10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

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

For the transition period from                      to                     

Commission File Number 000-13396

CNB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1450605
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1 South Second Street

P.O. Box 42

Clearfield, Pennsylvania 16830

(Address of principal executive offices)

Registrant’s telephone number, including area code, (814) 765-9621

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.    x    Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	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    x  No

The number of shares outstanding of the issuer’s common stock as of August 1, 2016

COMMON STOCK NO PAR VALUE PER SHARE: 14,462,862 SHARES

INDEX

PART I.

FINANCIAL INFORMATION

	Page Number
ITEM 1 – Financial Statements
Consolidated Balance Sheets – June 30, 2016 (unaudited) and December 31, 2015 (audited)		1
Consolidated Statements of Income – Three months ended June 30, 2016 and 2015 (unaudited)		2
Consolidated Statements of Income – Six months ended June 30, 2016 and 2015 (unaudited)		3
Consolidated Statements of Comprehensive Income – Three and six months ended June 30,  2016 and 2015 (unaudited)		4
Consolidated Statements of Cash Flows – Six months ended June 30, 2016 and 2015 (unaudited)		5
Notes to Consolidated Financial Statements		6
ITEM  2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
ITEM 3 – Quantitative and Qualitative Disclosures about Market Risk		37
ITEM 4 – Controls and Procedures		38
PART II. OTHER INFORMATION
ITEM 1 – Legal Proceedings		39
ITEM 1A – Risk Factors		39
ITEM 6 – Exhibits		39
Signatures		40

Forward-Looking Statements

This quarterly report on form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, liquidity, results of operations, future performance and our business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond our control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) changes in general business, industry or economic conditions or competition; (ii) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise; (iii) adverse changes or conditions in capital and financial markets; (iv) changes in interest rates; (v) higher than expected costs or other difficulties related to integration of combined or merged businesses; (vi) the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions; (vii) changes in the quality or composition of our loan and investment portfolios; (viii) adequacy of loan loss reserves; (ix) increased competition; (x) loss of certain key officers; (xi) continued relationships with major customers; (xii) deposit attrition; (xiii) rapidly changing technology; (xiv) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xv) changes in the cost of funds, demand for loan products or demand for financial services; (xvi) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices; and (xvii) our success at managing the foregoing items. Some of these and other factors are discussed in our annual and quarterly reports filed with the Securities and Exchange Commission (SEC). Such factors could have an adverse impact on our financial position and our results of operations.

The forward-looking statements contained herein are based upon management’s beliefs and assumptions. Any forward-looking statement made herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Part I Financial Information

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

Dollars in thousands, except share data

	(unaudited)
	June 30,			December 31,
	2016			2015
ASSETS
Cash and due from banks	$	20,934		$	23,302
Interest bearing deposits with other banks		2,992			3,959
Total cash and cash equivalents		23,926			27,261
Securities available for sale		521,001			546,043
Trading securities		4,438			4,576
Loans held for sale		863			1,381
Loans		1,659,591			1,582,354
Less: unearned discount		(3,747	)		(4,556	)
Less: allowance for loan losses		(15,988	)		(16,737	)
Net loans		1,639,856			1,561,061
FHLB and other equity interests		16,023			15,921
Premises and equipment, net		41,276			39,370
Bank owned life insurance		41,565			41,039
Mortgage servicing rights		950			962
Goodwill		27,194			27,194
Core deposit intangible		1,964			2,395
Accrued interest receivable and other assets		17,336			17,933
Total Assets	$	2,336,392		$	2,285,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest bearing deposits	$	253,352		$	263,639
Interest bearing deposits		1,637,243			1,551,414
Total deposits		1,890,595			1,815,053
FHLB and other long-term borrowings		54,232			104,243
Other short-term borrowings		131,421			116,272
Subordinated debentures		20,620			20,620
Accrued interest payable and other liabilities		28,586			27,035
Total liabilities		2,125,454			2,083,223
Common stock, $0 par value; authorized 50,000,000 shares; issued 14,473,482 shares		0			0
Additional paid in capital		77,337			77,827
Retained earnings		127,614			123,301
Treasury stock, at cost (11,475 shares at June 30, 2016 and 65,052 shares at December 31, 2015)		(205	)		(1,114	)
Accumulated other comprehensive income		6,192			1,899
Total shareholders’ equity		210,938			201,913
Total Liabilities and Shareholders’ Equity	$	2,336,392		$	2,285,136

See Notes to Consolidated Financial Statements

1

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Dollars in thousands, except per share data

	Three months ended
	June 30,
	2016		2015
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	19,043	$	17,339
Securities:
Taxable		2,414		2,911
Tax-exempt		867		949
Dividends		149		107
Total interest and dividend income		22,473		21,306
INTEREST EXPENSE:
Deposits		2,077		2,165
Borrowed funds		794		805
Subordinated debentures (includes $86 and $94 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2016 and 2015, respectively)		199		185
Total interest expense		3,070		3,155
NET INTEREST INCOME		19,403		18,151
PROVISION FOR LOAN LOSSES		220		486
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		19,183		17,665
NON-INTEREST INCOME:
Wealth and asset management fees		780		751
Service charges on deposit accounts		1,006		1,094
Other service charges and fees		624		761
Net realized gains on available-for-sale securities (includes $1,005 and $472 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2016 and 2015, respectively)		1,005		472
Net realized and unrealized gains (losses) on trading securities		64		(29	)
Mortgage banking		147		207
Bank owned life insurance		263		289
Other		481		596
Total non-interest income		4,370		4,141
NON-INTEREST EXPENSES:
Salaries and benefits		7,908		7,506
Net occupancy expense		1,881		1,794
Amortization of core deposit intangible		217		259
Data processing		1,121		1,091
State and local taxes		558		474
Legal, professional, and examination fees		364		338
Advertising		395		419
FDIC insurance premiums		340		323
Prepayment penalties – long-term borrowings		1,506		0
Core processing conversion costs		1,488		0
Merger costs		173		0
Other		2,353		1,917
Total non-interest expenses		18,304		14,121
INCOME BEFORE INCOME TAXES		5,249		7,685
INCOME TAX EXPENSE (includes ($322) and ($132) income tax expense from reclassification items in 2016 and 2015, respectively)		1,184		2,083
NET INCOME	$	4,065	$	5,602
EARNINGS PER SHARE:
Basic	$	0.28	$	0.39
Diluted	$	0.28	$	0.39
DIVIDENDS PER SHARE:
Cash dividends per share	$	0.165	$	0.165

See Notes to Consolidated Financial Statements

2

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Dollars in thousands, except per share data

	Six months ended
	June 30,
	2016		2015
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	37,729	$	34,835
Securities:
Taxable		4,769		5,850
Tax-exempt		1,750		1,887
Dividends		291		375
Total interest and dividend income		44,539		42,947
INTEREST EXPENSE:
Deposits		4,093		4,212
Borrowed funds		1,708		1,623
Subordinated debentures (includes $176 and $189 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2016 and 2015, respectively)		393		371
Total interest expense		6,194		6,206
NET INTEREST INCOME		38,345		36,741
PROVISION FOR LOAN LOSSES		1,416		1,429
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		36,929		35,312
NON-INTEREST INCOME:
Wealth and asset management fees		1,503		1,517
Service charges on deposit accounts		1,987		2,111
Other service charges and fees		1,184		1,385
Net realized gains on available-for-sale securities (includes $1,005 and $491 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2016 and 2015, respectively)		1,005		491
Net realized and unrealized gains (losses) on trading securities		30		(61	)
Mortgage banking		318		320
Bank owned life insurance		526		565
Other		960		910
Total non-interest income		7,513		7,238
NON-INTEREST EXPENSES:
Salaries and benefits		15,399		14,138
Net occupancy expense		3,720		3,593
Amortization of core deposit intangible		432		518
Data processing		2,373		2,128
State and local taxes		1,050		1,024
Legal, professional, and examination fees		738		650
Advertising		879		753
FDIC insurance premiums		662		619
Prepayment penalties – long-term borrowings		1,506		0
Core processing conversion costs		1,555		0
Merger costs		215		0
Other		3,955		3,791
Total non-interest expenses		32,484		27,214
INCOME BEFORE INCOME TAXES		11,958		15,336
INCOME TAX EXPENSE (includes ($291) and ($106) income tax expense from reclassification items in 2016 and 2015, respectively)		2,874		4,169
NET INCOME	$	9,084	$	11,167
EARNINGS PER SHARE:
Basic	$	0.63	$	0.77
Diluted	$	0.63	$	0.77
DIVIDENDS PER SHARE:
Cash dividends per share	$	0.33	$	0.33

See Notes to Consolidated Financial Statements

3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

Dollars in thousands

	Three months ended						Six months ended
	June 30,						June 30,
	2016			2015			2016			2015
NET INCOME	$	4,065		$	5,602		$	9,084		$	11,167
Other comprehensive income (loss), net of tax:
Net change in fair value of interest rate swap agreements designated as cash flow hedges:
Unrealized gain (loss) on interest rate swaps, net of tax of $14 and and ($1) for the three months ended June 30, 2016 and 2015, and $59 and $37 for the six months ended June 30, 2016 and 2015		(25	)		2			(109	)		(78	)
Reclassification adjustment for losses recognized in earnings, net of tax of ($30) and ($33) for the three months ended June 30, 2016 and 2015, and ($62) and ($66) for the six months ended June 30, 2016 and 2015		56			61			114			123
		31			63			5			45
Net change in unrealized gains on securities available for sale:
Unrealized gains on other-than-temporarily impaired securities available for sale:
Unrealized gains (losses) arising during the period, net of tax of $179 and ($90) for the three months ended June 30, 2016 and 2015, and $276 and ($90) for the six months ended June 30, 2016 and 2015		(332	)		165			(513	)		165
Reclassification adjustment for realized gains included in net income, net of tax of $323 and $0 for the three months ended June 30, 2016 and 2015, and $323 and $0 for the six months ended June 30, 2016 and 2015		(599	)		0			(599	)		0
		(931	)		165			(1,112	)		165
Unrealized gains (losses) on other securities available for sale:
Unrealized gains (losses) arising during the period, net of tax of ($991) and $3,488 for the three months ended June 30, 2016 and 2015, and ($2,936) and $838 for the six months ended June 30, 2016 and 2015		1,839			(6,475	)		5,454			(1,556	)
Reclassification adjustment for realized gains included in net income, net of tax of $29 and $165 for the three months ended June 30, 2016 and 2015, and $29 and $172 for the six months ended June 30, 2016 and 2015		(54	)		(307	)		(54	)		(319	)
		1,785			(6,782	)		5,400			(1,875	)
Other comprehensive income (loss)		885			(6,554	)		4,293			(1,665	)
COMPREHENSIVE INCOME (LOSS)	$	4,950		$	(952	)	$	13,377		$	9,502

See Notes to Consolidated Financial Statements

4

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Dollars in thousands

	Six months ended
	June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,084		$	11,167
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses		1,416			1,429
Depreciation and amortization of premises and equipment, core deposit intangible, and mortgage servicing rights		1,981			2,037
Amortization and accretion of securities premiums and discounts, deferred loan fees and costs, net yield and credit mark on acquired loans, and unearned income		(671	)		31
Net realized gains on sales of available-for-sale securities		(1,005	)		(491	)
Net realized and unrealized(gains) losses on trading securities		(30	)		61
Proceeds from sale of trading securities		468			625
Purchase of trading securities		(300	)		(943	)
Gain on sale of loans		(213	)		(268	)
Net losses on dispositions of premises and equipment and foreclosed assets		70			43
Proceeds from sale of loans		7,995			6,140
Origination of loans held for sale		(7,324	)		(7,416	)
Income on bank owned life insurance		(526	)		(565	)
Stock-based compensation expense		412			305
Contribution of treasury stock		61			48
Changes in:
Accrued interest receivable and other assets		156			(804	)
Accrued interest payable and other liabilities		(750	)		5,671
NET CASH PROVIDED BY OPERATING ACTIVITIES		10,824			17,070
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities, prepayments and calls of available-for-sale securities		29,113			40,100
Proceeds from sales of available-for-sale securities		4,420			48,529
Purchase of available-for-sale securities		(1,703	)		(46,542	)
Loan origination and payments, net		(78,766	)		(96,202	)
Purchase of FHLB and other equity interests		(102	)		(6,347	)
Purchase of premises and equipment		(3,384	)		(4,173	)
Proceeds from the sale of premises and equipment and foreclosed assets		377			48
NET CASH USED IN INVESTING ACTIVITIES		(50,045	)		(64,587	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in:
Checking, money market and savings accounts		71,735			(10,915	)
Certificates of deposit		3,807			26,584
Purchase of treasury stock		(23	)		(868	)
Cash dividends paid		(4,771	)		(4,761	)
Repayment of long-term borrowings		(50,011	)		(126	)
Net change in short-term borrowings		15,149			40,075
NET CASH PROVIDED BY FINANCING ACTIVITIES		35,886			49,989
NET INCREASE IN CASH AND CASH EQUIVALENTS		(3,335	)		2,472
CASH AND CASH EQUIVALENTS, Beginning		27,261			27,928
CASH AND CASH EQUIVALENTS, Ending	$	23,926		$	30,400
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	6,664		$	6,210
Income taxes	$	2,026		$	3,238
SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers to other real estate owned	$	40		$	240
Grant of restricted stock awards from treasury stock	$	874		$	821

See Notes to Consolidated Financial Statements

5

CNB FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared pursuant to rules and regulations of the SEC and in compliance with accounting principles generally accepted in the United States of America (“GAAP”). Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of management of the registrant, the accompanying consolidated financial statements as of June 30, 2016 and for the three and six month periods ended June 30, 2016 and 2015 include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial condition and the results of operations for the periods presented. The financial performance reported for CNB Financial Corporation (the “Corporation”) for the three and six month periods ended June 30, 2016 is not necessarily indicative of the results to be expected for the full year. This information should be read in conjunction with the Corporation’s Annual Report on Form 10-K for the period ended December 31, 2015. All dollar amounts are stated in thousands, except share and per share data and other amounts as indicated. Certain prior period amounts have been reclassified to conform to the current period presentation.

2. SUBSEQUENT EVENT – ACQUISITION OF LAKE NATIONAL BANK

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (“LNB”) of Mentor, Ohio for $22.50 per share in cash. The transaction closed on July 15, 2016 and resulted in consideration paid to LNB shareholders of $24.75 million. Following completion of the merger, the two branches of LNB in Mentor, Ohio are operating as part of the ERIEBANK division of CNB Bank.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $173 thousand and $215 thousand for the three and six months ended June 30, 2016. All merger costs have been expensed as incurred.

As of the date the Corporation’s second quarter 2016 consolidated financial statements are issued, all of the information required to be disclosed by Accounting Standards Codification No. 805 was not available since, given the short period between the July 15, 2016 acquisition date and the financial statement issuance, the calculation of the fair value of all material LNB assets acquired and liabilities assumed had not yet been completed.

3. STOCK COMPENSATION

The Corporation has a stock incentive plan for key employees and independent directors. The stock incentive plan, which is administered by a committee of the Board of Directors, provides for aggregate grants of up to 500,000 shares of common stock in the form of nonqualified options or restricted stock. For key employees, the plan vesting is one-fourth of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the fourth anniversary of the grant date. For independent directors, the vesting schedule is one-third of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the third anniversary of the grant date.

6

At June 30, 2016, there was no unrecognized compensation cost related to nonvested stock options granted under this plan and no stock options were granted during the three and six month periods ended June 30, 2016 and 2015.

Compensation expense for the restricted stock awards is recognized over the requisite service period noted above based on the fair value of the shares at the date of grant. Nonvested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from these restricted stock awards was $172 and $412 for the three and six months ended June 30, 2016 and $148 and $305 for the three and six months ended June 30, 2015. As of June 30, 2016, there was $1,551 of total unrecognized compensation cost related to unvested restricted stock awards to be recognized over the next five years.

A summary of changes in nonvested restricted stock awards for the three months ended June 30, 2016 follows:

			Per Share Weighted Average
	Shares		Grant Date Fair Value
Nonvested at beginning of period		101,728	$	17.34
Granted		1,500		17.83
Vested		0		0
Nonvested at end of period		103,228	$	17.35

A summary of changes in nonvested restricted stock awards for the six months ended June 30, 2016 follows:

				Per Share Weighted Average
	Shares			Grant Date Fair Value
Nonvested at beginning of period		84,600		$	17.01
Granted		51,500			17.64
Vested		(32,872	)		16.92
Nonvested at end of period		103,228		$	17.35

The fair value of shares vested during the three and six month periods ended June 30, 2016 was $542.

4. FAIR VALUE

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an 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. A fair value hierarchy has also been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs are used to measure fair value:

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.

7

The fair values of most trading securities and securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which 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 relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Corporation’s structured pooled trust preferred securities are priced using Level 3 inputs. The decline in the level of observable inputs and market activity in this class of investments by the measurement date has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, vary widely, and the once-active market has become comparatively inactive. The Corporation engaged a third party consultant who has developed a model for pricing these securities. Information such as historical and current performance of the underlying collateral, deferral and default rates, collateral coverage ratios, break in yield calculations, cash flow projections, liquidity and credit premiums required by a market participant, and financial trend analysis with respect to the individual issuing financial institutions and insurance companies are utilized in determining the security valuation. Due to the current market conditions as well as the limited trading activity of these types of securities, the market value of the Corporation’s structured pooled trust preferred securities are highly sensitive to assumption changes and market volatility.

The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2016 and December 31, 2015:

				Fair Value Measurements at June 30, 2016 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,789		$	0	$	141,789		$	0
States and political subdivisions		164,645			0		164,645			0
Residential and multi-family mortgage		146,858			0		146,858			0
Corporate notes and bonds		16,924			0		16,924			0
Pooled trust preferred		1,702			0		0			1,702
Pooled SBA		48,087			0		48,087			0
Other equity securities		996			996		0			0
Total Securities Available For Sale	$	521,001		$	996	$	518,303		$	1,702
Interest rate swaps	$	648		$	0	$	648		$	0
Trading Securities:
Corporate equity securities	$	3,037		$	3,037	$	0		$	0
Mutual funds		888			888		0			0
Certificates of deposit		255			255		0			0
Corporate notes and bonds		202			202		0			0
U.S. Government sponsored entities		56			0		56			0
Total Trading Securities	$	4,438		$	4,382	$	56		$	0
Liabilities,
Interest rate swaps	$	(1,376	)	$	0	$	(1,376	)	$	0

8

				Fair Value Measurements at December 31, 2015 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,751		$	0	$	141,751		$	0
States and political subdivisions		171,819			0		171,819			0
Residential and multi-family mortgage		157,982			0		157,982			0
Corporate notes and bonds		18,688			0		18,688			0
Pooled trust preferred		3,413			0		0			3,413
Pooled SBA		51,409			0		51,409			0
Other equity securities		981			981		0			0
Total Securities Available For Sale	$	546,043		$	981	$	541,649		$	3,413
Interest rate swaps	$	131		$	0	$	131		$	0
Trading Securities:
Corporate equity securities	$	3,389		$	3,389	$	0		$	0
Mutual funds		750			750		0			0
Certificates of deposit		253			253		0			0
Corporate notes and bonds		130			130		0			0
U.S. Government sponsored entities		54			0		54			0
Total Trading Securities	$	4,576		$	4,522	$	54		$	0
Liabilities,
Interest rate swaps	$	(867	)	$	0	$	(867	)	$	0

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, April 1	$	3,109		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(485	)		255
Balance, June 30	$	1,702		$	1,160

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, January 1	$	3,413		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(789	)		255
Balance, June 30	$	1,702		$	1,160

9

The following table presents quantitative information about Level 3 fair value measurements at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	1,702	Discounted cash flow	Collateral default rate	0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	10.0% 2.0% constant prepayment rate in 2016 and thereafter

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	3,413	Discounted cash flow	Collateral default rate	1% in 2015; 0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	9.0% 2.0% constant prepayment rate in 2015 and thereafter

At June 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurement of the Corporation’s pooled trust preferred securities are collateral default rate, yield, and prepayment speed. Significant increases in specific-issuer default assumptions or decreases in specific-issuer recovery assumptions would result in a lower fair value measurement. Conversely, decreases in specific-issuer default assumptions or increases in specific-issuer recovery assumptions would result in a higher fair value measurement.

Assets and liabilities measured at fair value on a non-recurring basis are as follows at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,030		0		0	$2,030

			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,247		0		0	$2,247

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Impaired loans, measured for impairment using the fair value of collateral for collateral dependent loans, had a recorded investment of $3,324 with a valuation allowance of $1,294 as of June 30, 2016, resulting in an additional provision for loan losses of $135 and $53 for the corresponding three and six month period ended June 30, 2016. Impaired loans had a recorded investment of $3,489 with a valuation allowance of $1,242 as of December 31, 2015. Impaired loans carried at fair value resulted in an additional provision for loan losses of $60 and $63 for the corresponding three and six month period ended June 30, 2015.

