loans for agricultural production	78,289	0	0	0	0	78,289
Other commercial loans	77,042	0	30	0	3	77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	39,956	0	2,213	0	101,453	143,622
Open end and junior lien loans	9,336	225	2,014	0	140,192	151,767
Residential construction loans	0	0	0	0	5,712	5,712
Other consumer loans	13,399	540	77	0	33,880	47,896
Total	$ 2,258,662	$       95,148	$       64,515	$                 0	$    283,598	$ 2,701,923

The recorded investment in loans does not include accrued interest.

As of December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

		Special			Not
(dollars in thousands)	Pass	Mention	Substandard	Doubtful	Rated	Total
Commercial and industrial loans:
Working capital lines of credit loans	$       431,069	$         15,212	$         11,674	$                  0	$                  0	$       457,955
Non-working capital loans	384,415	37,727	19,659	0	2,091	443,892
Commercial real estate and multi-
family residential loans:
Construction and land
development loans	148,338	763	8,037	0	0	157,138
Owner occupied loans	333,795	23,687	12,629	0	0	370,111
Nonowner occupied loans	367,108	9,180	17,948	0	0	394,236
Multifamily loans	63,392	0	0	0	0	63,392
Agri-business and agricultural loans:
Loans secured by farmland	132,331	0	1,113	0	16	133,460
Loans for agricultural production	120,665	0	0	0	0	120,665
Other commercial loans	70,766	0	0	0	0	70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	29,092	0	2,316	0	93,772	125,180
Open end and junior lien loans	8,291	1,863	0	0	137,441	147,595
Residential construction loans	0	0	0	0	4,631	4,631
Other consumer loans	10,722	416	291	0	34,648	46,077
Total	$    2,099,984	$         88,848	$         73,667	$                  0	$       272,599	$    2,535,098

The recorded investment in loans does not include accrued interest.

23

NOTE 5.  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).

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 determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice 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 Executive Vice 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 price tolerance variance of +/-3%, an individual security market value tolerance of +/-$50,000 and an aggregate market value tolerance of +/-$500,000 for all securities. If any securities fall outside any of these tolerance thresholds, 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.

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).

24

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: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods; (b) 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; (c) 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; (d) 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; and (e) 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 September 30, 2014 the fair value of the Company’s Level 3 servicing assets for residential mortgage loans was $3.3 million, none of which are currently impaired and therefore are carried at amortized cost.  These residential mortgage loans have a weighted average interest rate of 4.10%, 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 September 30, 2014, the constant prepayment speed (PSA) used was 187 and the discount rate used was 9.4%.  At December 31, 2013, the PSA used was 185 and the discount rate used was 9.4%.

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 result in a Level 2 classification.

25

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

	September 30, 2014
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$               985	$                     0	$                    0	$                985
Mortgage-backed securities	0	371,746	0	371,746
State and municipal securities	0	99,483	861	100,344
Total Securities	985	471,229	861	473,075
Mortgage banking derivative	0	222	0	222
Interest rate swap derivative	0	938	0	938
Total assets	$               985	$         472,389	$               861	$        474,235
Liabilities
Mortgage banking derivative	0	8	0	8
Interest rate swap derivative	0	940	0	940
Total liabilities	$                   0	$                 948	$                    0	$                948

	December 31, 2013
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
U.S. Treasury securities	$             1,017	$                      0	$                     0	$              1,017
Mortgage-backed securities	0	371,977	0	371,977
State and municipal securities	0	94,998	975	95,973
Total securities	1,017	466,975	975	468,967
Mortgage banking derivative	0	142	0	142
Interest rate swap derivative	0	627	0	627
Total assets	$             1,017	$           467,744	$                 975	$          469,736
Liabilities
Mortgage banking derivative	0	2	0	2
Interest rate swap derivative	0	592	0	592
Total liabilities	$                    0	$                  594	$                     0	$                 594

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2014 and there were no transfers between Level 1 and Level 2 during 2013.

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 nine months ended September 30, 2014 and 2013:

	Non-Agency Residential
	Mortgage-Backed Securities		State and Municipal Securities
(dollars in thousands)	2014	2013	2014	2013
Balance of recurring Level 3 assets at January 1	$                  0	$            2,859	$             975	$               988
Transfers into Level 3	0	3,334	0	0
Changes in fair value of securities
included in other comprehensive income	0	(158)	11	(11)
Principal payments	0	(2,183)	(125)	0
Sales	0	(3,852)	0	0
Balance of recurring Level 3 assets at September 30	$                  0	$                   0	$             861	$               977

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 securities were subsequently sold in the third quarter of 2013.  The Company no longer owns any non-agency residential mortgage backed securities.

26

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
				Range of
	Fair Value at			Inputs
(dollars in thousands)	9/30/2014	Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$                861	Price to type, par, call	Discount to benchmark index	0-7%
				(2.80%)

Quantitative Information about Level 3 Fair Value Measurements
				Range of
	Fair Value at			Inputs
(dollars in thousands)	12/31/2013	Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$              975	Price to type, par, call	Discount to benchmark index	0-6%
				(2.21%)

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:

	September 30, 2014
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$                 0	$                 0	$             868	$             868
Non-working capital loans	0	0	3,141	3,141
Commercial real estate and multi-family
residential loans:
Construction and land development loans	0	0	824	824
Owner occupied loans	0	0	3,544	3,544
Nonowner occupied loans	0	0	3,127	3,127
Agri-business and agricultural loans:
Loans secured by farmland	0	0	188	188
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	493	493
Open end and junior lien loans	0	0	43	43
Other consumer loans	0	0	33	33
Total impaired loans	$                 0	$                 0	$       12,261	$       12,261
Other real estate owned	0	0	75	75
Total assets	$                 0	$                 0	$       12,336	$       12,336

27

	December 31, 2013
	Fair Value Measurements Using			Assets
(dollars in thousands)	Level 1	Level 2	Level 3	at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$                  0	$                  0	$              920	$              920
Non-working capital loans	0	0	3,097	3,097
Commercial real estate and multi-family
residential loans:
Construction and land development loans	0	0	2,210	2,210
Owner occupied loans	0	0	3,958	3,958
Nonowner occupied loans	0	0	8,938	8,938
Agri-business and agricultural loans:
Loans secured by farmland	0	0	472	472
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	0	0	409	409
Open end and junior lien loans	0	0	174	174
Other consumer loans	0	0	50	50
Total impaired loans	$                  0	$                  0	$         20,228	$         20,228
Other real estate owned	0	0	75	75
Total assets	$                  0	$                  0	$         20,303	$         20,303

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2014:

(dollars in thousands)	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired loans:
Commercial and industrial	$       4,009	Collateral based	Discount to reflect	38%	(15% - 66%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	7,495	Collateral based	Discount to reflect	17%	(7% - 42%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	188	Collateral based	Discount to reflect	7%
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage	536	Collateral based	Discount to reflect	29%	(5% - 78%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	33	Collateral based	Discount to reflect	39%	(30% - 48%)
		measurements	current market conditions
			and ultimate collectability
Other real estate owned	75	Appraisals	Discount to reflect	49%
			current market conditions

28

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, 2013:

(dollars in thousands)	Fair Value	Valuation Methodology	Unobservable Inputs	Average	Range of Inputs
Impaired loans:
Commercial and industrial	$       4,017	Collateral based	Discount to reflect	29%	(3% - 93%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Commercial real estate	15,106	Collateral based	Discount to reflect	22%	(3% - 45%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Agri-business and agricultural	472	Collateral based	Discount to reflect	8%	(4% - 12%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage	583	Collateral based	Discount to reflect	33%	(6% - 77%)
		measurements	current market conditions
			and ultimate collectability
Impaired loans:
Other consumer	50	Collateral based	Discount to reflect	53%	(28% - 98%)
		measurements	current market conditions
			and ultimate collectability
Other real estate owned	75	Appraisals	Discount to reflect	49%
			current market conditions
			and ultimate collectability

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $16.5 million, with a valuation allowance of $4.2 million at September 30, 2014, resulting in a net provision for loan losses of $100,000 in the three months ended September 30, 2014, and a net recovery in the provision for loan losses of $2.1 million in the nine months ended September 30, 2014.  At September 30, 2013, impaired loans had a gross carrying amount of $30.0 million, with a valuation allowance of $7.3 million, resulting in a net recovery in the provision for loan losses of $200,000 and $2.7 million, respectively, for the three months and nine months ended September 30, 2013.

29

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.

	September 30, 2014
	Carrying	Estimated Fair Value
(dollars in thousands)	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$    70,202	$    70,202	$              0	$              0	$    70,202
Securities available for sale	473,075	985	471,229	861	473,075
Real estate mortgages held for sale	1,727	0	1,761	0	1,761
Loans, net	2,655,536	0	0	2,639,252	2,639,252
Federal Home Loan Bank stock	7,312	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	9,042	5	1,963	7,074	9,042
Financial Liabilities:
Certificates of deposit	(985,251)	0	(992,377)	0	(992,377)
All other deposits	(1,904,421)	(1,904,421)	0	0	(1,904,421)
Securities sold under agreements
to repurchase	(60,578)	0	(60,578)	0	(60,578)
Federal funds purchased	(8,000)	0	(8,000)	0	(8,000)
Long-term borrowings	(35)	0	(41)	0	(41)
Subordinated debentures	(30,928)	0	0	(31,220)	(31,220)
Standby letters of credit	(337)	0	0	(337)	(337)
Accrued interest payable	(2,748)	(105)	(2,640)	(3)	(2,748)

	December 31, 2013
	Carrying	Estimated Fair Value
(dollars in thousands)	Value	Level 1	Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents	$      63,105	$      63,105	$              0	$              0	$      63,105
Securities available for sale	468,967	1,017	466,975	975	468,967
Real estate mortgages held for sale	1,778	0	1,800	0	1,800
Loans, net	2,486,301	0	0	2,490,593	2,490,593
Federal Home Loan Bank stock	7,312	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	8,577	0	2,297	6,280	8,577
Financial Liabilities:
Certificates of deposit	(727,809)	0	(736,088)	0	(736,088)
All other deposits	(1,818,259)	(1,818,259)	0	0	(1,818,259)
Securities sold under agreements
to repurchase	(104,876)	0	(104,876)	0	(104,876)
Federal funds purchased	(11,000)	0	(11,000)	0	(11,000)
Other short-term borrowings	(146,000)	0	(146,002)	0	(146,002)
Long-term borrowings	(37)	0	(43)	0	(43)
Subordinated debentures	(30,928)	0	0	(31,217)	(31,217)
Standby letters of credit	(312)	0	0	(312)	(312)
Accrued interest payable	(2,918)	(125)	(2,790)	(3)	(2,918)

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 of the loan 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.

30

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 approximates their fair values resulting in a Level 2 classification.

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

Other short-term borrowings – The fair value of other short-term borrowings approximates 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 approximates fair value resulting in a Level 1, Level 2 or Level 3 classification which is consistent with its associated asset/liability.

NOTE 6. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Nine Months Ended September 30,				Three Months Ended September 30,
	Pension Benefits		SERP Benefits		Pension Benefits		SERP Benefits
(dollars in thousands)	2014	2013	2014	2013	2014	2013	2014	2013
Interest cost	$          90	$          87	$          38	$          34	$         30	$         29	$         13	$         11
Expected return on plan assets	(94)	(90)	(55)	(56)	(31)	(30)	(19)	(19)
Recognized net actuarial loss	88	113	60	70	29	38	20	24
Net pension expense	$          84	$        110	$          43	$          48	$         28	$         37	$         14	$         16

The Company previously disclosed in its financial statements for the year ended December 31, 2013 that it expected to contribute $207,000 to its pension plan and $4,000 to its Supplemental Executive Retirement Plan (“SERP”) in 2014.  The Company has contributed $138,000 to its pension plan and $4,000 to its SERP as of September 30, 2014.  The Company expects to contribute $69,000 to its pension plan during the remainder of 2014.  The Company does not expect to make any additional contributions to its SERP during the remainder of 2014.

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at September 30, 2014 and December 31, 2013.

31

	September 30, 2014
		Gross	Net Amounts
	Gross	Amounts	of Assets	Gross Amounts Not
	Amounts of	Offset in the	presented in	Offset in the Statement
	Recognized	Statement of	the Statement	of Financial Position
	Assets/	Financial	of Financial	Financial	Cash
(dollars in thousands)	Liabilities	Position	Position	Instruments	Received	Net
Assets
Interest rate swap derivatives	$            938	$                 0	$              938	$                 0	$           0	$    938
Total assets	$            938	$                 0	$              938	$                 0	$           0	$    938
Liabilities
Interest rate swap derivatives	$            940	$                 0	$              940	$                 0	$           0	$    940
Repurchase agreements	60,578	0	60,578	(60,578)	0	0
Total liabilities	$      61,518	$                 0	$        61,518	$     (60,578)	$           0	$    940

	December 31, 2013
		Gross	Net Amounts
	Gross	Amounts	of Assets	Gross Amounts Not
	Amounts of	Offset in the	presented in	Offset in the Statement
	Recognized	Statement of	the Statement	of Financial Position
	Assets/	Financial	of Financial	Financial	Cash Collateral
(dollars in thousands)	Liabilities	Position	Position	Instruments	Received	Net Amount
Assets
Interest rate swap derivatives	$             627	$                  0	$               627	$                 0	$      (260)	$      367
Total assets	$             627	$                  0	$               627	$                 0	$      (260)	$      367
Liabilities
Interest rate swap derivatives	$             592	$                  0	$               592	$                 0	$            0	$      592
Repurchase agreements	104,876	0	104,876	(104,876)	0	0
Total liabilities	$      105,468	$                  0	$        105,468	$     (104,876)	$            0	$      592

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 8. 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, none of which were antidilutive.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted average shares outstanding for basic earnings per common share	16,547,551	16,451,199	16,531,411	16,427,060
Dilutive effect of stock options, awards and warrants	228,219	183,734	237,668	154,029
Weighted average shares outstanding for diluted earnings per common share	16,775,770	16,634,933	16,769,079	16,581,089
Basic earnings per common share	$                     0.70	$                     0.59	$                     1.98	$                     1.72
Diluted earnings per common share	$                     0.69	$                     0.59	$                     1.95	$                     1.70

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014 and the year ended December 31, 2013:

32

	Unrealized
	Gains and
	Losses on	Defined
	Available-	Benefit
	for-Sales	Pension
(dollars in thousands)	Securities	Items	Total
Balance at December 31, 2013	$      (1,138)	$   (1,356)	$      (2,494)
Other comprehensive income before reclassification	4,828	31	4,859
Amounts reclassified from accumulated other comprehensive income (loss)	134	88	222
Net current period other comprehensive income	4,962	119	5,081
Balance at September 30, 2014	$        3,824	$   (1,237)	$        2,587

	Unrealized
	Gains and
	Losses on	Defined
	Available-	Benefit
	for-Sales	Pension
(dollars in thousands)	Securities	Items	Total
Balance at December 31, 2012	$        7,517	$   (1,828)	$        5,689
Other comprehensive income before reclassification	(8,591)	327	(8,264)
Amounts reclassified from accumulated other comprehensive income (loss)	(64)	145	81
Net current period other comprehensive income	(8,655)	472	(8,183)
Balance at December 31, 2013	$      (1,138)	$   (1,356)	$      (2,494)

Reclassifications out of accumulated comprehensive income for the three months ended September 30, 2014 are as follows:

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$                              (228)	Net securities gains (losses)
Tax effect	90	Income tax expense
	(138)	Net of tax
Amortization of defined benefit pension items	(49)	Salaries and employee benefits
Tax effect	20	Income tax expense
	(29)	Net of tax
Total reclassifications for the period	$                              (167)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$                               106	Net securities gains (losses)
Tax effect	(43)	Income tax expense
	63	Net of tax
Amortization of defined benefit pension items	(62)	Salaries and employee benefits
Tax effect	25	Income tax expense
	(37)	Net of tax
Total reclassifications for the period	$                                  26	Net of tax

Reclassifications out of accumulated comprehensive income for the nine months ended September 30, 2014 are as follows:

33

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$                              (224)	Net securities gains (losses)
Tax effect	90	Income tax expense
	(134)	Net of tax
Amortization of defined benefit pension items	(148)	Salaries and employee benefits
Tax effect	60	Income tax expense
	(88)	Net of tax
Total reclassifications for the period	$                              (222)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$                               107	Net securities gains (losses)
Tax effect	(43)	Income tax expense
	64	Net of tax
Amortization of defined benefit pension items	(183)	Salaries and employee benefits
Tax effect	74	Income tax expense
	(109)	Net of tax
Total reclassifications for the period	$                                (45)	Net of tax

NOTE 10.  NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Management is evaluating the impact of adopting this new accounting standard on our financial statements.

In January 2014, the FASB issued updated guidance related to the accounting for investments in qualified affordable housing projects. The amendment permits reporting entities to make an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). To qualify for the proportional amortization method, all of the following conditions must be met: 1. It is probable that the tax credits allocable to the investor will be available. 2. The investor does not have the ability to exercise significant influence over the operating and financial policies of the limited liability entity. 3. Substantially all of the projected benefits are from tax credits and other tax benefits (for example, tax benefits generated from the operating losses of the investment). 4. The investor’s projected yield based solely on the cash flows from the tax credits and other tax benefits is positive. 5. The investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the investor’s liability is limited to its capital investment. The decision to apply the proportional amortization method of accounting is an accounting policy decision that should be applied consistently to all qualifying affordable housing project investments rather than a decision to be applied to individual investments. For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment in accordance with Subtopic 970-323. The new requirements are effective for public companies in fiscal years, and interim periods within those years, beginning after December 15,

2014. Adopting this standard is not expected to have a significant impact on the Company’s financial condition or results of operations.

34

In January 2014, the FASB issued updated guidance related to the reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The amendments in this Update clarify that an in substance repossession or

foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The new requirements are effective for public companies in fiscal years, and interim periods within those years, beginning after December 15, 2014. Adopting this standard is not expected to have a significant impact on the Company’s financial condition or results of operations.

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.

35

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

OPERATIONS

OVERVIEW

Net income in the first nine months of 2014 was $32.7 million, up 15.9% from $28.3 million for the comparable period of 2013.  Diluted income per common share was $1.95 in the first nine months of 2014, up 14.7% from $1.70 in the comparable period of 2013.  Return on average total assets was 1.33% in the first nine months of 2014 versus 1.27% in the comparable period of 2013.  The equity to average assets ratio was 10.29% in the first nine months of 2014 versus 10.33% in the comparable period of 2013.

Net income in the third quarter of 2014 was $11.5 million, up 17.8% from $9.8 million for the comparable period of 2013.  Diluted income per common share was $0.69 in the third quarter of 2014, up 17.0% from $0.59 in the comparable period of 2013.  Return on average total assets was 1.36% in the third quarter of 2014 versus 1.29% in the comparable period of 2013.  The equity to average assets ratio was 10.39% in the third quarter of 2014 versus 10.33% in the comparable period of 2013.

Total assets were $3.356 billion as of September 30, 2014 versus $3.176 billion as of December 31, 2013, an increase of $180.1 million, or 5.7%. This increase was primarily due to a $166.6 million increase in total loans.

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 and the valuation and other-than-temporary impairment of investment securities.

Allowance for Loan Losses

The Company maintains an allowance for loan losses to provide for probable incurred credit losses. Loan losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for loan losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the loan loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of loan loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the allocation for specific watch list credits in determining the appropriate level of the loan loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for loan losses that generally includes consideration of the following factors: changes in the nature and volume of the loan portfolio, overall portfolio quality and current economic conditions that may affect the borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. With respect to specific allocation levels for individual credits, management considers the amounts and timing of expected future cash flows and the current valuation of collateral as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, allocations are assigned based upon historical experience unless the rate of loss is expected to be greater than historical losses as noted below. A detailed analysis is performed on loans that are classified but determined not to be impaired which incorporates probability of default with a loss given default scenario to develop non-specific allocations for the loan pool. These allocations may be adjusted based on the other factors cited above. An appropriate level of general allowance for pooled loans is determined after considering the following: application of historical loss percentages, emerging market risk, commercial loan focus and large credit concentration, new industry lending activity and general economic conditions. It is also possible that the following could affect the overall process: social, political, economic and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for loan losses deemed adequate to cover probable losses inherent in the loan portfolio.

36

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a loan may or may not be graded the same. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate the loan is impaired. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) does the customer’s cash flow or net worth appear insufficient to repay the loan; (b) is there adequate collateral to repay the loan; (c) has the loan been criticized in a regulatory examination; (d) is the loan impaired; (e) are there other reasons where the ultimate collectability of the loan is in question; or (f) are there unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually impaired, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. In addition, general allocations are made for other pools of loans, including non-classified loans. These general pooled loan allocations are performed for portfolio segments of commercial and industrial, commercial real estate and multi-family, agri-business and agricultural, other commercial, consumer 1-4 family mortgage and other consumer loans, and loans within certain industry categories believed to present unique risk of loss. General allocations of the allowance are primarily made based on a three-year historical average for loan losses for these portfolios, subjectively adjusted for economic factors and portfolio trends.

Due to the imprecise nature of estimating the allowance for loan losses, the Company’s allowance for loan losses includes an unallocated component. The unallocated component of the allowance for loan losses incorporates the Company’s determination, based on its judgment, of inherent losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers.

Valuation and Other-Than-Temporary Impairment of Investment Securities

The fair values of securities available for sale are determined on a recurring basis by obtaining quoted prices on nationally recognized securities exchanges 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. Different judgments and assumptions used in pricing could result in different estimates of value. The fair value of certain securities is determined using unobservable inputs, primarily observable inputs of similar securities.

At the end of each reporting period, securities held in the investment portfolio are evaluated on an individual security level for other-than-temporary impairment in accordance with current accounting guidance. Impairment is other-than-temporary if the decline in the fair value of the security is below its amortized cost and it is probable that all amounts due according to the contractual terms of a debt security will not be received.

Significant judgments are required in determining impairment, which includes making assumptions regarding the estimated prepayments, loss assumptions and the change in interest rates.

We consider the following factors when determining other-than-temporary impairment for a security or investment:

· the length of time and the extent to which the market value has been less than amortized cost;

· the financial condition and near-term prospects of the issuer;

· the underlying fundamentals of the relevant market and the outlook for such market for the near future; and

· our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in market value.