The estimated fair values of impaired collateral dependent loans such as commercial or residential mortgages are determined primarily through third-party appraisals. When a collateral dependent loan, such as a commercial or residential mortgage loan, becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal, and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral and a further reduction for estimated costs to sell the property is applied, which results in an amount that is considered to be the estimated fair value. If a loan becomes impaired and the appraisal of related loan collateral is outdated, management applies an appropriate adjustment factor based on its experience with current valuations of similar collateral in determining the loan’s estimated fair value and resulting allowance for loan losses. Third-party appraisals are not customarily obtained in respect of unimpaired loans, unless in management’s view changes in circumstances warrant obtaining an updated appraisal.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,030	Sales comparison approach	Adjustment for differences between the comparable sales	21% - 99% (39%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,247	Sales comparison approach	Adjustment for differences between the comparable sales	25% - 69% (36%)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at June 30, 2016:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	23,926		$	23,926		$	0		$	0	$	23,926
Securities available for sale		521,001			996			518,303			1,702		521,001
Trading securities		4,438			4,382			56			0		4,438
Loans held for sale		863			0			888			0		888
Net loans		1,639,856			0			0			1,638,624		1,638,624
FHLB and other equity interests		16,023			n/a			n/a			n/a		n/a
Interest rate swaps		648			0			648			0		648
Accrued interest receivable		7,518			6			3,096			4,416		7,518
LIABILITIES
Deposits	$	(1,890,595	)	$	(1,702,622	)	$	(187,606	)	$	0	$	(1,890,228	)
FHLB and other borrowings		(185,653	)		0			(184,850	)		0		(184,850	)
Subordinated debentures		(20,620	)		0			(12,029	)		0		(12,029	)
Interest rate swaps		(1,376	)		0			(1,376	)		0		(1,376	)
Accrued interest payable		(296	)		0			(296	)		0		(296	)

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The following table presents the carrying amount and fair value of financial instruments at December 31, 2015:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	27,261		$	27,261		$	0		$	0	$	27,261
Securities available for sale		546,043			981			541,649			3,413		546,043
Trading securities		4,576			4,522			54			0		4,576
Loans held for sale		1,381			0			1,438			0		1,438
Net loans		1,561,061			0			0			1,554,502		1,554,502
FHLB and other equity interests		15,921			n/a			n/a			n/a		n/a
Interest rate swaps		131			0			131			0		131
Accrued interest receivable		7,312			5			2,875			4,432		7,312
LIABILITIES
Deposits	$	(1,815,053	)	$	(1,630,888	)	$	(183,028	)	$	0		(1,813,916	)
FHLB and other borrowings		(220,515	)		0			(218,808	)		0		(218,808	)
Subordinated debentures		(20,620	)		0			(11,761	)		0		(11,761	)
Interest rate swaps		(867	)		0			(867	)		0		(867	)
Accrued interest payable		(766	)		(344	)		(422	)		0		(766	)

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

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, 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 interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, 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.

FHLB and other equity interests: It is not practical to determine the fair value of Federal Home Loan Bank stock and other equity interests due to restrictions placed on the transferability of these instruments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value. The Level classification of accrued interest receivable is matched to the corresponding Level of the asset with which it is associated.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 1 classification. Fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

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FHLB and other borrowings: The fair values of the Corporation’s FHLB and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Subordinated debentures: The fair value of the Corporation’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of arrangements, resulting in a Level 2 classification.

Accrued interest payable: The carrying amount of accrued interest payable approximates fair value resulting in a classification that is consistent with the liability with which it is associated.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates.

In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial assets such as, among other things, the estimated earning power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

5. SECURITIES

Securities available for sale at June 30, 2016 and December 31, 2015 are as follows:

			June 30, 2016									December 31, 2015
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Gov’t sponsored entities	$	139,061	$	2,732	$	(4	)	$	141,789	$	141,300	$	1,579	$	(1,128	)	$	141,751
State & political subdivisions		156,731		8,108		(194	)		164,645		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		145,782		1,792		(716	)		146,858		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,188		199		(1,463	)		16,924		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		902		0			1,702		800		2,613		0			3,413
Pooled SBA		47,394		872		(179	)		48,087		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(24	)		996		1,020		0		(39	)		981
Total	$	508,976	$	14,605	$	(2,580	)	$	521,001	$	540,614	$	12,411	$	(6,982	)	$	546,043

At June 30, 2016 and December 31, 2015, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities.

Trading securities at June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Corporate equity securities	$	3,037	$	3,389
Mutual funds		888		750
Certificates of deposit		255		253
Corporate notes and bonds		202		130
U.S. Government sponsored entities		56		54
Total	$	4,438	$	4,576

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Securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

June 30, 2016

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	0	$	0		$	6,398	$	(4	)	$	6,398	$	(4	)
State & political subdivisions		271		(194	)		0		0			271		(194	)
Residential & multi-family mortgage		7,907		(81	)		58,084		(635	)		65,991		(716	)
Corporate notes & bonds		0		0			7,940		(1,463	)		7,940		(1,463	)
Pooled SBA		0		0			25,840		(179	)		25,840		(179	)
Other equity securities		0		0			996		(24	)		996		(24	)
	$	8,178	$	(275	)	$	99,258	$	(2,305	)	$	107,436	$	(2,580	)

December 31, 2015

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	65,675	$	(640	)	$	31,923	$	(488	)	$	97,598	$	(1,128	)
State & political subdivisions		9,103		(234	)		2,478		(9	)		11,581		(243	)
Residential & multi-family mortgage		69,631		(1,562	)		50,351		(1,832	)		119,982		(3,394	)
Corporate notes & bonds		5,027		(2	)		8,144		(1,269	)		13,171		(1,271	)
Pooled SBA		2,908		(28	)		27,127		(879	)		30,035		(907	)
Other equity securities		0		0			981		(39	)		981		(39	)
	$	152,344	$	(2,466	)	$	121,004	$	(4,516	)	$	273,348	$	(6,982	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and six months ended June 30, 2016 and 2015 is as follows:

	2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	2,071		$	4,054

During the quarter ended June 30, 2016 the Corporation sold two structured pooled trust preferred securities which had been charged off in their entirety in prior periods. The original cost basis of these securities was $1,983 and the proceeds received totaled $922, which is reported in net realized gains on available-for-sale securities for the three and six months ended June 30, 2016. Due to the insignificance of the Corporation’s adjusted amortized cost balance of the remaining structured pooled trust securities, no further disclosures are required.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers,

14

management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of June 30, 2016 and December 31, 2015, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

• There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

• All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales on available for sale securities is as follows:

	Proceeds		Gross Gains		Gross Losses
Three months ended June 30, 2016	$	4,420	$	1,005	$	0
Six months ended June 30, 2016		4,420		1,005		0
Three months ended June 30, 2015		15,580		472		0
Six months ended June 30, 2015		48,529		608		(117	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at June 30, 2016:

	Amortized		Fair
	Cost		Value
1 year or less	$	34,631	$	34,518
1 year – 5 years		185,702		192,456
5 years – 10 years		73,600		76,503
After 10 years		20,847		21,583
		314,780		325,060
Residential and multi-family mortgage		145,782		146,858
Pooled SBA		47,394		48,087
Total debt securities	$	507,956	$	520,005

Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On June 30, 2016 and December 31, 2015, securities carried at $365,867 and $312,669, respectively, were pledged to secure public deposits and for other purposes as provided by law.

15

6. LOANS

Total net loans at June 30, 2016 and December 31, 2015 are summarized as follows:

	June 30, 2016			December 31, 2015
Commercial, industrial, and agricultural	$	490,838		$	475,364
Commercial mortgages		494,619			448,179
Residential real estate		591,779			574,225
Consumer		76,619			78,345
Credit cards		5,329			5,201
Overdrafts		407			1,040
Less: unearned discount		(3,747	)		(4,556	)
allowance for loan losses		(15,988	)		(16,737	)
Loans, net	$	1,639,856		$	1,561,061

At June 30, 2016 and December 31, 2015, net unamortized loan fees of $(728) and $(636), respectively, have been included in the carrying value of loans.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within Central and Western Pennsylvania and Central Ohio. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

All relevant documentation, such as the loan application, financial statements and tax returns, required under the lending policies is summarized and provided to management and/or the Corporation’s Board of Directors in connection with the loan approval process. Such documentation is subsequently electronically archived in the Corporation’s document management system. Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.

Commercial, industrial, and agricultural loans comprised 30% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015. Commercial mortgage loans comprised 30% and 28% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 75% of the value of accounts receivable, and a maximum of 60% of the value of business inventory. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.

Residential real estate loans comprised 36% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market through Freddie Mac. Loans originated for sale into the secondary market are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represent less than 10% of the total loan portfolio at both June 30, 2016 and December 31, 2015. Terms and collateral requirements vary depending on the size and nature of the loan.

16

CNB has not underwritten any hybrid loans, payment option loans, or low documentation/no documentation loans. Variable rate loans are generally underwritten at the fully indexed rate. Loan underwriting policies and procedures have not changed materially between any periods presented.

Transactions in the allowance for loan losses for the three months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2016	$	5,627		$	6,044		$	2,574		$	2,274		$	81		$	138		$	16,738
Charge-offs		(162	)		(20	)		(124	)		(701	)		(28	)		(30	)		(1,065	)
Recoveries		39			0			3			30			3			20			95
Provision (benefit) for loan losses		(286	)		183			(154	)		463			(6	)		20			220
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the six months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(433	)		(20	)		(149	)		(1,688	)		(37	)		(81	)		(2,408	)
Recoveries		47			5			62			74			15			40			243
Provision (benefit) for loan losses		(431	)		617			(89	)		1,309			(18	)		28			1,416
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the three months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2015	$	7,223		$	5,296	$	2,786		$	2,129		$	74		$	174		$	17,682
Charge-offs		(65	)		0		(90	)		(477	)		(44	)		(48	)		(724	)
Recoveries		12			0		0			26			2			20			60
Provision (benefit) for loan losses		(572	)		632		(84	)		440			66			4			486
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

Transactions in the allowance for loan losses for the six months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310	$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(139	)		0		(156	)		(1,000	)		(86	)		(105	)		(1,486	)
Recoveries		27			50		1			55			5			50			188
Provision (benefit) for loan losses		(404	)		568		288			858			108			11			1,429
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of June 30, 2016 and December 31, 2015. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

17

June 30, 2016

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	168	$	0	$	0	$	0	$	0	$	0	$	168
Collectively evaluated for impairment		4,428		4,146		2,299		2,066		50		148		13,137
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		622		2,061		0		0		0		0		2,683
Total ending allowance balance	$	5,218	$	6,207	$	2,299	$	2,066	$	50	$	148	$	15,988
Loans:
Individually evaluated for impairment	$	930	$	0	$	0	$	0	$	0	$	0	$	930
Collectively evaluated for impairment		485,393		484,378		591,779		76,619		5,329		407		1,643,905
Acquired with deteriorated credit quality		0		670		0		0		0		0		670
Modified in a troubled debt restructuring		4,515		9,571		0		0		0		0		14,086
Total ending loans balance	$	490,838	$	494,619	$	591,779	$	76,619	$	5,329	$	407	$	1,659,591

December 31, 2015

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	239	$	0	$	39	$	0	$	0	$	0	$	278
Collectively evaluated for impairment		4,909		3,580		2,436		2,371		90		161		13,547
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		887		2,025		0		0		0		0		2,912
Total ending allowance balance	$	6,035	$	5,605	$	2,475	$	2,371	$	90	$	161	$	16,737
Loans:
Individually evaluated for impairment	$	1,196	$	393	$	248	$	0	$	0	$	0	$	1,837
Collectively evaluated for impairment		469,128		437,200		573,977		78,345		5,201		1,040		1,564,891
Acquired with deteriorated credit quality		0		685		0		0		0		0		685
Modified in a troubled debt restructuring		5,040		9,901		0		0		0		0		14,941
Total ending loans balance	$	475,364	$	448,179	$	574,225	$	78,345	$	5,201	$	1,040	$	1,582,354

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015:

June 30, 2016

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,176	$	2,990	$	790
Commercial mortgage		5,870		5,144		2,061
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		3,394		2,455		0
Commercial mortgage		4,427		4,427		0
Residential real estate		0		0		0
Total	$	16,867	$	15,016	$	2,851

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December 31, 2015

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,448	$	3,448	$	1,126
Commercial mortgage		5,985		5,343		2,025
Residential real estate		351		248		39
With no related allowance recorded:
Commercial, industrial, and agricultural		3,716		2,788		0
Commercial mortgage		5,001		4,951		0
Residential real estate		0		0		0
Total	$	18,501	$	16,778	$	3,190

	Three Months Ended June 30, 2016						Six Months Ended June 30, 2016
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,150	$	2	$	2	$	3,249	$	2	$	2
Commercial mortgage		5,309		4		4		5,320		4		4
Residential real estate		0		0		0		83		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,525		2		2		2,612		2		2
Commercial mortgage		4,458		3		3		4,622		3		3
Residential real estate		0		0		0		0		0		0
Total	$	15,442	$	11	$	11	$	15,886	$	17	$	17

	Three Months Ended June 30, 2015						Six Months Ended June 30, 2015
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	6,315	$	7	$	7	$	6,071	$	42	$	42
Commercial mortgage		9,646		0		0		9,617		0		0
Residential real estate		400		11		11		400		13		13
With no related allowance recorded:
Commercial, industrial, and agricultural		1,689		2		2		1,631		12		12
Commercial mortgage		4,719		0		0		4,854		0		0
Residential real estate		129		4		4		129		6		6
Total	$	22,898	$	24	$	24	$	22,702	$	73	$	73

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The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still accruing interest by class of loans as of June 30, 2016 and December 31, 2015:

	June 30, 2016				December 31, 2015
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	3,471	$	107	$	3,560	$	3
Commercial mortgages		3,433		0		3,651		0
Residential real estate		3,981		37		3,671		87
Consumer		1,113		2		1,277		15
Credit cards		0		16		0		0
Total	$	11,998	$	162	$	12,159	$	105

Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2016 and December 31, 2015 by class of loans.

June 30, 2016

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,000	$	775	$	1,013	$	2,788	$	488,050	$	490,838
Commercial mortgages		477		0		3,319		3,796		490,823		494,619
Residential real estate		2,480		1,130		3,290		6,900		584,879		591,779
Consumer		365		238		1,088		1,691		74,928		76,619
Credit cards		39		40		16		95		5,234		5,329
Overdrafts		0		0		0		0		407		407
Total	$	4,361	$	2,183	$	8,726	$	15,270	$	1,644,321	$	1,659,591

December 31, 2015

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	131	$	622	$	698	$	1,451	$	473,913	$	475,364
Commercial mortgages		7		343		3,651		4,001		444,178		448,179
Residential real estate		2,834		378		3,001		6,213		568,012		574,225
Consumer		216		179		1,292		1,687		76,658		78,345
Credit cards		0		0		0		0		5,201		5,201
Overdrafts		0		0		0		0		1,040		1,040
Total	$	3,188	$	1,522	$	8,642	$	13,352	$	1,569,002	$	1,582,354

20

Troubled Debt Restructurings

The terms of certain loans have been modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of June 30, 2016 and December 31, 2015.

	June 30, 2016						December 31, 2015
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		7	$	4,515	$	622		8	$	5,040	$	887
Commercial mortgages		8		9,571		2,061		8		9,901		2,025
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		15	$	14,086	$	2,683		16	$	14,941	$	2,912

There were no loans modified as troubled debt restructurings during the three and six months ended June 30, 2016 or June 30, 2015.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. All loans modified in troubled debt restructurings are performing in accordance with their modified terms as of June 30, 2016 and December 31, 2015 and no principal balances were forgiven in connection with the loan restructurings.

In order to determine whether a borrower is experiencing financial difficulty, the Corporation performs an evaluation using its internal underwriting policies of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, non-performing troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Credit Quality Indicators

The Corporation classifies commercial, industrial, and agricultural loans and commercial mortgage 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. Loans with outstanding balances greater than $1 million are analyzed at least semiannually and loans with outstanding balances of less than $1 million are analyzed at least annually.

The Corporation 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 Corporation’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 Corporation 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 characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

21

Loans not rated as special mention, substandard, or doubtful are considered to be pass rated loans. All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

June 30, 2016

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	448,340	$	22,860	$	19,408	$	230	$	490,838
Commercial mortgages		473,054		3,393		17,752		420		494,619
Total	$	921,394	$	26,253	$	37,160	$	650	$	985,457

December 31, 2015

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	447,449	$	4,749	$	22,943	$	223	$	475,364
Commercial mortgages		426,870		1,735		19,148		426		448,179
Total	$	874,319	$	6,484	$	42,091	$	649	$	923,543

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer, and credit card loans based on payment activity as of June 30, 2016 and December 31, 2015:

	June 30, 2016						December 31, 2015
	Residential				Credit		Residential				Credit
	Real Estate		Consumer		Cards		Real Estate		Consumer		Cards
Performing	$	587,761	$	75,504	$	5,313	$	570,467	$	77,053	$	5,201
Non-performing		4,018		1,115		16		3,758		1,292		0
Total	$	591,779	$	76,619	$	5,329	$	574,225	$	78,345	$	5,201

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”) are considered to be subprime loans. Holiday is a subsidiary that offers small balance unsecured and secured loans primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio.

Holiday’s loan portfolio is summarized as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
	2016			2015
Consumer	$	25,956		$	30,001
Residential real estate		1,166			1,263
Less: unearned discount		(3,747	)		(4,556	)
Total	$	23,375		$	26,708

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7. DEPOSITS

Total deposits at June 30, 2016 and December 31, 2015 are summarized as follows (in thousands):

	Percentage Change			June 30, 2016		December 31, 2015
Checking, non-interest bearing		(3.9	%)	$	253,352	$	263,639
Checking, interest bearing		17.3	%		516,238		440,174
Savings accounts		0.6	%		933,032		927,074
Certificates of deposit		2.1	%		187,973		184,166
		4.2	%	$	1,890,595	$	1,815,053

8. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. For the three and six months ended June 30, 2016 and 2015, there were no outstanding stock options to include in the diluted earnings per share calculations.

Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding unvested stock awards are participating securities.

The computation of basic and diluted earnings per share is shown below (in thousands except per share data):

	Three months ended						Six months ended
	June 30,						June 30,
	2016			2015			2016			2015
Basic earnings per common share computation:
Net income per consolidated statements of income	$	4,065		$	5,602		$	9,084		$	11,167
Net earnings allocated to participating securities		(27	)		(33	)		(60	)		(62	)
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Distributed earnings allocated to common stock	$	2,369		$	2,362		$	4,737		$	4,731
Undistributed earnings allocated to common stock		1,669			3,207			4,287			6,374
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average common shares outstanding, including shares considered participating securities		14,460			14,404			14,448			14,410
Less: Average participating securities		(92	)		(80	)		(86	)		(73	)
Weighted average shares		14,368			14,324			14,362			14,337
Basic earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77
Diluted earnings per common share computation:
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average shares and dilutive potential common shares		14,368			14,324			14,362			14,366
Diluted earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77

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9. DERIVATIVE INSTRUMENTS

On May 3, 2011, the Corporation executed an interest rate swap agreement with a 5 year term and an effective date of September 15, 2013 in order to hedge cash flows associated with $10 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement. The Corporation’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount. At June 30, 2016, the variable rate on the subordinated debt was 2.20% (LIBOR plus 155 basis points) and the Corporation was paying 5.57% (4.02% fixed rate plus 155 basis points).

As of June 30, 2016 and December 31, 2015, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Corporation does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015:

		Fair value as of
	Balance Sheet	June 30,	December 31,
	Location	2016	2015
Interest rate contracts	Accrued interest and other liabilities	($728)	($736)

For the Three Months Ended June 30, 2016	(a)		(b)	(c)		(d)	(e)
Interest rate contracts	($31	)	Interest expense – subordinated debentures	($86	)	Other income	$0
For the Six Months Ended June 30, 2016	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$5		Interest expense – subordinated debentures	($176	)	Other income	$0
For the Three Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$63		Interest expense – subordinated debentures	($94	)	Other income	$0
For the Six Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$45		Interest expense – subordinated debentures	($189	)	Other income	$0

24

(a) Amount of Gain or (Loss) Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts reported in accumulated other comprehensive loss related to the interest rate swap will be reclassified to interest expense as interest payments are made on the subordinated debentures. Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be $337. As of June 30, 2016 and December 31, 2015, a cash collateral balance in the amount of $1,400 was maintained with a counterparty to the interest rate swaps. These balances are included in interest bearing deposits with other banks on the consolidated balance sheet.

The Corporation has entered into certain interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Corporation enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Corporation agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. Concurrently, the Corporation agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Corporation’s customers to effectively convert a variable rate loan to a fixed rate. Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The Corporation pledged cash collateral to another financial institution with a balance of $200 as of June 30, 2016. This balance is included in interest bearing deposits with other banks on the consolidated balance sheets. The Corporation does not require its customers to post cash or securities as collateral on its program of back-to-back swaps. However, certain language is included in the International Swaps and Derivatives Association agreement and loan documents where, in default situations, the Corporation is permitted to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Corporation may be required to post additional collateral to swap counterparties in the future in proportion to potential increases in unrealized loss positions.

The following table provides summary information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of June 30, 2016 and December 31, 2015:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate		Fair Value
June 30, 2016
3rd Party interest rate swaps	$	9,391			9.3		4.31	%		1 month LIBOR + 2.25%	$	648	(f)
Customer interest rate swaps		(9,391	)		9.3		4.31	%		1 month LIBOR + 2.25%		(648	)(g)
December 31, 2015
3rd Party interest rate swaps	$	6,751			9.4		4.42	%		1 month LIBOR + 2.25%	$	131	(f)
Customer interest rate swaps		(6,751	)		9.4		4.42	%		1 month LIBOR + 2.25%		(131	)(g)

(f) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(g) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

25

10. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting) which will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-09 is not expected to have a material effect on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments) which clarifies that an assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence in ASC 815-15-25-42. Entities are required to apply the guidance to existing debt instruments (or hybrid financial instruments that are determined to have a debt host) using a modified retrospective transition method as of the period of adoption. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-06 is not expected to have a material effect on the Corporation’s financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize lease assets and lease liabilities that arise from all leases. In addition, lessor accounting guidance will be changed to conform to the new guidance. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. Early adoption is not permitted. The adoption of ASU 2016-01 is not expected to have a material effect on the Corporation’s financial statements.

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Compensation – Stock Compensation (Topic 718)”. ASU 2014-12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under ASU 2014-12. The guidance is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 did not have a material effect on the Corporation’s financial statements.

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In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s financial statements.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial statements of the Corporation is presented to provide insight into management’s assessment of financial results. The Corporation’s subsidiary, CNB Bank (the “Bank”), provides financial services to individuals and businesses primarily within its primary market area of the Pennsylvania counties of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, Elk, Indiana, Jefferson, and McKean. As ERIEBANK, a division of CNB Bank, the Bank operates in the Pennsylvania counties of Crawford, Erie, and Warren, and the Ohio counties of Ashtabula and Lake. As FCBank, a division of CNB Bank, the Bank operates in the Ohio counties of Crawford, Richland, Ashland, Wayne, Marion, Morrow, Knox, Holmes, Delaware, Franklin, and Fairfield.

The Bank is subject to regulation, supervision and examination by the Pennsylvania State Department of Banking as well as the Federal Deposit Insurance Corporation. The financial condition and results of operations of the Corporation and its consolidated subsidiaries are not necessarily indicative of future performance. CNB Securities Corporation is incorporated in Delaware and currently maintains investments in debt and equity securities. CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. Holiday Financial Services Corporation (“Holiday”), incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics.

When we use the terms “we”, “us” and “our”, we mean CNB Financial Corporation and its subsidiaries. Management’s discussion and analysis should be read in conjunction with the Corporation’s consolidated financial statements and related notes.

The following discussion should be read in conjunction with the Corporation’s Consolidated Financial Statements and Notes thereto, for the year ended December 31, 2015, included in its 2015 Form 10-K, and in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 1 of this report. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results for the full year ending December 31, 2016, or any future period.

COMPLETED ACQUISITION / NORTHEAST OHIO MARKET

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (“LNB”) of Mentor, Ohio for $22.50 per share in cash. The transaction closed on July 15, 2016 and resulted in consideration paid to LNB shareholders of $24.75 million. Following completion of the merger, the two branches of LNB in Mentor, Ohio, which is a suburb of Cleveland, are operating as part of the ERIEBANK division of CNB Bank.

In order to facilitate its entry into northeastern Ohio as ERIEBANK, the Corporation had opened a loan production office in Ashtabula, Ohio in the fourth quarter of 2014. Construction of a full-service branch in Ashtabula is expected to begin in the third quarter of 2016, with completed anticipated by the end of the first quarter of 2017.

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GENERAL OVERVIEW

Management uses return on average equity, earnings per share, asset quality, and other metrics to measure the performance of the Corporation. The interest rate environment will continue to play an important role in the future earnings of the Corporation. During the past several years, in order to address the historically low interest rates that are primarily tied to short-term rates, such as the Prime Rate, the Corporation has taken a variety of measures including instituting rate floors on our commercial lines of credit and home equity lines.

Non-interest costs are expected to increase with the growth of the Corporation; however, management’s growth strategies are expected to also result in an increase in earning assets as well as enhanced non-interest income which is expected to more than offset increases in non-interest expenses in 2016 and beyond. While past results are not an indication of future earnings, management believes the Corporation is well-positioned to sustain core earnings during 2016.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents totaled $23.9 million at June 30, 2016 compared to $27.3 million at December 31, 2015. Cash and cash equivalents fluctuate based on the timing and amount of liquidity events that occur in the normal course of business.

Management believes the liquidity needs of the Corporation are satisfied by the current balance of cash and cash equivalents, readily available access to traditional funding sources, Federal Home Loan Bank financing, and the portions of the securities and loan portfolios that mature within one year. The Corporation expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due.

SECURITIES

Securities available for sale and trading securities decreased by $25.2 million or 4.6% since December 31, 2015, and associated cash proceeds were used primarily to fund loan growth. The footnotes to the consolidated financial statements provide more detail concerning the composition of the Corporation’s securities portfolio, the process for evaluating securities for other-than-temporary impairment, and for valuation of structured pooled trust preferred securities.

The Corporation generally buys into the market over time and does not attempt to “time” its transactions. In doing this, the highs and lows of the market are averaged into the portfolio and the overall effect of different rate environments is minimized. The Corporation monitors the earnings performance and the effectiveness of the liquidity of the securities portfolio on a regular basis through meetings of the Asset/Liability Committee of the Corporation’s Board of Directors (“ALCO”). The ALCO also reviews and manages interest rate risk for the Corporation. Through active balance sheet management and analysis of the securities portfolio, a sufficient level of liquidity is maintained to satisfy depositor requirements and various credit needs of our customers.

LOANS

The Corporation experienced an increase in loans, net of unearned discount, of $78.0 million, or 4.9%, during the first six months of 2016. Lending efforts consist principally of commercial and retail lending, which includes single family residential mortgages and other consumer loans. The Corporation views commercial lending as its competitive advantage and continues to focus on this area by hiring and retaining experienced loan officers and supporting them with quality credit analysis. The Corporation expects loan demand to be solid and loan balances to grow throughout the remainder of 2016.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established by provisions for losses in the loan portfolio as well as overdrafts in deposit accounts. These provisions are charged against current income. Loans and overdrafts deemed not collectible are charged off against the allowance while any subsequent collections are recorded as recoveries and increase the allowance.

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The table below shows activity within the allowance account for the specified periods (in thousands):

	Six months ending June 30, 2016			Year ending December 31, 2015			Six months ending June 30, 2015
Balance at beginning of period	$	16,737		$	17,373		$	17,373
Charge-offs:
Commercial, industrial, and agricultural		(433	)		(307	)		(139	)
Commercial mortgages		(20	)		(486	)		—
Residential real estate		(149	)		(632	)		(156	)
Consumer		(1,688	)		(1,956	)		(1,000	)
Credit cards		(37	)		(116	)		(86	)
Overdrafts		(81	)		(221	)		(105	)
		(2,408	)		(3,718	)		(1,486	)
Recoveries:
Commercial, industrial, and agricultural		47			267			27
Commercial mortgages		5			52			50
Residential real estate		62			8			1
Consumer		74			96			55
Credit cards		15			14			5
Overdraft deposit accounts		40			85			50
		243			522			188
Net charge-offs		(2,165	)		(3,196	)		(1,298	)
Provision for loan losses		1,416			2,560			1,429
Balance at end of period	$	15,988		$	16,737		$	17,504
Loans, net of unearned	$	1,655,844		$	1,577,798		$	1,451,464
Allowance to net loans		0.97	%		1.06	%		1.21	%
Net charge-offs to average loans (annualized)		0.27	%		0.22	%		0.19	%
Nonperforming assets	$	12,676		$	12,918		$	13,087
Nonperforming % of total assets		0.54	%		0.57	%		0.58	%

The adequacy of the allowance for loan losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation. As part of the formal analysis, delinquencies and losses are monitored monthly. The loan portfolio is divided into several categories in order to better analyze the entire pool. First is a selection of classified loans that is given a specific reserve. The remaining loans are pooled, by category, into these segments:

Reviewed

• Commercial, industrial, and agricultural

• Commercial mortgages

Homogeneous

• Residential real estate

• Consumer

• Credit cards

• Overdrafts

The reviewed loan pools are further segregated into four categories: special mention, substandard, doubtful, and pass rated. Historical loss factors are calculated for each pool excluding overdrafts based on the previous eight quarters of experience. The homogeneous pools are evaluated by analyzing the historical loss factors from the most previous quarter end and the two most recent year ends.

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The historical loss factors for both the reviewed and homogeneous pools are adjusted based on the following six qualitative factors:

• levels of and trends in delinquencies, non-accrual loans, and classified loans;

• trends in volume and terms of loans;

• effects of any changes in lending policies and procedures;

• experience and ability of management;

• national and local economic trends and conditions; and

• concentrations of credit.

The methodology described above was created using the experience of the Corporation’s Management team, guidance from the regulatory agencies, expertise of a third-party loan review provider, and discussions with peers. The resulting factors are applied to the pool balances in order to estimate the probable risk of loss within each pool. Prudent business practices dictate that the level of the allowance, as well as corresponding charges to the provision for loan losses, should be commensurate with identified areas of risk within the loan portfolio and the attendant risks inherent therein. The quality of the credit risk management function and the overall administration of this vital segment of the Corporation’s assets are critical to the ongoing success of the Corporation.

The previously mentioned analysis considers numerous historical and other factors to analyze the adequacy of the allowance and current period charges against the provision for loan losses. Management uses the analysis to compare and plot the actual level of the allowance against the aggregate amount of loans adversely classified in order to compute the estimated probable losses associated with those loans. Management then determines the current adequacy of the allowance and evaluates trends that may be developing. The volume and composition of the Corporation’s loan portfolio continue to reflect growth in commercial credits including commercial real estate loans.

As mentioned in the Loans section of this analysis, management considers commercial lending to be a competitive advantage and continues to focus on this area as part of its strategic growth initiatives. However, management recognizes and considers the fact that risk is more pronounced in these types of credits and is, to a greater degree than with other loans, driven by the economic environment in which the debtor’s business operates.

During the three and six months ended June 30, 2016, the Corporation recorded a provision for loan losses of $220 thousand and $1.4 million, as compared to a provision for loan losses of $486 thousand and $1.4 million for the three and six months ended June 30, 2015. Net chargeoffs during the three and six months ended June 30, 2016 were $970 thousand and $2.2 million, as compared to $664 thousand and $1.3 million for the three and six months ended June 30, 2015.

The increase in chargeoffs was primarily attributable to consumer loans held in CNB’s consumer discount company, Holiday Financial Services Corporation. There were no new impaired commercial loan relationships that required a significant loss reserve in the first six months of 2016. The overall decrease in the provision for loan losses in the second quarter of 2016 compared to the second quarter of 2015 primarily reflects lower historical loss rates in the commercial & industrial, commercial real estate, residential real estate, and consumer portfolio segments.

Management believes that the allowance for loan losses is reasonable and adequate to absorb probable incurred losses in the Corporation’s portfolio at June 30, 2016.

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FUNDING SOURCES

The Corporation considers deposits, short-term borrowings, and term debt when evaluating funding sources. Deposits increased $75.5 million from $1.815 billion at December 31, 2015 to $1.891 billion at June 30, 2016.    Periodically, the Corporation utilizes term borrowings from the Federal Home Loan Bank (“FHLB”) and other lenders to meet funding needs. Management plans to maintain access to short-term and long-term borrowings as an available funding source.

During the second quarter of 2016, the Corporation repaid FHLB long-term borrowings totaling $40.0 million which carried interest rates ranging from 3.97% to 4.60% and incurred an early repayment penalty of $1.5 million. Resulting interest expense savings are projected at $870 thousand for the remainder of 2016 and $1.0 million for 2017.

SHAREHOLDERS’ EQUITY AND CAPITAL RATIOS AND METRICS

The Corporation’s capital continued to provide a base for profitable growth through June 30, 2016. Total shareholders’ equity was $210.9 million at June 30, 2016 and $201.9 million at December 31, 2015. In the first six months of 2016, the Corporation earned $9.1 million and declared dividends of $4.8 million, resulting in a dividend payout ratio of 52.5% of net income.

The Corporation is required to comply with standards of capital adequacy mandated by banking regulators. On January 1, 2015, rules to implement Basel III capital requirements became effective for community banks.

The rules substantially revised the risk-based capital requirements in comparison to the previously existing U.S. risk-based capital rules. The Basel III Capital Rules, among other things, (i) introduced a new capital measure called “Common Equity Tier 1” (“CET1”), (ii) increased the minimum requirements for Tier 1 Capital ratio as well as the minimum levels to be considered well capitalized under prompt corrective action; (iii) and introduced the “capital conservation buffer”, designed to absorb losses during periods of economic stress. Institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer are subject to constraints on dividends, equity repurchases and discretionary bonuses to executive officers based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).

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The Corporation’s capital ratios, book value per share and tangible book value per share as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Total risk-based capital ratio		12.70	%		13.18	%
Tier 1 capital ratio		11.75	%		12.14	%
Tier 1 common equity ratio		10.56	%		10.90	%
Leverage ratio		8.62	%		8.73	%
Tangible common equity/tangible assets (1)		7.88	%		7.64	%
Book value per share	$	14.59		$	14.01
Tangible book value per share (1)		12.57		$	11.96

(1) Tangible common equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and core deposit intangibles from the calculation of shareholders’ equity. Tangible assets is calculated by excluding the balance of goodwill and core deposit intangibles from the calculation of total assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. The Corporation believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition because they are additional measures used to assess capital adequacy. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except share and per share data).

	June 30, 2016			December 31, 2015
Shareholders’ equity	$	210,938		$	201,913
Less goodwill		27,194			27,194
Less core deposit intangible		1,964			2,395
Tangible common equity	$	181,780		$	172,324
Total assets	$	2,336,392		$	2,285,136
Less goodwill		27,194			27,194
Less core deposit intangible		1,964			2,395
Tangible assets	$	2,307,234		$	2,255,547
Ending shares outstanding		14,462,007			14,408,430
Tangible book value per share	$	12.57		$	11.96
Tangible common equity/tangible assets		7.88	%		7.64	%

LIQUIDITY

Liquidity measures an organization’s ability to meet cash obligations as they come due. The consolidated statement of cash flows provides analysis of the Corporation’s cash and cash equivalents. Additionally, management considers that portion of the loan and investment portfolio that matures within one year to be part of the Corporation’s liquid assets. The Corporation’s liquidity is monitored by both management and the ALCO, which establishes and monitors ranges of acceptable liquidity. Management believes the Corporation’s current liquidity position is acceptable.

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OFF BALANCE SHEET ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off balance sheet risk was as follows at June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016				December 31, 2015
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	35,684	$	252,908	$	42,803	$	259,032
Unused lines of credit		0		88,557		0		87,493
Standby letters of credit		0		14,933		0		15,704

Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at June 30, 2016 have interest rates ranging from 1.19% to 18.00% and maturities ranging from 3 months to 20 years. The fixed rate loan commitments at December 31, 2015 have interest rates ranging from 1.19% to 18.00% and maturities ranging from 3 months to 20 years.

In October 2015, the Corporation entered into a subscription agreement with Oxer BCP Mezzanine Fund, LP (“Oxer”) and committed to invest $5,000 as a limited partner in the fund. Oxer is a Small Business Investment Company (SBIC) that is licensed and regulated by the Office of Investment at the Small Business Administration (SBA). The SBIC license allows SBICs to employ private capital and funds borrowed at a low cost using SBA-guaranteed securities to make investments in qualifying small businesses and similar enterprises as defined by SBA regulations. As of June 30, 2016, the Corporation has invested $1,445 of its $5,000 commitment.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2016 and 2015

OVERVIEW OF THE INCOME STATEMENT

The Corporation had net income of $4.1 million in the second quarter of 2016 and $5.6 million in the second quarter of 2015. The earnings per diluted share were $0.28 in the second quarter of 2016 and $0.39 in the second quarter of 2015. Earnings in the second quarter of 2016 were impacted by a prepayment penalty on the early payoff of long-term borrowings of $1.5 million, core processing conversion costs of $1.5 million, merger costs of $173 thousand, and realized gains on the sale of available-for-sale securities of $1.0 million. The annualized return on assets and return on equity for the second quarter of 2016 are 0.70% and 7.72% compared to 1.00% and 11.48% for the second quarter of 2015.

INTEREST INCOME AND EXPENSE

Net interest margin on a fully tax equivalent basis was 3.73% for the three months ended June 30, 2016, compared to 3.62% for the three months ended June 30, 2015. Net interest income increased by 6.9% from $18.2 million for the three months ended June 30, 2015 to $19.4 million for the three months ended June 30, 2016. The Corporation’s net interest margin has stabilized in 2016 as the Corporation continues to use cash flows from its available-for-sale securities portfolio and core deposit growth, supplemented by short-term borrowings as needed, to fund loan growth.

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PROVISION FOR LOAN LOSSES

The Corporation recorded a provision for loan losses of $220 thousand in the second quarter of 2016 compared to $486 thousand in the second quarter of 2015. Net chargeoffs in the second quarter of 2016 were $970 thousand, compared to net chargeoffs of $664 thousand in the second quarter of 2015. The increase in chargeoffs was primarily attributable to consumer loans held in CNB’s consumer discount company, Holiday Financial Services Corporation. The Corporation increased its loan loss reserve on one impaired commercial mortgage loan by $224 thousand in the second quarter of 2016 as a result of an update to the appraised value of the collateral securing the loan. The overall decrease in the provision for loan losses in the second quarter of 2016 compared to the second quarter of 2015 primarily reflects lower historical loss rates in the commercial & industrial, commercial real estate, residential real estate, and consumer portfolio segments.

Management believes the provision for loan losses was appropriate and the allowance for loan losses is adequate to absorb probable incurred losses in our portfolio as of June 30, 2016.

NON-INTEREST INCOME

Non-interest income was $4.4 million for the quarter ended June 30, 2016, compared to $4.1 million for the quarter ended June 30, 2015. In the second quarter of 2016, the Corporation realized gains on the sale of available-for-sale securities in the amount of $1.0 million, including $922 thousand on the sale of two structured pooled trust preferred securities that had no carrying value due to other-than-temporary impairment charges recorded in previous periods. Realized gains on the sale of available-for-sale securities in the second quarter of 2015 were $472 thousand.

NON-INTEREST EXPENSES

Total non-interest expenses were $18.3 million during the three months ended June 30, 2016, compared to $14.1 million during the three months ended June 30, 2015. Throughout 2015 and the first six months of 2016, CNB made numerous infrastructure, personnel, and other investments to facilitate its continued growth. In order to better serve our customers and to achieve operational efficiencies, CNB completed a core processing system upgrade in May 2016. Included in non-interest expenses in the second quarter of 2016 were $3.2 million of non-recurring items, with merger related expenses of $173 thousand, costs associated with our core processing system upgrade of $1.5 million, and a prepayment penalty associated with the early payoff of long-term borrowings of $1.5 million. The borrowings totaled $40 million and carried interest rates ranging from 3.97% to 4.60%, and the resulting interest expense savings are projected at $870 thousand for the remainder of 2016 and $1.0 million for 2017.

Salaries and benefits expenses increased $402 thousand, or 5.4%, during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. As of June 30, 2016, the Corporation had 453 full-time equivalent staff, compared to 430 full-time equivalent staff as of June 30, 2015. The staff added during this period included both customer-facing personnel such as business development and wealth management officers, as well as support department personnel.

INCOME TAX EXPENSE

Income tax expense was $1.2 million in the second quarter of 2016 and $2.1 million in the second quarter of 2015, resulting in effective tax rates of 22.6% and 27.1% for the periods, respectively. The effective rates for the periods differed from the federal statutory rate of 35.0% principally as a result of tax exempt income from securities and loans as well as earnings from bank owned life insurance.

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CONSOLIDATED YIELD COMPARISONS

AVERAGE BALANCES AND NET INTEREST MARGIN FOR THE SIX MONTHS ENDED

Dollars in thousands

	June 30, 2016								June 30, 2015
	Average			Annual			Interest		Average			Annual			Interest
	Balance			Rate			Inc./Exp.		Balance			Rate			Inc./Exp.
ASSETS:
Securities:
Taxable (1)	$	409,851			2.36	%	$	4,769	$	520,474			2.26	%	$	5,850
Tax-Exempt (1,2)		127,899			4.25	%		2,630		136,080			4.27	%		2,830
Equity Securities (1,2)		18,146			4.33	%		393		11,603			8.72	%		506
Total securities		555,896			2.86	%		7,792		668,157			2.78	%		9,186
Loans:
Commercial (2)		481,201			4.78	%		11,506		448,758			4.77	%		10,699
Mortgage (2)		1,051,634			4.36	%		22,906		869,134			4.79	%		20,824
Consumer		82,658			9.42	%		3,894		75,086			9.77	%		3,668
Total loans (3)		1,615,493			4.74	%		38,306		1,392,978			5.05	%		35,191
Total earning assets	$	2,171,389			4.27	%	$	46,098	$	2,061,135			4.32	%	$	44,377
Non interest-bearing assets:
Cash and due from banks		25,169								28,178
Premises and equipment		40,355								36,653
Other assets		92,289								94,637
Allowance for loan losses		(16,662	)							(17,792	)
Total non interest-bearing assets		141,151								141,676
TOTAL ASSETS	$	2,312,540							$	2,202,811
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing	$	485,418			0.36	%	$	863	$	450,979			0.35	%	$	792
Savings		946,094			0.46	%		2,184		950,942			0.50	%		2,358
Time		187,998			1.11	%		1,046		199,353			1.07	%		1,062
Total interest-bearing deposits		1,619,510			0.51	%		4,093		1,601,274			0.53	%		4,212
Short-term borrowings		87,109			0.50	%		216		39,537			0.23	%		45
Long-term borrowings		91,742			3.25	%		1,492		75,717			4.17	%		1,578
Subordinated debentures		20,620			3.81	%		393		20,620			3.60	%		371
Total interest-bearing liabilities		1,818,981			0.68	%	$	6,194		1,737,148			0.71	%	$	6,206
Demand—non interest-bearing		257,575								248,862
Other liabilities		26,394								22,155
Total liabilities		2,102,950								2,008,165
Shareholders’ equity		209,590								194,646
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,312,540							$	2,202,811
Interest income/Earning assets					4.27	%	$	46,098					4.32	%	$	44,377
Interest expense/Interest-bearing liabilities					0.68	%		6,194					0.71	%		6,206
Net interest spread					3.59	%	$	39,904					3.61	%	$	38,171
Interest income/Earning assets					4.27	%	$	46,098					4.32	%	$	44,377
Interest expense/Earning assets					0.57	%		6,194					0.60	%		6,206
Net interest margin					3.70	%	$	39,904					3.72	%	$	38,171

(1) Includes unamortized discounts and premiums. Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized cost average balance for available for sale securities.