An additional independent analysis was performed for the non-agency residential mortgage-backed securities to determine if other-than-temporary impairment needed to be recorded for these securities. The independent analysis utilized third party data sources which were then included in projections of the cash flows of the individual securities under several different scenarios based upon assumptions of collateral defaults, prepayment speeds, expected losses and the severity of potential losses. Based upon the initial review using the analysis created with third party sources, securities were identified for further analysis. For any that were identified, management made assumptions as to prepayment speeds, default rates, severity of losses and lag time until losses are actually recorded for each security based upon historical data for each security and other factors. Cash flows for each security using these assumptions were generated and the net present value was computed using an appropriate discount rate (the original accounting yield) for the individual security. The net present value was then compared to the book value of the security to determine if there was any other-than-temporary impairment that must be recorded. During 2013, all non-agency mortgage-backed securities owned as of December 31, 2012 were sold and no additional non-agency mortgage-backed securities were purchased.

37

If, in management’s judgment, other-than-temporary impairment exists, the cost basis of the security will be written down to the computed net present value, and the unrealized loss will be transferred from accumulated other comprehensive loss as an immediate reduction of current earnings (as if the loss had been realized in the period of other-than-temporary impairment). In addition, discount accretion will be discontinued on any bond that meets one or both of the following: (1) the rating by S&P, Moody’s or Fitch decreases to below “A” and/or (2) the cash flow analysis on a security indicates that, under any scenario modeled by the third party, there is a potential to not receive the full amount invested in the security.

RESULTS OF OPERATIONS

Overview

Selected income statement information for the three months and nine months ended September 30, 2014 and 2013 is presented in the following table:

	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in thousands)	2014	2013	2014	2013
Income Statement Summary:
Net interest income	$               25,965	$               22,972	$               76,199	$               66,141
Provision for loan losses	0	0	0	0
Noninterest income	7,871	7,809	22,890	22,859
Noninterest expense	16,660	16,266	49,534	46,250
Other Data:
Efficiency ratio	49.24%	52.84%	49.99%	51.97%
Dilutive EPS	$                   0.69	$                   0.59	$                   1.95	$                   1.70
Tangible capital ratio	10.40%	10.25%	10.40%	10.25%
Net charge-offs(recoveries) to average loans	(0.12)%	0.14%	0.12%	0.10%
Net interest margin	3.31%	3.29%	3.34%	3.22%
Noninterest income to total revenue	23.26%	25.37%	23.10%	25.68%

Net Income

Net income was $32.7 million in the first nine months of 2014, an increase of $4.5 million, or 15.9%, versus net income of $28.3 million in the first nine months of 2013. Net interest income increased $10.1 million, or 15.2%, to $76.2 million versus $66.1 million in the first nine months of 2013. Net interest income increased primarily due to an 11.2% increase in average earning assets.  Significantly affecting average earning assets during 2014 was an increase of 15.9% in the commercial loan portfolio, which reflects our continuing strategic focus on commercial lending.  The net interest margin was 3.34% in the first nine months of 2014 versus 3.22% in 2013. The higher margin reflected a decline in funding costs offset by lower yields on earning assets.

Net income was $11.5 million in the third quarter of 2014, an increase of $1.7 million, or 17.8%, versus net income of $9.8 million in the third quarter of 2013. Net interest income increased $3.0 million, or 13.0%, to $26.0 million versus $23.0 million in the third quarter of 2013. Net interest income increased primarily due to a 12.3% increase in average earning assets, driven by an increase of 15.7% in the commercial loan portfolio.  The net interest margin was 3.31% in the third quarter of 2014 versus 3.29% in 2013. The higher margin reflected a decline in funding costs offset by lower yields on earning assets.

38

Net Interest Income

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

	Nine Months Ended September 30,
	2014				2013
	Average	Interest	Yield (1)/		Average	Interest	Yield (1)/
(fully tax equivalent basis, dollars in thousands)	Balance	Income	Rate		Balance	Income	Rate
Earning assets
Loans:
Taxable (2)(3)	$ 2,611,722	$   78,317	4.01	%	$ 2,295,352	$   73,469	4.28	%
Tax exempt (1)	11,800	522	5.91		8,651	459	7.10
Investments: (1)
Available for sale	474,809	9,837	2.77		475,077	7,036	1.98
Short-term investments	5,239	3	0.08		6,972	4	0.08
Interest bearing deposits	4,913	28	0.76		10,611	42	0.53
Total earning assets	$ 3,108,483	$   88,707	3.82	%	$ 2,796,663	$   81,010	3.87	%
Less:  Allowance for loan losses	(46,886)				(50,944)
Nonearning Assets
Cash and due from banks	73,007				83,945
Premises and equipment	39,842				35,692
Other nonearning assets	112,290				110,922
Total assets	$ 3,286,736				$ 2,976,278
Interest bearing liabilities
Savings deposits	$    236,342	$        389	0.22	%	$    227,522	$        493	0.29	%
Interest bearing checking accounts	1,150,904	3,423	0.40		1,018,904	4,179	0.55
Time deposits:
In denominations under $100,000	279,890	2,380	1.14		336,495	3,607	1.43
In denominations over $100,000	603,135	3,754	0.83		497,003	4,086	1.10
Miscellaneous short-term borrowings	151,786	351	0.31		138,383	349	0.34
Long-term borrowings and
subordinated debentures (4)	30,964	769	3.32		32,888	831	3.38
Total interest bearing liabilities	$ 2,453,021	$   11,066	0.60	%	$ 2,251,195	$   13,545	0.80	%
Noninterest bearing liabilities
Demand deposits	480,356				401,006
Other liabilities	15,241				16,481
Stockholders' equity	338,118				307,596
Total liabilities and stockholders' equity	$ 3,286,736				$ 2,976,278
Interest Margin Recap
Interest income/average earning assets		88,707	3.82			81,010	3.87
Interest expense/average earning assets		11,066	0.48			13,545	0.65
Net interest income and margin		$   77,641	3.34	%		$   67,465	3.22	%

(1)	Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2014 and 2013. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) adjustment applicable to nondeductible interest expenses.
(2)	Loan fees, which are immaterial in relation to total taxable loan interest income for the nine months ended September 30, 2014 and 2013, are included as taxable loan interest income.
(3)	Nonaccrual loans are included in the average balance of taxable loans.

39

	Three Months Ended September 30,
	2014				2013
	Average	Interest	Yield (1)/		Average	Interest	Yield (1)/
(fully tax equivalent basis, dollars in thousands)	Balance	Income	Rate		Balance	Income	Rate
Earning assets
Loans:
Taxable (2)(3)	$ 2,671,249	$   26,713	3.97	%	$ 2,342,527	$   24,595	4.17	%
Tax exempt (1)	13,418	186	5.49		8,456	152	7.11
Investments: (1)
Available for sale	476,643	3,320	2.76		464,652	2,670	2.28
Short-term investments	4,987	1	0.08		6,344	1	0.06
Interest bearing deposits	6,126	11	0.71		3,524	9	1.01
Total earning assets	$ 3,172,423	$   30,231	3.78	%	$ 2,825,503	$   27,427	3.85	%
Less:  Allowance for loan losses	(45,994)				(50,466)
Nonearning Assets
Cash and due from banks	73,481				77,947
Premises and equipment	40,098				37,754
Other nonearning assets	111,466				111,535
Total assets	$ 3,351,474				$ 3,002,273
Interest bearing liabilities
Savings deposits	$    230,635	$        125	0.22	%	$    235,190	$        143	0.24	%
Interest bearing checking accounts	1,159,009	1,167	0.40		1,015,298	1,121	0.44
Time deposits:
In denominations under $100,000	277,719	791	1.13		320,314	1,108	1.37
In denominations over $100,000	650,281	1,341	0.82		474,173	1,217	1.02
Miscellaneous short-term borrowings	137,372	96	0.28		166,132	146	0.35
Long-term borrowings and
subordinated debentures (4)	30,963	260	3.33		30,965	263	3.37
Total interest bearing liabilities	$ 2,485,979	$     3,780	0.60	%	$ 2,242,072	$     3,998	0.71	%
Noninterest bearing liabilities
Demand deposits	501,594				434,476
Other liabilities	15,747				15,654
Stockholders' equity	348,154				310,071
Total liabilities and stockholders' equity	$ 3,351,474				$ 3,002,273
Interest Margin Recap
Interest income/average earning assets		30,231	3.78			27,427	3.85
Interest expense/average earning assets		3,780	0.47			3,998	0.56
Net interest income and margin		$   26,451	3.31	%		$   23,429	3.29	%

(1)	Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2014 and 2013. The tax equivalent rate for tax exempt loans and tax exempt securities acquired after January 1, 1983 included the Tax Equity and Fiscal Responsibility Act of 1982 (“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 September 30, 2014 and 2013, are included as taxable loan interest income.
(3)	Nonaccrual loans are included in the average balance of taxable loans.

Net interest income increased $10.1 million, or 15.2%, for the nine months ended September 30, 2014 compared with the first nine months of 2013. The increased level of net interest income during the first nine months of 2014 compared with the first nine months of 2013 was largely driven by an increase in net earning assets as well as a deceleration in the amortization of premiums on agency mortgage-backed securities.  The deceleration was primarily the result of rising long-term mortgage interest rates which have reduced prepayments in the loans underlying the securities.  In addition, the Company’s cost of funds decreased by 20 basis points during the first nine months of 2014 compared to the first nine months of 2013.  The tax equivalent net interest margin was 3.34% for the first nine months of 2014 compared to 3.22% during the first nine months of 2013.  The yield on earning assets totaled 3.82% during the nine months ended September 30, 2014 compared to 3.87% in the same period of 2013 while the cost of funds (expressed as a percentage of average earning assets) totaled 0.48% during the first nine months of 2014 compared to 0.65% in the same period of 2013.  Net interest income increased $3.0 million, or 13.0%, for the third quarter of 2014 compared to the third quarter of 2013.  The increase was driven by an increase in net earning assets.  In addition, the Company’s cost of funds decreased by 11 basis points during the third quarter of 2014 compared to the third quarter of 2013.  The tax equivalent net interest margin was 3.31% for the third quarter of 2014 compared to 3.29% during the third quarter of 2013.

40

The decline in the Company’s cost of funds during the nine month and three month periods ended September 30, 2014, compared to the same periods in 2013 was largely driven by a continued decline in deposit rates as well as increases in average noninterest bearing demand deposits.

Average earning assets increased by $311.8 million for the nine months ended September 30, 2014 compared with the same period of 2013.  Average loans outstanding increased $319.5 million during the nine months ended September 30, 2014 compared with the first nine months of 2013, with most of the growth being in commercial loans.  The average securities portfolio decreased $268,000 in the nine months ended September 30, 2014 compared with the first nine months of 2013.  Average earning assets increased by $346.9 million for the third quarter of 2014 compared with the same period of 2013.  Average loans outstanding increased $333.7 million during the third quarter of 2014 compared with the third quarter of 2013, with most of the growth being in commercial loans.  The average securities portfolio increased $12.0 million in the third quarter 2014 compared with the third quarter of 2013.

Provision for Loan Losses

No provisions for loan loss expense were recorded during the nine month and three month periods ended September 30, 2014 and 2013.  The allowance for loan losses at September 30, 2014 represented 1.72% of the loan portfolio, versus 1.92% at December 31, 2013 and 2.08% at September 30, 2013.  Factors impacting the decision not to record a provision in the first nine months of 2014 included the stabilization or improvement in key loan quality metrics including strong reserve coverage of nonperforming loans, a decrease in historical loss percentages, continuing signs of stabilization in economic conditions in the Company’s markets and sustained signs of improvement in borrower performance and future prospects. In addition, management gave consideration to changes in the allocation for specific watch list credits in determining the appropriate level of the loan loss provision. Management’s overall view on current credit quality was also a factor in the determination of the provision for loan losses. The Company’s management continues to monitor the adequacy of the provision based on loan levels, asset quality, economic conditions and other factors that may influence the assessment of the collectability of loans.

Noninterest Income

Noninterest income categories for the nine-month and three-month periods ended September 30, 2014 and 2013 are shown in the following table:

	Nine Months Ended
	September 30,
			Percent
(dollars in thousands)	2014	2013	Change
Wealth advisory fees	$        3,046	$         2,895	5.2	%
Investment brokerage fees	2,739	3,449	(20.6)
Service charges on deposit accounts	6,973	6,548	6.5
Loan, insurance and service fees	5,187	4,792	8.2
Merchant card fee income	1,137	925	22.9
Bank owned life insurance	1,082	1,184	(8.6)
Other income	2,442	1,753	39.3
Mortgage banking income	508	1,206	(57.9)
Net securities gains (losses)	(224)	107	(309.3)
Total noninterest income	$      22,890	$       22,859	0.1	%
Noninterest income to total revenue	23.10%	25.68%

41

	Three Months Ended
	September 30,
			Percent
(dollars in thousands)	2014	2013	Change
Wealth advisory fees	$        1,030	$            980	5.1	%
Investment brokerage fees	699	1,503	(53.5)
Service charges on deposit accounts	2,474	2,325	6.4
Loan, insurance and service fees	1,972	1,524	29.4
Merchant card fee income	407	356	14.3
Bank owned life insurance	372	373	(0.3)
Other income	881	483	82.4
Mortgage banking income	264	159	66.0
Net securities gains (losses)	(228)	106	(315.1)
Total noninterest income	$        7,871	$         7,809	0.8	%
Noninterest income to total revenue	23.26%	25.37%

The Company's noninterest income was virtually unchanged during the nine month and three month periods ended September 30, 2014 compared to the same periods in 2013.  Noninterest income was positively impacted by increases in service charges on deposit accounts driven by increases in account analysis service charges on commercial checking accounts, as well as increases in loan insurance and service fees driven by higher commercial loan fees.  Other income increased due to income related to bank owned life insurance proceeds.  Noninterest income was negatively impacted by decreases in investment brokerage fees due to lower production volumes, decreases in mortgage banking income, driven by lower production volumes due to higher long-term mortgage rates.  Loans originated for sale totaled $38.7 million and $12.4 million, respectively in the nine month and three month periods ended September 30, 2014, versus $68.4 million and $16.7 million for the comparable periods of 2013.  In addition, investment brokerage fees declined due to lower trading volumes.

Noninterest Expense

Noninterest expense categories for the nine-month and three-month periods ended September 30, 2014 and 2013 are shown in the following table:

	Nine Months Ended
	September 30,
			Percent
(dollars in thousands)	2014	2013	Change
Salaries and employee benefits	$      29,310	$      27,493	6.6	%
Net occupancy expense	2,885	2,532	13.9
Equipment costs	2,346	2,021	16.1
Data processing fees and supplies	4,541	4,115	10.4
Corporate and business development	1,371	1,292	6.1
FDIC insurance and other regulatory fees	1,446	1,384	4.5
Professional fees	2,241	2,366	(5.3)
Other expense	5,394	5,047	6.9
Total noninterest expense	$      49,534	$      46,250	7.1	%

42

	Three Months Ended
	September 30,
			Percent
(dollars in thousands)	2014	2013	Change
Salaries and employee benefits	$        9,856	$        9,437	4.4	%
Net occupancy expense	872	813	7.3
Equipment costs	812	758	7.1
Data processing fees and supplies	1,557	1,443	7.9
Corporate and business development	474	443	7.0
FDIC insurance and other regulatory fees	481	463	3.9
Professional fees	705	1,018	(30.7)
Other expense	1,903	1,891	0.6
Total noninterest expense	$      16,660	$      16,266	2.4	%

The Company’s noninterest expense increased $3.3 million and $394,000, respectively, in the nine-month and three-month periods ended September 30, 2014 versus the same periods in 2013.  Salaries and employee benefits increased by $1.8 million and $419,000, respectively, driven by higher performance-based compensation costs as a result of the Company’s strong results versus internal objectives.  Data processing fees increased by $426,000 and $114,000, respectively, due to a larger customer base as well as greater utilization of services from the Company’s core processor, which the Company expects will improve the customer experience through delivery of electronic banking alternatives and improved commercial product solutions as well as enhancing marketing and cross-selling initiatives.  In addition, other expenses increased primarily due to higher advertising costs.  Offsetting these increases was a decrease in professional fees due to $310,000 in nonrecurring consulting fees which the Company incurred during the third quarter of 2013.  The Company’s efficiency ratio improved to 50.0% and 49.2%, respectively, for the nine-month and three-month periods ended September 30, 2014 compared to 52.0% and 52.8% for the comparable periods in 2013.

Income Taxes

Income tax expense increased $2.3 million, or 16.0%, for the first nine months of 2014, compared to the same period in 2013.  The combined state franchise tax expense and the federal income tax expense, as a percentage of income before income tax expense, was 33.9% during the first nine months of 2014 and 2013.  The combined tax expense was 33.0% for the third quarter of 2014, compared to 32.7% for the third quarter of 2013.

FINANCIAL CONDITION

Overview

Total assets of the Company were $3.356 billion as of September 30, 2014, an increase of $180.1 million, or 5.7%, when compared to $3.176 billion as of December 31, 2013.  Total loans increased by $166.8 million, or 6.6%, to $2.702 billion at September 30, 2014 from $2.535 billion at December 31, 2013.  Funding for the loan growth came from a $343.6 million increase in deposits offset by a $193.3 million decrease in short-term borrowings.

Uses of Funds

Total Cash and Cash Equivalents

Total cash and cash equivalents increased by $7.1 million, or 11.3%, to $70.2 million at September 30, 2014, from $63.1 million at December 31, 2013.

43

Investment Portfolio

The amortized cost and the fair value of securities as of September 30, 2014 and December 31, 2013 were as follows:

	September 30, 2014		December 31, 2013
	Amortized	Fair	Amortized	Fair
(dollars in thousands)	Cost	Value	Cost	Value
U.S. Treasury securities	$              985	$              985	$           1,001	$           1,017
Agency residential mortgage-backed securities	368,935	371,746	374,611	371,977
State and municipal securities	96,985	100,344	95,388	95,973
Total	$       466,905	$       473,075	$       471,000	$       468,967

At September 30, 2014 and December 31, 2013, there were no holdings of securities of any one issuer, other than the U.S. government, government agencies and government sponsored agencies, in an amount greater than 10% of stockholders’ equity.

Purchases of securities available for sale totaled $58.7 million in the first nine months of 2014.  Paydowns from prepayments and scheduled payments of $42.6 million were received in the first nine months of 2014, and the amortization of premiums, net of the accretion of discounts, was $4.2 million.  Sales of securities totaled $14.0 million in the first nine months of 2014.  Maturities and calls of securities totaled $2.0 million in the first nine months of 2014.  No other-than-temporary impairment was recognized in the first nine months of 2014. The investment portfolio is managed to provide for an appropriate balance between, liquidity, credit risk and investment return and to limit the Company’s exposure to risk to an acceptable level.  The Company does not trade or invest in or sponsor certain unregistered investment companies defined as hedge funds and private equity funds in the Volcker Rule.

Real Estate Mortgage Loans HFS

Real estate mortgage loans held-for-sale decreased by $51,000, or 2.9%, to $1.7 million at September 30, 2014, from $1.8 million at December 31, 2013.  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.  The Company generally sells all of the mortgage loans it originates on the secondary market.  Proceeds from sales totaled $39.3 million in the first nine months of 2014.

Loan Portfolio

The loan portfolio by class as of September 30, 2014 and December 31, 2013 is summarized as follows:

							Current
	September 30,			December 31,			Period
(dollars in thousands)	2014			2013			Change
Commercial and industrial loans	$    1,031,441	38.2	%	$       901,567	35.6	%	$    129,874
Commercial real estate and multi-family residential loans	1,035,654	38.3		986,207	38.9		49,447
Agri-business and agricultural loans	209,719	7.8		254,029	10.0		(44,310)
Other commercial loans	77,076	2.9		70,770	2.8		6,306
Consumer 1-4 family mortgage loans	300,477	11.1		277,030	10.9		23,447
Other consumer loans	47,967	1.8		46,125	1.8		1,842
Subtotal	2,702,334	100.0	%	2,535,728	100.0	%	166,606
Less:  Allowance for loan losses	(46,387)			(48,797)			2,410
Net deferred loan fees	(411)			(630)			219
Loans, net	$    2,655,536			$    2,486,301			$    169,235

Total loans, excluding real estate mortgage loans held for sale, increased by $166.6 million to $2.702 billion at September 30, 2014 from $2.536 billion at December 31, 2013.  The increase was concentrated in the commercial and commercial real estate categories and reflected the Company’s long standing strategic plan that is focused on expanding and growing the commercial lending business throughout our market areas.  The increase was partially offset by seasonal declines in agri-business loans.

44

The following table summarizes the Company’s non-performing assets as of September 30, 2014 and December 31, 2013:

	September 30,	December 31,
(dollars in thousands)	2014	2013
Nonaccrual loans including nonaccrual troubled debt restructured loans	$              14,767	$              23,898
Loans past due over 90 days and still accruing	0	46
Total nonperforming loans	$              14,767	$              23,944
Other real estate owned	200	469
Repossessions	6	12
Total nonperforming assets	$              14,973	$              24,425
Impaired loans including troubled debt restructurings	$              34,144	$              43,218
Nonperforming loans to total loans	0.55%	0.94%
Nonperforming assets to total assets	0.45%	0.77%
Performing troubled debt restructured loans	$              17,650	$              17,714
Nonperforming troubled debt restructured loans (included in nonaccrual loans)	9,841	18,531
Total troubled debt restructured loans	$              27,491	$              36,245

Total nonperforming assets decreased by $9.5 million, or 38.7%, to $15.0 million during the nine-month period ended September 30, 2014.  The decrease in nonperforming assets primarily resulted from the sale, to an independent party, of a single commercial relationship consisting of three loans totaling $6.7 million.  The three loans were accounted for as troubled debt restructurings.  The Company received proceeds of $4.3 million and recognized charge offs of $2.4 million as a result of the sale.  The amount charged-off had previously been specifically allocated for by the Company.  In addition, one commercial credit of $1.4 million was removed from the impaired category due to improved performance.

Net recoveries totaled $782,000 in the third quarter of 2014, versus net charge-offs of $831,000 during the third quarter of 2013 and net charge-offs of $532,000 during the second quarter of 2014.

A loan is impaired when full payment under the original loan terms is not expected.  Impairment for smaller loans that are similar in nature and which are not in nonaccrual or troubled debt restructured status, such as residential mortgage, consumer, and credit card loans, is determined based on the class of loans and impairment is determined 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 flow or at the fair value of collateral if repayment is expected solely from the collateral.

Total impaired loans decreased by $9.1 million, or 21.0%, to $34.1 million at September 30, 2014 from $43.2 million at December 31, 2013.  The decrease in the impaired loans category was primarily due to the sale proceeds received and charge offs recognized on a single commercial relationship consisting of three impaired loans totaling $6.7 million.  In addition, one commercial credit of $1.4 million was removed from the impaired category due to improved performance.

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 a 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.

45

At September 30, 2014, the allowance for loan losses was 1.72% of total loans outstanding, versus 1.92% of total loans outstanding at December 31, 2013.  At September 30, 2014, management believed the allowance for loan losses 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 increases in the allowance for loan losses. The process of identifying probable credit losses is a subjective process. Therefore, the Company maintains a general allowance to cover probable incurred credit losses within the entire portfolio. The methodology management uses to determine the adequacy of the loan loss reserve includes the considerations below.

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. Generally, this type of lending has more credit risk than other types of lending because of the size and diversity of the credits. The Company manages this risk by adjusting its pricing to the perceived risk of each individual credit and by diversifying the portfolio by customer, product, industry and geography.

As of September 30, 2014, on the basis of management’s review of the loan portfolio, the Company had 93 credits totaling $159.7 million on the classified loan list versus 98 credits totaling $165.1 million on December 31, 2013. As of September 30, 2014, the Company had $95.2 million of assets classified as Special Mention, $64.5 million classified as Substandard, $0 classified as Doubtful and $0 classified as Loss as compared to $90.4 million, $72.1 million, $0 and $0, respectively at December 31, 2013.

Allowance estimates are developed by management after taking into account actual loss experience adjusted for current economic conditions. The Company 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.  For a more thorough discussion of the allowance for loan losses methodology see the Critical Accounting Policies section of this Item 2.

The allowance for loan losses decreased 4.9%, or $2.4 million, from $48.8 million at December 31, 2013 to $46.4 million at September 30, 2014.  Pooled loan allocations increased from $39.5 million at December 31, 2013 to $39.9 million at September 30, 2014, which was due to an increase in pooled loan balances as well as management’s view of current credit quality and the current economic environment.  Impaired loan allocations decreased $2.8 million from $9.3 million at December 31, 2013 to $6.5 million at September 30, 2014.  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 $3.4 million at September 30, 2014 and $3.5 million at December 31, 2013.  While general trends in the overall economy and 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.

Most of the Company’s loan growth has been concentrated in the commercial loan portfolio, which can result in overall asset quality being influenced by a small number of credits. Management has historically considered growth and portfolio composition when determining loan loss allocations. Management believes that it is prudent to continue to provide for loan losses in a manner consistent with its historical approach due to the loan growth described above and current economic conditions.

Economic conditions in the Company’s markets have generally continued to improve and stabilize, and management is cautiously optimistic that the recovery is positively impacting its borrowers.  The unemployment rate in Indiana of 5.8% is below the national rate of 5.9%.  In addition the unemployment rate of the Indiana counties we operate in has declined as compared to a year ago.  While unemployment figures have improved since a year ago, the labor participation rate remains lower than one year ago.  While the Company has seen indications of improved economic conditions in its markets, including commercial real estate activity and manufacturing growth, they are not wide spread or particularly strong improvements.  The Company’s continued growth strategy promotes diversification among industries as well as continued focus on enforcement of a strong credit environment and an aggressive position in loan work-out situations. Although the Company believes that historical industry-specific issues in the Company’s markets have improved, the economic environment impacting the Company’s entire geographic footprint will continue to present challenges.

46

Sources of Funds

The following table summarizes deposits and borrowings as of September 30, 2014 and December 31, 2013:

			Current
	September 30,	December 31,	Period
(dollars in thousands)	2014	2013	Change
Non-interest bearing demand deposits	$         515,696	$         479,606	$       36,090
Interest bearing demand, savings & money market accounts	1,388,725	1,338,653	50,072
Time deposits under $100,000	283,561	291,566	(8,005)
Time deposits of $100,000 or more	701,690	436,243	265,447
Total deposits	2,889,672	2,546,068	343,604
Short-term borrowings	68,578	261,876	(193,298)
Long-term borrowings	35	37	(2)
Subordinated debentures	30,928	30,928	0
Total borrowings	99,541	292,841	(193,300)
Total funding sources	$      2,989,213	$      2,838,909	$     150,304

Deposits and Borrowings

Total deposits increased by $343.6 million, or 13.5%, from December 31, 2013.  The growth in deposits consisted of $149.9 million in core deposit growth and an increase of $193.7 million in brokered deposits.  Core deposit growth was concentrated in other time deposits of $100,000 or more, non-interest bearing demand deposits, public fund certificates of deposit of $100,000 or more, interest bearing transaction accounts and money market accounts.  The increase in money market balances as well as a decline in time deposits under $100,000 was reflective of the ongoing low interest rate environment and consumers’ desire to keep funds in a more liquid short-term deposit vehicle, in anticipation of higher rates in the future.  Total brokered deposits were $219.7 million at September 30, 2014 compared to $26.0 million at December 31, 2013.  Total public funds deposits, including public funds transaction accounts, were $740.2 million at September 30, 2014 compared to $648.2 at December 31, 2013.

Total borrowings decreased by $193.3 million, or 66.0%, from December 31, 2013.  Most of the decrease was from a decrease in short-term advances from the Federal Home Loan Bank of Indianapolis, securities sold under agreements to repurchase and federal funds purchased.  The Company used wholesale funding, including brokered deposits and Federal Home Loan Bank advances, to fund part of its loan growth and to help maintain its desired interest rate risk position.

47

Capital

As of September 30, 2014, total stockholders’ equity was $351.9 million, an increase of  $30.0 million, or 9.3%, from $321.9 million at December 31, 2013.  In addition to net income of $32.7 million, other significant changes in equity during the first nine months of 2014 included $10.1 million of dividends paid. The accumulated other comprehensive income component of equity increased $5.1 million during the nine months ended September 30, 2014, driven by changes in the fair values of available-for-sale securities.  The impact on equity by other comprehensive income is not included in regulatory capital.  The banking regulators have established guidelines for leverage capital requirements, expressed in terms of Tier 1, or core capital, as a percentage of average assets, to measure the soundness of a financial institution. In addition, banking regulators have established risk-based capital guidelines for U.S. banking organizations. The actual capital amounts and ratios of the Company and the Bank as of September 30, 2014 and December 31, 2013, are presented in the table below:

					Minimum Required to
			Minimum Required		Be Well Capitalized
			For Capital		Under Prompt Corrective
	Actual		Adequacy Purposes		Action Regulations
(dollars in thousands)	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of September 30, 2014:
Total Capital (to Risk
Weighted Assets)
Consolidated	$   409,758	14.40%	$   227,635	8.00%	$   284,544	10.00%
Bank	$   396,269	13.95%	$   227,200	8.00%	$   284,000	10.00%
Tier I Capital (to Risk
Weighted Assets)
Consolidated	$   374,057	13.15%	$   113,818	4.00%	$   170,726	6.00%
Bank	$   360,634	12.70%	$   113,600	4.00%	$   170,400	6.00%
Tier I Capital (to Average Assets)
Consolidated	$   374,057	11.18%	$   133,850	4.00%	$   167,313	5.00%
Bank	$   360,634	10.83%	$   133,168	4.00%	$   166,460	5.00%
As of December 31, 2013:
Total Capital (to Risk
Weighted Assets)
Consolidated	$   382,951	14.23%	$   215,229	8.00%	$   269,036	10.00%
Bank	$   373,685	13.92%	$   214,704	8.00%	$   268,380	10.00%
Tier I Capital (to Risk
Weighted Assets)
Consolidated	$   349,134	12.98%	$   107,614	4.00%	$   161,422	6.00%
Bank	$   339,949	12.67%	$   107,352	4.00%	$   161,028	6.00%
Tier I Capital (to Average Assets)
Consolidated	$   349,134	11.25%	$   124,152	4.00%	$   155,190	5.00%
Bank	$   339,949	10.98%	$   123,809	4.00%	$   154,761	5.00%

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 on certain assets.  To be considered “well capitalized,” as well as in compliance with the capital conservation buffer, a financial institution must maintain 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 capital conservation buffer is being phased-in and will be in full effect beginning January 1, 2019.  Under the new regulations, all financial institutions must maintain a Tier 1 leverage ratio of 4% to be considered “adequately capitalized” and 5% to be considered “well-capitalized.”  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 would exceed the capital ratio requirements to be considered “well-capitalized” and in compliance with the capital conservation buffer under Basel III if they were effective at September 30, 2014.

48

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.

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 Corporate Risk Committee of the Board of Directors annually reviews and approves the policy used to manage interest rate risk. The policy was last reviewed and approved in July 2014. 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 its 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. The Company continually evaluates the assumptions used in the model.  Additionally, during 2014 an adjustment was made impacting interest expense on deposits under the various interest rate scenarios which increased model precision.  The balance sheet structure is considered to be within acceptable risk levels.

Results for the base, falling 100 basis points, rising 100 basis points, and rising 300 basis points interest rate scenarios are listed below based upon the Company’s rate sensitive assets and liabilities at September 30, 2014. The net interest income shown represents cumulative net interest income over a twelve-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations.

		Falling		Rising		Rising
(dollars in thousands)	Base	(100 Basis Points)		(100 Basis Points)		(300 Basis Points)
Net interest income	$   106,280	$                 96,566		$               112,418		$               127,636
Variance from Base		$                (9,714)		$                   6,138		$                 21,356
Percent of change from Base		(9.14)	%	5.78	%	20.09	%

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 September 30, 2014.  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 September 30, 2014, 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.

49

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 routine litigation 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 2013 Form 10-K.  Please refer to that section of the Company’s Form 10-K and Item 2 of Part I of this Form 10-Q 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 September 30, 2014 with respect to shares of common stock repurchased by the Company during the quarter then ended:

Issuer Purchases of Equity Securities(a)

ISSUER PURCHASES OF EQUITY SECURITIES
				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
July 1-31	4,538	$                39.45	0	$                                          0
August 1-31	482	36.58	0	0
September 1-30	0	0	0	0
Total	5,020	$                39.17	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

            None

Item 4. Mine Safety Disclosures

 N/A

Item 5. Other Information

            None

50

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 September 30, 2014 and December 31, 2013; (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2014 and September 30, 2013; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and September 30, 2013; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and September 30, 2013; and (v) Notes to Unaudited Consolidated Financial Statements.

51

LAKELAND FINANCIAL CORPORATION

FORM 10-Q

September 30, 2014

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: November 10, 2014	/s/ David M. Findlay
	David M. Findlay – President and
	Chief Executive Officer

Date: November 10, 2014	/s/ Lisa M. O’Neill
	Lisa M. O’Neill – Executive Vice President and
	Chief Financial Officer

Date: November 10, 2014	/s/ Teresa A. Bartman
	Teresa A. Bartman – Senior Vice President-
	Finance and Controller

52

EX-31.1

Exhibit 31.1

I, David M. Findlay, 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:  November 10, 2014	/s/David M. Findlay
	David M. Findlay
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Lisa M. O’Neill, 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:  November 10, 2014	/s/ Lisa M. O’Neill
	Lisa M. O’Neill
	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 September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, David M. Findlay, 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/ David M. Findlay

David M. Findlay

Chief Executive Officer

November 10, 2014

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 September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report), I, Lisa M. O’Neill, 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/ Lisa M. O’Neill

Lisa M. O’Neill

Chief Financial Officer

November 10, 2014

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

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Troubled Debt Restructuring) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Troubled Debt Restructuring [Abstract]
Accruing troubled debt restructured loans	$ 17,650		$ 17,714
Nonaccrual troubled debt restructured loans	9,841		18,531
Total troubled debt restructured loans	$ 27,491	$ 2,700	$ 36,245

XML

EARNINGS PER SHARE (Earnings Per Share Computations) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Weighted average shares outstanding for basic earnings per common share	16,547,551	16,451,199	16,531,411	16,427,060
Dilutive effect of stock options, awards and warrants	228,219	183,734	237,668	154,029
Weighted average shares outstanding for diluted earnings per common share	16,775,770	16,634,933	16,769,079	16,581,089
Basic earnings per common share	$ 0.70	$ 0.59	$ 1.98	$ 1.72
Diluted earnings per common share	$ 0.69	$ 0.59	$ 1.95	$ 1.70

XML

FAIR VALUE DISCLOSURES (Valuation Methodology and Unobservable Inputs for Level 3 Assets) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Measurements, Nonrecurring [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans	$ 12,261	$ 20,228
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	4,009	4,017
Valuation Methodology	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	15.00%	3.00%
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	66.00%	93.00%
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	38.00%	29.00%
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	7,495	15,106
Valuation Methodology	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	7.00%	3.00%
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%	45.00%
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	17.00%	22.00%
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	188	472
Valuation Methodology	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] | Minimum [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Range of Inputs		4.00%
Agri-business and Agricultural 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		12.00%
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	7.00%	8.00%
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	536	583
Valuation Methodology	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	5.00%	6.00%
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	78.00%	77.00%
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	29.00%	33.00%
Other Consumer Loans [Member]
Valuation Methodology and Unobservable Inputs For Level 3 Assets Measured At Fair Value [Line Items]
Impaired loans		50
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	33	50
Valuation Methodology	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	30.00%	28.00%
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	48.00%	98.00%
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%	53.00%
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]
Impaired loans	$ 75	$ 75
Valuation Methodology	Appraisals	Appraisals
Unobservable Inputs	Discount to reflect current market conditions	Discount to reflect current market conditions and ultimate collectability
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

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Changes in Accumulated Other Comprehensive Income By Component) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax [Abstract]
Unrealized Gains and Losses on Available- for-Sales Securities, Opening Balance			$ (1,138)	$ 7,517	$ 7,517
Unrealized Gains and Losses on Available- for-Sales Securities, Other comprehensive income before reclassification			4,828		(8,591)
Unrealized Gains and Losses on Available- for-Sales Securities, Amounts reclassified from accumulated other comprehensive income (loss)			134		(64)
Unrealized Gains and Losses on Available- for-Sales Securities,Net current period other comprehensive income			4,962		(8,655)
Unrealized Gains and Losses on Available- for-Sales Securities, Ending Balance	3,824		3,824		(1,138)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax [Abstract]
Defined Benefit Pension Items, Opening Balance			(1,356)	(1,828)	(1,828)
Defined Benefit Pension Items, Other comprehensive income before reclassification			31		327
Defined Benefit Pension Items, Amounts reclassified from accumulated other comprehensive income (loss)			88		145
Defined Benefit Pension Items, Net current period other comprehensive income			119		472
Defined Benefit Pension Items, Ending Balance	(1,237)		(1,237)		(1,356)
Accumulated other comprehensive income, Opening Balance			(2,494)	5,689	5,689
Other comprehensive income before reclassification			4,859		(8,264)
Amounts reclassified from accumulated other comprehensive income (loss)			222		81
Net current period other comprehensive income	(765)	(827)	5,081	(7,141)	(8,183)
Accumulated other comprehensive income, Ending Balance	$ 2,587		$ 2,587		$ (2,494)

XML

FAIR VALUE DISCLOSURES (Quantitative Information about Level 3 Fair Value Measurements) (Details) (State and Municipal Securities [Member], Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets	$ 861	$ 975
Valuation Technique	Price to type, par, call	Price to type, par, call
Discount To Benchmark Index [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	0.00%	0.00%
Discount To Benchmark Index [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	7.00%	6.00%
Discount To Benchmark Index [Member] | Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range of Inputs	(2.80%)	(2.21%)

XML

SECURITIES (Quantitative Disclosure Of Available Sale Of Securities) (Details)	Sep. 30, 2014 Number	Dec. 31, 2013 Number
Number of securities with unrealized losses [Abstract]
Number of available-for-sale securities in unrealized loss positions, Less than 12 months	22	108
Number of available-for-sale securities in unrealized loss positions, 12 months or more	62	22
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	84	130
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	21	49
Number of available-for-sale securities in unrealized loss positions, 12 months or more	29	10
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	50	59
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	1	59
Number of available-for-sale securities in unrealized loss positions, 12 months or more	33	12
Available-for-sale, Securities in Unrealized Loss Positions, Number of Positions	34	71

XML

EMPLOYEE BENEFIT PLANS (Tables)

9 Months Ended

Sep. 30, 2014

Employee Benefit Plans [Abstract]

Components of net periodic benefit cost

Components of net periodic benefit cost:

	Nine Months Ended September 30,								Three Months Ended September 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(dollars in thousands)	2014		2013		2014		2013		2014		2013		2014		2013
Interest cost	$	90	$	87	$	38	$	34	$	30	$	29	$	13	$	11
Expected return on plan assets		(94)		(90)		(55)		(56)		(31)		(30)		(19)		(19)
Recognized net actuarial loss		88		113		60		70		29		38		20		24
Net pension expense	$	84	$	110	$	43	$	48	$	28	$	37	$	14	$	16

XML

FAIR VALUE DISCLOSURES (Additional Information) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended				3 Months Ended	9 Months Ended														3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2012	Mar. 31, 2013 Non Agency Residential Mortgage Backed Securities [Member]	Sep. 30, 2014 State and Municipal Securities [Member]	Sep. 30, 2013 State and Municipal Securities [Member]	Sep. 30, 2014 Commercial Real Estates [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Commercial Real Estates [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Inventory Finished Goods [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Inventory Finished Goods [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Finished Goods [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Finished Goods [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Inventory Work In Process [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Inventory Work In Process [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Equipment [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Equipment [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Marketable Securities [Member] Minimum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Marketable Securities [Member] Maximum [Member] Fair Value, Inputs, Level 3 [Member]	Sep. 30, 2014 Impaired Loans [Member]	Sep. 30, 2013 Impaired Loans [Member]	Sep. 30, 2014 Impaired Loans [Member]	Sep. 30, 2013 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.
Mortgage servicing rights	$ 3,300,000		$ 3,300,000
Percentage of discount from appraised value (in hundredths)												0.00%	50.00%	35.00%	65.00%	30.00%	60.00%	50.00%	100.00%	30.00%	70.00%	10.00%	30.00%
Weighted average interest rate, residential mortgages (in hundredths)			4.10%
Weighted average maturity of residential mortgages			19 years
Discount rate used to estimate fair value (in hundredths)			9.40%		9.40%
Subtotal	2,702,334,000		2,702,334,000		2,535,728,000																			16,500,000	30,000,000	16,500,000	30,000,000
Valuation allowance	46,387,000	49,804,000	46,387,000	49,804,000	48,797,000	45,605,000	50,635,000	51,445,000																4,200,000	7,300,000	4,200,000	7,300,000
Recoveries	1,051,000	465,000	1,265,000	1,230,000																				100,000	200,000	2,100,000	2,700,000
Fair Value, Measurement With Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3									3,300,000	0	0
Market Value Price Variance Tolerance Percentage			3.00%
Market Value Tolerable Value Indidual Security Increase Decrease			50,000
Market Value Tolerable Value Increase Decrease			$ 500,000

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,701,923	$ 2,535,098
Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	47,896	46,077
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,031,682	901,847
Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	518,114	457,955
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	513,568	443,892
Commercial Real Estate and Multi-family Residential Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,034,361	984,877
Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	152,726	157,138
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	395,925	370,111
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	400,978	394,236
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	84,732	63,392
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	209,808	254,125
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	131,519	133,460
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	78,289	120,665
Agri-business and Agricultural Loans [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	77,075	70,766
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	301,101	277,406
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	143,622	125,180
Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	151,767	147,595
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,712	4,631
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,258,662	2,099,984
Pass [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	77,042	70,766
Pass [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	13,399	10,722
Pass [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	477,113	431,069
Pass [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	458,676	384,415
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	145,217	148,338
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	361,482	333,795
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	382,386	367,108
Pass [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	84,732	63,392
Pass [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	131,034	132,331
Pass [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	78,289	120,665
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	39,956	29,092
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	9,336	8,291
Pass [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	95,148	88,848
Special Mention [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Special Mention [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	540	416
Special Mention [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	28,236	15,212
Special Mention [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	31,335	37,727
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	558	763
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	21,638	23,687
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	12,616	9,180
Special Mention [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Special Mention [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Special Mention [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	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	0	0
Special Mention [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	225	1,863
Special Mention [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	64,515	73,667
Substandard [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	30	0
Substandard [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	77	291
Substandard [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	12,765	11,674
Substandard [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	21,199	19,659
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,951	8,037
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	12,805	12,629
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,976	17,948
Substandard [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Substandard [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	485	1,113
Substandard [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,213	2,316
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,014	0
Substandard [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Doubtful [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	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	0	0
Doubtful [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	283,598	272,599
Not Rated [Member] | Other Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	33,880	34,648
Not Rated [Member] | Commercial and Industrial Loans [Member] | Working Capital Lines of Credit Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Not Rated [Member] | Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,358	2,091
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	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	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	0	0
Not Rated [Member] | Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Not Rated [Member] | Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	16
Not Rated [Member] | Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Not Rated [Member] | Agri-business and Agricultural Loans [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3	0
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	101,453	93,772
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Open End And Junior Lien Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	140,192	137,441
Not Rated [Member] | Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 5,712	$ 4,631