(2) Average yields are stated on a fully taxable equivalent basis.

(3) Average outstanding includes the average balance outstanding of all non-accrual loans. Loans consist of the average of total loans less average unearned income. The amount of loan fees included in the interest income on loans is not material.

35

Six Months Ended June 30, 2015 and 2014

OVERVIEW OF THE INCOME STATEMENT

The Corporation had net income of $9.1 million in the six months ended June 30, 2016 compared to $11.2 for the same period of 2015. The earnings per diluted share were $0.63 for the six months ended June 30, 2016 and $0.77 for the six months ended June 30, 2015. Earnings in 2016 were impacted by a prepayment penalty on the early payoff of long-term borrowings of $1.5 million, core processing conversion costs of $1.6 million, merger costs of $215 thousand, and realized gains on the sale of available-for-sale securities of $1.0 million. The annualized return on assets and return on equity for the six months ended June 30, 2016 are 0.79% and 8.68% compared to 1.01% and 11.47%, respectively for the same period of 2015.

INTEREST INCOME AND EXPENSE

Net interest margin on a fully tax equivalent basis was 3.70% for the six months ended June 30, 2016, compared to 3.72% for the six months ended June 30, 2015. Net interest income increased by 4.4% from $36.7 million for the six months ended June 30, 2015 to $38.3 million for the six months ended June 30, 2016. The Corporation’s net interest margin has stabilized in 2016 as the Corporation continues to use cash flows from its available-for-sale securities portfolio and core deposit growth, supplemented by short-term borrowings as needed, to fund loan growth.

PROVISION FOR LOAN LOSSES

The Corporation recorded a provision for loan losses of $1.4 million in both the six months ended June 30, 2016 and 2015. Net chargeoffs for the six months ended June 30, 2016 were $2.2 million, compared to net chargeoffs of $1.3 million in the same period of 2015. The increase in chargeoffs was primarily attributable to consumer loans held in CNB’s consumer discount company, Holiday Financial Services Corporation. The Corporation increased its loan loss reserve on one impaired commercial mortgage loan by $224 thousand in the second quarter of 2016 as a result of an update to the appraised value of the collateral securing the loan. This change was offset by a decrease in the general loan loss reserves required in 2016 due to lower historical loss rates in the commercial & industrial, commercial real estate, and residential real estate portfolio segments.

Management believes the provision for loan losses was appropriate and the allowance for loan losses is adequate to absorb probable incurred losses in our portfolio as of June, 2016.

NON-INTEREST INCOME

Non-interest income was $7.5 million for the six months ended June 30, 2016, compared to $7.2 million for the six months ended June 30, 2015. In 2016, the Corporation realized gains on the sale of available-for-sale securities in the amount of $1.0 million, including $922 thousand on the sale of two structured pooled trust preferred securities that had no carrying value due to other-than-temporary impairment charges recorded in previous periods. Net realized gains on the sale of available-for-sale securities in 2015 were $491 thousand.

NON-INTEREST EXPENSES

Total non-interest expenses were $32.5 million during the six months ended June 30, 2016, compared to $27.2 million during the six months ended June 30, 2015. Throughout 2015 and the first six months of 2016, CNB made numerous infrastructure, personnel, and other investments to facilitate its continued growth. In order to better serve our customers and to achieve operational efficiencies, CNB completed a core processing system upgrade in May 2016. Included in non-interest expenses in 2016 were $3.3 million of non-recurring items, with merger related expenses of $215 thousand, costs associated with our core processing system upgrade of $1.6 million, and a prepayment penalty associated with the early payoff of long-term borrowings of $1.5 million. The borrowings totaled $40 million and carried interest rates ranging from 3.97% to 4.60%, and the resulting interest expense savings are projected at $870 thousand for the remainder of 2016 and $1.0 million for 2017.

36

Salaries and benefits expenses increased $1.3 million, or 8.9%, during the six months ended June 30, 2016 compared to the six months ended June 30, 2015. As of June 30, 2016, the Corporation had 453 full-time equivalent staff, compared to 430 full-time equivalent staff as of June 30, 2015. The staff added during this period included both customer-facing personnel such as business development and wealth management officers, as well as support department personnel.

INCOME TAX EXPENSE

Income tax expense was $2.9 million for the six months ended June 30, 2016 as compared to $4.2 million for the six months ended June 30, 2015, resulting in effective tax rates of 24.0% and 27.2% for the periods, respectively. The effective rates for the periods differed from the federal statutory rate of 35.0% principally as a result of tax exempt income from securities and loans, earnings from bank owned life insurance, and nondeductible merger costs.

CRITICAL ACCOUNTING POLICIES

The Corporation’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the financial services industry. Accounting and reporting practices for the allowance for loan losses and fair value of securities are deemed critical since they involve the use of estimates and require significant management judgments. In addition, the fair value of assets acquired and liabilities assumed in connection with business combinations, including the associated goodwill that was recorded, required the use of material estimates. Application of assumptions different than those used by management could result in material changes in the Corporation’s financial position or results of operations. Note 1 (Summary of Significant Accounting Policies), Note 2 (Business Combination), Note 4 (Securities), and Note 5 (Loans) of the Corporation’s 2015 Form 10-K, provide detail with regard to the Corporation’s accounting for the allowance for loan losses, the fair value of securities, business combinations and loans. There have been no significant changes in the application of accounting policies since December 31, 2015.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a financial institution, the Corporation’s primary source of market risk is interest rate risk, which is the exposure to fluctuations in the Corporation’s future earnings resulting from changes in interest rates. This exposure is correlated to the repricing characteristics of the Corporation’s portfolio of assets and liabilities. Each asset or liability reprices either at maturity or during the life of the instrument.

The principal purpose of asset/liability management is to maximize current and future net interest income within acceptable levels of interest rate risk while satisfying liquidity and capital requirements. Net interest income is enhanced by increasing the net interest margin and by the growth in earning assets. As a result, the primary goal of interest rate risk management is to maintain a balance between risk and reward such that net interest income is maximized while risk is maintained at an acceptable level.

The Corporation uses an asset-liability management model to measure the effect of interest rate changes on its net interest income. The Corporation’s management also reviews asset-liability maturity gap and repricing analyses regularly. The Corporation does not always attempt to achieve a precise match between interest sensitive assets and liabilities because it believes that an actively managed amount of interest rate risk is inherent and appropriate in the management of the Corporation’s profitability.

Asset-liability modeling techniques and simulation involve assumptions and estimates that inherently cannot be measured with precision. Key assumptions in these analyses include maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing. These assumptions are inherently uncertain due to the timing, magnitude, and frequency of rate changes and changes in market conditions and management strategies, among other factors. However, the analyses are useful in quantifying risk and provide a relative gauge of the Corporation’s interest rate risk position over time.

37

Management reviews interest rate risk on a quarterly basis and reports to the ALCO. This review includes earnings shock scenarios whereby interest rates are immediately increased and decreased by 100, 300, and 400 basis points. These scenarios, detailed in the table below, indicate that there would not be a significant variance in net interest income over a one-year period due to interest rate changes; however, actual results could vary significantly. Based on the most recent data available as of March 31, 2016, all interest rate risk levels according to the model were within the tolerance limits of ALCO approved policy of +/- 25%. In addition, the table does not take into consideration changes that management would make to realign its assets and liabilities in the event of an unexpected change in the interest rate environment. Due to the historically low interest rate environment, the -300 and -400 scenarios have been excluded from the table.

March 31, 2016
Change in Basis Points	% Change in Net Interest Income
400	2.9%
300	3.5%
100	1.8%
(100)	(2.5%)

ITEM 4

CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) (“Exchange Act”). Based on their evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that the Corporation’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. There were no changes in the Corporation’s internal control over financial reporting that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

38

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS – None

ITEM 1A. RISK FACTORS – There have been no material changes to the risk factors disclosed in Part I, Item IA of the 2015 Form 10-K.

ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of December 29, 2015, by and between the Corporation, the Bank and Lake National Bank, filed with the SEC as Exhibit 2.1 to the Corporation’s Current Report on Form 8-K filed on December 30, 2015, and incorporated herein by reference.
3.1	Amended and Restated Articles of Incorporation of the Corporation, filed as Appendix B to the 2006 Proxy Statement, filed with the SEC on March 24, 2006, and incorporated herein by reference.
3.2	By-Laws of the Corporation, as amended and restated, filed as Appendix C to the 2006 Proxy Statement, filed with the SEC on March 24, 2006, and incorporated herein by reference.
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Financial Officer
32.1	Section 1350 Certification
32.2	Section 1350 Certification
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

39

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.

	CNB FINANCIAL CORPORATION
	(Registrant)
DATE: August 4, 2016	/s/ Joseph B. Bower, Jr.
	Joseph B. Bower, Jr.
	President and Director
	(Principal Executive Officer)
DATE: August 4, 2016	/s/ Brian W. Wingard
	Brian W. Wingard
	Treasurer
	(Principal Financial Officer)

40

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of December 29, 2015, by and between the Corporation, the Bank and Lake National Bank, filed with the SEC as Exhibit 2.1 to the Corporation’s Current Report on Form 8-K filed on December 30, 2015, and incorporated herein by reference.
3.1	Amended and Restated Articles of Incorporation of the Corporation, filed as Appendix B to the 2005 Proxy Statement, filed with the SEC on March 24, 2006, and incorporated herein by reference.
3.2	By-Laws of the Corporation, as amended and restated, filed as Appendix C to the 2005 Proxy Statement, filed with the SEC on March 24, 2006, and incorporated herein by reference.
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Financial Officer
32.1	Section 1350 Certification
32.2	Section 1350 Certification
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

41

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joseph B. Bower, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNB 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 purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2016

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brian W. Wingard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNB 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 purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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 the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2016

/s/ Brian W. Wingard

Brian W. Wingard

Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATE

As required by 18 U.S.C. 1350, the undersigned certifies that this Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the issuer.

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

President and Director

(Principal Executive Officer)

Dated: August 4, 2016

EX-32.2

Exhibit 32.2

CERTIFICATE

As required by 18 U.S.C. 1350, the undersigned certifies that this Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the issuer.

/s/ Brian W. Wingard

Brian W. Wingard

Treasurer

(Principal Financial Officer)

Dated: August 4, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	CCNE
Entity Registrant Name	CNB FINANCIAL CORP/PA
Entity Central Index Key	0000736772
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,462,862

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 20,934	$ 23,302
Interest bearing deposits with other banks	2,992	3,959
Total cash and cash equivalents	23,926	27,261
Securities available for sale	521,001	546,043
Trading securities	4,438	4,576
Loans held for sale	863	1,381
Loans	1,659,591	1,582,354
Less: unearned discount	(3,747)	(4,556)
Less: allowance for loan losses	(15,988)	(16,737)
Net loans	1,639,856	1,561,061
FHLB and other equity interests	16,023	15,921
Premises and equipment, net	41,276	39,370
Bank owned life insurance	41,565	41,039
Mortgage servicing rights	950	962
Goodwill	27,194	27,194
Core deposit intangible	1,964	2,395
Accrued interest receivable and other assets	17,336	17,933
Total Assets	2,336,392	2,285,136
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits	253,352	263,639
Interest bearing deposits	1,637,243	1,551,414
Total deposits	1,890,595	1,815,053
FHLB and other long-term borrowings	54,232	104,243
Other short-term borrowings	131,421	116,272
Subordinated debentures	20,620	20,620
Accrued interest payable and other liabilities	28,586	27,035
Total liabilities	2,125,454	2,083,223
Common stock, $0 par value; authorized 50,000,000 shares; issued 14,473,482 shares	0	0
Additional paid in capital	77,337	77,827
Retained earnings	127,614	123,301
Treasury stock, at cost (11,475 shares at June 30, 2016 and 65,052 shares at December 31, 2015)	(205)	(1,114)
Accumulated other comprehensive income	6,192	1,899
Total shareholders' equity	210,938	201,913
Total Liabilities and Shareholders' Equity	$ 2,336,392	$ 2,285,136

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	14,473,482	14,473,482
Treasury stock, shares	11,475	65,052

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
INTEREST AND DIVIDEND INCOME:
Loans including fees	$ 19,043	$ 17,339	$ 37,729	$ 34,835
Securities:
Taxable	2,414	2,911	4,769	5,850
Tax-exempt	867	949	1,750	1,887
Dividends	149	107	291	375
Total interest and dividend income	22,473	21,306	44,539	42,947
INTEREST EXPENSE:
Deposits	2,077	2,165	4,093	4,212
Borrowed funds	794	805	1,708	1,623
Subordinated debentures (includes $176 and $189 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2016 and 2015, respectively)	199	185	393	371
Total interest expense	3,070	3,155	6,194	6,206
NET INTEREST INCOME	19,403	18,151	38,345	36,741
PROVISION FOR LOAN LOSSES	220	486	1,416	1,429
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	19,183	17,665	36,929	35,312
NON-INTEREST INCOME:
Wealth and asset management fees	780	751	1,503	1,517
Service charges on deposit accounts	1,006	1,094	1,987	2,111
Other service charges and fees	624	761	1,184	1,385
Net realized gains on available-for-sale securities (includes $1,005 and $472 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2016 and 2015, respectively)	1,005	472	1,005	491
Net realized and unrealized gains (losses) on trading securities	64	(29)	30	(61)
Mortgage banking	147	207	318	320
Bank owned life insurance	263	289	526	565
Other	481	596	960	910
Total non-interest income	4,370	4,141	7,513	7,238
NON-INTEREST EXPENSES:
Salaries and benefits	7,908	7,506	15,399	14,138
Net occupancy expense	1,881	1,794	3,720	3,593
Amortization of core deposit intangible	217	259	432	518
Data processing	1,121	1,091	2,373	2,128
State and local taxes	558	474	1,050	1,024
Legal, professional, and examination fees	364	338	738	650
Advertising	395	419	879	753
FDIC insurance premiums	340	323	662	619
Prepayment penalties - long-term borrowings	1,506	0	1,506	0
Core processing conversion costs	1,488	0	1,555	0
Merger costs	173	0	215	0
Other	2,353	1,917	3,955	3,791
Total non-interest expenses	18,304	14,121	32,484	27,214
INCOME BEFORE INCOME TAXES	5,249	7,685	11,958	15,336
INCOME TAX EXPENSE (includes ($291) and ($106) income tax expense from reclassification items in 2016 and 2015, respectively)	1,184	2,083	2,874	4,169
NET INCOME	$ 4,065	$ 5,602	$ 9,084	$ 11,167
EARNINGS PER SHARE:
Basic	$ 0.28	$ 0.39	$ 0.63	$ 0.77
Diluted	0.28	0.39	0.63	0.77
DIVIDENDS PER SHARE:
Cash dividends per share	$ 0.165	$ 0.165	$ 0.33	$ 0.33

XML

Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements	$ 86	$ 94	$ 176	$ 189
Accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities	1,005	472	1,005	491
Income tax expense from reclassification	$ (322)	$ (132)	$ (291)	$ (106)

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 4,065	$ 5,602	$ 9,084	$ 11,167
Net change in fair value of interest rate swap agreements designated as cash flow hedges:
Unrealized gain (loss) on interest rate swaps, net of tax of $14 and and ($1) for the three months ended June 30, 2016 and 2015, and $59 and $37 for the six months ended June 30, 2016 and 2015	(25)	2	(109)	(78)
Reclassification adjustment for losses recognized in earnings, net of tax of ($30) and ($33) for the three months ended June 30, 2016 and 2015, and ($62) and ($66) for the six months ended June 30, 2016 and 2015	56	61	114	123
Net change in fair value of interest rate swap agreements designated as cash flow hedges	31	63	5	45
Unrealized gains on other-than-temporarily impaired securities available for sale:
Unrealized gains (losses) arising during the period, net of tax of $179 and ($90) for the three months ended June 30, 2016 and 2015, and $276 and ($90) for the six months ended June 30, 2016 and 2015	(332)	165	(513)	165
Reclassification adjustment for realized gains included in net income, net of tax of $323 and $0 for the three months ended June 30, 2016 and 2015, and $323 and $0 for the six months ended June 30, 2016 and 2015	(599)	0	(599)	0
Unrealized gains on other-than-temporarily impaired securities available for sale	(931)	165	(1,112)	165
Unrealized gains (losses) on other securities available for sale:
Unrealized gains (losses) arising during the period, net of tax of ($991) and $3,488 for the three months ended June 30, 2016 and 2015, and ($2,936) and $838 for the six months ended June 30, 2016 and 2015	1,839	(6,475)	5,454	(1,556)
Reclassification adjustment for realized gains included in net income, net of tax of $29 and $165 for the three months ended June 30, 2016 and 2015, and $29 and $172 for the six months ended June 30, 2016 and 2015	(54)	(307)	(54)	(319)
Unrealized losses on other securities available for sale net of reclassification adjustment for realized gains included in net income	1,785	(6,782)	5,400	(1,875)
Other comprehensive income (loss)	885	(6,554)	4,293	(1,665)
COMPREHENSIVE INCOME (LOSS)	$ 4,950	$ (952)	$ 13,377	$ 9,502

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on interest rate swaps, tax	$ 14	$ (1)	$ 59	$ 37
Reclassification adjustment for losses recognized in earnings, tax	(30)	(33)	(62)	(66)
Unrealized gains (losses) on other-than-temporarily impaired securities available for sale arising during the period, tax	179	(90)	276	(90)
Reclassification adjustment for realized gains included in net income, tax	323	0	323	0
Unrealized gains (losses) on other securities available for sale arising during the period, tax	(991)	3,488	(2,936)	838
Reclassification adjustment for realized gains included in net income, tax	$ 29	$ 165	$ 29	$ 172

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 9,084	$ 11,167
Adjustments to reconcile net income to net cash provided by operations:
PROVISION FOR LOAN LOSSES	1,416	1,429
Depreciation and amortization of premises and equipment, core deposit intangible, and mortgage servicing rights	1,981	2,037
Amortization and accretion of securities premiums and discounts, deferred loan fees and costs, net yield and credit mark on acquired loans, and unearned income	(671)	31
Net realized gains on sales of available-for-sale securities	(1,005)	(491)
Net realized and unrealized(gains) losses on trading securities	(30)	61
Proceeds from sale of trading securities	468	625
Purchase of trading securities	(300)	(943)
Gain on sale of loans	(213)	(268)
Net losses on dispositions of premises and equipment and foreclosed assets	70	43
Proceeds from sale of loans	7,995	6,140
Origination of loans held for sale	(7,324)	(7,416)
Income on bank owned life insurance	(526)	(565)
Stock-based compensation expense	412	305
Contribution of treasury stock	61	48
Changes in:
Accrued interest receivable and other assets	156	(804)
Accrued interest payable and other liabilities	(750)	5,671
NET CASH PROVIDED BY OPERATING ACTIVITIES	10,824	17,070
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities, prepayments and calls of available-for-sale securities	29,113	40,100
Proceeds from sales of available-for-sale securities	4,420	48,529
Purchase of available-for-sale securities	(1,703)	(46,542)
Loan origination and payments, net	(78,766)	(96,202)
Purchase of FHLB and other equity interests	(102)	(6,347)
Purchase of premises and equipment	(3,384)	(4,173)
Proceeds from the sale of premises and equipment and foreclosed assets	377	48
NET CASH USED IN INVESTING ACTIVITIES	(50,045)	(64,587)
Net change in:
Checking, money market and savings accounts	71,735	(10,915)
Certificates of deposit	3,807	26,584
Purchase of treasury stock	(23)	(868)
Cash dividends paid	(4,771)	(4,761)
Repayment of long-term borrowings	(50,011)	(126)
Net change in short-term borrowings	15,149	40,075
NET CASH PROVIDED BY FINANCING ACTIVITIES	35,886	49,989
NET INCREASE IN CASH AND CASH EQUIVALENTS	(3,335)	2,472
CASH AND CASH EQUIVALENTS, Beginning	27,261	27,928
CASH AND CASH EQUIVALENTS, Ending	23,926	30,400
Cash paid during the period for:
Interest	6,664	6,210
Income taxes	2,026	3,238
SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers to other real estate owned	40	240
Grant of restricted stock awards from treasury stock	$ 874	$ 821

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared pursuant to rules and regulations of the SEC and in compliance with accounting principles generally accepted in the United States of America (“GAAP”). Because this report is based on an interim period, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

In the opinion of management of the registrant, the accompanying consolidated financial statements as of June 30, 2016 and for the three and six month periods ended June 30, 2016 and 2015 include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial condition and the results of operations for the periods presented. The financial performance reported for CNB Financial Corporation (the “Corporation”) for the three and six month periods ended June 30, 2016 is not necessarily indicative of the results to be expected for the full year. This information should be read in conjunction with the Corporation’s Annual Report on Form 10-K for the period ended December 31, 2015. All dollar amounts are stated in thousands, except share and per share data and other amounts as indicated. Certain prior period amounts have been reclassified to conform to the current period presentation.