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Loans Individually Evaluated For Impairment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Ending allowance balance attributable to loans:
Unpaid Principal Balance	$ 38,510		$ 38,510		$ 50,877
Recorded Investment	34,144		34,144		43,227
Allowance for loans losses allocated	6,520		6,520		9,316
Average Recorded Investment	32,388	47,653	35,045	50,010
Interest Income Recognized	235	255	680	865
Cash Basis Interest Income Recogonized	232	272	674	908
Other Commerical Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	0		0
Unpaid principal balance with an allowance recorded	0		0
Recorded Investment with no related allowance recorded	0		0
Recorded investment with an allowance recorded	0		0
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	0		0
Average recorded investment with no related allowance recorded	0		0
Average recorded investment with an allowance recorded	0		0
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
Other Consumer Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	1		1		1
Unpaid principal balance with an allowance recorded	131		131		118
Recorded Investment with no related allowance recorded	1		1		1
Recorded investment with an allowance recorded	131		131		118
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	74		74		57
Average recorded investment with no related allowance recorded	1	1	1	1
Average recorded investment with an allowance recorded	89	99	87
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	1	0	1
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	1	0	1
Commercial and Industrial Loans [Member]
Ending allowance balance attributable to loans:
Allowance for loans losses allocated	4,017		4,017		4,144
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	22		22		63
Unpaid principal balance with an allowance recorded	1,808		1,808		5,251
Recorded Investment with no related allowance recorded	21		21		63
Recorded investment with an allowance recorded	1,807		1,807		2,641
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	901		901		984
Average recorded investment with no related allowance recorded	22	64	186	65
Average recorded investment with an allowance recorded	1,680	2,988	1,893	3,019
Interest income recognized with no related allowance recorded	0	0	1	0
Interest income recognized with an allowance recorded	22	12	55	39
Cash basis interest income recognized with no related allowance recorded	0	0	1	0
Cash basis interest income recognized with an allowance recorded	18	14	47	41
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	1,679		1,679
Unpaid principal balance with an allowance recorded	16,821		16,821		15,345
Recorded Investment with no related allowance recorded	285		285
Recorded investment with an allowance recorded	14,658		14,658		13,492
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	3,116		3,116		3,160
Average recorded investment with no related allowance recorded	290	0	133	11
Average recorded investment with an allowance recorded	13,662	14,017	13,762	14,081
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	127	120	387	391
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	126	126	388	402
Commercial Real Estate and Multi-Family Residential Loans [Member]
Ending allowance balance attributable to loans:
Allowance for loans losses allocated	1,875		1,875		4,598
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	528		528
Unpaid principal balance with an allowance recorded	1,391		1,391		2,795
Recorded Investment with no related allowance recorded	528		528
Recorded investment with an allowance recorded	1,390		1,390		2,795
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	382		382		585
Average recorded investment with no related allowance recorded	533		178
Average recorded investment with an allowance recorded	1,679	2,848	2,341	3,860
Interest income recognized with no related allowance recorded	0		0
Interest income recognized with an allowance recorded	7	11	37	63
Cash basis interest income recognized with no related allowance recorded	0		0
Cash basis interest income recognized with an allowance recorded	5	20	36	67
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	337		337		377
Unpaid principal balance with an allowance recorded	4,452		4,452		5,553
Recorded Investment with no related allowance recorded	157		157		196
Recorded investment with an allowance recorded	4,411		4,411		4,681
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	867		867		723
Average recorded investment with no related allowance recorded	160	616	215	575
Average recorded investment with an allowance recorded	3,241	3,707	2,956	3,592
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	26	20	45	88
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	29	20	43	96
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	323		323
Unpaid principal balance with an allowance recorded	6,154		6,154		15,163
Recorded Investment with no related allowance recorded	323		323
Recorded investment with an allowance recorded	6,161		6,161		14,532
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	626		626		3,290
Average recorded investment with no related allowance recorded	327		341
Average recorded investment with an allowance recorded	6,485	19,183	8,507	20,960
Interest income recognized with no related allowance recorded	0		0
Interest income recognized with an allowance recorded	35	87	104	255
Cash basis interest income recognized with no related allowance recorded	0		0
Cash basis interest income recognized with an allowance recorded	36	86	105	258
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	0		0
Unpaid principal balance with an allowance recorded	0		0
Recorded Investment with no related allowance recorded	0		0
Recorded investment with an allowance recorded	0		0
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	0		0
Average recorded investment with no related allowance recorded	0		0
Average recorded investment with an allowance recorded	0	0	0	64
Interest income recognized with no related allowance recorded	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
Cash basis interest income recognized with an allowance recorded	0	0	0	0
Agri-business and Agricultural Loans [Member]
Ending allowance balance attributable to loans:
Allowance for loans losses allocated	15		15		38
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	603		603		604
Unpaid principal balance with an allowance recorded	381		381		1,008
Recorded Investment with no related allowance recorded	283		283		604
Recorded investment with an allowance recorded	203		203		510
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	15		15		38
Average recorded investment with no related allowance recorded	284	479	226	480
Average recorded investment with an allowance recorded	203	536	411	418
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]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	0		0
Unpaid principal balance with an allowance recorded	0		0
Recorded Investment with no related allowance recorded	0		0
Recorded investment with an allowance recorded	0		0
Allowance for loan losses allocated with no related allowance recorded	0		0
Allowance for loans losses allocated with an allowance recorded	0		0
Average recorded investment with no related allowance recorded	0		0
Average recorded investment with an allowance recorded	0		0
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]
Ending allowance balance attributable to loans:
Allowance for loans losses allocated	539		539		479
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	133		133		150
Unpaid principal balance with an allowance recorded	0		0
Recorded Investment with no related allowance recorded	133		133		150
Recorded investment with an allowance recorded	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
Average recorded investment with no related allowance recorded	135		141
Average recorded investment with an allowance recorded	0		0
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] | Closed End First Mortgage Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	706		706		688
Unpaid principal balance with an allowance recorded	2,640		2,640		3,469
Recorded Investment with no related allowance recorded	708		708		689
Recorded investment with an allowance recorded	2,544		2,544		2,463
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	534		534		442
Average recorded investment with no related allowance recorded	695	719	691	275
Average recorded investment with an allowance recorded	2,568	2,347	2,740	2,461
Interest income recognized with no related allowance recorded	0	0	0	0
Interest income recognized with an allowance recorded	17	5	50	28
Cash basis interest income recognized with no related allowance recorded	0	0	0	0
Cash basis interest income recognized with an allowance recorded	17	6	53	43
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member]
Ending allowance balance attributable to loans:
Unpaid principal balance with no related allowance recorded	352		352		81
Unpaid principal balance with an allowance recorded	48		48		211
Recorded Investment with no related allowance recorded	352		352		81
Recorded investment with an allowance recorded	48		48		211
Allowance for loan losses allocated with no related allowance recorded	0		0		0
Allowance for loans losses allocated with an allowance recorded	5		5		37
Average recorded investment with no related allowance recorded	286	27	170	23
Average recorded investment with an allowance recorded	48	22	66	40
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
Consumer 1-4 Family Mortgage Loans [Member] | Other Consumer Loans [Member]
Ending allowance balance attributable to loans:
Average recorded investment with an allowance recorded				86
Interest income recognized with an allowance recorded				1
Cash basis interest income recognized with an allowance recorded				$ 1

XML

EMPLOYEE BENEFIT PLANS (Additional Information) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Additional contributions to benefit plan	$ 138,000
Pension Plan, Defined Benefit [Member]
Estimated future employer contributions in next fiscal year	69,000	207,000
Supplemental Employee Retirement Plan, Defined Benefit [Member]
Estimated future employer contributions in next fiscal year	$ 4,000	$ 4,000

XML

FAIR VALUE DISCLOSURES (Assets Measured at Fair Value on a Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	$ 12,261	$ 20,228
Other real estate owned	75	75
Total assets	12,336	20,303
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 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
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	12,261	20,228
Other real estate owned	75	75
Total assets	12,336	20,303
Commercial and Industrial Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	4,009	4,017
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	868	920
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	868	920
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	3,141	3,097
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	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	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	3,141	3,097
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	7,495	15,106
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	824	2,210
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	824	2,210
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	3,544	3,958
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	3,544	3,958
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	3,127	8,938
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	3,127	8,938
Agri-business and Agricultural Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	188	472
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	188	472
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	188	472
Consumer 1-4 Family Mortgage Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	536	583
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	493	409
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	493	409
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	43	174
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	43	174
Other Consumer Loans [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans		50
Other Consumer Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets Measured At Fair Value On Nonrecurring Basis [Line Items]
Impaired loans	33	50
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	$ 33	$ 50

XML

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2014

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 in this report is the Bank’s wholly owned subsidiary, LCB Investments II, Inc. (“LCB Investments”), which manages a portion of the Bank’s investment portfolio.  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 nine-month periods ending September 30, 2014 are not necessarily indicative of the results that may be expected for any subsequent reporting periods, including the year ending December 31, 2014. The 2013 Lakeland Financial Corporation Annual Report on Form 10-K should be read in conjunction with these statements.

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Additional Information) (Details) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013
Troubled Debt Restructuring [Abstract]
Loans Modified In Troubled Debt Restructured Loans	$ 4,500,000			$ 4,500,000		$ 173,000	$ 8,300,000		$ 1,800,000
Amount added to total troubled debt restructured loans								328,000
Financing Receivable, Modifications, Subsequent Default, Recorded Investment		159,000	0		912,000
Loan amount of credit quality analysis				250,000
Financing Receivable, Modifications, Recorded Investment	27,491,000	2,700,000		27,491,000			36,245,000
Number Of Loans Restructured		3
Recognized charge offs	0	2,400,000	0	0	365,000
Proceeds from sale of loans		4,300,000
Sale Of Loan		6,700,000
Allowance for Loan and Lease Losses, Period Increase (Decrease)		80,000
Commercial and Industrial Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss	74,000			211,000
Commercial Real Estate and Multi-Family Residential Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss	53,000		11,000	152,000	384,000
Consumer 1-4 Family Mortgage Loans [Member]
Troubled Debt Restructuring [Abstract]
Increase (decrease) in allowance for loan loss			$ 4,000		$ 61,000

XML

SECURITIES (Summary Of Available Sale Of Securities) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Information related to available for sale securities [Abstract]
Amortized Cost	$ 466,905	$ 471,000
Gross Unrealized Gain	10,499	7,914
Gross Unrealized Losses	(4,329)	(9,947)
Fair Value	473,075	468,967
U.S. Treasury securities [Member]
Information related to available for sale securities [Abstract]
Amortized Cost	985	1,001
Gross Unrealized Gain	0	16
Gross Unrealized Losses	0	0
Fair Value	985	1,017
Agency Residential Mortgage-Backed Securities [Member]
Information related to available for sale securities [Abstract]
Amortized Cost	368,935	374,611
Gross Unrealized Gain	6,610	5,301
Gross Unrealized Losses	(3,799)	(7,935)
Fair Value	371,746	371,977
State and Municipal Securities [Member]
Information related to available for sale securities [Abstract]
Amortized Cost	96,985	95,388
Gross Unrealized Gain	3,889	2,597
Gross Unrealized Losses	(530)	(2,012)
Fair Value	$ 100,344	$ 95,973

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2014

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 (loss) for the nine months ended September 30, 2014 and the year ended December 31, 2013:

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at December 31, 2013	$	(1,138)	$	(1,356)	$	(2,494)
Other comprehensive income before reclassification		4,828		31		4,859
Amounts reclassified from accumulated other comprehensive income (loss)		134		88		222
Net current period other comprehensive income		4,962		119		5,081
Balance at September 30, 2014	$	3,824	$	(1,237)	$	2,587

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at December 31, 2012	$	7,517	$	(1,828)	$	5,689
Other comprehensive income before reclassification		(8,591)		327		(8,264)
Amounts reclassified from accumulated other comprehensive income (loss)		(64)		145		81
Net current period other comprehensive income		(8,655)		472		(8,183)
Balance at December 31, 2013	$	(1,138)	$	(1,356)	$	(2,494)

Reclassification Accumulated Other Comprehensive Income

Reclassifications out of accumulated comprehensive income for the three months ended September 30, 2014 are as follows:

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	(228)	Net securities gains (losses)
Tax effect		90	Income tax expense
		(138)	Net of tax
Amortization of defined benefit pension items		(49)	Salaries and employee benefits
Tax effect		20	Income tax expense
		(29)	Net of tax
Total reclassifications for the period	$	(167)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	106	Net securities gains (losses)
Tax effect		(43)	Income tax expense
		63	Net of tax
Amortization of defined benefit pension items		(62)	Salaries and employee benefits
Tax effect		25	Income tax expense
		(37)	Net of tax
Total reclassifications for the period	$	26	Net of tax

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	(224)	Net securities gains (losses)
Tax effect		90	Income tax expense
		(134)	Net of tax
Amortization of defined benefit pension items		(148)	Salaries and employee benefits
Tax effect		60	Income tax expense
		(88)	Net of tax
Total reclassifications for the period	$	(222)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	107	Net securities gains (losses)
Tax effect		(43)	Income tax expense
		64	Net of tax
Amortization of defined benefit pension items		(183)	Salaries and employee benefits
Tax effect		74	Income tax expense
		(109)	Net of tax
Total reclassifications for the period	$	(45)	Net of tax

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Reclassification Adjustment) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Amount Reclassified From Accumulated Other Comprehensive Income [Member]	Sep. 30, 2013 Amount Reclassified From Accumulated Other Comprehensive Income [Member]	Sep. 30, 2014 Amount Reclassified From Accumulated Other Comprehensive Income [Member]	Sep. 30, 2013 Amount Reclassified From Accumulated Other Comprehensive Income [Member]
Unrealized gains and losses on available-for-sale securities
Net securities gains (losses)			$ (228)	$ 106	$ (224)	$ 107
Income tax expense	(134)	64	90	(43)	90	(43)
Net of tax			(138)	63	(134)	64
Amortization of defined benefit pension items
Salaries and employee benefits			(49)	(62)	(148)	(183)
Income tax expense	(88)	(145)	20	25	60	74
Net of tax			(29)	(37)	(88)	(109)
Total reclassifications for the period	$ (222)	$ (81)	$ (167)	$ 26	$ (222)	$ (45)

XML

FAIR VALUE DISCLOSURES (Assets and Liabilities Measured At Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets
Mortgage-backed securities	$ 371,746
Total securities	473,075	468,967
Mortgage banking derivative	938	367
Liabilities
Mortgage banking derivative	940	592
Fair Value, Measurements, Recurring [Member]
Assets
U.S. Treasury securities	985	1,017
Mortgage-backed securities	371,746	371,977
State and municipal securities	100,344	95,973
Total securities	473,075	468,967
Mortgage banking derivative	222	142
Interest rate swap derivative	938	627
Total assets	474,235	469,736
Liabilities
Mortgage banking derivative	8	2
Interest rate swap derivative	940	592
Total liabilities	948	594
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Assets
U.S. Treasury securities	985	1,017
Mortgage-backed securities	0	0
State and municipal securities	0	0
Total securities	985	1,017
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	985	1,017
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Assets
U.S. Treasury securities	0	0
Mortgage-backed securities	371,746	371,977
State and municipal securities	99,483	94,998
Total securities	471,229	466,975
Mortgage banking derivative	222	142
Interest rate swap derivative	938	627
Total assets	472,389	467,744
Liabilities
Mortgage banking derivative	8	2
Interest rate swap derivative	940	592
Total liabilities	948	594
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Assets
U.S. Treasury securities	0	0
Mortgage-backed securities	0	0
State and municipal securities	861	975
Total securities	861	975
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total assets	861	975
Liabilities
Mortgage banking derivative	0	0
Interest rate swap derivative	0	0
Total liabilities	$ 0	$ 0

XML

SECURITIES (Schedule Of Available Sale Of Securities By Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Maturities of Available-for-sale Debt Securities [Abstract]
Due in one year or less, Amortized Cost	$ 4,564
Due after one year through five years, Amortized Cost	18,257
Due after five years through ten years, Amortized Cost	45,045
Due after ten years, Amortized Cost	30,104
Available for sale securities with maturities, Amortized cost	97,970
Mortgage-backed securities, Amortized Cost	368,935
Total debt securities, Amortized cost	466,905	471,000
Due in one year or less, Fair Value	4,603
Due after one year through five years, Fair Value	19,273
Due after five years through ten years, Fair Value	46,872
Due after ten years, Fair Value	30,581
Available for sale securities with maturities fair value, Fair Value	101,329
Mortgage-backed securities, Fair Value	371,746
Total debt securities	$ 473,075	$ 468,967

XML

SECURITIES (Schedule Of Sales Of Securities Available For Sale) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Sales of securities available for sale [Abstract]
Proceeds	$ 13,766	$ 29,995	$ 13,766	$ 29,995
Gross gains	3	1,077	3	1,077
Gross losses	$ 231	$ 972	$ 231	$ 972

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net income	$ 32,735	$ 28,251
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	2,507	2,174
Net (gain) loss on sale and write down of other real estate owned	(85)	8
Amortization of intangible assets	0	35
Amortization of loan servicing rights	392	453
Net change in loan servicing rights valuation allowance	0	(39)
Loans originated for sale	(38,682)	(68,378)
Net gain on sales of loans	(826)	(2,193)
Proceeds from sale of loans	39,254	78,221
Net gain on sales of premises and equipment	11	12
Net (gain) loss on sales and calls of securities available for sale	224	(107)
Net securities amortization	4,199	7,097
Stock based compensation expense	2,267	1,365
Earnings on life insurance	(1,082)	(1,168)
Tax benefit of stock option exercises	(36)	(77)
Net change:
Interest receivable and other assets	(1,664)	5,898
Interest payable and other liabilities	436	(1,368)
Total adjustments	6,915	21,933
Net cash from operating activities	39,650	50,184
Cash flows from investing activities:
Proceeds from sale of securities available for sale	13,766	29,996
Proceeds from maturities, calls and principal paydowns of securities available for sale	44,562	97,229
Purchases of securities available for sale	(58,655)	(142,011)
Purchase of life insurance	(157)	(117)
Proceeds from loans sold to others	4,307	0
Net increase in total loans	(174,553)	(136,944)
Proceeds from sales of land, premises and equipment	6	1
Purchases of land, premises and equipment	(3,712)	(5,861)
Proceeds from sales of other real estate	1,326	621
Proceeds from life insurance	778	0
Net cash from investing activities	(172,332)	(157,086)
Cash flows from financing activities:
Net increase (decrease) in total deposits	343,604	(136,930)
Net increase (decrease) in short-term borrowings	(193,298)	114,076
Payments on long-term borrowings	(2)	(15,001)
Common dividends paid	(10,079)	(6,244)
Preferred dividends paid	(13)	(13)
Proceeds (payments) related to equity incentive plans	(6)	498
Purchase of treasury stock	(427)	(381)
Net cash from financing activities	139,779	(43,995)
Net change in cash and cash equivalents	7,097	(150,897)
Cash and cash equivalents at beginning of the period	63,105	232,237
Cash and cash equivalents at end of the period	70,202	81,340
Cash paid during the period for:
Interest	11,235	14,673
Income taxes	16,535	13,180
Supplemental non-cash disclosures:
Loans transferred to other real estate owned	$ 1,011	$ 108

XML

SECURITIES (Schedule Of Available Sale Of Securities Continuous Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	$ 66,048	$ 202,389
Less than 12 months, Unrealized Losses	(522)	(7,546)
12 months or more, Fair Value	131,060	42,130
12 months or more, Unrealized Losses	(3,807)	(2,401)
Total Fair Value	197,108	244,519
Total Unrealized Losses	(4,329)	(9,947)
Agency Residential Mortgage-Backed Securities [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	65,582	177,779
Less than 12 months, Unrealized Losses	(507)	(6,444)
12 months or more, Fair Value	113,996	34,093
12 months or more, Unrealized Losses	(3,292)	(1,491)
Total Fair Value	179,578	211,872
Total Unrealized Losses	(3,799)	(7,935)
State and Municipal Securities [Member]
Securities with unrealized losses [Abstract]
Less than 12 months, Fair Value	466	24,610
Less than 12 months, Unrealized Losses	(15)	(1,102)
12 months or more, Fair Value	17,064	8,037
12 months or more, Unrealized Losses	(515)	(910)
Total Fair Value	17,530	32,647
Total Unrealized Losses	$ (530)	$ (2,012)

XML

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	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	1	5	10
Pre-Modification Outstanding Recorded Investment	$ 929	$ 3,072	$ 2,515
Post-Modification Outstanding Recorded Investment	1,000	3,143	2,526
Interest Rate Reductions [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		1	8
Pre-Modification Outstanding Recorded Investment		89	227
Post-Modification Outstanding Recorded Investment		95	221
Principal and Interest Forgiveness [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans			2
Principal and Interest Forgiveness [Member] | Interest [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment			164
Post-Modification Outstanding Recorded Investment			149
Principal and Interest Forgiveness [Member] | Principal [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Pre-Modification Outstanding Recorded Investment			156
Post-Modification Outstanding Recorded Investment			161
Modified Repayment Terms [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	1	4
Extension period for modified repayment terms	24 months
Modified Repayment Terms [Member] | Minimum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		12 years
Modified Repayment Terms [Member] | Maximum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		24 years
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans		2
Pre-Modification Outstanding Recorded Investment		433
Post-Modification Outstanding Recorded Investment		433
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
Pre-Modification Outstanding Recorded Investment		0
Post-Modification Outstanding Recorded Investment		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		2
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Modified Repayment Terms [Member] | Minimum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		12 years
Commercial and Industrial Loans [Member] | Non Working Capital Loans [Member] | Modified Repayment Terms [Member] | Maximum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		15 years
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
Pre-Modification Outstanding Recorded Investment			2,198
Post-Modification Outstanding Recorded Investment			2,198
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
Pre-Modification Outstanding Recorded Investment			85
Post-Modification Outstanding Recorded Investment			63
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
Post-Modification Outstanding Recorded Investment			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]
Number of Loans			0
Pre-Modification Outstanding Recorded Investment			0
Post-Modification Outstanding Recorded Investment			0
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans	1	3
Pre-Modification Outstanding Recorded Investment	929	2,639
Post-Modification Outstanding Recorded Investment	1,000	2,710
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
Pre-Modification Outstanding Recorded Investment		89
Post-Modification Outstanding Recorded Investment		95
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	1	2
Extension period for modified repayment terms	24 months
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Modified Repayment Terms [Member] | Minimum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		12 years
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member] | Modified Repayment Terms [Member] | Maximum [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Extension period for modified repayment terms		24 years
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Troubled Debt Restructurings Modified During Period [Abstract]
Number of Loans			4
Pre-Modification Outstanding Recorded Investment			317
Post-Modification Outstanding Recorded Investment			328
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
Pre-Modification Outstanding Recorded Investment			142
Post-Modification Outstanding Recorded Investment			158
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
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
Post-Modification Outstanding Recorded Investment			149
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
Post-Modification Outstanding Recorded Investment			$ 161

XML

OFFSETTING ASSETS AND LIABILITIES (Derivatives Assets And Liability) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Off Setting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	$ 938	$ 627
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	938	627
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	(260)
Net Amount	938	367
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	61,518	105,468
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	61,518	105,468
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	(60,578)	(104,876)
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0	0
Net Amount	940	592
Interest Rate Swap [Member]
Off Setting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	938	627
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets presented in the Statement of Financial Position	938	627
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	(260)
Net Amount	938	367
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	940	592
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	940	592
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0	0
Net Amount	940	592
Repurchase Agreements [Member]
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	60,578	104,876
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities presented in the Statement of Financial Position	60,578	104,876
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	(60,578)	(104,876)
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	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 58,945	$ 55,727
Short-term investments	11,257	7,378
Total cash and cash equivalents	70,202	63,105
Securities available for sale (carried at fair value)	473,075	468,967
Real estate mortgage loans held for sale	1,727	1,778
Loans, net of allowance for loan losses of $46,387 and $48,797	2,655,536	2,486,301
Land, premises and equipment, net	40,523	39,335
Bank owned life insurance	63,283	62,883
Federal Reserve and Federal Home Loan Bank stock	10,732	10,732
Accrued interest receivable	9,042	8,577
Goodwill	4,970	4,970
Other assets	26,813	29,116
Total assets	3,355,903	3,175,764
LIABILITIES
Noninterest bearing deposits	515,696	479,606
Interest bearing deposits	2,373,976	2,066,462
Total deposits	2,889,672	2,546,068
Short-term borrowings
Federal funds purchased	8,000	11,000
Securities sold under agreements to repurchase	60,578	104,876
Other short-term borrowings	0	146,000
Total short-term borrowings	68,578	261,876
Long-term borrowings	35	37
Subordinated debentures	30,928	30,928
Accrued interest payable	2,748	2,918
Other liabilities	11,993	11,973
Total liabilities	3,003,954	2,853,800
STOCKHOLDERS' EQUITY
Common stock: 90,000,000 shares authorized, no par value 16,548,074 shares issued and 16,463,796 outstanding as of September 30, 2014 16,475,716 shares issued and 16,377,449 outstanding as of December 31, 2013	95,505	93,249
Retained earnings	255,751	233,108
Accumulated other comprehensive income/(loss)	2,587	(2,494)
Treasury stock, at cost (2014 - 84,278 shares, 2013 - 98,267 shares)	(1,983)	(1,988)
Total stockholders' equity	351,860	321,875
Noncontrolling interest	89	89
Total equity	351,949	321,964
Total liabilities and equity	$ 3,355,903	$ 3,175,764