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Subsequent Event - Acquisition of Lake National Bank

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Event - Acquisition of Lake National Bank

2. SUBSEQUENT EVENT – ACQUISITION OF LAKE NATIONAL BANK

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (“LNB”) of Mentor, Ohio for $22.50 per share in cash. The transaction closed on July 15, 2016 and resulted in consideration paid to LNB shareholders of $24.75 million. Following completion of the merger, the two branches of LNB in Mentor, Ohio are operating as part of the ERIEBANK division of CNB Bank.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $173 thousand and $215 thousand for the three and six months ended June 30, 2016. All merger costs have been expensed as incurred.

As of the date the Corporation’s second quarter 2016 consolidated financial statements are issued, all of the information required to be disclosed by Accounting Standards Codification No. 805 was not available since, given the short period between the July 15, 2016 acquisition date and the financial statement issuance, the calculation of the fair value of all material LNB assets acquired and liabilities assumed had not yet been completed.

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Stock Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation

3. STOCK COMPENSATION

The Corporation has a stock incentive plan for key employees and independent directors. The stock incentive plan, which is administered by a committee of the Board of Directors, provides for aggregate grants of up to 500,000 shares of common stock in the form of nonqualified options or restricted stock. For key employees, the plan vesting is one-fourth of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the fourth anniversary of the grant date. For independent directors, the vesting schedule is one-third of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the third anniversary of the grant date.

At June 30, 2016, there was no unrecognized compensation cost related to nonvested stock options granted under this plan and no stock options were granted during the three and six month periods ended June 30, 2016 and 2015.

Compensation expense for the restricted stock awards is recognized over the requisite service period noted above based on the fair value of the shares at the date of grant. Nonvested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from these restricted stock awards was $172 and $412 for the three and six months ended June 30, 2016 and $148 and $305 for the three and six months ended June 30, 2015. As of June 30, 2016, there was $1,551 of total unrecognized compensation cost related to unvested restricted stock awards to be recognized over the next five years.

A summary of changes in nonvested restricted stock awards for the three months ended June 30, 2016 follows:

			Per Share Weighted Average
	Shares		Grant Date Fair Value
Nonvested at beginning of period		101,728	$	17.34
Granted		1,500		17.83
Vested		0		0
Nonvested at end of period		103,228	$	17.35

A summary of changes in nonvested restricted stock awards for the six months ended June 30, 2016 follows:

				Per Share Weighted Average
	Shares			Grant Date Fair Value
Nonvested at beginning of period		84,600		$	17.01
Granted		51,500			17.64
Vested		(32,872	)		16.92
Nonvested at end of period		103,228		$	17.35

The fair value of shares vested during the three and six month periods ended June 30, 2016 was $542.

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Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value

4. FAIR VALUE

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an 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. A fair value hierarchy has also been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs are used to measure fair value:

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 fair values of most trading securities and securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which 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 relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Corporation’s structured pooled trust preferred securities are priced using Level 3 inputs. The decline in the level of observable inputs and market activity in this class of investments by the measurement date has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, vary widely, and the once-active market has become comparatively inactive. The Corporation engaged a third party consultant who has developed a model for pricing these securities. Information such as historical and current performance of the underlying collateral, deferral and default rates, collateral coverage ratios, break in yield calculations, cash flow projections, liquidity and credit premiums required by a market participant, and financial trend analysis with respect to the individual issuing financial institutions and insurance companies are utilized in determining the security valuation. Due to the current market conditions as well as the limited trading activity of these types of securities, the market value of the Corporation’s structured pooled trust preferred securities are highly sensitive to assumption changes and market volatility.

The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2016 and December 31, 2015:

				Fair Value Measurements at June 30, 2016 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,789		$	0	$	141,789		$	0
States and political subdivisions		164,645			0		164,645			0
Residential and multi-family mortgage		146,858			0		146,858			0
Corporate notes and bonds		16,924			0		16,924			0
Pooled trust preferred		1,702			0		0			1,702
Pooled SBA		48,087			0		48,087			0
Other equity securities		996			996		0			0
Total Securities Available For Sale	$	521,001		$	996	$	518,303		$	1,702
Interest rate swaps	$	648		$	0	$	648		$	0
Trading Securities:
Corporate equity securities	$	3,037		$	3,037	$	0		$	0
Mutual funds		888			888		0			0
Certificates of deposit		255			255		0			0
Corporate notes and bonds		202			202		0			0
U.S. Government sponsored entities		56			0		56			0
Total Trading Securities	$	4,438		$	4,382	$	56		$	0
Liabilities,
Interest rate swaps	$	(1,376	)	$	0	$	(1,376	)	$	0

				Fair Value Measurements at December 31, 2015 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,751		$	0	$	141,751		$	0
States and political subdivisions		171,819			0		171,819			0
Residential and multi-family mortgage		157,982			0		157,982			0
Corporate notes and bonds		18,688			0		18,688			0
Pooled trust preferred		3,413			0		0			3,413
Pooled SBA		51,409			0		51,409			0
Other equity securities		981			981		0			0
Total Securities Available For Sale	$	546,043		$	981	$	541,649		$	3,413
Interest rate swaps	$	131		$	0	$	131		$	0
Trading Securities:
Corporate equity securities	$	3,389		$	3,389	$	0		$	0
Mutual funds		750			750		0			0
Certificates of deposit		253			253		0			0
Corporate notes and bonds		130			130		0			0
U.S. Government sponsored entities		54			0		54			0
Total Trading Securities	$	4,576		$	4,522	$	54		$	0
Liabilities,
Interest rate swaps	$	(867	)	$	0	$	(867	)	$	0

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, April 1	$	3,109		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(485	)		255
Balance, June 30	$	1,702		$	1,160

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, January 1	$	3,413		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(789	)		255
Balance, June 30	$	1,702		$	1,160

The following table presents quantitative information about Level 3 fair value measurements at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	1,702	Discounted cash flow	Collateral default rate	0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	10.0% 2.0% constant prepayment rate in 2016 and thereafter

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	3,413	Discounted cash flow	Collateral default rate	1% in 2015; 0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	9.0% 2.0% constant prepayment rate in 2015 and thereafter

At June 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurement of the Corporation’s pooled trust preferred securities are collateral default rate, yield, and prepayment speed. Significant increases in specific-issuer default assumptions or decreases in specific-issuer recovery assumptions would result in a lower fair value measurement. Conversely, decreases in specific-issuer default assumptions or increases in specific-issuer recovery assumptions would result in a higher fair value measurement.

Assets and liabilities measured at fair value on a non-recurring basis are as follows at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,030		0		0	$2,030

			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,247		0		0	$2,247

Impaired loans, measured for impairment using the fair value of collateral for collateral dependent loans, had a recorded investment of $3,324 with a valuation allowance of $1,294 as of June 30, 2016, resulting in an additional provision for loan losses of $135 and $53 for the corresponding three and six month period ended June 30, 2016. Impaired loans had a recorded investment of $3,489 with a valuation allowance of $1,242 as of December 31, 2015. Impaired loans carried at fair value resulted in an additional provision for loan losses of $60 and $63 for the corresponding three and six month period ended June 30, 2015.

The estimated fair values of impaired collateral dependent loans such as commercial or residential mortgages are determined primarily through third-party appraisals. When a collateral dependent loan, such as a commercial or residential mortgage loan, becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal, and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral and a further reduction for estimated costs to sell the property is applied, which results in an amount that is considered to be the estimated fair value. If a loan becomes impaired and the appraisal of related loan collateral is outdated, management applies an appropriate adjustment factor based on its experience with current valuations of similar collateral in determining the loan’s estimated fair value and resulting allowance for loan losses. Third-party appraisals are not customarily obtained in respect of unimpaired loans, unless in management’s view changes in circumstances warrant obtaining an updated appraisal.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,030	Sales comparison approach	Adjustment for differences between the comparable sales	21% - 99% (39%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,247	Sales comparison approach	Adjustment for differences between the comparable sales	25% - 69% (36%)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at June 30, 2016:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	23,926		$	23,926		$	0		$	0	$	23,926
Securities available for sale		521,001			996			518,303			1,702		521,001
Trading securities		4,438			4,382			56			0		4,438
Loans held for sale		863			0			888			0		888
Net loans		1,639,856			0			0			1,638,624		1,638,624
FHLB and other equity interests		16,023			n/a			n/a			n/a		n/a
Interest rate swaps		648			0			648			0		648
Accrued interest receivable		7,518			6			3,096			4,416		7,518
LIABILITIES
Deposits	$	(1,890,595	)	$	(1,702,622	)	$	(187,606	)	$	0	$	(1,890,228	)
FHLB and other borrowings		(185,653	)		0			(184,850	)		0		(184,850	)
Subordinated debentures		(20,620	)		0			(12,029	)		0		(12,029	)
Interest rate swaps		(1,376	)		0			(1,376	)		0		(1,376	)
Accrued interest payable		(296	)		0			(296	)		0		(296	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2015:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	27,261		$	27,261		$	0		$	0	$	27,261
Securities available for sale		546,043			981			541,649			3,413		546,043
Trading securities		4,576			4,522			54			0		4,576
Loans held for sale		1,381			0			1,438			0		1,438
Net loans		1,561,061			0			0			1,554,502		1,554,502
FHLB and other equity interests		15,921			n/a			n/a			n/a		n/a
Interest rate swaps		131			0			131			0		131
Accrued interest receivable		7,312			5			2,875			4,432		7,312
LIABILITIES
Deposits	$	(1,815,053	)	$	(1,630,888	)	$	(183,028	)	$	0		(1,813,916	)
FHLB and other borrowings		(220,515	)		0			(218,808	)		0		(218,808	)
Subordinated debentures		(20,620	)		0			(11,761	)		0		(11,761	)
Interest rate swaps		(867	)		0			(867	)		0		(867	)
Accrued interest payable		(766	)		(344	)		(422	)		0		(766	)

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

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, 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 interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, 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.

FHLB and other equity interests: It is not practical to determine the fair value of Federal Home Loan Bank stock and other equity interests due to restrictions placed on the transferability of these instruments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value. The Level classification of accrued interest receivable is matched to the corresponding Level of the asset with which it is associated.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 1 classification. Fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

FHLB and other borrowings: The fair values of the Corporation’s FHLB and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Subordinated debentures: The fair value of the Corporation’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of arrangements, resulting in a Level 2 classification.

Accrued interest payable: The carrying amount of accrued interest payable approximates fair value resulting in a classification that is consistent with the liability with which it is associated.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates.

In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial assets such as, among other things, the estimated earning power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

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Securities

6 Months Ended

Jun. 30, 2016

Cash and Cash Equivalents [Abstract]

Securities

5. SECURITIES

Securities available for sale at June 30, 2016 and December 31, 2015 are as follows:

			June 30, 2016									December 31, 2015
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Gov’t sponsored entities	$	139,061	$	2,732	$	(4	)	$	141,789	$	141,300	$	1,579	$	(1,128	)	$	141,751
State & political subdivisions		156,731		8,108		(194	)		164,645		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		145,782		1,792		(716	)		146,858		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,188		199		(1,463	)		16,924		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		902		0			1,702		800		2,613		0			3,413
Pooled SBA		47,394		872		(179	)		48,087		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(24	)		996		1,020		0		(39	)		981
Total	$	508,976	$	14,605	$	(2,580	)	$	521,001	$	540,614	$	12,411	$	(6,982	)	$	546,043

At June 30, 2016 and December 31, 2015, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities.

Trading securities at June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Corporate equity securities	$	3,037	$	3,389
Mutual funds		888		750
Certificates of deposit		255		253
Corporate notes and bonds		202		130
U.S. Government sponsored entities		56		54
Total	$	4,438	$	4,576

Securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

June 30, 2016

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	0	$	0		$	6,398	$	(4	)	$	6,398	$	(4	)
State & political subdivisions		271		(194	)		0		0			271		(194	)
Residential & multi-family mortgage		7,907		(81	)		58,084		(635	)		65,991		(716	)
Corporate notes & bonds		0		0			7,940		(1,463	)		7,940		(1,463	)
Pooled SBA		0		0			25,840		(179	)		25,840		(179	)
Other equity securities		0		0			996		(24	)		996		(24	)
	$	8,178	$	(275	)	$	99,258	$	(2,305	)	$	107,436	$	(2,580	)

December 31, 2015

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	65,675	$	(640	)	$	31,923	$	(488	)	$	97,598	$	(1,128	)
State & political subdivisions		9,103		(234	)		2,478		(9	)		11,581		(243	)
Residential & multi-family mortgage		69,631		(1,562	)		50,351		(1,832	)		119,982		(3,394	)
Corporate notes & bonds		5,027		(2	)		8,144		(1,269	)		13,171		(1,271	)
Pooled SBA		2,908		(28	)		27,127		(879	)		30,035		(907	)
Other equity securities		0		0			981		(39	)		981		(39	)
	$	152,344	$	(2,466	)	$	121,004	$	(4,516	)	$	273,348	$	(6,982	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and six months ended June 30, 2016 and 2015 is as follows:

	2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	2,071		$	4,054

During the quarter ended June 30, 2016 the Corporation sold two structured pooled trust preferred securities which had been charged off in their entirety in prior periods. The original cost basis of these securities was $1,983 and the proceeds received totaled $922, which is reported in net realized gains on available-for-sale securities for the three and six months ended June 30, 2016. Due to the insignificance of the Corporation’s adjusted amortized cost balance of the remaining structured pooled trust securities, no further disclosures are required.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of June 30, 2016 and December 31, 2015, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

• There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

• All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales on available for sale securities is as follows:

	Proceeds		Gross Gains		Gross Losses
Three months ended June 30, 2016	$	4,420	$	1,005	$	0
Six months ended June 30, 2016		4,420		1,005		0
Three months ended June 30, 2015		15,580		472		0
Six months ended June 30, 2015		48,529		608		(117	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at June 30, 2016:

	Amortized		Fair
	Cost		Value
1 year or less	$	34,631	$	34,518
1 year – 5 years		185,702		192,456
5 years – 10 years		73,600		76,503
After 10 years		20,847		21,583
		314,780		325,060
Residential and multi-family mortgage		145,782		146,858
Pooled SBA		47,394		48,087
Total debt securities	$	507,956	$	520,005

Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On June 30, 2016 and December 31, 2015, securities carried at $365,867 and $312,669, respectively, were pledged to secure public deposits and for other purposes as provided by law.

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Loans

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loans

6. LOANS

Total net loans at June 30, 2016 and December 31, 2015 are summarized as follows:

	June 30, 2016			December 31, 2015
Commercial, industrial, and agricultural	$	490,838		$	475,364
Commercial mortgages		494,619			448,179
Residential real estate		591,779			574,225
Consumer		76,619			78,345
Credit cards		5,329			5,201
Overdrafts		407			1,040
Less: unearned discount		(3,747	)		(4,556	)
allowance for loan losses		(15,988	)		(16,737	)
Loans, net	$	1,639,856		$	1,561,061

At June 30, 2016 and December 31, 2015, net unamortized loan fees of $(728) and $(636), respectively, have been included in the carrying value of loans.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within Central and Western Pennsylvania and Central Ohio. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

All relevant documentation, such as the loan application, financial statements and tax returns, required under the lending policies is summarized and provided to management and/or the Corporation’s Board of Directors in connection with the loan approval process. Such documentation is subsequently electronically archived in the Corporation’s document management system. Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.

Commercial, industrial, and agricultural loans comprised 30% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015. Commercial mortgage loans comprised 30% and 28% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 75% of the value of accounts receivable, and a maximum of 60% of the value of business inventory. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.

Residential real estate loans comprised 36% of the Corporation’s total loan portfolio at June 30, 2016 and December 31, 2015. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market through Freddie Mac. Loans originated for sale into the secondary market are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represent less than 10% of the total loan portfolio at both June 30, 2016 and December 31, 2015. Terms and collateral requirements vary depending on the size and nature of the loan.

CNB has not underwritten any hybrid loans, payment option loans, or low documentation/no documentation loans. Variable rate loans are generally underwritten at the fully indexed rate. Loan underwriting policies and procedures have not changed materially between any periods presented.

Transactions in the allowance for loan losses for the three months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2016	$	5,627		$	6,044		$	2,574		$	2,274		$	81		$	138		$	16,738
Charge-offs		(162	)		(20	)		(124	)		(701	)		(28	)		(30	)		(1,065	)
Recoveries		39			0			3			30			3			20			95
Provision (benefit) for loan losses		(286	)		183			(154	)		463			(6	)		20			220
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the six months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(433	)		(20	)		(149	)		(1,688	)		(37	)		(81	)		(2,408	)
Recoveries		47			5			62			74			15			40			243
Provision (benefit) for loan losses		(431	)		617			(89	)		1,309			(18	)		28			1,416
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the three months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2015	$	7,223		$	5,296	$	2,786		$	2,129		$	74		$	174		$	17,682
Charge-offs		(65	)		0		(90	)		(477	)		(44	)		(48	)		(724	)
Recoveries		12			0		0			26			2			20			60
Provision (benefit) for loan losses		(572	)		632		(84	)		440			66			4			486
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

Transactions in the allowance for loan losses for the six months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310	$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(139	)		0		(156	)		(1,000	)		(86	)		(105	)		(1,486	)
Recoveries		27			50		1			55			5			50			188
Provision (benefit) for loan losses		(404	)		568		288			858			108			11			1,429
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of June 30, 2016 and December 31, 2015. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

June 30, 2016

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	168	$	0	$	0	$	0	$	0	$	0	$	168
Collectively evaluated for impairment		4,428		4,146		2,299		2,066		50		148		13,137
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		622		2,061		0		0		0		0		2,683
Total ending allowance balance	$	5,218	$	6,207	$	2,299	$	2,066	$	50	$	148	$	15,988
Loans:
Individually evaluated for impairment	$	930	$	0	$	0	$	0	$	0	$	0	$	930
Collectively evaluated for impairment		485,393		484,378		591,779		76,619		5,329		407		1,643,905
Acquired with deteriorated credit quality		0		670		0		0		0		0		670
Modified in a troubled debt restructuring		4,515		9,571		0		0		0		0		14,086
Total ending loans balance	$	490,838	$	494,619	$	591,779	$	76,619	$	5,329	$	407	$	1,659,591

December 31, 2015

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	239	$	0	$	39	$	0	$	0	$	0	$	278
Collectively evaluated for impairment		4,909		3,580		2,436		2,371		90		161		13,547
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		887		2,025		0		0		0		0		2,912
Total ending allowance balance	$	6,035	$	5,605	$	2,475	$	2,371	$	90	$	161	$	16,737
Loans:
Individually evaluated for impairment	$	1,196	$	393	$	248	$	0	$	0	$	0	$	1,837
Collectively evaluated for impairment		469,128		437,200		573,977		78,345		5,201		1,040		1,564,891
Acquired with deteriorated credit quality		0		685		0		0		0		0		685
Modified in a troubled debt restructuring		5,040		9,901		0		0		0		0		14,941
Total ending loans balance	$	475,364	$	448,179	$	574,225	$	78,345	$	5,201	$	1,040	$	1,582,354

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015:

June 30, 2016

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,176	$	2,990	$	790
Commercial mortgage		5,870		5,144		2,061
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		3,394		2,455		0
Commercial mortgage		4,427		4,427		0
Residential real estate		0		0		0
Total	$	16,867	$	15,016	$	2,851

December 31, 2015

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,448	$	3,448	$	1,126
Commercial mortgage		5,985		5,343		2,025
Residential real estate		351		248		39
With no related allowance recorded:
Commercial, industrial, and agricultural		3,716		2,788		0
Commercial mortgage		5,001		4,951		0
Residential real estate		0		0		0
Total	$	18,501	$	16,778	$	3,190

	Three Months Ended June 30, 2016						Six Months Ended June 30, 2016
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,150	$	2	$	2	$	3,249	$	2	$	2
Commercial mortgage		5,309		4		4		5,320		4		4
Residential real estate		0		0		0		83		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,525		2		2		2,612		2		2
Commercial mortgage		4,458		3		3		4,622		3		3
Residential real estate		0		0		0		0		0		0
Total	$	15,442	$	11	$	11	$	15,886	$	17	$	17

	Three Months Ended June 30, 2015						Six Months Ended June 30, 2015
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	6,315	$	7	$	7	$	6,071	$	42	$	42
Commercial mortgage		9,646		0		0		9,617		0		0
Residential real estate		400		11		11		400		13		13
With no related allowance recorded:
Commercial, industrial, and agricultural		1,689		2		2		1,631		12		12
Commercial mortgage		4,719		0		0		4,854		0		0
Residential real estate		129		4		4		129		6		6
Total	$	22,898	$	24	$	24	$	22,702	$	73	$	73

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still accruing interest by class of loans as of June 30, 2016 and December 31, 2015:

	June 30, 2016				December 31, 2015
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	3,471	$	107	$	3,560	$	3
Commercial mortgages		3,433		0		3,651		0
Residential real estate		3,981		37		3,671		87
Consumer		1,113		2		1,277		15
Credit cards		0		16		0		0
Total	$	11,998	$	162	$	12,159	$	105

Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2016 and December 31, 2015 by class of loans.