XML

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	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	$ 0	$ 2,859
Transfers into Level 3	0	3,334
Changes in fair value of securities included in other comprehensive income	0	(158)
Principal payments	0	(2,183)
Sales	0	(3,852)
Balance	0	0
State and Municipal Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	975	988
Transfers into Level 3	0	0
Changes in fair value of securities included in other comprehensive income	11	(11)
Principal payments	(125)	0
Sales	0	0
Balance	$ 861	$ 977

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Balance at Dec. 31, 2012	$ 297,739	$ 90,039	$ 203,654	$ 5,689	$ (1,643)
Balance (in shares) at Dec. 31, 2012		16,290,136
Comprehensive income:
Net income	28,251		28,251
Other comprehensive income (loss), net of tax	(7,141)			(7,141)
Cash dividends declared	(6,257)		(6,257)
Treasury shares purchased under deferred directors' plan	0	381			(381)
Treasury shares purchased under deferred directors' plan (in shares)		(13,652)
Treasury stock sold and distributed under deferred directors' plan	0	(54)			54
Treasury stock sold and distributed under deferred directors' plan (in shares)		3,018
Stock activity under equity compensation plans	498	498
Stock activity under equity compensation plans (in shares)		81,909
Stock based compensation expense	1,365	1,365
Balance at Sep. 30, 2013	314,455	92,229	225,648	(1,452)	(1,970)
Balance (in shares) at Sep. 30, 2013		16,361,411
Balance at Dec. 31, 2013	321,875	93,249	233,108	(2,494)	(1,988)
Balance (in shares) at Dec. 31, 2013		16,377,449
Comprehensive income:
Net income	32,735		32,735
Other comprehensive income (loss), net of tax	5,081			5,081
Cash dividends declared	(10,092)		(10,092)
Treasury shares purchased under deferred directors' plan	0	427			(427)
Treasury shares purchased under deferred directors' plan (in shares)		(11,042)
Treasury stock sold and distributed under deferred directors' plan	0	(432)			432
Treasury stock sold and distributed under deferred directors' plan (in shares)		25,031
Stock activity under equity compensation plans	(6)	(6)
Stock activity under equity compensation plans (in shares)		72,358
Stock based compensation expense	2,267	2,267
Balance at Sep. 30, 2014	$ 351,860	$ 95,505	$ 255,751	$ 2,587	$ (1,983)
Balance (in shares) at Sep. 30, 2014		16,463,796

XML

LOANS (Total Loans Outstanding) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	$ 348,444	$ 323,155
Subtotal	2,702,334	2,535,728
Less: Allowance for loan losses	(46,387)	(48,797)	(45,605)	(49,804)	(50,635)	(51,445)
Net deferred loan fees	(411)	(630)
Loans, net	2,655,536	2,486,301
Percentage of Total consumer loans	12.90%	12.70%
Percentage of Subtotal	100.00%	100.00%
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	2,353,890	2,212,573
Percentage of Total commercial loans	87.10%	87.30%
Other Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	47,967	46,125
Percentage of Total consumer loans	1.80%	1.80%
Commercial and Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	1,031,441	901,567
Less: Allowance for loan losses	(21,985)	(21,005)	(20,922)	(21,497)	(21,879)	(22,342)
Percentage of Total commercial loans	38.20%	35.60%
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	517,916	457,690
Percentage of Total commercial loans	19.20%	18.00%
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	513,525	443,877
Percentage of Total commercial loans	19.00%	17.50%
Commercial Real Estate and Multi-family Residential Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	1,035,654	986,207
Percentage of Total commercial loans	38.30%	38.90%
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	153,118	157,630
Percentage of Total commercial loans	5.70%	6.20%
Commercial Real Estate and Multi-family Residential Loans [Member] | Owner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	396,207	370,386
Percentage of Total commercial loans	14.70%	14.60%
Commercial Real Estate and Multi-family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	401,454	394,748
Percentage of Total commercial loans	14.90%	15.60%
Commercial Real Estate and Multi-family Residential Loans [Member] | Multifamily Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	84,875	63,443
Percentage of Total commercial loans	3.10%	2.50%
Agri-business and Agricultural Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	209,719	254,029
Less: Allowance for loan losses	(1,375)	(1,682)	(1,404)	(1,533)	(1,517)	(1,403)
Percentage of Total commercial loans	7.80%	10.00%
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	131,516	133,458
Percentage of Total commercial loans	4.90%	5.30%
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	78,203	120,571
Percentage of Total commercial loans	2.90%	4.80%
Other Commerical Loans [Member] | Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total commercial loans	77,076	70,770
Percentage of Total commercial loans	2.90%	2.80%
Consumer 1-4 Family Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	300,477	277,030
Percentage of Total consumer loans	11.10%	10.90%
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total consumer loans	143,892	125,444
Percentage of Total consumer loans	5.30%	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	150,859	146,946
Percentage of Total consumer loans	5.60%	5.80%
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	$ 5,726	$ 4,640
Percentage of Total consumer loans	0.20%	0.20%

XML

LOANS (Tables)

9 Months Ended

Sep. 30, 2014

Loans [Abstract]

Schedule of loans

	September 30,				December 31,
(dollars in thousands)	2014				2013
Commercial and industrial loans:
Working capital lines of credit loans	$	517,916	19.2	%	$	457,690	18.0	%
Non-working capital loans		513,525	19.0			443,877	17.5
Total commercial and industrial loans		1,031,441	38.2			901,567	35.6
Commercial real estate and multi-family residential loans:
Construction and land development loans		153,118	5.7			157,630	6.2
Owner occupied loans		396,207	14.7			370,386	14.6
Nonowner occupied loans		401,454	14.9			394,748	15.6
Multifamily loans		84,875	3.1			63,443	2.5
Total commercial real estate and multi-family residential loans		1,035,654	38.3			986,207	38.9
Agri-business and agricultural loans:
Loans secured by farmland		131,516	4.9			133,458	5.3
Loans for agricultural production		78,203	2.9			120,571	4.8
Total agri-business and agricultural loans		209,719	7.8			254,029	10.0
Other commercial loans		77,076	2.9			70,770	2.8
Total commercial loans		2,353,890	87.1			2,212,573	87.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		143,892	5.3			125,444	4.9
Open end and junior lien loans		150,859	5.6			146,946	5.8
Residential construction and land development loans		5,726	0.2			4,640	0.2
Total consumer 1-4 family mortgage loans		300,477	11.1			277,030	10.9
Other consumer loans		47,967	1.8			46,125	1.8
Total consumer loans		348,444	12.9			323,155	12.7
Subtotal		2,702,334	100.0	%		2,535,728	100.0	%
Less:  Allowance for loan losses		(46,387)				(48,797)
Net deferred loan fees		(411)				(630)
Loans, net	$	2,655,536			$	2,486,301

XML

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		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 45,605	$ 50,635	$ 48,797	$ 51,445
Provision for loan losses	0	0	0	0
Loans charged-off	(269)	(1,296)	(3,675)	(2,871)
Recoveries	1,051	465	1,265	1,230
Net loans (charged-off)recovered	782	(831)	(2,410)	(1,641)
Ending balance	46,387	49,804	46,387	49,804
Ending allowance balance attributable to loans:
Individually evaluated for impairment	6,520		6,520		9,316
Collectively evaluated for impairment	39,867		39,867		39,481
Total ending allowance balance	46,387	49,804	46,387	49,804
Loans:
Loans individually evaluated for impairment	34,144		34,144		43,227
Loans collectively evaluated for impairment	2,667,779		2,667,779		2,491,871
Total ending loan balance	2,701,923		2,701,923		2,535,098
Commercial and Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	20,922	21,879	21,005	22,342
Provision for loan losses	919	138	1,296	(569)
Loans charged-off	(147)	(595)	(660)	(738)
Recoveries	291	75	344	462
Net loans (charged-off)recovered	144	(520)	(316)	(276)
Ending balance	21,985	21,497	21,985	21,497
Ending allowance balance attributable to loans:
Individually evaluated for impairment	4,017		4,017		4,144
Collectively evaluated for impairment	17,968		17,968		16,861
Total ending allowance balance	21,985	21,497	21,985	21,497
Loans:
Loans individually evaluated for impairment	16,771		16,771		16,196
Loans collectively evaluated for impairment	1,014,911		1,014,911		885,651
Total ending loan balance	1,031,682		1,031,682		901,847
Commercial Real Estate and Multi-Family Residential Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	15,975	20,098	18,557	20,812
Provision for loan losses	(1,274)	(544)	(1,334)	(627)
Loans charged-off	0	(455)	(2,553)	(1,361)
Recoveries	670	73	701	348
Net loans (charged-off)recovered	670	(382)	(1,852)	(1,013)
Ending balance	15,371	19,172	15,371	19,172
Ending allowance balance attributable to loans:
Individually evaluated for impairment	1,875		1,875		4,598
Collectively evaluated for impairment	13,496		13,496		13,959
Total ending allowance balance	15,371	19,172	15,371	19,172
Loans:
Loans individually evaluated for impairment	12,970		12,970		22,204
Loans collectively evaluated for impairment	1,021,391		1,021,391		962,673
Total ending loan balance	1,034,361		1,034,361		984,877
Agri-business and Agricultural Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1,404	1,517	1,682	1,403
Provision for loan losses	(34)	(185)	(323)	125
Loans charged-off	0	0	0	(200)
Recoveries	5	201	16	205
Net loans (charged-off)recovered	5	201	16	5
Ending balance	1,375	1,533	1,375	1,533
Ending allowance balance attributable to loans:
Individually evaluated for impairment	15		15		38
Collectively evaluated for impairment	1,360		1,360		1,644
Total ending allowance balance	1,375	1,533	1,375	1,533
Loans:
Loans individually evaluated for impairment	486		486		1,114
Loans collectively evaluated for impairment	209,322		209,322		253,011
Total ending loan balance	209,808		209,808		254,125
Other Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	234	264	391	240
Provision for loan losses	76	(23)	(81)	1
Loans charged-off	0	0	0	0
Recoveries	0	0	0	0
Net loans (charged-off)recovered	0	0	0	0
Ending balance	310	241	310	241
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	310		310		391
Total ending allowance balance	310	241	310	241
Loans:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	77,075		77,075		70,766
Total ending loan balance	77,075		77,075		70,766
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,275	2,823	3,045	2,682
Provision for loan losses	178	409	587	709
Loans charged-off	(60)	(126)	(282)	(315)
Recoveries	59	71	102	101
Net loans (charged-off)recovered	(1)	(55)	(180)	(214)
Ending balance	3,452	3,177	3,452	3,177
Ending allowance balance attributable to loans:
Individually evaluated for impairment	539		539		479
Collectively evaluated for impairment	2,913		2,913		2,566
Total ending allowance balance	3,452	3,177	3,452	3,177
Loans:
Loans individually evaluated for impairment	3,785		3,785		3,594
Loans collectively evaluated for impairment	297,316		297,316		273,812
Total ending loan balance	301,101		301,101		277,406
Other Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	487	587	608	609
Provision for loan losses	68	179	(11)	225
Loans charged-off	(62)	(120)	(180)	(257)
Recoveries	26	45	102	114
Net loans (charged-off)recovered	(36)	(75)	(78)	(143)
Ending balance	519	691	519	691
Ending allowance balance attributable to loans:
Individually evaluated for impairment	74		74		57
Collectively evaluated for impairment	445		445		551
Total ending allowance balance	519	691	519	691
Loans:
Loans individually evaluated for impairment	132		132		119
Loans collectively evaluated for impairment	47,764		47,764		45,958
Total ending loan balance	47,896		47,896		46,077
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,308	3,467	3,509	3,357
Provision for loan losses	67	26	(134)	136
Loans charged-off	0	0	0	0
Recoveries	0	0	0	0
Net loans (charged-off)recovered	0	0	0	0
Ending balance	3,375	3,493	3,375	3,493
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0		0
Collectively evaluated for impairment	3,375		3,375		3,509
Total ending allowance balance	3,375	3,493	3,375	3,493
Loans:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	0		0		0
Total ending loan balance	$ 0		$ 0		$ 0

XML

FAIR VALUE DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2014

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:

	September 30, 2014
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	985	$	0	$	0	$	985
Mortgage-backed securities		0		371,746		0		371,746
State and municipal securities		0		99,483		861		100,344
Total Securities		985		471,229		861		473,075
Mortgage banking derivative		0		222		0		222
Interest rate swap derivative		0		938		0		938
Total assets	$	985	$	472,389	$	861	$	474,235
Liabilities
Mortgage banking derivative		0		8		0		8
Interest rate swap derivative		0		940		0		940
Total liabilities	$	0	$	948	$	0	$	948

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,017	$	0	$	0	$	1,017
Mortgage-backed securities		0		371,977		0		371,977
State and municipal securities		0		94,998		975		95,973
Total securities		1,017		466,975		975		468,967
Mortgage banking derivative		0		142		0		142
Interest rate swap derivative		0		627		0		627
Total assets	$	1,017	$	467,744	$	975	$	469,736
Liabilities
Mortgage banking derivative		0		2		0		2
Interest rate swap derivative		0		592		0		592
Total liabilities	$	0	$	594	$	0	$	594

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 nine months ended September 30, 2014 and 2013:

	Non-Agency Residential
	Mortgage-Backed Securities				State and Municipal Securities
(dollars in thousands)	2014		2013		2014		2013
Balance of recurring Level 3 assets at January 1	$	0	$	2,859	$	975	$	988
Transfers into Level 3		0		3,334		0		0
Changes in fair value of securities
included in other comprehensive income		0		(158)		11		(11)
Principal payments		0		(2,183)		(125)		0
Sales		0		(3,852)		0		0
Balance of recurring Level 3 assets at September 30	$	0	$	0	$	861	$	977

Fair Value Measurements, Recurring, Valuation Techniques

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	9/30/2014		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	861	Price to type, par, call	Discount to benchmark index	0-7%
					(2.80%)

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	12/31/2013		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	975	Price to type, par, call	Discount to benchmark index	0-6%
					(2.21%)

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:

	September 30, 2014
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	868	$	868
Non-working capital loans		0		0		3,141		3,141
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		824		824
Owner occupied loans		0		0		3,544		3,544
Nonowner occupied loans		0		0		3,127		3,127
Agri-business and agricultural loans:
Loans secured by farmland		0		0		188		188
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		493		493
Open end and junior lien loans		0		0		43		43
Other consumer loans		0		0		33		33
Total impaired loans	$	0	$	0	$	12,261	$	12,261
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	12,336	$	12,336

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	920	$	920
Non-working capital loans		0		0		3,097		3,097
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		2,210		2,210
Owner occupied loans		0		0		3,958		3,958
Nonowner occupied loans		0		0		8,938		8,938
Agri-business and agricultural loans:
Loans secured by farmland		0		0		472		472
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		409		409
Open end and junior lien loans		0		0		174		174
Other consumer loans		0		0		50		50
Total impaired loans	$	0	$	0	$	20,228	$	20,228
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	20,303	$	20,303

Fair Value Measured On Nonrecurring Basis Valuation Techniques

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2014:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	4,009	Collateral based	Discount to reflect	38	%	(15% - 66%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		7,495	Collateral based	Discount to reflect	17	%	(7% - 42%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		188	Collateral based	Discount to reflect	7	%
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		536	Collateral based	Discount to reflect	29	%	(5% - 78%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		33	Collateral based	Discount to reflect	39	%	(30% - 48%)
			measurements	current market conditions
				and ultimate collectability
Other real estate owned		75	Appraisals	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, 2013:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	4,017	Collateral based	Discount to reflect	29	%	(3% - 93%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		15,106	Collateral based	Discount to reflect	22	%	(3% - 45%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		472	Collateral based	Discount to reflect	8	%	(4% - 12%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		583	Collateral based	Discount to reflect	33	%	(6% - 77%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		50	Collateral based	Discount to reflect	53	%	(28% - 98%)
			measurements	current market conditions
				and ultimate collectability
Other real estate owned		75	Appraisals	Discount to reflect	49	%
				current market conditions
				and ultimate collectability

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.

		September 30, 2014
		Carrying		Estimated Fair Value
(dollars in thousands)		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	70,202	$	70,202	$	0	$	0	$	70,202
Securities available for sale		473,075		985		471,229		861		473,075
Real estate mortgages held for sale		1,727		0		1,761		0		1,761
Loans, net		2,655,536		0		0		2,639,252		2,639,252
Federal Home Loan Bank stock		7,312		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		9,042		5		1,963		7,074		9,042
Financial Liabilities:
Certificates of deposit		(985,251)		0		(992,377)		0		(992,377)
All other deposits		(1,904,421)		(1,904,421)		0		0		(1,904,421)
Securities sold under agreements
to repurchase		(60,578)		0		(60,578)		0		(60,578)
Federal funds purchased		(8,000)		0		(8,000)		0		(8,000)
Long-term borrowings		(35)		0		(41)		0		(41)
Subordinated debentures		(30,928)		0		0		(31,220)		(31,220)
Standby letters of credit		(337)		0		0		(337)		(337)
Accrued interest payable		(2,748)		(105)		(2,640)		(3)		(2,748)

		December 31, 2013
		Carrying		Estimated Fair Value
(dollars in thousands)		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	63,105	$	63,105	$	0	$	0	$	63,105
Securities available for sale		468,967		1,017		466,975		975		468,967
Real estate mortgages held for sale		1,778		0		1,800		0		1,800
Loans, net		2,486,301		0		0		2,490,593		2,490,593
Federal Home Loan Bank stock		7,312		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		8,577		0		2,297		6,280		8,577
Financial Liabilities:
Certificates of deposit		(727,809)		0		(736,088)		0		(736,088)
All other deposits		(1,818,259)		(1,818,259)		0		0		(1,818,259)
Securities sold under agreements
to repurchase		(104,876)		0		(104,876)		0		(104,876)
Federal funds purchased		(11,000)		0		(11,000)		0		(11,000)
Other short-term borrowings		(146,000)		0		(146,002)		0		(146,002)
Long-term borrowings		(37)		0		(43)		0		(43)
Subordinated debentures		(30,928)		0		0		(31,217)		(31,217)
Standby letters of credit		(312)		0		0		(312)		(312)
Accrued interest payable		(2,918)		(125)		(2,790)		(3)		(2,918)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Common stock cash dividends declared, per share (in dollars per share)	$ 0.61	$ 0.38

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Valuation allowance	$ 46,387	$ 48,797
EQUITY
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares issued (in shares)	16,548,074	16,475,716
Common stock, shares outstanding (in shares)	16,463,796	16,377,449
Treasury stock, at cost	84,278	98,267

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes within each classification of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014 and the year ended December 31, 2013:

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at December 31, 2013	$	(1,138)	$	(1,356)	$	(2,494)
Other comprehensive income before reclassification		4,828		31		4,859
Amounts reclassified from accumulated other comprehensive income (loss)		134		88		222
Net current period other comprehensive income		4,962		119		5,081
Balance at September 30, 2014	$	3,824	$	(1,237)	$	2,587

	Unrealized
	Gains and
	Losses on		Defined
	Available-		Benefit
	for-Sales		Pension
(dollars in thousands)	Securities		Items		Total
Balance at December 31, 2012	$	7,517	$	(1,828)	$	5,689
Other comprehensive income before reclassification		(8,591)		327		(8,264)
Amounts reclassified from accumulated other comprehensive income (loss)		(64)		145		81
Net current period other comprehensive income		(8,655)		472		(8,183)
Balance at December 31, 2013	$	(1,138)	$	(1,356)	$	(2,494)

Reclassifications out of accumulated comprehensive income for the three months ended September 30, 2014 are as follows:

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	(228)	Net securities gains (losses)
Tax effect		90	Income tax expense
		(138)	Net of tax
Amortization of defined benefit pension items		(49)	Salaries and employee benefits
Tax effect		20	Income tax expense
		(29)	Net of tax
Total reclassifications for the period	$	(167)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	106	Net securities gains (losses)
Tax effect		(43)	Income tax expense
		63	Net of tax
Amortization of defined benefit pension items		(62)	Salaries and employee benefits
Tax effect		25	Income tax expense
		(37)	Net of tax
Total reclassifications for the period	$	26	Net of tax

Reclassifications out of accumulated comprehensive income for the nine months ended September 30, 2014 are as follows:

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	(224)	Net securities gains (losses)
Tax effect		90	Income tax expense
		(134)	Net of tax
Amortization of defined benefit pension items		(148)	Salaries and employee benefits
Tax effect		60	Income tax expense
		(88)	Net of tax
Total reclassifications for the period	$	(222)	Net of tax

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

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
(dollars in thousands)
Unrealized gains and losses on available-for-sale securities	$	107	Net securities gains (losses)
Tax effect		(43)	Income tax expense
		64	Net of tax
Amortization of defined benefit pension items		(183)	Salaries and employee benefits
Tax effect		74	Income tax expense
		(109)	Net of tax
Total reclassifications for the period	$	(45)	Net of tax

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Registrant Name	LAKELAND FINANCIAL CORP
Entity Central Index Key	0000721994
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	LKFN
Entity Common Stock, Shares Outstanding		16,548,074

XML

NEW ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2014

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NOTE 10.  NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Management is evaluating the impact of adopting this new accounting standard on our financial statements.

In January 2014, the FASB issued updated guidance related to the accounting for investments in qualified affordable housing projects. The amendment permits reporting entities to make an accounting policy election to account for investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). To qualify for the proportional amortization method, all of the following conditions must be met: 1. It is probable that the tax credits allocable to the investor will be available. 2. The investor does not have the ability to exercise significant influence over the operating and financial policies of the limited liability entity. 3. Substantially all of the projected benefits are from tax credits and other tax benefits (for example, tax benefits generated from the operating losses of the investment). 4. The investor’s projected yield based solely on the cash flows from the tax credits and other tax benefits is positive. 5. The investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the investor’s liability is limited to its capital investment. The decision to apply the proportional amortization method of accounting is an accounting policy decision that should be applied consistently to all qualifying affordable housing project investments rather than a decision to be applied to individual investments. For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment in accordance with Subtopic 970-323. The new requirements are effective for public companies in fiscal years, and interim periods within those years, beginning after December 15,

2014. Adopting this standard is not expected to have a significant impact on the Company’s financial condition or results of operations.