June 30, 2016

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,000	$	775	$	1,013	$	2,788	$	488,050	$	490,838
Commercial mortgages		477		0		3,319		3,796		490,823		494,619
Residential real estate		2,480		1,130		3,290		6,900		584,879		591,779
Consumer		365		238		1,088		1,691		74,928		76,619
Credit cards		39		40		16		95		5,234		5,329
Overdrafts		0		0		0		0		407		407
Total	$	4,361	$	2,183	$	8,726	$	15,270	$	1,644,321	$	1,659,591

December 31, 2015

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	131	$	622	$	698	$	1,451	$	473,913	$	475,364
Commercial mortgages		7		343		3,651		4,001		444,178		448,179
Residential real estate		2,834		378		3,001		6,213		568,012		574,225
Consumer		216		179		1,292		1,687		76,658		78,345
Credit cards		0		0		0		0		5,201		5,201
Overdrafts		0		0		0		0		1,040		1,040
Total	$	3,188	$	1,522	$	8,642	$	13,352	$	1,569,002	$	1,582,354

Troubled Debt Restructurings

The terms of certain loans have been modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of June 30, 2016 and December 31, 2015.

	June 30, 2016						December 31, 2015
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		7	$	4,515	$	622		8	$	5,040	$	887
Commercial mortgages		8		9,571		2,061		8		9,901		2,025
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		15	$	14,086	$	2,683		16	$	14,941	$	2,912

There were no loans modified as troubled debt restructurings during the three and six months ended June 30, 2016 or June 30, 2015.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. All loans modified in troubled debt restructurings are performing in accordance with their modified terms as of June 30, 2016 and December 31, 2015 and no principal balances were forgiven in connection with the loan restructurings.

In order to determine whether a borrower is experiencing financial difficulty, the Corporation performs an evaluation using its internal underwriting policies of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, non-performing troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Credit Quality Indicators

The Corporation classifies commercial, industrial, and agricultural loans and commercial mortgage 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. Loans with outstanding balances greater than $1 million are analyzed at least semiannually and loans with outstanding balances of less than $1 million are analyzed at least annually.

The Corporation 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 Corporation’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 Corporation 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 characteristic 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 rated as special mention, substandard, or doubtful are considered to be pass rated loans. All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

June 30, 2016

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	448,340	$	22,860	$	19,408	$	230	$	490,838
Commercial mortgages		473,054		3,393		17,752		420		494,619
Total	$	921,394	$	26,253	$	37,160	$	650	$	985,457

December 31, 2015

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	447,449	$	4,749	$	22,943	$	223	$	475,364
Commercial mortgages		426,870		1,735		19,148		426		448,179
Total	$	874,319	$	6,484	$	42,091	$	649	$	923,543

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer, and credit card loans based on payment activity as of June 30, 2016 and December 31, 2015:

	June 30, 2016						December 31, 2015
	Residential				Credit		Residential				Credit
	Real Estate		Consumer		Cards		Real Estate		Consumer		Cards
Performing	$	587,761	$	75,504	$	5,313	$	570,467	$	77,053	$	5,201
Non-performing		4,018		1,115		16		3,758		1,292		0
Total	$	591,779	$	76,619	$	5,329	$	574,225	$	78,345	$	5,201

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”) are considered to be subprime loans. Holiday is a subsidiary that offers small balance unsecured and secured loans primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio.

Holiday’s loan portfolio is summarized as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
	2016			2015
Consumer	$	25,956		$	30,001
Residential real estate		1,166			1,263
Less: unearned discount		(3,747	)		(4,556	)
Total	$	23,375		$	26,708

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Deposits

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Deposits

7. DEPOSITS

Total deposits at June 30, 2016 and December 31, 2015 are summarized as follows (in thousands):

	Percentage Change			June 30, 2016		December 31, 2015
Checking, non-interest bearing		(3.9	%)	$	253,352	$	263,639
Checking, interest bearing		17.3	%		516,238		440,174
Savings accounts		0.6	%		933,032		927,074
Certificates of deposit		2.1	%		187,973		184,166
		4.2	%	$	1,890,595	$	1,815,053

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Earnings Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

8. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. For the three and six months ended June 30, 2016 and 2015, there were no outstanding stock options to include in the diluted earnings per share calculations.

Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding unvested stock awards are participating securities.

The computation of basic and diluted earnings per share is shown below (in thousands except per share data):

	Three months ended						Six months ended
	June 30,						June 30,
	2016			2015			2016			2015
Basic earnings per common share computation:
Net income per consolidated statements of income	$	4,065		$	5,602		$	9,084		$	11,167
Net earnings allocated to participating securities		(27	)		(33	)		(60	)		(62	)
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Distributed earnings allocated to common stock	$	2,369		$	2,362		$	4,737		$	4,731
Undistributed earnings allocated to common stock		1,669			3,207			4,287			6,374
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average common shares outstanding, including shares considered participating securities		14,460			14,404			14,448			14,410
Less: Average participating securities		(92	)		(80	)		(86	)		(73	)
Weighted average shares		14,368			14,324			14,362			14,337
Basic earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77
Diluted earnings per common share computation:
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average shares and dilutive potential common shares		14,368			14,324			14,362			14,366
Diluted earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77

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Derivative Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

9. DERIVATIVE INSTRUMENTS

On May 3, 2011, the Corporation executed an interest rate swap agreement with a 5 year term and an effective date of September 15, 2013 in order to hedge cash flows associated with $10 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement. The Corporation’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount. At June 30, 2016, the variable rate on the subordinated debt was 2.20% (LIBOR plus 155 basis points) and the Corporation was paying 5.57% (4.02% fixed rate plus 155 basis points).

As of June 30, 2016 and December 31, 2015, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Corporation does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015:

		Fair value as of
	Balance Sheet	June 30,	December 31,
	Location	2016	2015
Interest rate contracts	Accrued interest and other liabilities	($728)	($736)

For the Three Months Ended June 30, 2016	(a)		(b)	(c)		(d)	(e)
Interest rate contracts	($31	)	Interest expense – subordinated debentures	($86	)	Other income	$0
For the Six Months Ended June 30, 2016	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$5		Interest expense – subordinated debentures	($176	)	Other income	$0
For the Three Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$63		Interest expense – subordinated debentures	($94	)	Other income	$0
For the Six Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$45		Interest expense – subordinated debentures	($189	)	Other income	$0

(a) Amount of Gain or (Loss) Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts reported in accumulated other comprehensive loss related to the interest rate swap will be reclassified to interest expense as interest payments are made on the subordinated debentures. Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be $337. As of June 30, 2016 and December 31, 2015, a cash collateral balance in the amount of $1,400 was maintained with a counterparty to the interest rate swaps. These balances are included in interest bearing deposits with other banks on the consolidated balance sheet.

The Corporation has entered into certain interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Corporation enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Corporation agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. Concurrently, the Corporation agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Corporation’s customers to effectively convert a variable rate loan to a fixed rate. Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The Corporation pledged cash collateral to another financial institution with a balance of $200 as of June 30, 2016. This balance is included in interest bearing deposits with other banks on the consolidated balance sheets. The Corporation does not require its customers to post cash or securities as collateral on its program of back-to-back swaps. However, certain language is included in the International Swaps and Derivatives Association agreement and loan documents where, in default situations, the Corporation is permitted to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Corporation may be required to post additional collateral to swap counterparties in the future in proportion to potential increases in unrealized loss positions.

The following table provides summary information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of June 30, 2016 and December 31, 2015:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate		Fair Value
June 30, 2016
3rd Party interest rate swaps	$	9,391			9.3		4.31	%		1 month LIBOR + 2.25%	$	648	(f)
Customer interest rate swaps		(9,391	)		9.3		4.31	%		1 month LIBOR + 2.25%		(648	)(g)
December 31, 2015
3rd Party interest rate swaps	$	6,751			9.4		4.42	%		1 month LIBOR + 2.25%	$	131	(f)
Customer interest rate swaps		(6,751	)		9.4		4.42	%		1 month LIBOR + 2.25%		(131	)(g)

(f) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(g) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

10. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting) which will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-09 is not expected to have a material effect on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments) which clarifies that an assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence in ASC 815-15-25-42. Entities are required to apply the guidance to existing debt instruments (or hybrid financial instruments that are determined to have a debt host) using a modified retrospective transition method as of the period of adoption. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-06 is not expected to have a material effect on the Corporation’s financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize lease assets and lease liabilities that arise from all leases. In addition, lessor accounting guidance will be changed to conform to the new guidance. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. Early adoption is not permitted. The adoption of ASU 2016-01 is not expected to have a material effect on the Corporation’s financial statements.

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Compensation – Stock Compensation (Topic 718)”. ASU 2014-12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under ASU 2014-12. The guidance is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 did not have a material effect on the Corporation’s financial statements.

In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s financial statements.

ITEM 2

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Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Adoption of New Accounting Standards

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting) which will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-09 is not expected to have a material effect on the Corporation’s financial statements.

In March 2016, the FASB issued an update (ASU 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments) which clarifies that an assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host requires only an analysis of the four-step decision sequence in ASC 815-15-25-42. Entities are required to apply the guidance to existing debt instruments (or hybrid financial instruments that are determined to have a debt host) using a modified retrospective transition method as of the period of adoption. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The adoption of ASU 2016-06 is not expected to have a material effect on the Corporation’s financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize lease assets and lease liabilities that arise from all leases. In addition, lessor accounting guidance will be changed to conform to the new guidance. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. Early adoption is not permitted. The adoption of ASU 2016-01 is not expected to have a material effect on the Corporation’s financial statements.

In June 2014, the FASB issued Accounting Standards Update 2014-12, “Compensation – Stock Compensation (Topic 718)”. ASU 2014-12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under ASU 2014-12. The guidance is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 did not have a material effect on the Corporation’s financial statements.

In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s financial statements.

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Stock Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Changes in Nonvested Restricted Stock Awards

A summary of changes in nonvested restricted stock awards for the three months ended June 30, 2016 follows:

			Per Share Weighted Average
	Shares		Grant Date Fair Value
Nonvested at beginning of period		101,728	$	17.34
Granted		1,500		17.83
Vested		0		0
Nonvested at end of period		103,228	$	17.35

A summary of changes in nonvested restricted stock awards for the six months ended June 30, 2016 follows:

				Per Share Weighted Average
	Shares			Grant Date Fair Value
Nonvested at beginning of period		84,600		$	17.01
Granted		51,500			17.64
Vested		(32,872	)		16.92
Nonvested at end of period		103,228		$	17.35

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2016 and December 31, 2015:

				Fair Value Measurements at June 30, 2016 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,789		$	0	$	141,789		$	0
States and political subdivisions		164,645			0		164,645			0
Residential and multi-family mortgage		146,858			0		146,858			0
Corporate notes and bonds		16,924			0		16,924			0
Pooled trust preferred		1,702			0		0			1,702
Pooled SBA		48,087			0		48,087			0
Other equity securities		996			996		0			0
Total Securities Available For Sale	$	521,001		$	996	$	518,303		$	1,702
Interest rate swaps	$	648		$	0	$	648		$	0
Trading Securities:
Corporate equity securities	$	3,037		$	3,037	$	0		$	0
Mutual funds		888			888		0			0
Certificates of deposit		255			255		0			0
Corporate notes and bonds		202			202		0			0
U.S. Government sponsored entities		56			0		56			0
Total Trading Securities	$	4,438		$	4,382	$	56		$	0
Liabilities,
Interest rate swaps	$	(1,376	)	$	0	$	(1,376	)	$	0

				Fair Value Measurements at December 31, 2015 Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
				Identical Assets		Observable Inputs			Inputs
Description	Total			(Level 1)		(Level 2)			(Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	141,751		$	0	$	141,751		$	0
States and political subdivisions		171,819			0		171,819			0
Residential and multi-family mortgage		157,982			0		157,982			0
Corporate notes and bonds		18,688			0		18,688			0
Pooled trust preferred		3,413			0		0			3,413
Pooled SBA		51,409			0		51,409			0
Other equity securities		981			981		0			0
Total Securities Available For Sale	$	546,043		$	981	$	541,649		$	3,413
Interest rate swaps	$	131		$	0	$	131		$	0
Trading Securities:
Corporate equity securities	$	3,389		$	3,389	$	0		$	0
Mutual funds		750			750		0			0
Certificates of deposit		253			253		0			0
Corporate notes and bonds		130			130		0			0
U.S. Government sponsored entities		54			0		54			0
Total Trading Securities	$	4,576		$	4,522	$	54		$	0
Liabilities,
Interest rate swaps	$	(867	)	$	0	$	(867	)	$	0

Securities Available for Sale Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, April 1	$	3,109		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(485	)		255
Balance, June 30	$	1,702		$	1,160

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 and June 30, 2015:

	2016			2015
Balance, January 1	$	3,413		$	905
Proceeds from sale of securities		(922	)		0
Total gains or (losses):
Included in other comprehensive income (unrealized)		(789	)		255
Balance, June 30	$	1,702		$	1,160

Quantitative Information about Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	1,702	Discounted cash flow	Collateral default rate	0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	10.0% 2.0% constant prepayment rate in 2016 and thereafter

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	3,413	Discounted cash flow	Collateral default rate	1% in 2015; 0.5% in 2016 and thereafter
				Yield (weighted average) Prepayment speed	9.0% 2.0% constant prepayment rate in 2015 and thereafter

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are as follows at June 30, 2016 and December 31, 2015:

			Fair Value Measurements at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,030		0		0	$2,030

			Fair Value Measurements at December 31, 2015 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,247		0		0	$2,247

Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Non Recurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,030	Sales comparison approach	Adjustment for differences between the comparable sales	21% - 99% (39%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages		$2,247	Sales comparison approach	Adjustment for differences between the comparable sales	25% - 69% (36%)

Carrying Amount and Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at June 30, 2016:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	23,926		$	23,926		$	0		$	0	$	23,926
Securities available for sale		521,001			996			518,303			1,702		521,001
Trading securities		4,438			4,382			56			0		4,438
Loans held for sale		863			0			888			0		888
Net loans		1,639,856			0			0			1,638,624		1,638,624
FHLB and other equity interests		16,023			n/a			n/a			n/a		n/a
Interest rate swaps		648			0			648			0		648
Accrued interest receivable		7,518			6			3,096			4,416		7,518
LIABILITIES
Deposits	$	(1,890,595	)	$	(1,702,622	)	$	(187,606	)	$	0	$	(1,890,228	)
FHLB and other borrowings		(185,653	)		0			(184,850	)		0		(184,850	)
Subordinated debentures		(20,620	)		0			(12,029	)		0		(12,029	)
Interest rate swaps		(1,376	)		0			(1,376	)		0		(1,376	)
Accrued interest payable		(296	)		0			(296	)		0		(296	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2015:

	Carrying			Fair Value Measurement Using:								Total
	Amount			Level 1			Level 2			Level 3		Fair Value
ASSETS
Cash and cash equivalents	$	27,261		$	27,261		$	0		$	0	$	27,261
Securities available for sale		546,043			981			541,649			3,413		546,043
Trading securities		4,576			4,522			54			0		4,576
Loans held for sale		1,381			0			1,438			0		1,438
Net loans		1,561,061			0			0			1,554,502		1,554,502
FHLB and other equity interests		15,921			n/a			n/a			n/a		n/a
Interest rate swaps		131			0			131			0		131
Accrued interest receivable		7,312			5			2,875			4,432		7,312
LIABILITIES
Deposits	$	(1,815,053	)	$	(1,630,888	)	$	(183,028	)	$	0		(1,813,916	)
FHLB and other borrowings		(220,515	)		0			(218,808	)		0		(218,808	)
Subordinated debentures		(20,620	)		0			(11,761	)		0		(11,761	)
Interest rate swaps		(867	)		0			(867	)		0		(867	)
Accrued interest payable		(766	)		(344	)		(422	)		0		(766	)

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Securities (Tables)

6 Months Ended

Jun. 30, 2016

Cash and Cash Equivalents [Abstract]

Securities Available for Sale

Securities available for sale at June 30, 2016 and December 31, 2015 are as follows:

			June 30, 2016									December 31, 2015
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Gov’t sponsored entities	$	139,061	$	2,732	$	(4	)	$	141,789	$	141,300	$	1,579	$	(1,128	)	$	141,751
State & political subdivisions		156,731		8,108		(194	)		164,645		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		145,782		1,792		(716	)		146,858		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,188		199		(1,463	)		16,924		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		902		0			1,702		800		2,613		0			3,413
Pooled SBA		47,394		872		(179	)		48,087		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(24	)		996		1,020		0		(39	)		981
Total	$	508,976	$	14,605	$	(2,580	)	$	521,001	$	540,614	$	12,411	$	(6,982	)	$	546,043

Trading Securities

Trading securities at June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016		December 31, 2015
Corporate equity securities	$	3,037	$	3,389
Mutual funds		888		750
Certificates of deposit		255		253
Corporate notes and bonds		202		130
U.S. Government sponsored entities		56		54
Total	$	4,438	$	4,576

Securities with Unrealized Losses Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position

Securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

June 30, 2016

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	0	$	0		$	6,398	$	(4	)	$	6,398	$	(4	)
State & political subdivisions		271		(194	)		0		0			271		(194	)
Residential & multi-family mortgage		7,907		(81	)		58,084		(635	)		65,991		(716	)
Corporate notes & bonds		0		0			7,940		(1,463	)		7,940		(1,463	)
Pooled SBA		0		0			25,840		(179	)		25,840		(179	)
Other equity securities		0		0			996		(24	)		996		(24	)
	$	8,178	$	(275	)	$	99,258	$	(2,305	)	$	107,436	$	(2,580	)

December 31, 2015

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	65,675	$	(640	)	$	31,923	$	(488	)	$	97,598	$	(1,128	)
State & political subdivisions		9,103		(234	)		2,478		(9	)		11,581		(243	)
Residential & multi-family mortgage		69,631		(1,562	)		50,351		(1,832	)		119,982		(3,394	)
Corporate notes & bonds		5,027		(2	)		8,144		(1,269	)		13,171		(1,271	)
Pooled SBA		2,908		(28	)		27,127		(879	)		30,035		(907	)
Other equity securities		0		0			981		(39	)		981		(39	)
	$	152,344	$	(2,466	)	$	121,004	$	(4,516	)	$	273,348	$	(6,982	)

Roll-Forward of Other-Than-Temporary Impairment Amount Related to Credit Losses

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and six months ended June 30, 2016 and 2015 is as follows:

	2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	2,071		$	4,054

Information Pertaining to Security Sales

Information pertaining to security sales on available for sale securities is as follows:

	Proceeds		Gross Gains		Gross Losses
Three months ended June 30, 2016	$	4,420	$	1,005	$	0
Six months ended June 30, 2016		4,420		1,005		0
Three months ended June 30, 2015		15,580		472		0
Six months ended June 30, 2015		48,529		608		(117	)

Schedule of Contractual Maturity of Securities Available for Sale, Excluding Equity Securities

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at June 30, 2016:

	Amortized		Fair
	Cost		Value
1 year or less	$	34,631	$	34,518
1 year – 5 years		185,702		192,456
5 years – 10 years		73,600		76,503
After 10 years		20,847		21,583
		314,780		325,060
Residential and multi-family mortgage		145,782		146,858
Pooled SBA		47,394		48,087
Total debt securities	$	507,956	$	520,005

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Loans (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule of Net Loans

Total net loans at June 30, 2016 and December 31, 2015 are summarized as follows:

	June 30, 2016			December 31, 2015
Commercial, industrial, and agricultural	$	490,838		$	475,364
Commercial mortgages		494,619			448,179
Residential real estate		591,779			574,225
Consumer		76,619			78,345
Credit cards		5,329			5,201
Overdrafts		407			1,040
Less: unearned discount		(3,747	)		(4,556	)
allowance for loan losses		(15,988	)		(16,737	)
Loans, net	$	1,639,856		$	1,561,061

Allowance for Loan Losses

Transactions in the allowance for loan losses for the three months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2016	$	5,627		$	6,044		$	2,574		$	2,274		$	81		$	138		$	16,738
Charge-offs		(162	)		(20	)		(124	)		(701	)		(28	)		(30	)		(1,065	)
Recoveries		39			0			3			30			3			20			95
Provision (benefit) for loan losses		(286	)		183			(154	)		463			(6	)		20			220
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the six months ended June 30, 2016 were as follows:

	Commercial,						Residential
	Industrial, and			Commercial			Real						Credit
	Agricultural			Mortgages			Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(433	)		(20	)		(149	)		(1,688	)		(37	)		(81	)		(2,408	)
Recoveries		47			5			62			74			15			40			243
Provision (benefit) for loan losses		(431	)		617			(89	)		1,309			(18	)		28			1,416
Allowance for loan losses, June 30, 2016	$	5,218		$	6,207		$	2,299		$	2,066		$	50		$	148		$	15,988

Transactions in the allowance for loan losses for the three months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, April 1, 2015	$	7,223		$	5,296	$	2,786		$	2,129		$	74		$	174		$	17,682
Charge-offs		(65	)		0		(90	)		(477	)		(44	)		(48	)		(724	)
Recoveries		12			0		0			26			2			20			60
Provision (benefit) for loan losses		(572	)		632		(84	)		440			66			4			486
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

Transactions in the allowance for loan losses for the six months ended June 30, 2015 were as follows:

	Commercial,					Residential
	Industrial, and			Commercial		Real						Credit
	Agricultural			Mortgages		Estate			Consumer			Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310	$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(139	)		0		(156	)		(1,000	)		(86	)		(105	)		(1,486	)
Recoveries		27			50		1			55			5			50			188
Provision (benefit) for loan losses		(404	)		568		288			858			108			11			1,429
Allowance for loan losses, June 30, 2015	$	6,598		$	5,928	$	2,612		$	2,118		$	98		$	150		$	17,504

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of June 30, 2016 and December 31, 2015. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

June 30, 2016

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	168	$	0	$	0	$	0	$	0	$	0	$	168
Collectively evaluated for impairment		4,428		4,146		2,299		2,066		50		148		13,137
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		622		2,061		0		0		0		0		2,683
Total ending allowance balance	$	5,218	$	6,207	$	2,299	$	2,066	$	50	$	148	$	15,988
Loans:
Individually evaluated for impairment	$	930	$	0	$	0	$	0	$	0	$	0	$	930
Collectively evaluated for impairment		485,393		484,378		591,779		76,619		5,329		407		1,643,905
Acquired with deteriorated credit quality		0		670		0		0		0		0		670
Modified in a troubled debt restructuring		4,515		9,571		0		0		0		0		14,086
Total ending loans balance	$	490,838	$	494,619	$	591,779	$	76,619	$	5,329	$	407	$	1,659,591

December 31, 2015

	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	239	$	0	$	39	$	0	$	0	$	0	$	278
Collectively evaluated for impairment		4,909		3,580		2,436		2,371		90		161		13,547
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		887		2,025		0		0		0		0		2,912
Total ending allowance balance	$	6,035	$	5,605	$	2,475	$	2,371	$	90	$	161	$	16,737
Loans:
Individually evaluated for impairment	$	1,196	$	393	$	248	$	0	$	0	$	0	$	1,837
Collectively evaluated for impairment		469,128		437,200		573,977		78,345		5,201		1,040		1,564,891
Acquired with deteriorated credit quality		0		685		0		0		0		0		685
Modified in a troubled debt restructuring		5,040		9,901		0		0		0		0		14,941
Total ending loans balance	$	475,364	$	448,179	$	574,225	$	78,345	$	5,201	$	1,040	$	1,582,354

Loans Individually Evaluated for Impairment Including Loans Modified in Troubled Debt Restructurings by Portfolio Segment

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of June 30, 2016 and December 31, 2015 and for the three months ended June 30, 2016 and 2015:

June 30, 2016

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,176	$	2,990	$	790
Commercial mortgage		5,870		5,144		2,061
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		3,394		2,455		0
Commercial mortgage		4,427		4,427		0
Residential real estate		0		0		0
Total	$	16,867	$	15,016	$	2,851

December 31, 2015

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,448	$	3,448	$	1,126
Commercial mortgage		5,985		5,343		2,025
Residential real estate		351		248		39
With no related allowance recorded:
Commercial, industrial, and agricultural		3,716		2,788		0
Commercial mortgage		5,001		4,951		0
Residential real estate		0		0		0
Total	$	18,501	$	16,778	$	3,190

Impaired Financing Receivables with Related and not Related Allowances

	Three Months Ended June 30, 2016						Six Months Ended June 30, 2016
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	3,150	$	2	$	2	$	3,249	$	2	$	2
Commercial mortgage		5,309		4		4		5,320		4		4
Residential real estate		0		0		0		83		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,525		2		2		2,612		2		2
Commercial mortgage		4,458		3		3		4,622		3		3
Residential real estate		0		0		0		0		0		0
Total	$	15,442	$	11	$	11	$	15,886	$	17	$	17

	Three Months Ended June 30, 2015						Six Months Ended June 30, 2015
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	6,315	$	7	$	7	$	6,071	$	42	$	42
Commercial mortgage		9,646		0		0		9,617		0		0
Residential real estate		400		11		11		400		13		13
With no related allowance recorded:
Commercial, industrial, and agricultural		1,689		2		2		1,631		12		12
Commercial mortgage		4,719		0		0		4,854		0		0
Residential real estate		129		4		4		129		6		6
Total	$	22,898	$	24	$	24	$	22,702	$	73	$	73

Nonaccrual Loans and Loans Past Due over 90 Days Still Accruing Interest by Class of Loans

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still accruing interest by class of loans as of June 30, 2016 and December 31, 2015:

	June 30, 2016				December 31, 2015
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	3,471	$	107	$	3,560	$	3
Commercial mortgages		3,433		0		3,651		0
Residential real estate		3,981		37		3,671		87
Consumer		1,113		2		1,277		15
Credit cards		0		16		0		0
Total	$	11,998	$	162	$	12,159	$	105

Aging of Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans as of June 30, 2016 and December 31, 2015 by class of loans.

June 30, 2016

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,000	$	775	$	1,013	$	2,788	$	488,050	$	490,838
Commercial mortgages		477		0		3,319		3,796		490,823		494,619
Residential real estate		2,480		1,130		3,290		6,900		584,879		591,779
Consumer		365		238		1,088		1,691		74,928		76,619
Credit cards		39		40		16		95		5,234		5,329
Overdrafts		0		0		0		0		407		407
Total	$	4,361	$	2,183	$	8,726	$	15,270	$	1,644,321	$	1,659,591

December 31, 2015

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	131	$	622	$	698	$	1,451	$	473,913	$	475,364
Commercial mortgages		7		343		3,651		4,001		444,178		448,179
Residential real estate		2,834		378		3,001		6,213		568,012		574,225
Consumer		216		179		1,292		1,687		76,658		78,345
Credit cards		0		0		0		0		5,201		5,201
Overdrafts		0		0		0		0		1,040		1,040
Total	$	3,188	$	1,522	$	8,642	$	13,352	$	1,569,002	$	1,582,354

Restructured in Troubled Debt

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of June 30, 2016 and December 31, 2015.

	June 30, 2016						December 31, 2015
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		7	$	4,515	$	622		8	$	5,040	$	887
Commercial mortgages		8		9,571		2,061		8		9,901		2,025
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		15	$	14,086	$	2,683		16	$	14,941	$	2,912

Schedule of Loan Assigned Risk Rating within 12 Months of Balance Sheet Date

All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

June 30, 2016

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	448,340	$	22,860	$	19,408	$	230	$	490,838
Commercial mortgages		473,054		3,393		17,752		420		494,619
Total	$	921,394	$	26,253	$	37,160	$	650	$	985,457

December 31, 2015

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	447,449	$	4,749	$	22,943	$	223	$	475,364
Commercial mortgages		426,870		1,735		19,148		426		448,179
Total	$	874,319	$	6,484	$	42,091	$	649	$	923,543

Recorded Investment in Residential, Consumer and Credit Card Loans Based on Payment Activity

The following table presents the recorded investment in residential, consumer, and credit card loans based on payment activity as of June 30, 2016 and December 31, 2015:

	June 30, 2016						December 31, 2015
	Residential				Credit		Residential				Credit
	Real Estate		Consumer		Cards		Real Estate		Consumer		Cards
Performing	$	587,761	$	75,504	$	5,313	$	570,467	$	77,053	$	5,201
Non-performing		4,018		1,115		16		3,758		1,292		0
Total	$	591,779	$	76,619	$	5,329	$	574,225	$	78,345	$	5,201

Summary of Holiday's Loan Portfolio

Holiday’s loan portfolio is summarized as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
	2016			2015
Consumer	$	25,956		$	30,001
Residential real estate		1,166			1,263
Less: unearned discount		(3,747	)		(4,556	)
Total	$	23,375		$	26,708

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Deposits (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Total Deposits

Total deposits at June 30, 2016 and December 31, 2015 are summarized as follows (in thousands):

	Percentage Change			June 30, 2016		December 31, 2015
Checking, non-interest bearing		(3.9	%)	$	253,352	$	263,639
Checking, interest bearing		17.3	%		516,238		440,174
Savings accounts		0.6	%		933,032		927,074
Certificates of deposit		2.1	%		187,973		184,166
		4.2	%	$	1,890,595	$	1,815,053

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands except per share data):

	Three months ended						Six months ended
	June 30,						June 30,
	2016			2015			2016			2015
Basic earnings per common share computation:
Net income per consolidated statements of income	$	4,065		$	5,602		$	9,084		$	11,167
Net earnings allocated to participating securities		(27	)		(33	)		(60	)		(62	)
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Distributed earnings allocated to common stock	$	2,369		$	2,362		$	4,737		$	4,731
Undistributed earnings allocated to common stock		1,669			3,207			4,287			6,374
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average common shares outstanding, including shares considered participating securities		14,460			14,404			14,448			14,410
Less: Average participating securities		(92	)		(80	)		(86	)		(73	)
Weighted average shares		14,368			14,324			14,362			14,337
Basic earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77
Diluted earnings per common share computation:
Net earnings allocated to common stock	$	4,038		$	5,569		$	9,024		$	11,105
Weighted average shares and dilutive potential common shares		14,368			14,324			14,362			14,366
Diluted earnings per common share	$	0.28		$	0.39		$	0.63		$	0.77

XML

Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Amounts and Locations of Activity Related to Interest Rate Swaps Designated as Cash Flow Hedges within Corporation's Consolidated Balance Sheet and Statement of Income

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015:

		Fair value as of
	Balance Sheet	June 30,	December 31,
	Location	2016	2015
Interest rate contracts	Accrued interest and other liabilities	($728)	($736)

For the Three Months Ended June 30, 2016	(a)		(b)	(c)		(d)	(e)
Interest rate contracts	($31	)	Interest expense – subordinated debentures	($86	)	Other income	$0
For the Six Months Ended June 30, 2016	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$5		Interest expense – subordinated debentures	($176	)	Other income	$0
For the Three Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$63		Interest expense – subordinated debentures	($94	)	Other income	$0
For the Six Months Ended June 30, 2015	(a	)	(b)	(c)		(d)	(e)
Interest rate contracts	$45		Interest expense – subordinated debentures	($189	)	Other income	$0

(a) Amount of Gain or (Loss) Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts and Locations of Activity Related to Back-to-Back Interest Rate Swaps within Corporation's Consolidated Balance Sheet

The following table provides summary information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of June 30, 2016 and December 31, 2015:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate		Fair Value
June 30, 2016
3rd Party interest rate swaps	$	9,391			9.3		4.31	%		1 month LIBOR + 2.25%	$	648	(f)
Customer interest rate swaps		(9,391	)		9.3		4.31	%		1 month LIBOR + 2.25%		(648	)(g)
December 31, 2015
3rd Party interest rate swaps	$	6,751			9.4		4.42	%		1 month LIBOR + 2.25%	$	131	(f)
Customer interest rate swaps		(6,751	)		9.4		4.42	%		1 month LIBOR + 2.25%		(131	)(g)

(f) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(g) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

XML

Subsequent Event - Acquisition of Lake National Bank - Additional Information (Detail) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Dec. 30, 2015 USD ($) $ / shares	Jun. 30, 2016 USD ($) Branches	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Branches	Jun. 30, 2015 USD ($)
Business Acquisition [Line Items]
Merger costs		$ 173	$ 0	$ 215	$ 0
Lake National Bank of Mentor, Ohio [Member]
Business Acquisition [Line Items]
Share price | $ / shares	$ 22.50
Aggregate cash paid	$ 24,750
Number of branches | Branches		2		2
Merger costs		$ 173		$ 215

XML

Stock Compensation - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of nonqualified options or restricted stock for key employees and independent director	500,000		500,000
Description of award terms			For key employees, the plan vesting is one-fourth of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the fourth anniversary of the grant date. For independent directors, the vesting schedule is one-third of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the third anniversary of the grant date.
Unrecognized compensation cost related to nonvested stock options granted under this plan	$ 0		$ 0
Stock options, granted	0	0	0	0
Compensation expense restricted stock awards	$ 172,000	$ 148,000	$ 412,000	$ 305,000
Fair value of shares vested during the period	542,000		$ 542,000
Independent Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Starting period of vesting of stock based award			1 year
Aggregate percentage of stock based awards to be matured			100.00%
Stock incentive plan, vesting per year			33.33%
Award vesting period			3 years
Key Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Starting period of vesting of stock based award			1 year
Aggregate percentage of stock based awards to be matured			100.00%
Stock incentive plan, vesting per year			25.00%
Award vesting period			4 years
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to nonvested restricted stock	$ 1,551,000		$ 1,551,000
Period over which unrecognized compensation cost related to nonvested restricted stock to be recognized			5 years

XML

Stock Compensation - Summary of Changes in Nonvested Restricted Stock Awards (Detail) - $ / shares	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Nonvested at beginning of period, Shares	101,728	84,600
Granted, Shares	1,500	51,500
Vested, Shares	0	(32,872)
Nonvested at end of period, Shares	103,228	103,228
Nonvested at beginning of period, Weighted-average Grant Date Fair Value	$ 17.34	$ 17.01
Granted, Weighted-average Grant Date Fair Value	17.83	17.64
Vested, Weighted-average Grant Date Fair Value	0	16.92
Nonvested at end of period, Weighted-average Grant Date Fair Value	$ 17.35	$ 17.35

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Securities Available For Sale:
Securities available for sale	$ 521,001	$ 546,043
Trading Securities:
Trading securities	4,438	4,576
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Securities Available For Sale:
Securities available for sale	996	981
Interest rate swaps	0	0
Trading Securities:
Trading securities	4,382	4,522
Liabilities
Interest rate swaps	0	0
Significant Other Observable Inputs (Level 2) [Member]
Securities Available For Sale:
Securities available for sale	518,303	541,649
Interest rate swaps	648	131
Trading Securities:
Trading securities	56	54
Liabilities
Interest rate swaps	(1,376)	(867)
Significant Unobservable Inputs (Level 3) [Member]
Securities Available For Sale:
Securities available for sale	1,702	3,413
Interest rate swaps	0	0
Trading Securities:
Trading securities	0	0
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member]
Securities Available For Sale:
Securities available for sale	521,001	546,043
Interest rate swaps	648	131
Trading Securities:
Trading securities	4,438	4,576
Liabilities
Interest rate swaps	(1,376)	(867)
Fair Value Measurement on Recurring Basis [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	141,789	141,751
Trading Securities:
Trading securities	56	54
Fair Value Measurement on Recurring Basis [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	164,645	171,819
Fair Value Measurement on Recurring Basis [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	146,858	157,982
Fair Value Measurement on Recurring Basis [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	16,924	18,688
Trading Securities:
Trading securities	202	130
Fair Value Measurement on Recurring Basis [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale	1,702	3,413
Fair Value Measurement on Recurring Basis [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	48,087	51,409
Fair Value Measurement on Recurring Basis [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	996	981
Fair Value Measurement on Recurring Basis [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	3,037	3,389
Fair Value Measurement on Recurring Basis [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	888	750
Fair Value Measurement on Recurring Basis [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	255	253
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Securities Available For Sale:
Securities available for sale	996	981
Interest rate swaps	0	0
Trading Securities:
Trading securities	4,382	4,522
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	202	130
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	996	981
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	3,037	3,389
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	888	750
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	255	253
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities Available For Sale:
Securities available for sale	518,303	541,649
Interest rate swaps	648	131
Trading Securities:
Trading securities	56	54
Liabilities
Interest rate swaps	(1,376)	(867)
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	141,789	141,751
Trading Securities:
Trading securities	56	54
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	164,645	171,819
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	146,858	157,982
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	16,924	18,688
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	48,087	51,409
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Securities Available For Sale:
Securities available for sale	1,702	3,413
Interest rate swaps	0	0
Trading Securities:
Trading securities	0	0
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale	1,702	3,413
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	$ 0	$ 0

XML

Fair Value - Securities Available for Sale Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Beginning Balance	$ 3,109	$ 905	$ 3,413	$ 905
Proceeds from sale of securities	(922)	0	(922)	0
Total gains or (losses):
Included in other comprehensive income (unrealized)	(485)	255	(789)	255
Ending Balance	$ 1,702	$ 1,160	$ 1,702	$ 1,160

XML

Fair Value - Quantitative Information About Level 3 Fair Value Measurements (Detail) - Pooled Trust Preferred [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 1,702	$ 3,413
Collateral Default Rate [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized two	0.5% in 2016 and thereafter	1% in 2015; 0.5% in 2016 and thereafter
Yield (Weighted Average) [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized one	10.00%	9.00%
Prepayment Speed [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized two	2.0% constant prepayment rate in 2016 and thereafter	2.0% constant prepayment rate in 2015 and thereafter

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) - Commercial Mortgages [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	$ 2,030	$ 2,247
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	0	0
Significant Other Observable Inputs (Level 2) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	$ 2,030	$ 2,247

XML

Fair Value - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, recorded investment	$ 15,016		$ 15,016		$ 16,778
Impaired loans allowance	2,851		2,851		3,190
Collateral Dependent Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, recorded investment	3,324		3,324		3,489
Impaired loans allowance	1,294		1,294		$ 1,242
Impaired loans, additional provisions	$ 135	$ 60	$ 53	$ 63

XML

Fair Value - Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Non Recurring Basis (Detail) - Impaired Loans - Commercial Mortgages [Member] - Sales Comparison Valuation Technique [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 2,030	$ 2,247
Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Sales comparison approach	21.00%	25.00%
Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Sales comparison approach	99.00%	69.00%
Weighted Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Sales comparison approach	(39.00%)	(36.00%)

XML

Fair Value - Carrying Amount and Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 23,926	$ 27,261	$ 30,400	$ 27,928
Securities available for sale	521,001	546,043
Trading securities	4,438	4,576
Loans held for sale	863	1,381
Net loans	1,639,856	1,561,061
FHLB and other equity interests	16,023	15,921
Liabilities
Deposits	(1,890,595)	(1,815,053)
Subordinated debentures	(20,620)	(20,620)
Carrying Amount [Member]
ASSETS
Cash and cash equivalents	23,926	27,261
Securities available for sale	521,001	546,043
Trading securities	4,438	4,576
Loans held for sale	863	1,381
Net loans	1,639,856	1,561,061
FHLB and other equity interests	16,023	15,921
Interest rate swaps	648	131
Accrued interest receivable	7,518	7,312
Liabilities
Deposits	(1,890,595)	(1,815,053)
FHLB and other borrowings	(185,653)	(220,515)
Subordinated debentures	(20,620)	(20,620)
Interest rate swaps	(1,376)	(867)
Accrued interest payable	(296)	(766)
Total Fair Value [Member]
ASSETS
Cash and cash equivalents	23,926	27,261
Securities available for sale	521,001	546,043
Trading securities	4,438	4,576
Loans held for sale	888	1,438
Net loans	1,638,624	1,554,502
Interest rate swaps	648	131
Accrued interest receivable	7,518	7,312
Liabilities
Deposits	(1,890,228)	(1,813,916)
FHLB and other borrowings	(184,850)	(218,808)
Subordinated debentures	(12,029)	(11,761)
Interest rate swaps	(1,376)	(867)
Accrued interest payable	(296)	(766)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
ASSETS
Cash and cash equivalents	23,926	27,261
Securities available for sale	996	981
Trading securities	4,382	4,522
Loans held for sale	0	0
Net loans	0	0
Interest rate swaps	0	0
Accrued interest receivable	6	5
Liabilities
Deposits	(1,702,622)	(1,630,888)
FHLB and other borrowings	0	0
Subordinated debentures	0	0
Interest rate swaps	0	0
Accrued interest payable	0	(344)
Significant Other Observable Inputs (Level 2) [Member]
ASSETS
Cash and cash equivalents	0	0
Securities available for sale	518,303	541,649
Trading securities	56	54
Loans held for sale	888	1,438
Net loans	0	0
Interest rate swaps	648	131
Accrued interest receivable	3,096	2,875
Liabilities
Deposits	(187,606)	(183,028)
FHLB and other borrowings	(184,850)	(218,808)
Subordinated debentures	(12,029)	(11,761)
Interest rate swaps	(1,376)	(867)
Accrued interest payable	(296)	(422)
Significant Unobservable Inputs (Level 3) [Member]
ASSETS
Cash and cash equivalents	0	0
Securities available for sale	1,702	3,413
Trading securities	0	0
Loans held for sale	0	0
Net loans	1,638,624	1,554,502
Interest rate swaps	0	0
Accrued interest receivable	4,416	4,432
Liabilities
Deposits	0	0
FHLB and other borrowings	0	0
Subordinated debentures	0	0
Interest rate swaps	0	0
Accrued interest payable	$ 0	$ 0

XML

Securities - Securities Available for Sale (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 508,976	$ 540,614
Unrealized Gains	14,605	12,411
Unrealized Losses	(2,580)	(6,982)
Fair Value	521,001	546,043
U.S. Government Sponsored Entities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	139,061	141,300
Unrealized Gains	2,732	1,579
Unrealized Losses	(4)	(1,128)
Fair Value	141,789	141,751
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	156,731	165,828
Unrealized Gains	8,108	6,234
Unrealized Losses	(194)	(243)
Fair Value	164,645	171,819
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	145,782	160,316
Unrealized Gains	1,792	1,060
Unrealized Losses	(716)	(3,394)
Fair Value	146,858	157,982
Corporate Notes and Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	18,188	19,794
Unrealized Gains	199	165
Unrealized Losses	(1,463)	(1,271)
Fair Value	16,924	18,688
Pooled Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	800	800
Unrealized Gains	902	2,613
Unrealized Losses	0	0
Fair Value	1,702	3,413
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	47,394	51,556
Unrealized Gains	872	760
Unrealized Losses	(179)	(907)
Fair Value	48,087	51,409
Other Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,020	1,020
Unrealized Gains	0	0
Unrealized Losses	(24)	(39)
Fair Value	$ 996	$ 981

XML

Securities - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) Securities	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Securities	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) Securities
Schedule of Available-for-sale Securities [Line Items]
Number of securities holdings | Securities	0		0		0
Shareholders' equity percentage	10.00%		10.00%		10.00%
Proceeds from sale of securities	$ 4,420	$ 15,580	$ 4,420	$ 48,529
Securities	$ 365,867		365,867		$ 312,669
Pooled Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of structured pooled trust preferred securities sold | Securities	2
Amortized cost of securities	$ 1,983		1,983
Proceeds from sale of securities	$ 922		$ 922