In January 2014, the FASB issued updated guidance related to the reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The new requirements are effective for public companies in fiscal years, and interim periods within those years, beginning after December 15, 2014. Adopting this standard is not expected to have a significant impact on the Company’s financial condition or results of operations.

XML

CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest and fees on loans
Taxable	$ 26,713	$ 24,595	$ 78,317	$ 73,469
Tax exempt	125	100	348	304
Interest and dividends on securities
Taxable	2,075	1,463	6,114	3,560
Tax exempt	820	802	2,455	2,307
Interest on short-term investments	12	10	31	46
Total interest income	29,745	26,970	87,265	79,686
Interest on deposits	3,424	3,589	9,946	12,365
Interest on borrowings
Short-term	96	146	351	349
Long-term	260	263	769	831
Total interest expense	3,780	3,998	11,066	13,545
NET INTEREST INCOME	25,965	22,972	76,199	66,141
Provision for loan losses	0	0	0	0
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	25,965	22,972	76,199	66,141
NONINTEREST INCOME
Wealth advisory fees	1,030	980	3,046	2,895
Investment brokerage fees	699	1,503	2,739	3,449
Service charges on deposit accounts	2,474	2,325	6,973	6,548
Loan, insurance and service fees	1,972	1,524	5,187	4,792
Merchant card fee income	407	356	1,137	925
Bank owned life insurance income	372	373	1,082	1,184
Other income	881	483	2,442	1,753
Mortgage banking income	264	159	508	1,206
Net securities gains (losses)	(228)	106	(224)	107
Total noninterest income	7,871	7,809	22,890	22,859
NONINTEREST EXPENSE
Salaries and employee benefits	9,856	9,437	29,310	27,493
Net occupancy expense	872	813	2,885	2,532
Equipment costs	812	758	2,346	2,021
Data processing fees and supplies	1,557	1,443	4,541	4,115
Corporate and business development	474	443	1,371	1,292
FDIC insurance and other regulatory fees	481	463	1,446	1,384
Professional fees	705	1,018	2,241	2,366
Other expense	1,903	1,891	5,394	5,047
Total noninterest expense	16,660	16,266	49,534	46,250
INCOME BEFORE INCOME TAX EXPENSE	17,176	14,515	49,555	42,750
Income tax expense	5,665	4,746	16,820	14,499
NET INCOME	$ 11,511	$ 9,769	$ 32,735	$ 28,251
BASIC WEIGHTED AVERAGE COMMON SHARES	16,547,551	16,451,199	16,531,411	16,427,060
BASIC EARNINGS PER COMMON SHARE	$ 0.70	$ 0.59	$ 1.98	$ 1.72
DILUTED WEIGHTED AVERAGE COMMON SHARES	16,775,770	16,634,933	16,769,079	16,581,089
DILUTED EARNINGS PER COMMON SHARE	$ 0.69	$ 0.59	$ 1.95	$ 1.70

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

9 Months Ended

Sep. 30, 2014

Loans [Abstract]

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY 

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended September 30, 2014 and 2013:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Beginning balance	$	20,922	$	15,975	$	1,404	$	234	$	3,275	$	487	$	3,308	$	45,605
Provision for loan losses		919		(1,274)		(34)		76		178		68		67		0
Loans charged-off		(147)		0		0		0		(60)		(62)		0		(269)
Recoveries		291		670		5		0		59		26		0		1,051
Net loans (charged-off)recovered		144		670		5		0		(1)		(36)		0		782
Ending balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387

			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2013
Beginning balance	$	21,879	$	20,098	$	1,517	$	264	$	2,823	$	587	$	3,467	$	50,635
Provision for loan losses		138		(544)		(185)		(23)		409		179		26		0
Loans charged-off		(595)		(455)		0		0		(126)		(120)		0		(1,296)
Recoveries		75		73		201		0		71		45		0		465
Net loans (charged-off)recovered		(520)		(382)		201		0		(55)		(75)		0		(831)
Ending balance	$	21,497	$	19,172	$	1,533	$	241	$	3,177	$	691	$	3,493	$	49,804

The following tables present the activity in the allowance for loan losses by portfolio segment for the nine-month periods ended September 30, 2014 and 2013:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Beginning balance	$	21,005	$	18,557	$	1,682	$	391	$	3,045	$	608	$	3,509	$	48,797
Provision for loan losses		1,296		(1,334)		(323)		(81)		587		(11)		(134)		0
Loans charged-off		(660)		(2,553)		0		0		(282)		(180)		0		(3,675)
Recoveries		344		701		16		0		102		102		0		1,265
Net loans (charged-off)recovered		(316)		(1,852)		16		0		(180)		(78)		0		(2,410)
Ending balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2013
Beginning balance	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Provision for loan losses		(569)		(627)		125		1		709		225		136		0
Loans charged-off		(738)		(1,361)		(200)		0		(315)		(257)		0		(2,871)
Recoveries		462		348		205		0		101		114		0		1,230
Net loans (charged-off)recovered		(276)		(1,013)		5		0		(214)		(143)		0		(1,641)
Ending balance	$	21,497	$	19,172	$	1,533	$	241	$	3,177	$	691	$	3,493	$	49,804

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2014 and December 31, 2013:

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,017	$	1,875	$	15	$	0	$	539	$	74	$	0	$	6,520
Collectively evaluated for impairment		17,968		13,496		1,360		310		2,913		445		3,375		39,867
Total ending allowance balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387
Loans:
Loans individually evaluated for impairment	$	16,771	$	12,970	$	486	$	0	$	3,785	$	132	$	0	$	34,144
Loans collectively evaluated for impairment		1,014,911		1,021,391		209,322		77,075		297,316		47,764		0		2,667,779
Total ending loans balance	$	1,031,682	$	1,034,361	$	209,808	$	77,075	$	301,101	$	47,896	$	0	$	2,701,923

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
December 31, 2013
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,144	$	4,598	$	38	$	0	$	479	$	57	$	0	$	9,316
Collectively evaluated for impairment		16,861		13,959		1,644		391		2,566		551		3,509		39,481
Total ending allowance balance	$	21,005	$	18,557	$	1,682	$	391	$	3,045	$	608	$	3,509	$	48,797
Loans:
Loans individually evaluated for impairment	$	16,196	$	22,204	$	1,114	$	0	$	3,594	$	119	$	0	$	43,227
Loans collectively evaluated for impairment		885,651		962,673		253,011		70,766		273,812		45,958		0		2,491,871
Total ending loans balance	$	901,847	$	984,877	$	254,125	$	70,766	$	277,406	$	46,077	$	0	$	2,535,098

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 September 30, 2014:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	21	$	0
Non-working capital loans		1,679		285		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		528		528		0
Owner occupied loans		337		157		0
Nonowner occupied loans		323		323		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		706		708		0
Open end and junior lien loans		352		352		0
Residential construction loans		133		133		0
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,808		1,807		901
Non-working capital loans		16,821		14,658		3,116
Commercial real estate and multi-family residential loans:
Construction and land development loans		1,391		1,390		382
Owner occupied loans		4,452		4,411		867
Nonowner occupied loans		6,154		6,161		626
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		381		203		15
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,640		2,544		534
Open end and junior lien loans		48		48		5
Residential construction loans		0		0		0
Other consumer loans		131		131		74
Total	$	38,510	$	34,144	$	6,520

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, 2013:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	63	$	63	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		377		196		0
Agri-business and agricultural loans:
Loans secured by farmland		604		604		0
Other commercial loans
Consumer 1-4 family loans:
Closed end first mortgage loans		688		689		0
Open end and junior lien loans		81		81		0
Residential construction loans		150		150		0
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,251		2,641		984
Non-working capital loans		15,345		13,492		3,160
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,795		2,795		585
Owner occupied loans		5,553		4,681		723
Nonowner occupied loans		15,163		14,532		3,290
Agri-business and agricultural loans:
Loans secured by farmland		1,008		510		38
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,469		2,463		442
Open end and junior lien loans		211		211		37
Other consumer loans		118		118		57
Total	$	50,877	$	43,227	$	9,316

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 period ended September 30, 2014:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	0	$	0
Non-working capital loans		290		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		533		0		0
Owner occupied loans		160		0		0
Nonowner occupied loans		327		0		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		284		0		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		695		0		0
Open end and junior lien loans		286		0		0
Residential construction loans		135		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,680		22		18
Non-working capital loans		13,662		127		126
Commercial real estate and multi-family residential loans:
Construction and land development loans		1,679		7		5
Owner occupied loans		3,241		26		29
Nonowner occupied loans		6,485		35		36
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		203		0		0
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,568		17		17
Open end and junior lien loans		48		0		0
Residential construction loans		0		0		0
Other consumer loans		89		1		1
Total	$	32,388	$	235	$	232

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 period ended September 30, 2013:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	64	$	0	$	0
Non-working capital loans		0		0		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		616		0		0
Agri-business and agricultural loans:
Loans secured by farmland		479		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		719		0		0
Open end and junior lien loans		27		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		2,988		12		14
Non-working capital loans		14,017		120		126
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,848		11		20
Owner occupied loans		3,707		20		20
Nonowner occupied loans		19,183		87		86
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		536		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,347		5		6
Open end and junior lien loans		22		0		0
Other consumer loans		99		0		0
Total	$	47,653	$	255	$	272

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 nine-month period ended September 30, 2014:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	186	$	1	$	1
Non-working capital loans		133		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		178		0		0
Owner occupied loans		215		0		0
Nonowner occupied loans		341		0		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		226		0		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		691		0		0
Open end and junior lien loans		170		0		0
Residential construction loans		141		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,893		55		47
Non-working capital loans		13,762		387		388
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,341		37		36
Owner occupied loans		2,956		45		43
Nonowner occupied loans		8,507		104		105
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		411		0		0
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,740		50		53
Open end and junior lien loans		66		0		0
Residential construction loans		0		0		0
Other consumer loans		87		1		1
Total	$	35,045	$	680	$	674

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 nine-month period ended September 30, 2013:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	65	$	0	$	0
Non-working capital loans		11		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans		575		0		0
Agri-business and agricultural loans:
Loans secured by farmland		480		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		275		0		0
Open end and junior lien loans		23		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		3,019		39		41
Non-working capital loans		14,081		391		402
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,860		63		67
Owner occupied loans		3,592		88		96
Nonowner occupied loans		20,960		255		258
Multifamily loans		64		0		0
Agri-business and agricultural loans:
Loans secured by farmland		418		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,461		28		43
Open end and junior lien loans		40		0		0
Other consumer loans		86		1		1
Total	$	50,010	$	865	$	908

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 September 30, 2014 by class of loans:

				30-89		Greater than
		Loans Not		Days		90 Days				Total
(dollars in thousands)		Past Due		Past Due		Past Due		Nonaccrual		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	517,009	$	0	$	0	$	1,105	$	1,105	$	518,114
Non-working capital loans		508,354		102		0		5,112		5,214		513,568
Commercial real estate and multi-family
residential loans:
Construction and land development loans		152,197		0		0		529		529		152,726
Owner occupied loans		393,498		414		0		2,013		2,427		395,925
Nonowner occupied loans		397,246		0		0		3,732		3,732		400,978
Multifamily loans		84,732		0		0		0		0		84,732
Agri-business and agricultural loans:
Loans secured by farmland		131,034		0		0		485		485		131,519
Loans for agricultural production		78,289		0		0		0		0		78,289
Other commercial loans		77,075		0		0		0		0		77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		140,719		1,699		0		1,204		2,903		143,622
Open end and junior lien loans		151,229		139		0		399		538		151,767
Residential construction loans		5,579		0		0		133		133		5,712
Other consumer loans		47,758		83		0		55		138		47,896
Total	$	2,684,719	$	2,437	$	0	$	14,767	$	17,204	$	2,701,923

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, 2013 by class of loans:

				30-89		Greater than
		Loans Not		Days		90 Days				Total
(dollars in thousands)		Past Due		Past Due		Past Due		Nonaccrual		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	456,136	$	0	$	0	$	1,819	$	1,819	$	457,955
Non-working capital loans		440,050		46		0		3,796		3,842		443,892
Commercial real estate and multi-family
residential loans:
Construction and land development loans		156,594		0		0		544		544		157,138
Owner occupied loans		366,955		0		0		3,156		3,156		370,111
Nonowner occupied loans		382,478		0		0		11,758		11,758		394,236
Multifamily loans		63,392		0		0		0		0		63,392
Agri-business and agricultural loans:
Loans secured by farmland		132,347		0		0		1,113		1,113		133,460
Loans for agricultural production		120,665		0		0		0		0		120,665
Other commercial loans		70,766		0		0		0		0		70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		122,370		1,645		0		1,165		2,810		125,180
Open end and junior lien loans		147,123		135		46		291		472		147,595
Residential construction loans		4,481		0		0		150		150		4,631
Other consumer loans		45,826		145		0		106		251		46,077
Total	$	2,509,183	$	1,971	$	46	$	23,898	$	25,915	$	2,535,098

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 $4.5 million and $8.3 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2014 and December 31, 2013. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.

		September 30,		December 31,
(dollars in thousands)		2014		2013
Accruing troubled debt restructured loans	$	17,650	$	17,714
Nonaccrual troubled debt restructured loans		9,841		18,531
Total troubled debt restructured loans	$	27,491	$	36,245

During the nine months ending September 30, 2014 certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

During the quarter ending June 30, 2014 one loan previously identified as a troubled debt restructure was rewritten under terms that are not readily available in the marketplace.  Terms in the current loan agreement include an amortization period that exceeds those of similar type loans for a borrower enduring financial hardship.  This concession was granted without additional compensation.  This loan had a balance of $173,000 as of June 30, 2014.

During the quarter ending March 31, 2014, there were restructure terms offered to one borrower under financial duress which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing similar risk profiles. In this instance, it was determined that a concession had been granted. It is difficult to quantify the concession granted due to an absence of readily available market terms to be used for comparison. The restructure was granted to a borrower engaged in retail sales where the collateral and cash flow did not support the loan with a recorded investment of $159,000.

An additional concession was granted to a borrower with a previously restructured loan.  The new concession includes further forgiveness of principal if the terms of the restructured loan are met during the life of the loan. This borrower had a recorded investment of $2.7 million as of March 31, 2014.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three-months ending September 30, 2014:

	All Modifications					Modified Repayment Terms
			Pre-Modification		Post-Modification		Extension
			Outstanding		Outstanding		Period or
	Number of		Recorded		Recorded	Number of	Range
(dollars in thousands)	Loans		Investment		Investment	Loans	(in months)
Troubled Debt Restructurings
Commercial real estate and
Multi-family residential loans:
Owner occupied loans	1	$	929	$	1,000	1	24
Total	1	$	929	$	1,000	1	24

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine-months ending September 30, 2014:

	All Modifications					Interest Rate Reductions					Modified Repayment Terms
			Pre-Modification		Post-Modification							Extension
			Outstanding		Outstanding			Interest at		Interest at		Period or
	Number of		Recorded		Recorded	Number of		Pre-Modification		Post-Modification	Number of	Range
(dollars in thousands)	Loans		Investment		Investment	Loans		Rate		Rate	Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	2	$	433	$	433	0	$	0	$	0	2	12-15
Commercial real estate and multi-
family residential loans:
Owner occupied loans	3		2,639		2,710	1		89		95	2	12-24
Total	5	$	3,072	$	3,143	1	$	89	$	95	4	12-24

For the quarter ending September 30, 2014, the commercial and industrial troubled debt restructurings described above increased the allowance for loan losses by $74,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $53,000.  For the nine month period ending September 30, 2014, the commercial and industrial troubled debt restructurings described above increased the allowance for loan losses by $211,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $152,000.

No charge-offs resulted from any of the troubled debt restructurings described above during the three-month and nine-month periods ending September 30, 2014.

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 $1.8 million were modified as troubled debt restructured loans. The modified terms of the loans included reductions in the interest rates to rates 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.

No loans were modified as troubled debt restructurings during the third quarter of 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2013:

	All Modifications					Interest Rate Reductions
			Pre-Modification		Post-Modification
			Outstanding		Outstanding			Interest at		Interest at
	Number of		Recorded		Recorded	Number of		Pre-Modification		Post-Modification
(dollars in thousands)	Loans		Investment		Investment	Loans		Rate		Rate
Troubled Debt Restructurings
Commercial real estate and:
multi-family residential loans
Construction and land development loans	6	$	2,198	$	2,198	6	$	85	$	63
Consumer 1-4 family loans:
Closed end first mortgage loans	4		317		328	2		142		158
Total	10	$	2,515	$	2,526	8	$	227	$	221

	Principal and Interest Forgiveness
							Interest at		Interest at
	Number of		Principal at		Principal at		Pre-Modification		Post-Modification
(dollars in thousands)	Loans		Pre-Modification		Post-Modification		Rate		Rate
Troubled Debt Restructurings
Commercial real estate and
multi-family residential loans:
Construction and land development loans	0	$	0	$	0	$	0	$	0
Consumer 1-4 family loans:
Closed end first mortgage loans	2		156		161		164		149
Total	2	$	156	$	161	$	164	$	149

For the quarter ending September 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $11,000 and the consumer 1-4 family loan troubled debt restructurings described above decreased the allowance for loan losses by $4,000

For the nine month period ending September 30, 2013 the commercial real estate and multi-family residential loan troubled debt restructurings described above decreased the allowance for loan losses by $384,000 and the consumer 1-4 family loan troubled debt restructurings described above increased the allowance for loan losses by $61,000.

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

There were no troubled debt restructurings which had payment defaults within the twelve months following modification during the three or nine months ended September 30, 2014.  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 nine month periods ending September 30, 2013:

	Modifications
	Three Months Ended September 30, 2013			Nine Months Ended September 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	$	912
Total	0	$	0	1	$	912

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 nine month periods ending September 30, 2013.

During the first quarter of 2014 the Company sold, to an independent party, three loans totaling $6.7 million, representing a single commercial relationship.  The three loans were accounted for as troubled debt restructurings.  The Company received proceeds of $4.3 million and recognized charge offs of $2.4 million as a result of the sale.  The amount charged-off had previously been reserved for by the Company.

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 and consumer nonaccrual loans which are evaluated individually and listed with Not Rated 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 September 30, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

				Special						Not
(dollars in thousands)		Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	477,113	$	28,236	$	12,765	$	0	$	0	$	518,114
Non-working capital loans		458,676		31,335		21,199		0		2,358		513,568
Commercial real estate and multi-
family residential loans:
Construction and land development loans		145,217		558		6,951		0		0		152,726
Owner occupied loans		361,482		21,638		12,805		0		0		395,925
Nonowner occupied loans		382,386		12,616		5,976		0		0		400,978
Multifamily loans		84,732		0		0		0		0		84,732
Agri-business and agricultural loans:
Loans secured by farmland		131,034		0		485		0		0		131,519
Loans for agricultural production		78,289		0		0		0		0		78,289
Other commercial loans		77,042		0		30		0		3		77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		39,956		0		2,213		0		101,453		143,622
Open end and junior lien loans		9,336		225		2,014		0		140,192		151,767
Residential construction loans		0		0		0		0		5,712		5,712
Other consumer loans		13,399		540		77		0		33,880		47,896
Total	$	2,258,662	$	95,148	$	64,515	$	0	$	283,598	$	2,701,923

The recorded investment in loans does not include accrued interest.

As of December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

				Special						Not
(dollars in thousands)		Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	431,069	$	15,212	$	11,674	$	0	$	0	$	457,955
Non-working capital loans		384,415		37,727		19,659		0		2,091		443,892
Commercial real estate and multi-
family residential loans:
Construction and land
development loans		148,338		763		8,037		0		0		157,138
Owner occupied loans		333,795		23,687		12,629		0		0		370,111
Nonowner occupied loans		367,108		9,180		17,948		0		0		394,236
Multifamily loans		63,392		0		0		0		0		63,392
Agri-business and agricultural loans:
Loans secured by farmland		132,331		0		1,113		0		16		133,460
Loans for agricultural production		120,665		0		0		0		0		120,665
Other commercial loans		70,766		0		0		0		0		70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		29,092		0		2,316		0		93,772		125,180
Open end and junior lien loans		8,291		1,863		0		0		137,441		147,595
Residential construction loans		0		0		0		0		4,631		4,631
Other consumer loans		10,722		416		291		0		34,648		46,077
Total	$	2,099,984	$	88,848	$	73,667	$	0	$	272,599	$	2,535,098

The recorded investment in loans does not include accrued interest.

XML

LOANS

9 Months Ended

Sep. 30, 2014

Loans [Abstract]

LOANS

NOTE 3. LOANS

	September 30,				December 31,
(dollars in thousands)	2014				2013
Commercial and industrial loans:
Working capital lines of credit loans	$	517,916	19.2	%	$	457,690	18.0	%
Non-working capital loans		513,525	19.0			443,877	17.5
Total commercial and industrial loans		1,031,441	38.2			901,567	35.6
Commercial real estate and multi-family residential loans:
Construction and land development loans		153,118	5.7			157,630	6.2
Owner occupied loans		396,207	14.7			370,386	14.6
Nonowner occupied loans		401,454	14.9			394,748	15.6
Multifamily loans		84,875	3.1			63,443	2.5
Total commercial real estate and multi-family residential loans		1,035,654	38.3			986,207	38.9
Agri-business and agricultural loans:
Loans secured by farmland		131,516	4.9			133,458	5.3
Loans for agricultural production		78,203	2.9			120,571	4.8
Total agri-business and agricultural loans		209,719	7.8			254,029	10.0
Other commercial loans		77,076	2.9			70,770	2.8
Total commercial loans		2,353,890	87.1			2,212,573	87.3
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		143,892	5.3			125,444	4.9
Open end and junior lien loans		150,859	5.6			146,946	5.8
Residential construction and land development loans		5,726	0.2			4,640	0.2
Total consumer 1-4 family mortgage loans		300,477	11.1			277,030	10.9
Other consumer loans		47,967	1.8			46,125	1.8
Total consumer loans		348,444	12.9			323,155	12.7
Subtotal		2,702,334	100.0	%		2,535,728	100.0	%
Less:  Allowance for loan losses		(46,387)				(48,797)
Net deferred loan fees		(411)				(630)
Loans, net	$	2,655,536			$	2,486,301

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Tables)

9 Months Ended

Sep. 30, 2014

Loans [Abstract]

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

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended September 30, 2014 and 2013:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Beginning balance	$	20,922	$	15,975	$	1,404	$	234	$	3,275	$	487	$	3,308	$	45,605
Provision for loan losses		919		(1,274)		(34)		76		178		68		67		0
Loans charged-off		(147)		0		0		0		(60)		(62)		0		(269)
Recoveries		291		670		5		0		59		26		0		1,051
Net loans (charged-off)recovered		144		670		5		0		(1)		(36)		0		782
Ending balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387

			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2013
Beginning balance	$	21,879	$	20,098	$	1,517	$	264	$	2,823	$	587	$	3,467	$	50,635
Provision for loan losses		138		(544)		(185)		(23)		409		179		26		0
Loans charged-off		(595)		(455)		0		0		(126)		(120)		0		(1,296)
Recoveries		75		73		201		0		71		45		0		465
Net loans (charged-off)recovered		(520)		(382)		201		0		(55)		(75)		0		(831)
Ending balance	$	21,497	$	19,172	$	1,533	$	241	$	3,177	$	691	$	3,493	$	49,804

The following tables present the activity in the allowance for loan losses by portfolio segment for the nine-month periods ended September 30, 2014 and 2013:

			Commercial
			Real Estate
	Commercial		and		Agri-business				Consumer
	and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)	Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Beginning balance	$	21,005	$	18,557	$	1,682	$	391	$	3,045	$	608	$	3,509	$	48,797
Provision for loan losses		1,296		(1,334)		(323)		(81)		587		(11)		(134)		0
Loans charged-off		(660)		(2,553)		0		0		(282)		(180)		0		(3,675)
Recoveries		344		701		16		0		102		102		0		1,265
Net loans (charged-off)recovered		(316)		(1,852)		16		0		(180)		(78)		0		(2,410)
Ending balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2013
Beginning balance	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Provision for loan losses		(569)		(627)		125		1		709		225		136		0
Loans charged-off		(738)		(1,361)		(200)		0		(315)		(257)		0		(2,871)
Recoveries		462		348		205		0		101		114		0		1,230
Net loans (charged-off)recovered		(276)		(1,013)		5		0		(214)		(143)		0		(1,641)
Ending balance	$	21,497	$	19,172	$	1,533	$	241	$	3,177	$	691	$	3,493	$	49,804

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2014 and December 31, 2013:

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
September 30, 2014
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,017	$	1,875	$	15	$	0	$	539	$	74	$	0	$	6,520
Collectively evaluated for impairment		17,968		13,496		1,360		310		2,913		445		3,375		39,867
Total ending allowance balance	$	21,985	$	15,371	$	1,375	$	310	$	3,452	$	519	$	3,375	$	46,387
Loans:
Loans individually evaluated for impairment	$	16,771	$	12,970	$	486	$	0	$	3,785	$	132	$	0	$	34,144
Loans collectively evaluated for impairment		1,014,911		1,021,391		209,322		77,075		297,316		47,764		0		2,667,779
Total ending loans balance	$	1,031,682	$	1,034,361	$	209,808	$	77,075	$	301,101	$	47,896	$	0	$	2,701,923

				Commercial
				Real Estate
		Commercial		and		Agri-business				Consumer
		and		Multifamily		and		Other		1-4 Family		Other
(dollars in thousands)		Industrial		Residential		Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
December 31, 2013
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,144	$	4,598	$	38	$	0	$	479	$	57	$	0	$	9,316
Collectively evaluated for impairment		16,861		13,959		1,644		391		2,566		551		3,509		39,481
Total ending allowance balance	$	21,005	$	18,557	$	1,682	$	391	$	3,045	$	608	$	3,509	$	48,797
Loans:
Loans individually evaluated for impairment	$	16,196	$	22,204	$	1,114	$	0	$	3,594	$	119	$	0	$	43,227
Loans collectively evaluated for impairment		885,651		962,673		253,011		70,766		273,812		45,958		0		2,491,871
Total ending loans balance	$	901,847	$	984,877	$	254,125	$	70,766	$	277,406	$	46,077	$	0	$	2,535,098

Loans individually evaluated for impairment

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2014:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	21	$	0
Non-working capital loans		1,679		285		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		528		528		0
Owner occupied loans		337		157		0
Nonowner occupied loans		323		323		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		603		283		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		706		708		0
Open end and junior lien loans		352		352		0
Residential construction loans		133		133		0
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,808		1,807		901
Non-working capital loans		16,821		14,658		3,116
Commercial real estate and multi-family residential loans:
Construction and land development loans		1,391		1,390		382
Owner occupied loans		4,452		4,411		867
Nonowner occupied loans		6,154		6,161		626
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		381		203		15
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,640		2,544		534
Open end and junior lien loans		48		48		5
Residential construction loans		0		0		0
Other consumer loans		131		131		74
Total	$	38,510	$	34,144	$	6,520

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, 2013:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
(dollars in thousands)	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	63	$	63	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		377		196		0
Agri-business and agricultural loans:
Loans secured by farmland		604		604		0
Other commercial loans
Consumer 1-4 family loans:
Closed end first mortgage loans		688		689		0
Open end and junior lien loans		81		81		0
Residential construction loans		150		150		0
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,251		2,641		984
Non-working capital loans		15,345		13,492		3,160
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,795		2,795		585
Owner occupied loans		5,553		4,681		723
Nonowner occupied loans		15,163		14,532		3,290
Agri-business and agricultural loans:
Loans secured by farmland		1,008		510		38
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,469		2,463		442
Open end and junior lien loans		211		211		37
Other consumer loans		118		118		57
Total	$	50,877	$	43,227	$	9,316

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 period ended September 30, 2014:

					Cash Basis
	Average		Interest		Interest
	Recorded		Income		Income
(dollars in thousands)	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	22	$	0	$	0
Non-working capital loans		290		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		533		0		0
Owner occupied loans		160		0		0
Nonowner occupied loans		327		0		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		284		0		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		695		0		0
Open end and junior lien loans		286		0		0
Residential construction loans		135		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,680		22		18
Non-working capital loans		13,662		127		126
Commercial real estate and multi-family residential loans:
Construction and land development loans		1,679		7		5
Owner occupied loans		3,241		26		29
Nonowner occupied loans		6,485		35		36
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		203		0		0
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,568		17		17
Open end and junior lien loans		48		0		0
Residential construction loans		0		0		0
Other consumer loans		89		1		1
Total	$	32,388	$	235	$	232

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 period ended September 30, 2013:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	64	$	0	$	0
Non-working capital loans		0		0		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		616		0		0
Agri-business and agricultural loans:
Loans secured by farmland		479		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		719		0		0
Open end and junior lien loans		27		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		2,988		12		14
Non-working capital loans		14,017		120		126
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,848		11		20
Owner occupied loans		3,707		20		20
Nonowner occupied loans		19,183		87		86
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		536		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,347		5		6
Open end and junior lien loans		22		0		0
Other consumer loans		99		0		0
Total	$	47,653	$	255	$	272

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 nine-month period ended September 30, 2014:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	186	$	1	$	1
Non-working capital loans		133		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		178		0		0
Owner occupied loans		215		0		0
Nonowner occupied loans		341		0		0
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		226		0		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		691		0		0
Open end and junior lien loans		170		0		0
Residential construction loans		141		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		1,893		55		47
Non-working capital loans		13,762		387		388
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,341		37		36
Owner occupied loans		2,956		45		43
Nonowner occupied loans		8,507		104		105
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		411		0		0
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,740		50		53
Open end and junior lien loans		66		0		0
Residential construction loans		0		0		0
Other consumer loans		87		1		1
Total	$	35,045	$	680	$	674

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 nine-month period ended September 30, 2013:

						Cash Basis
		Average		Interest		Interest
		Recorded		Income		Income
(dollars in thousands)		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	65	$	0	$	0
Non-working capital loans		11		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans		575		0		0
Agri-business and agricultural loans:
Loans secured by farmland		480		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		275		0		0
Open end and junior lien loans		23		0		0
Other consumer loans		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		3,019		39		41
Non-working capital loans		14,081		391		402
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,860		63		67
Owner occupied loans		3,592		88		96
Nonowner occupied loans		20,960		255		258
Multifamily loans		64		0		0
Agri-business and agricultural loans:
Loans secured by farmland		418		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,461		28		43
Open end and junior lien loans		40		0		0
Other consumer loans		86		1		1
Total	$	50,010	$	865	$	908

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 September 30, 2014 by class of loans:

				30-89		Greater than
		Loans Not		Days		90 Days				Total
(dollars in thousands)		Past Due		Past Due		Past Due		Nonaccrual		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	517,009	$	0	$	0	$	1,105	$	1,105	$	518,114
Non-working capital loans		508,354		102		0		5,112		5,214		513,568
Commercial real estate and multi-family
residential loans:
Construction and land development loans		152,197		0		0		529		529		152,726
Owner occupied loans		393,498		414		0		2,013		2,427		395,925
Nonowner occupied loans		397,246		0		0		3,732		3,732		400,978
Multifamily loans		84,732		0		0		0		0		84,732
Agri-business and agricultural loans:
Loans secured by farmland		131,034		0		0		485		485		131,519
Loans for agricultural production		78,289		0		0		0		0		78,289
Other commercial loans		77,075		0		0		0		0		77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		140,719		1,699		0		1,204		2,903		143,622
Open end and junior lien loans		151,229		139		0		399		538		151,767
Residential construction loans		5,579		0		0		133		133		5,712
Other consumer loans		47,758		83		0		55		138		47,896
Total	$	2,684,719	$	2,437	$	0	$	14,767	$	17,204	$	2,701,923

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, 2013 by class of loans:

				30-89		Greater than
		Loans Not		Days		90 Days				Total
(dollars in thousands)		Past Due		Past Due		Past Due		Nonaccrual		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	456,136	$	0	$	0	$	1,819	$	1,819	$	457,955
Non-working capital loans		440,050		46		0		3,796		3,842		443,892
Commercial real estate and multi-family
residential loans:
Construction and land development loans		156,594		0		0		544		544		157,138
Owner occupied loans		366,955		0		0		3,156		3,156		370,111
Nonowner occupied loans		382,478		0		0		11,758		11,758		394,236
Multifamily loans		63,392		0		0		0		0		63,392
Agri-business and agricultural loans:
Loans secured by farmland		132,347		0		0		1,113		1,113		133,460
Loans for agricultural production		120,665		0		0		0		0		120,665
Other commercial loans		70,766		0		0		0		0		70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		122,370		1,645		0		1,165		2,810		125,180
Open end and junior lien loans		147,123		135		46		291		472		147,595
Residential construction loans		4,481		0		0		150		150		4,631
Other consumer loans		45,826		145		0		106		251		46,077
Total	$	2,509,183	$	1,971	$	46	$	23,898	$	25,915	$	2,535,098

The recorded investment in loans does not include accrued interest.

Troubled debt restructuring

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

		September 30,		December 31,
(dollars in thousands)		2014		2013
Accruing troubled debt restructured loans	$	17,650	$	17,714
Nonaccrual troubled debt restructured loans		9,841		18,531
Total troubled debt restructured loans	$	27,491	$	36,245

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-months ending September 30, 2014:

	All Modifications					Modified Repayment Terms
			Pre-Modification		Post-Modification		Extension
			Outstanding		Outstanding		Period or
	Number of		Recorded		Recorded	Number of	Range
(dollars in thousands)	Loans		Investment		Investment	Loans	(in months)
Troubled Debt Restructurings
Commercial real estate and
Multi-family residential loans:
Owner occupied loans	1	$	929	$	1,000	1	24
Total	1	$	929	$	1,000	1	24

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine-months ending September 30, 2014:

	All Modifications					Interest Rate Reductions					Modified Repayment Terms
			Pre-Modification		Post-Modification							Extension
			Outstanding		Outstanding			Interest at		Interest at		Period or
	Number of		Recorded		Recorded	Number of		Pre-Modification		Post-Modification	Number of	Range
(dollars in thousands)	Loans		Investment		Investment	Loans		Rate		Rate	Loans	(in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Non-working capital loans	2	$	433	$	433	0	$	0	$	0	2	12-15
Commercial real estate and multi-
family residential loans:
Owner occupied loans	3		2,639		2,710	1		89		95	2	12-24
Total	5	$	3,072	$	3,143	1	$	89	$	95	4	12-24

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2013:

	All Modifications					Interest Rate Reductions
			Pre-Modification		Post-Modification
			Outstanding		Outstanding			Interest at		Interest at
	Number of		Recorded		Recorded	Number of		Pre-Modification		Post-Modification
(dollars in thousands)	Loans		Investment		Investment	Loans		Rate		Rate
Troubled Debt Restructurings
Commercial real estate and:
multi-family residential loans
Construction and land development loans	6	$	2,198	$	2,198	6	$	85	$	63
Consumer 1-4 family loans:
Closed end first mortgage loans	4		317		328	2		142		158
Total	10	$	2,515	$	2,526	8	$	227	$	221

	Principal and Interest Forgiveness
							Interest at		Interest at
	Number of		Principal at		Principal at		Pre-Modification		Post-Modification
(dollars in thousands)	Loans		Pre-Modification		Post-Modification		Rate		Rate
Troubled Debt Restructurings
Commercial real estate and
multi-family residential loans:
Construction and land development loans	0	$	0	$	0	$	0	$	0
Consumer 1-4 family loans:
Closed end first mortgage loans	2		156		161		164		149
Total	2	$	156	$	161	$	164	$	149

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 nine month periods ending September 30, 2013:

	Modifications
	Three Months Ended September 30, 2013			Nine Months Ended September 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	$	912
Total	0	$	0	1	$	912

Credit quality indicators

As of September 30, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

				Special						Not
(dollars in thousands)		Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	477,113	$	28,236	$	12,765	$	0	$	0	$	518,114
Non-working capital loans		458,676		31,335		21,199		0		2,358		513,568
Commercial real estate and multi-
family residential loans:
Construction and land development loans		145,217		558		6,951		0		0		152,726
Owner occupied loans		361,482		21,638		12,805		0		0		395,925
Nonowner occupied loans		382,386		12,616		5,976		0		0		400,978
Multifamily loans		84,732		0		0		0		0		84,732
Agri-business and agricultural loans:
Loans secured by farmland		131,034		0		485		0		0		131,519
Loans for agricultural production		78,289		0		0		0		0		78,289
Other commercial loans		77,042		0		30		0		3		77,075
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		39,956		0		2,213		0		101,453		143,622
Open end and junior lien loans		9,336		225		2,014		0		140,192		151,767
Residential construction loans		0		0		0		0		5,712		5,712
Other consumer loans		13,399		540		77		0		33,880		47,896
Total	$	2,258,662	$	95,148	$	64,515	$	0	$	283,598	$	2,701,923

The recorded investment in loans does not include accrued interest.

As of December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

				Special						Not
(dollars in thousands)		Pass		Mention		Substandard		Doubtful		Rated		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	431,069	$	15,212	$	11,674	$	0	$	0	$	457,955
Non-working capital loans		384,415		37,727		19,659		0		2,091		443,892
Commercial real estate and multi-
family residential loans:
Construction and land
development loans		148,338		763		8,037		0		0		157,138
Owner occupied loans		333,795		23,687		12,629		0		0		370,111
Nonowner occupied loans		367,108		9,180		17,948		0		0		394,236
Multifamily loans		63,392		0		0		0		0		63,392
Agri-business and agricultural loans:
Loans secured by farmland		132,331		0		1,113		0		16		133,460
Loans for agricultural production		120,665		0		0		0		0		120,665
Other commercial loans		70,766		0		0		0		0		70,766
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		29,092		0		2,316		0		93,772		125,180
Open end and junior lien loans		8,291		1,863		0		0		137,441		147,595
Residential construction loans		0		0		0		0		4,631		4,631
Other consumer loans		10,722		416		291		0		34,648		46,077
Total	$	2,099,984	$	88,848	$	73,667	$	0	$	272,599	$	2,535,098

The recorded investment in loans does not include accrued interest.

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2014

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.

XML

OFFSETTING ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2014

Offsetting [Abstract]

OFFSETTING ASSETS AND LIABILITIES

NOTE 7. OFFSETTING ASSETS AND LIABILITIES

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at September 30, 2014 and December 31, 2013.

	September 30, 2014
			Gross		Net Amounts
	Gross		Amounts		of Assets		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash
(dollars in thousands)	Liabilities		Position		Position		Instruments		Received		Net
Assets
Interest rate swap derivatives	$	938	$	0	$	938	$	0	$	0	$	938
Total assets	$	938	$	0	$	938	$	0	$	0	$	938
Liabilities
Interest rate swap derivatives	$	940	$	0	$	940	$	0	$	0	$	940
Repurchase agreements		60,578		0		60,578		(60,578)		0		0
Total liabilities	$	61,518	$	0	$	61,518	$	(60,578)	$	0	$	940

		December 31, 2013
			Gross		Net Amounts
	Gross		Amounts		of Assets		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Received		Net Amount
Assets
Interest rate swap derivatives	$	627	$	0	$	627	$	0	$	(260)	$	367
Total assets	$	627	$	0	$	627	$	0	$	(260)	$	367
Liabilities
Interest rate swap derivatives	$	592	$	0	$	592	$	0	$	0	$	592
Repurchase agreements		104,876		0		104,876		(104,876)		0		0
Total liabilities	$	105,468	$	0	$	105,468	$	(104,876)	$	0	$	592

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

FAIR VALUE DISCLOSURES

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

NOTE 5.  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).

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 determine the Company’s valuation policies and procedures. Both of these areas report directly to the Executive Vice 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 Executive Vice 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 price tolerance variance of +/-3%, an individual security market value tolerance of +/-$50,000 and an aggregate market value tolerance of +/-$500,000 for all securities. If any securities fall outside any of these tolerance thresholds, 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.

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: (a) raw and finished inventory is discounted from its cost or book value by 35-65%, depending on the marketability of the goods; (b) 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; (c) 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; (d) 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; and (e) 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 September 30, 2014 the fair value of the Company’s Level 3 servicing assets for residential mortgage loans was $3.3 million, none of which are currently impaired and therefore are carried at amortized cost.  These residential mortgage loans have a weighted average interest rate of 4.10%, 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 September 30, 2014, the constant prepayment speed (PSA) used was 187 and the discount rate used was 9.4%.  At December 31, 2013, the PSA used was 185 and the discount rate used was 9.4%.

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 result in a Level 2 classification.

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

	September 30, 2014
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	985	$	0	$	0	$	985
Mortgage-backed securities		0		371,746		0		371,746
State and municipal securities		0		99,483		861		100,344
Total Securities		985		471,229		861		473,075
Mortgage banking derivative		0		222		0		222
Interest rate swap derivative		0		938		0		938
Total assets	$	985	$	472,389	$	861	$	474,235
Liabilities
Mortgage banking derivative		0		8		0		8
Interest rate swap derivative		0		940		0		940
Total liabilities	$	0	$	948	$	0	$	948

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
U.S. Treasury securities	$	1,017	$	0	$	0	$	1,017
Mortgage-backed securities		0		371,977		0		371,977
State and municipal securities		0		94,998		975		95,973
Total securities		1,017		466,975		975		468,967
Mortgage banking derivative		0		142		0		142
Interest rate swap derivative		0		627		0		627
Total assets	$	1,017	$	467,744	$	975	$	469,736
Liabilities
Mortgage banking derivative		0		2		0		2
Interest rate swap derivative		0		592		0		592
Total liabilities	$	0	$	594	$	0	$	594

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2014 and there were no transfers between Level 1 and Level 2 during 2013.

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 nine months ended September 30, 2014 and 2013:

	Non-Agency Residential
	Mortgage-Backed Securities				State and Municipal Securities
(dollars in thousands)	2014		2013		2014		2013
Balance of recurring Level 3 assets at January 1	$	0	$	2,859	$	975	$	988
Transfers into Level 3		0		3,334		0		0
Changes in fair value of securities
included in other comprehensive income		0		(158)		11		(11)
Principal payments		0		(2,183)		(125)		0
Sales		0		(3,852)		0		0
Balance of recurring Level 3 assets at September 30	$	0	$	0	$	861	$	977

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 securities were subsequently sold in the third quarter of 2013.  The Company no longer owns any non-agency residential mortgage backed securities.

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
					Range of
	Fair Value at				Inputs
(dollars in thousands)	9/30/2014		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	861	Price to type, par, call	Discount to benchmark index	0-7%
					(2.80%)

Quantitative Information about Level 3 Fair Value Measurements
					Range of
	Fair Value at				Inputs
(dollars in thousands)	12/31/2013		Valuation Technique	Unobservable Input	(Average)
State and municipal securities	$	975	Price to type, par, call	Discount to benchmark index	0-6%
					(2.21%)

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:

	September 30, 2014
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	868	$	868
Non-working capital loans		0		0		3,141		3,141
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		824		824
Owner occupied loans		0		0		3,544		3,544
Nonowner occupied loans		0		0		3,127		3,127
Agri-business and agricultural loans:
Loans secured by farmland		0		0		188		188
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		493		493
Open end and junior lien loans		0		0		43		43
Other consumer loans		0		0		33		33
Total impaired loans	$	0	$	0	$	12,261	$	12,261
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	12,336	$	12,336

	December 31, 2013
	Fair Value Measurements Using						Assets
(dollars in thousands)	Level 1		Level 2		Level 3		at Fair Value
Assets
Impaired loans:
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	0	$	920	$	920
Non-working capital loans		0		0		3,097		3,097
Commercial real estate and multi-family
residential loans:
Construction and land development loans		0		0		2,210		2,210
Owner occupied loans		0		0		3,958		3,958
Nonowner occupied loans		0		0		8,938		8,938
Agri-business and agricultural loans:
Loans secured by farmland		0		0		472		472
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		0		0		409		409
Open end and junior lien loans		0		0		174		174
Other consumer loans		0		0		50		50
Total impaired loans	$	0	$	0	$	20,228	$	20,228
Other real estate owned		0		0		75		75
Total assets	$	0	$	0	$	20,303	$	20,303

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2014:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	4,009	Collateral based	Discount to reflect	38	%	(15% - 66%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		7,495	Collateral based	Discount to reflect	17	%	(7% - 42%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		188	Collateral based	Discount to reflect	7	%
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		536	Collateral based	Discount to reflect	29	%	(5% - 78%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		33	Collateral based	Discount to reflect	39	%	(30% - 48%)
			measurements	current market conditions
				and ultimate collectability
Other real estate owned		75	Appraisals	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, 2013:

(dollars in thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Average		Range of Inputs
Impaired loans:
Commercial and industrial	$	4,017	Collateral based	Discount to reflect	29	%	(3% - 93%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Commercial real estate		15,106	Collateral based	Discount to reflect	22	%	(3% - 45%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Agri-business and agricultural		472	Collateral based	Discount to reflect	8	%	(4% - 12%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Consumer 1-4 family mortgage		583	Collateral based	Discount to reflect	33	%	(6% - 77%)
			measurements	current market conditions
				and ultimate collectability
Impaired loans:
Other consumer		50	Collateral based	Discount to reflect	53	%	(28% - 98%)
			measurements	current market conditions
				and ultimate collectability
Other real estate owned		75	Appraisals	Discount to reflect	49	%
				current market conditions
				and ultimate collectability

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a gross carrying amount of $16.5 million, with a valuation allowance of $4.2 million at September 30, 2014, resulting in a net provision for loan losses of $100,000 in the three months ended September 30, 2014, and a net recovery in the provision for loan losses of $2.1 million in the nine months ended September 30, 2014.  At September 30, 2013, impaired loans had a gross carrying amount of $30.0 million, with a valuation allowance of $7.3 million, resulting in a net recovery in the provision for loan losses of $200,000 and $2.7 million, respectively, for the three months and nine months ended September 30, 2013.

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.

		September 30, 2014
		Carrying		Estimated Fair Value
(dollars in thousands)		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	70,202	$	70,202	$	0	$	0	$	70,202
Securities available for sale		473,075		985		471,229		861		473,075
Real estate mortgages held for sale		1,727		0		1,761		0		1,761
Loans, net		2,655,536		0		0		2,639,252		2,639,252
Federal Home Loan Bank stock		7,312		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		9,042		5		1,963		7,074		9,042
Financial Liabilities:
Certificates of deposit		(985,251)		0		(992,377)		0		(992,377)
All other deposits		(1,904,421)		(1,904,421)		0		0		(1,904,421)
Securities sold under agreements
to repurchase		(60,578)		0		(60,578)		0		(60,578)
Federal funds purchased		(8,000)		0		(8,000)		0		(8,000)
Long-term borrowings		(35)		0		(41)		0		(41)
Subordinated debentures		(30,928)		0		0		(31,220)		(31,220)
Standby letters of credit		(337)		0		0		(337)		(337)
Accrued interest payable		(2,748)		(105)		(2,640)		(3)		(2,748)

		December 31, 2013
		Carrying		Estimated Fair Value
(dollars in thousands)		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	63,105	$	63,105	$	0	$	0	$	63,105
Securities available for sale		468,967		1,017		466,975		975		468,967
Real estate mortgages held for sale		1,778		0		1,800		0		1,800
Loans, net		2,486,301		0		0		2,490,593		2,490,593
Federal Home Loan Bank stock		7,312		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		8,577		0		2,297		6,280		8,577
Financial Liabilities:
Certificates of deposit		(727,809)		0		(736,088)		0		(736,088)
All other deposits		(1,818,259)		(1,818,259)		0		0		(1,818,259)
Securities sold under agreements
to repurchase		(104,876)		0		(104,876)		0		(104,876)
Federal funds purchased		(11,000)		0		(11,000)		0		(11,000)
Other short-term borrowings		(146,000)		0		(146,002)		0		(146,002)
Long-term borrowings		(37)		0		(43)		0		(43)
Subordinated debentures		(30,928)		0		0		(31,217)		(31,217)
Standby letters of credit		(312)		0		0		(312)		(312)
Accrued interest payable		(2,918)		(125)		(2,790)		(3)		(2,918)

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 of the loan 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 approximates their fair values resulting in a Level 2 classification.

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

Other short-term borrowings – The fair value of other short-term borrowings approximates 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 approximates fair value resulting in a Level 1, Level 2 or Level 3 classification which is consistent with its associated asset/liability.

XML

EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2014

Employee Benefit Plans [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 6. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost:

	Nine Months Ended September 30,								Three Months Ended September 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(dollars in thousands)	2014		2013		2014		2013		2014		2013		2014		2013
Interest cost	$	90	$	87	$	38	$	34	$	30	$	29	$	13	$	11
Expected return on plan assets		(94)		(90)		(55)		(56)		(31)		(30)		(19)		(19)
Recognized net actuarial loss		88		113		60		70		29		38		20		24
Net pension expense	$	84	$	110	$	43	$	48	$	28	$	37	$	14	$	16

The Company previously disclosed in its financial statements for the year ended December 31, 2013 that it expected to contribute $207,000 to its pension plan and $4,000 to its Supplemental Executive Retirement Plan (“SERP”) in 2014.  The Company has contributed $138,000 to its pension plan and $4,000 to its SERP as of September 30, 2014.  The Company expects to contribute $69,000 to its pension plan during the remainder of 2014.  The Company does not expect to make any additional contributions to its SERP during the remainder of 2014.

XML

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 8. 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, none of which were antidilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Weighted average shares outstanding for basic earnings per common share		16,547,551		16,451,199		16,531,411		16,427,060
Dilutive effect of stock options, awards and warrants		228,219		183,734		237,668		154,029
Weighted average shares outstanding for diluted earnings per common share		16,775,770		16,634,933		16,769,079		16,581,089
Basic earnings per common share	$	0.70	$	0.59	$	1.98	$	1.72
Diluted earnings per common share	$	0.69	$	0.59	$	1.95	$	1.70

XML

SECURITIES (Additional information) (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Information related to available for sale securities [Abstract]
Available-for-sale Securities pledged as collateral	$ 196.3	$ 244.3
Cost basis of securities sold	14.0		29.9
Fair Value of securities slold	$ 13.8		$ 30.0

XML

EMPLOYEE BENEFIT PLANS (Components of Net Periodic Benefit Cost) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Pension Plans, Defined Benefit [Member]
Interest cost	$ 30	$ 29	$ 90	$ 87
Expected return on plan assets	(31)	(30)	(94)	(90)
Recognized net actuarial (gain) loss	29	38	88	113
Net pension expense (benefit)	28	37	84	110
Supplemental Employee Retirement Plans, Defined Benefit [Member]
Interest cost	13	11	38	34
Expected return on plan assets	(19)	(19)	(55)	(56)
Recognized net actuarial (gain) loss	20	24	60	70
Net pension expense (benefit)	$ 14	$ 16	$ 43	$ 48

XML

SECURITIES (Tables)

9 Months Ended

Sep. 30, 2014

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
		Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)		Cost		Gain		Losses		Value
September 30, 2014
U.S. Treasury securities	$	985	$	0	$	0	$	985
Agency residential mortgage-backed securities		368,935		6,610		(3,799)		371,746
State and municipal securities		96,985		3,889		(530)		100,344
Total	$	466,905	$	10,499	$	(4,329)	$	473,075
December 31, 2013
U.S. Treasury securities	$	1,001	$	16	$	0	$	1,017
Agency residential mortgage-backed securities		374,611		5,301		(7,935)		371,977
State and municipal securities		95,388		2,597		(2,012)		95,973
Total	$	471,000	$	7,914	$	(9,947)	$	468,967

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
(dollars in thousands)		Cost		Value
Due in one year or less	$	4,564	$	4,603
Due after one year through five years		18,257		19,273
Due after five years through ten years		45,045		46,872
Due after ten years		30,104		30,581
		97,970		101,329
Mortgage-backed securities		368,935		371,746
Total debt securities	$	466,905	$	473,075

Schedule of Sales of Securities Available For Sale

Securities proceeds, gross gains and gross losses are presented below.

	Nine months ended September 30,				Three months ended September 30,
(dollars in thousands)	2014		2013		2014		2013
Sales of securities available for sale
Proceeds	$	13,766	$	29,995	$	13,766	$	29,995
Gross gains		3		1,077		3		1,077
Gross losses		231		972		231		972

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

Information regarding securities with unrealized losses as of September 30, 2014 and December 31, 2013 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
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2014
Agency residential mortgage-backed
securities	$	65,582	$	(507)	$	113,996	$	(3,292)	$	179,578	$	(3,799)
State and municipal securities		466		(15)		17,064		(515)		17,530		(530)
Total temporarily impaired	$	66,048	$	(522)	$	131,060	$	(3,807)	$	197,108	$	(4,329)
December 31, 2013
Agency residential mortgage-backed
securities	$	177,779	$	(6,444)	$	34,093	$	(1,491)	$	211,872	$	(7,935)
State and municipal securities		24,610		(1,102)		8,037		(910)		32,647		(2,012)
Total temporarily impaired	$	202,389	$	(7,546)	$	42,130	$	(2,401)	$	244,519	$	(9,947)

Quantitative disclosure of available-for-sale securities

The total number of securities with unrealized losses as of September 30, 2014 and December 31, 2013 is presented below.

	Less than	12 months
	12 months	or more	Total
September 30, 2014
Agency residential mortgage-backed securities	21	29	50
State and municipal securities	1	33	34
Total temporarily impaired	22	62	84
	Less than	12 months
	12 months	or more	Total
December 31, 2013
Agency residential mortgage-backed securities	49	10	59
State and municipal securities	59	12	71
Total temporarily impaired	108	22	130

XML

OFFSETTING ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2014

Offsettings [Abstract]

Offsetting Assets and Liability

The following tables summarize gross and net information about financial instruments and derivative instruments that are offset in the statement of financial position or that are subject to an enforceable master netting arrangement at September 30, 2014 and December 31, 2013.

	September 30, 2014
			Gross		Net Amounts
	Gross		Amounts		of Assets		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash
(dollars in thousands)	Liabilities		Position		Position		Instruments		Received		Net
Assets
Interest rate swap derivatives	$	938	$	0	$	938	$	0	$	0	$	938
Total assets	$	938	$	0	$	938	$	0	$	0	$	938
Liabilities
Interest rate swap derivatives	$	940	$	0	$	940	$	0	$	0	$	940
Repurchase agreements		60,578		0		60,578		(60,578)		0		0
Total liabilities	$	61,518	$	0	$	61,518	$	(60,578)	$	0	$	940

		December 31, 2013
			Gross		Net Amounts
	Gross		Amounts		of Assets		Gross Amounts Not
	Amounts of		Offset in the		presented in		Offset in the Statement
	Recognized		Statement of		the Statement		of Financial Position
	Assets/		Financial		of Financial		Financial		Cash Collateral
(dollars in thousands)	Liabilities		Position		Position		Instruments		Received		Net Amount
Assets
Interest rate swap derivatives	$	627	$	0	$	627	$	0	$	(260)	$	367
Total assets	$	627	$	0	$	627	$	0	$	(260)	$	367
Liabilities
Interest rate swap derivatives	$	592	$	0	$	592	$	0	$	0	$	592
Repurchase agreements		104,876		0		104,876		(104,876)		0		0
Total liabilities	$	105,468	$	0	$	105,468	$	(104,876)	$	0	$	592

XML

FAIR VALUE DISCLOSURES (Estimated Fair Values And The Related Carrying Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financial Assets:
Securities available for sale	$ 473,075	$ 468,967
Financial Liabilities:
Federal funds purchased	(8,000)	(11,000)
Carrying Value [Member]
Financial Assets:
Cash and cash equivalents	70,202	63,105
Securities available for sale	473,075	468,967
Real estate mortgages held for sale	1,727	1,778
Loans, net	2,655,536	2,486,301
Federal Home Loan Bank stock	7,312	7,312
Federal Reserve Bank stock	3,420	3,420
Accrued interest receivable	9,042	8,577
Financial Liabilities:
Certificates of deposit	(985,251)	(727,809)
All other deposits	(1,904,421)	(1,818,259)
Securities sold under agreements to repurchase	(60,578)	(104,876)
Federal funds purchased	(8,000)	(11,000)
Other short-term borrowings		(146,000)
Long-term borrowings	(35)	(37)
Subordinated debentures	(30,928)	(30,928)
Standby letters of credit	(337)	(312)
Accrued interest payable	(2,748)	(2,918)
Estimated Fair Value [Member]
Financial Assets:
Cash and cash equivalents	70,202	63,105
Securities available for sale	473,075	468,967
Real estate mortgages held for sale	1,761	1,800
Loans, net	2,639,252	2,490,593
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	9,042	8,577
Financial Liabilities:
Certificates of deposit	(992,377)	(736,088)
All other deposits	(1,904,421)	(1,818,259)
Securities sold under agreements to repurchase	(60,578)	(104,876)
Federal funds purchased	(8,000)	(11,000)
Other short-term borrowings		(146,002)
Long-term borrowings	(41)	(43)
Subordinated debentures	(31,220)	(31,217)
Standby letters of credit	(337)	(312)
Accrued interest payable	(2,748)	(2,918)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and cash equivalents	70,202	63,105
Securities available for sale	985	1,017
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	5	0
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	(1,904,421)	(1,818,259)
Securities sold under agreements to repurchase	0	0
Federal funds purchased	0	0
Other short-term borrowings		0
Long-term borrowings	0	0
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(105)	(125)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Securities available for sale	471,229	466,975
Real estate mortgages held for sale	1,761	1,800
Loans, net	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	1,963	2,297
Financial Liabilities:
Certificates of deposit	(992,377)	(736,088)
All other deposits	0	0
Securities sold under agreements to repurchase	(60,578)	(104,876)
Federal funds purchased	(8,000)	(11,000)
Other short-term borrowings		(146,002)
Long-term borrowings	(41)	(43)
Subordinated debentures	0	0
Standby letters of credit	0	0
Accrued interest payable	(2,640)	(2,790)
Estimated Fair Value [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Securities available for sale	861	975
Real estate mortgages held for sale	0	0
Loans, net	2,639,252	2,490,593
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Accrued interest receivable	7,074	6,280
Financial Liabilities:
Certificates of deposit	0	0
All other deposits	0	0
Securities sold under agreements to repurchase	0	0
Federal funds purchased	0	0
Other short-term borrowings		0
Long-term borrowings	0	0
Subordinated debentures	(31,220)	(31,217)
Standby letters of credit	(337)	(312)
Accrued interest payable	$ (3)	$ (3)

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Troubled Debt Restructuring Subsequently Defaulted) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2013
Troubled Debt Restructurings that Subsequently Defaulted [Abstract]
Number of Loans		0	1
Recorded Investment	$ 159	$ 0	$ 912
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
Recorded Investment		$ 0	$ 912

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income	$ 11,511	$ 9,769	$ 32,735	$ 28,251
Change in securities available for sale:
Unrealized holding gain (loss) on securities available for sale arising during the period	(1,573)	(1,242)	7,979	(11,642)
Reclassification adjustment for (gains) losses included in net income	228	(106)	224	(107)
Net securities gain (loss) activity during the period	(1,345)	(1,348)	8,203	(11,749)
Tax effect	551	484	(3,241)	4,589
Net of tax amount	(794)	(864)	4,962	(7,160)
Defined benefit pension plans:
Net gain (loss) on defined benefit pension plans	0	0	64	(151)
Amortization of net actuarial loss	49	62	148	183
Net gain (loss) activity during the period	49	62	212	32
Tax effect	(20)	(25)	(93)	(13)
Net of tax amount	29	37	119	19
Total other comprehensive income (loss), net of tax	(765)	(827)	5,081	(7,141)
Comprehensive income	$ 10,746	$ 8,942	$ 37,816	$ 21,110

XML

SECURITIES

9 Months Ended

Sep. 30, 2014

Securities [Abstract]

SECURITIES

  NOTE 2. 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
		Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)		Cost		Gain		Losses		Value
September 30, 2014
U.S. Treasury securities	$	985	$	0	$	0	$	985
Agency residential mortgage-backed securities		368,935		6,610		(3,799)		371,746
State and municipal securities		96,985		3,889		(530)		100,344
Total	$	466,905	$	10,499	$	(4,329)	$	473,075
December 31, 2013
U.S. Treasury securities	$	1,001	$	16	$	0	$	1,017
Agency residential mortgage-backed securities		374,611		5,301		(7,935)		371,977
State and municipal securities		95,388		2,597		(2,012)		95,973
Total	$	471,000	$	7,914	$	(9,947)	$	468,967

There was no other-than-temporary impairment (“OTTI”) recognized in accumulated other comprehensive income (loss) for securities available for sale at September 30, 2014 and December 31, 2013.

Information regarding the fair value and amortized cost of available for sale debt securities by maturity as of September 30, 2014 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
(dollars in thousands)		Cost		Value
Due in one year or less	$	4,564	$	4,603
Due after one year through five years		18,257		19,273
Due after five years through ten years		45,045		46,872
Due after ten years		30,104		30,581
		97,970		101,329
Mortgage-backed securities		368,935		371,746
Total debt securities	$	466,905	$	473,075

Securities proceeds, gross gains and gross losses are presented below.

	Nine months ended September 30,				Three months ended September 30,
(dollars in thousands)	2014		2013		2014		2013
Sales of securities available for sale
Proceeds	$	13,766	$	29,995	$	13,766	$	29,995
Gross gains		3		1,077		3		1,077
Gross losses		231		972		231		972

The Company sold twelve securities with a total book value of $14.0 million and a total fair value of $13.8 million during the first nine months of 2014.  The remaining gains during the first nine months of 2014 were from calls.  The Company sold twelve securities with a total book value of $29.9 million and a total fair value of $30.0 million during the first nine months of 2013.  The sales in 2013 included four non-agency residential mortgage backed securities.

Purchase premiums or discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of 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 $196.3 million and $244.3 million were pledged as of September 30, 2014 and December 31, 2013, 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 September 30, 2014 and December 31, 2013 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
(dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2014
Agency residential mortgage-backed
securities	$	65,582	$	(507)	$	113,996	$	(3,292)	$	179,578	$	(3,799)
State and municipal securities		466		(15)		17,064		(515)		17,530		(530)
Total temporarily impaired	$	66,048	$	(522)	$	131,060	$	(3,807)	$	197,108	$	(4,329)
December 31, 2013
Agency residential mortgage-backed
securities	$	177,779	$	(6,444)	$	34,093	$	(1,491)	$	211,872	$	(7,935)
State and municipal securities		24,610		(1,102)		8,037		(910)		32,647		(2,012)
Total temporarily impaired	$	202,389	$	(7,546)	$	42,130	$	(2,401)	$	244,519	$	(9,947)

The total number of securities with unrealized losses as of September 30, 2014 and December 31, 2013 is presented below.

	Less than	12 months
	12 months	or more	Total
September 30, 2014
Agency residential mortgage-backed securities	21	29	50
State and municipal securities	1	33	34
Total temporarily impaired	22	62	84
	Less than	12 months
	12 months	or more	Total
December 31, 2013
Agency residential mortgage-backed securities	49	10	59
State and municipal securities	59	12	71
Total temporarily impaired	108	22	130

The following factors are considered in determining whether or not the impairment of these securities is other-than-temporary. In making this determination, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income.  Credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings. Ninety-nine percent of the securities are backed by the U.S. government, government agencies, government sponsored agencies or are A-rated or better, except for certain non-local or local municipal securities, which are not rated. For the government, government-sponsored agency and municipal securities, management did not believe that there would be credit losses or that full principal would 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.

XML

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of weighted average number of shares

 Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, stock awards and warrants, none of which were antidilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Weighted average shares outstanding for basic earnings per common share		16,547,551		16,451,199		16,531,411		16,427,060
Dilutive effect of stock options, awards and warrants		228,219		183,734		237,668		154,029
Weighted average shares outstanding for diluted earnings per common share		16,775,770		16,634,933		16,769,079		16,581,089
Basic earnings per common share	$	0.70	$	0.59	$	1.98	$	1.72
Diluted earnings per common share	$	0.69	$	0.59	$	1.95	$	1.70

XML

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY (Aging Of The Recorded Investment In Past Due Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	$ 2,684,719	$ 2,509,183
30-89 Days Past Due	2,437	1,971
Greater than 90 Days Past Due	0	46
Nonaccrual	14,767	23,898
Total Past Due	17,204	25,915
Total ending loan balance	2,701,923	2,535,098
Commercial and Industrial Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	1,031,682	901,847
Commercial and Industrial Loans [Member] | Working Capital Lines Of Credit Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	517,009	456,136
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	1,105	1,819
Total Past Due	1,105	1,819
Total ending loan balance	518,114	457,955
Commercial and Industrial Loans [Member] | Non-working Capital Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	508,354	440,050
30-89 Days Past Due	102	46
Greater than 90 Days Past Due	0	0
Nonaccrual	5,112	3,796
Total Past Due	5,214	3,842
Total ending loan balance	513,568	443,892
Commercial Real Estate and Multi-Family Residential Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	1,034,361	984,877
Commercial Real Estate and Multi-Family Residential Loans [Member] | Construction and Land Development Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	152,197	156,594
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	529	544
Total Past Due	529	544
Total ending loan balance	152,726	157,138
Commercial Real Estate and Multi-Family Residential Loans [Member] | Owner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	393,498	366,955
30-89 Days Past Due	414	0
Greater than 90 Days Past Due	0	0
Nonaccrual	2,013	3,156
Total Past Due	2,427	3,156
Total ending loan balance	395,925	370,111
Commercial Real Estate and Multi-Family Residential Loans [Member] | Nonowner Occupied Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	397,246	382,478
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	3,732	11,758
Total Past Due	3,732	11,758
Total ending loan balance	400,978	394,236
Commercial Real Estate and Multi-Family Residential Loans [Member] | Multifamily Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	84,732	63,392
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due	0	0
Total ending loan balance	84,732	63,392
Agri-business and Agricultural Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	209,808	254,125
Agri-business and Agricultural Loans [Member] | Loans Secured By Farmland [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	131,034	132,347
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	485	1,113
Total Past Due	485	1,113
Total ending loan balance	131,519	133,460
Agri-business and Agricultural Loans [Member] | Loans For Agricultural Production [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	78,289	120,665
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due	0	0
Total ending loan balance	78,289	120,665
Agri-business and Agricultural Loans [Member] | Other Commerical Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	77,075	70,766
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	0	0
Total Past Due	0	0
Total ending loan balance	77,075	70,766
Consumer 1-4 Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Total ending loan balance	301,101	277,406
Consumer 1-4 Family Mortgage Loans [Member] | Closed End First Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	140,719	122,370
30-89 Days Past Due	1,699	1,645
Greater than 90 Days Past Due	0	0
Nonaccrual	1,204	1,165
Total Past Due	2,903	2,810
Total ending loan balance	143,622	125,180
Consumer 1-4 Family Mortgage Loans [Member] | Open End and Junior Lien Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	151,229	147,123
30-89 Days Past Due	139	135
Greater than 90 Days Past Due	0	46
Nonaccrual	399	291
Total Past Due	538	472
Total ending loan balance	151,767	147,595
Consumer 1-4 Family Mortgage Loans [Member] | Residential Construction Loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	5,579	4,481
30-89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Nonaccrual	133	150
Total Past Due	133	150
Total ending loan balance	5,712	4,631
Other consumer loans [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Loans Not Past Due	47,758	45,826
30-89 Days Past Due	83	145
Greater than 90 Days Past Due	0	0
Nonaccrual	55	106
Total Past Due	138	251
Total ending loan balance	$ 47,896	$ 46,077

XML

RECLASSIFICATIONS

9 Months Ended

Sep. 30, 2014

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.