XML

Securities - Trading Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	$ 4,438	$ 4,576
Corporate Equity Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	3,037	3,389
Mutual Funds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	888	750
Certificates of Deposit [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	255	253
Corporate Notes and Bonds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	202	130
U.S. Government Sponsored Entities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	$ 56	$ 54

XML

Securities - Securities with Unrealized Losses Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 8,178	$ 152,344
Less than 12 Months, Unrealized Loss	(275)	(2,466)
12 Months or More, Fair Value	99,258	121,004
12 Months or More, Unrealized Loss	(2,305)	(4,516)
Total, Fair Value	107,436	273,348
Total, Unrealized Loss	(2,580)	(6,982)
U.S. Government Sponsored Entities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	65,675
Less than 12 Months, Unrealized Loss	0	(640)
12 Months or More, Fair Value	6,398	31,923
12 Months or More, Unrealized Loss	(4)	(488)
Total, Fair Value	6,398	97,598
Total, Unrealized Loss	(4)	(1,128)
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	271	9,103
Less than 12 Months, Unrealized Loss	(194)	(234)
12 Months or More, Fair Value	0	2,478
12 Months or More, Unrealized Loss	0	(9)
Total, Fair Value	271	11,581
Total, Unrealized Loss	(194)	(243)
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	7,907	69,631
Less than 12 Months, Unrealized Loss	(81)	(1,562)
12 Months or More, Fair Value	58,084	50,351
12 Months or More, Unrealized Loss	(635)	(1,832)
Total, Fair Value	65,991	119,982
Total, Unrealized Loss	(716)	(3,394)
Corporate Notes and Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	5,027
Less than 12 Months, Unrealized Loss	0	(2)
12 Months or More, Fair Value	7,940	8,144
12 Months or More, Unrealized Loss	(1,463)	(1,269)
Total, Fair Value	7,940	13,171
Total, Unrealized Loss	(1,463)	(1,271)
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	2,908
Less than 12 Months, Unrealized Loss	0	(28)
12 Months or More, Fair Value	25,840	27,127
12 Months or More, Unrealized Loss	(179)	(879)
Total, Fair Value	25,840	30,035
Total, Unrealized Loss	(179)	(907)
Other Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	0
Less than 12 Months, Unrealized Loss	0	0
12 Months or More, Fair Value	996	981
12 Months or More, Unrealized Loss	(24)	(39)
Total, Fair Value	996	981
Total, Unrealized Loss	$ (24)	$ (39)

XML

Securities - Roll-Forward of Other-Than-Temporary Impairment Amount Related to Credit Losses (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Marketable Securities [Abstract]
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$ 4,054	$ 4,054
Credit losses previously recognized on securities sold during the period	(1,983)	0
Additional credit loss for which other-than-temporary impairment was not previously recognized	0	0
Additional credit loss for which other-than-temporary impairment was previously recognized	0	0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$ 2,071	$ 4,054

XML

Securities - Information Pertaining to Security Sales (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 4,420	$ 15,580	$ 4,420	$ 48,529
Gross Gains	1,005	472	1,005	608
Gross Losses	$ 0	$ 0	$ 0	$ (117)

XML

Securities - Schedule of Contractual Maturity of Securities Available for Sale, Excluding Equity Securities (Detail) $ in Thousands	Jun. 30, 2016 USD ($)
Schedule of Available-for-sale Securities [Line Items]
1 year or less, Amortized Cost	$ 34,631
1 year - 5 years, Amortized Cost	185,702
5 years - 10 years, Amortized Cost	73,600
After 10 years, Amortized Cost	20,847
Total, Amortized Cost	314,780
1 year or less, Fair Value	34,518
1 year - 5 years, Fair Value	192,456
5 years - 10 years, Fair Value	76,503
After 10 years, Fair Value	21,583
Total, Fair Value	325,060
Total debt securities, Amortized Cost	507,956
Total debt securities, Fair Value	520,005
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage & asset backed securities, Amortized Cost	145,782
Mortgage & asset backed securities, Fair Value	146,858
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage & asset backed securities, Amortized Cost	47,394
Mortgage & asset backed securities, Fair Value	$ 48,087

XML

Loans - Schedule of Net Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Loan Portfolio By Loan Grade [Line Items]
Commercial, industrial, and agricultural	$ 490,838	$ 475,364
Commercial mortgages	494,619	448,179
Residential real estate	591,779	574,225
Credit cards	5,329	5,201
Overdrafts	407	1,040
Less: unearned discount	(3,747)	(4,556)
Less: allowance for loan losses	(15,988)	(16,737)
Net loans	1,639,856	1,561,061
Consumer Portfolio Segment [Member]
Loan Portfolio By Loan Grade [Line Items]
Consumer	$ 76,619	$ 78,345

XML

Loans - Additional Information (Detail)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($) Loans	Jun. 30, 2015 Loans	Jun. 30, 2016 USD ($) Loans	Jun. 30, 2015 Loans	Dec. 31, 2015 USD ($) Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net unamortized loan fees | $	$ (728,000)		$ (728,000)		$ (636,000)
Percentage of comprised loan, commercial, industrial and agricultural loans	30.00%		30.00%		30.00%
Percentage of comprised loan, commercial mortgage loans	30.00%		30.00%		28.00%
Percentage of loan-to-value to business equipment			80.00%
Percentage of loan-to-value to accounts receivable			75.00%
Percentage of loan-to-value to business inventory			60.00%
Percentage of loan-to-value to real estate			85.00%
Percentage of residential real estate loan in portfolio	36.00%		36.00%		36.00%
Number of Loans | Loans			15		16
Minimum period to be considered for loan to have defaulted			90 days
Principal balances forgiven in connection with loan restructuring | $	$ 0		$ 0		$ 0
Outstanding balance of semi annual loans			Greater than $1 million
Outstanding balance of annual loans			Less than $1 million
Trouble Debt Restructuring [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Loans	0	0	0	0
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Maximum percentage of consumer loan and credit card in portfolio	10.00%		10.00%		10.00%

XML

Loans - Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	$ 16,738	$ 17,682	$ 16,737	$ 17,373
Charge-offs	(1,065)	(724)	(2,408)	(1,486)
Recoveries	95	60	243	188
Provision (benefit) for loan losses	220	486	1,416	1,429
Allowances for loan losses, Ending Balance	15,988	17,504	15,988	17,504
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	5,627	7,223	6,035	7,114
Charge-offs	(162)	(65)	(433)	(139)
Recoveries	39	12	47	27
Provision (benefit) for loan losses	(286)	(572)	(431)	(404)
Allowances for loan losses, Ending Balance	5,218	6,598	5,218	6,598
Commercial Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	6,044	5,296	5,605	5,310
Charge-offs	(20)	0	(20)	0
Recoveries	0	0	5	50
Provision (benefit) for loan losses	183	632	617	568
Allowances for loan losses, Ending Balance	6,207	5,928	6,207	5,928
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	2,574	2,786	2,475	2,479
Charge-offs	(124)	(90)	(149)	(156)
Recoveries	3	0	62	1
Provision (benefit) for loan losses	(154)	(84)	(89)	288
Allowances for loan losses, Ending Balance	2,299	2,612	2,299	2,612
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	2,274	2,129	2,371	2,205
Charge-offs	(701)	(477)	(1,688)	(1,000)
Recoveries	30	26	74	55
Provision (benefit) for loan losses	463	440	1,309	858
Allowances for loan losses, Ending Balance	2,066	2,118	2,066	2,118
Credit Cards [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	81	74	90	71
Charge-offs	(28)	(44)	(37)	(86)
Recoveries	3	2	15	5
Provision (benefit) for loan losses	(6)	66	(18)	108
Allowances for loan losses, Ending Balance	50	98	50	98
Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowances for loan losses, Beginning Balance	138	174	161	194
Charge-offs	(30)	(48)	(81)	(105)
Recoveries	20	20	40	50
Provision (benefit) for loan losses	20	4	28	11
Allowances for loan losses, Ending Balance	$ 148	$ 150	$ 148	$ 150

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Loans - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	$ 168		$ 278
Allowance for loan losses, Collectively evaluated for impairment	13,137		13,547
Allowance for loan losses, Modified in a troubled debt restructuring	2,683		2,912
Acquired with deteriorated credit quality	15,988	$ 16,738	16,737	$ 17,504	$ 17,682	$ 17,373
Loans:
Loans individually evaluated for impairment	930		1,837
Loans collectively evaluated for impairment	1,643,905		1,564,891
Acquired with deteriorated credit quality	985,457		923,543
Loans modified in a troubled debt restructuring	14,086		14,941
Total ending loans balance	1,659,591		1,582,354
Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	670		685
Commercial, Industrial, and Agricultural [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	168		239
Allowance for loan losses, Collectively evaluated for impairment	4,428		4,909
Allowance for loan losses, Modified in a troubled debt restructuring	622		887
Acquired with deteriorated credit quality	5,218	5,627	6,035	6,598	7,223	7,114
Loans:
Loans individually evaluated for impairment	930		1,196
Loans collectively evaluated for impairment	485,393		469,128
Acquired with deteriorated credit quality	490,838		475,364
Loans modified in a troubled debt restructuring	4,515		5,040
Total ending loans balance	490,838		475,364
Commercial, Industrial, and Agricultural [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Commercial Mortgages [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0		0
Allowance for loan losses, Collectively evaluated for impairment	4,146		3,580
Allowance for loan losses, Modified in a troubled debt restructuring	2,061		2,025
Acquired with deteriorated credit quality	6,207	6,044	5,605	5,928	5,296	5,310
Loans:
Loans individually evaluated for impairment	0		393
Loans collectively evaluated for impairment	484,378		437,200
Acquired with deteriorated credit quality	494,619		448,179
Loans modified in a troubled debt restructuring	9,571		9,901
Total ending loans balance	494,619		448,179
Commercial Mortgages [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	670		685
Residential Real Estate [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0		39
Allowance for loan losses, Collectively evaluated for impairment	2,299		2,436
Allowance for loan losses, Modified in a troubled debt restructuring	0		0
Acquired with deteriorated credit quality	2,299	2,574	2,475	2,612	2,786	2,479
Loans:
Loans individually evaluated for impairment	0		248
Loans collectively evaluated for impairment	591,779		573,977
Loans modified in a troubled debt restructuring	0		0
Total ending loans balance	591,779		574,225
Residential Real Estate [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Consumer [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0		0
Allowance for loan losses, Collectively evaluated for impairment	2,066		2,371
Allowance for loan losses, Modified in a troubled debt restructuring	0		0
Acquired with deteriorated credit quality	2,066	2,274	2,371	2,118	2,129	2,205
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	76,619		78,345
Loans modified in a troubled debt restructuring	0		0
Total ending loans balance	76,619		78,345
Consumer [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Credit Cards [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0		0
Allowance for loan losses, Collectively evaluated for impairment	50		90
Allowance for loan losses, Modified in a troubled debt restructuring	0		0
Acquired with deteriorated credit quality	50	81	90	98	74	71
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	5,329		5,201
Loans modified in a troubled debt restructuring	0		0
Total ending loans balance	5,329		5,201
Credit Cards [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	0		0
Overdrafts [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0		0
Allowance for loan losses, Collectively evaluated for impairment	148		161
Allowance for loan losses, Modified in a troubled debt restructuring	0		0
Acquired with deteriorated credit quality	148	$ 138	161	$ 150	$ 174	$ 194
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	407		1,040
Loans modified in a troubled debt restructuring	0		0
Total ending loans balance	407		1,040
Overdrafts [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0		0
Loans:
Acquired with deteriorated credit quality	$ 0		$ 0

XML

Loans - Loans Individually Evaluated for Impairment Including Loans Modified in Troubled Debt Restructurings by Portfolio Segment (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Total	$ 16,867	$ 18,501
Recorded Investment, Total	15,016	16,778
Allowance for Loan Losses Allocated	2,851	3,190
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	3,176	3,448
Recorded Investment, Related Allowance	2,990	3,448
Allowance for Loan Losses Allocated	790	1,126
Unpaid Principal Balance, No Related Allowance	3,394	3,716
Recorded Investment, No Related Allowance	2,455	2,788
Allowance for Loan Losses Allocated, No Related Allowance	0	0
Commercial Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	5,870	5,985
Recorded Investment, Related Allowance	5,144	5,343
Allowance for Loan Losses Allocated	2,061	2,025
Unpaid Principal Balance, No Related Allowance	4,427	5,001
Recorded Investment, No Related Allowance	4,427	4,951
Allowance for Loan Losses Allocated, No Related Allowance	0	0
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	0	351
Recorded Investment, Related Allowance	0	248
Allowance for Loan Losses Allocated	0	39
Unpaid Principal Balance, No Related Allowance	0	0
Recorded Investment, No Related Allowance	0	0
Allowance for Loan Losses Allocated, No Related Allowance	$ 0	$ 0

XML

Loans - Impaired Financing Receivables with Related and not Related Allowances (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 15,442	$ 22,898	$ 15,886	$ 22,702
Interest Income Recognized, Total	11	24	17	73
Cash Basis Interest Recognized, Total	11	24	17	73
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	3,150	6,315	3,249	6,071
Interest Income Recognized, Related Allowance	2	7	2	42
Cash Basis Interest Recognized, Related Allowance	2	7	2	42
Average Recorded Investment, No Related Allowance	2,525	1,689	2,612	1,631
Interest Income Recognized, No Related Allowance	2	2	2	12
Cash Basis Interest Recognized, No Related Allowance	2	2	2	12
Commercial Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	5,309	9,646	5,320	9,617
Interest Income Recognized, Related Allowance	4	0	4	0
Cash Basis Interest Recognized, Related Allowance	4	0	4	0
Average Recorded Investment, No Related Allowance	4,458	4,719	4,622	4,854
Interest Income Recognized, No Related Allowance	3	0	3	0
Cash Basis Interest Recognized, No Related Allowance	3	0	3	0
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	0	400	83	400
Interest Income Recognized, Related Allowance	0	11	6	13
Cash Basis Interest Recognized, Related Allowance	0	11	6	13
Average Recorded Investment, No Related Allowance	0	129	0	129
Interest Income Recognized, No Related Allowance	0	4	0	6
Cash Basis Interest Recognized, No Related Allowance	$ 0	$ 4	$ 0	$ 6

XML

Loans - Nonaccrual Loans and Loans Past Due over 90 Days Still Accruing Interest by Class of Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 11,998	$ 12,159
Past Due Over 90 Days Still on Accrual	162	105
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	3,471	3,560
Past Due Over 90 Days Still on Accrual	107	3
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	3,433	3,651
Past Due Over 90 Days Still on Accrual	0	0
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	3,981	3,671
Past Due Over 90 Days Still on Accrual	37	87
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,113	1,277
Past Due Over 90 Days Still on Accrual	2	15
Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	0	0
Past Due Over 90 Days Still on Accrual	$ 16	$ 0

XML

Loans - Aging of Recorded Investment in Past Due Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 15,270	$ 13,352
Loans Not Past Due	1,644,321	1,569,002
Total	1,659,591	1,582,354
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,361	3,188
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,183	1,522
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	8,726	8,642
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,788	1,451
Loans Not Past Due	488,050	473,913
Total	490,838	475,364
Commercial, Industrial, and Agricultural [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,000	131
Commercial, Industrial, and Agricultural [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	775	622
Commercial, Industrial, and Agricultural [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,013	698
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,796	4,001
Loans Not Past Due	490,823	444,178
Total	494,619	448,179
Commercial Mortgages [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	477	7
Commercial Mortgages [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	343
Commercial Mortgages [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,319	3,651
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	6,900	6,213
Loans Not Past Due	584,879	568,012
Total	591,779	574,225
Residential Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,480	2,834
Residential Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,130	378
Residential Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,290	3,001
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,691	1,687
Loans Not Past Due	74,928	76,658
Total	76,619	78,345
Consumer [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	365	216
Consumer [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	238	179
Consumer [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,088	1,292
Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	95	0
Loans Not Past Due	5,234	5,201
Total	5,329	5,201
Credit Cards [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	39	0
Credit Cards [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	40	0
Credit Cards [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	16	0
Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Loans Not Past Due	407	1,040
Total	407	1,040
Overdrafts [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Overdrafts [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Overdrafts [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 0	$ 0

XML

Loans - Restructured in Troubled Debt (Detail) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($) Loans	Dec. 31, 2015 USD ($) Loans
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	15	16
Loan Balance	$ 14,086	$ 14,941
Specific Reserve	$ 2,683	$ 2,912
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	7	8
Loan Balance	$ 4,515	$ 5,040
Specific Reserve	$ 622	$ 887
Commercial Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	8	8
Loan Balance	$ 9,571	$ 9,901
Specific Reserve	$ 2,061	$ 2,025
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0
Credit Cards [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0

XML

Loans - Schedule of Loan Assigned Risk Rating within 12 Months of Balance Sheet Date (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	$ 985,457	$ 923,543
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	490,838	475,364
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	494,619	448,179
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	921,394	874,319
Pass [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	448,340	447,449
Pass [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	473,054	426,870
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	26,253	6,484
Special Mention [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	22,860	4,749
Special Mention [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	3,393	1,735
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	37,160	42,091
Substandard [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	19,408	22,943
Substandard [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	17,752	19,148
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	650	649
Doubtful [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	230	223
Doubtful [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	$ 420	$ 426

XML

Loans - Recorded Investment in Residential, Consumer and Credit Card Loans Based on Payment Activity (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	$ 591,779	$ 574,225
Credit cards	5,329	5,201
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	76,619	78,345
Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	587,761	570,467
Credit cards	5,313	5,201
Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	75,504	77,053
Non-Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	4,018	3,758
Credit cards	16	0
Non-Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	$ 1,115	$ 1,292

XML

Loans - Summary of Holiday's Loan Portfolio (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential real estate	$ 591,779	$ 574,225
Less: unearned discount	(3,747)	(4,556)
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer	76,619	78,345
Holiday Financial Services Corporation [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential real estate	1,166	1,263
Less: unearned discount	(3,747)	(4,556)
Total	23,375	26,708
Holiday Financial Services Corporation [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer	$ 25,956	$ 30,001

XML

Deposits - Total Deposits (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Percentage Change, Checking, non-interest bearing	(3.90%)
Percentage Change, Checking, interest bearing	17.30%
Percentage Change, Savings accounts	0.60%
Percentage Change, Certificates of deposit	2.10%
Percentage change, Total	4.20%
Checking, non-interest bearing	$ 253,352	$ 263,639
Checking, interest bearing	516,238	440,174
Savings accounts	933,032	927,074
Certificates of deposit	187,973	184,166
Total deposits	$ 1,890,595	$ 1,815,053

XML

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Antidilutive shares excluded from the diluted earnings per share calculations	0	0	0	0

XML

Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic earnings per common share computation:
Net income per consolidated statements of income	$ 4,065	$ 5,602	$ 9,084	$ 11,167
Net earnings allocated to participating securities	(27)	(33)	(60)	(62)
Net earnings allocated to common stock	$ 4,038	$ 5,569	$ 9,024	$ 11,105
Weighted average common shares outstanding, including shares considered participating securities	14,460	14,404	14,448	14,410
Less: Average participating securities	(92)	(80)	(86)	(73)
Weighted average shares	14,368	14,324	14,362	14,337
Basic earnings per common share	$ 0.28	$ 0.39	$ 0.63	$ 0.77
Diluted earnings per common share computation:
Net earnings allocated to common stock	$ 4,038	$ 5,569	$ 9,024	$ 11,105
Weighted average shares and dilutive potential common shares	14,368	14,324	14,362	14,366
Diluted earnings per common share	$ 0.28	$ 0.39	$ 0.63	$ 0.77
Distributed Earnings Allocated to Common Stock [Member]
Basic earnings per common share computation:
Net earnings allocated to common stock	$ 2,369	$ 2,362	$ 4,737	$ 4,731
Undistributed Earnings Allocated to Common Stock [Member]
Basic earnings per common share computation:
Net earnings allocated to common stock	$ 1,669	$ 3,207	$ 4,287	$ 6,374

XML

Derivative Instruments - Additional Information (Detail) - USD ($)		6 Months Ended
	May 03, 2011	Jun. 30, 2016	Dec. 31, 2015
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Term of interest rate swap agreement executed	5 years
Interest rate swap inception date	May 03, 2011
Value of subordinated note hedged	$ 10,000,000
Interest rate swap effective date	Sep. 15, 2013
Interest rate		The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount.
Derivatives designated as fair value hedges		$ 0	$ 0
Accumulated other comprehensive loss estimated		337,000
Collateral amount for counterparty interest rate swap		$ 1,400,000	$ 1,400,000
LIBOR Plus 155 Basis Points [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Variable rate on the subordinated debt on effective date in case of interest rate swap		LIBOR plus 155 basis points
Variable interest rate on subordinate debt		2.20%
4.02% Fixed Rate Plus 155 Basis Points [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Variable rate on the subordinated debt on effective date in case of interest rate swap		4.02% fixed rate plus 155 basis points
Interest rate being paid by the corporation		5.57%
Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Derivative basis spread on variable rate		1.55%
Derivative fixed interest rate rate basis		4.02%
Cash collateral pledged		$ 200,000

XML

Derivative Instruments - Amounts and Locations of Activity Related to Interest Rate Swaps Designated as Cash Flow Hedges within Corporation's Consolidated Balance Sheet and Statement of Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Derivative [Line Items]
Interest rate contracts	$ (31)	$ 63	$ 5	$ 45
Accrued Interest and Other Liabilities [Member]
Derivative [Line Items]
Interest rate contract, fair value	(728)		(728)		$ (736)
Interest Expense - Subordinated Debentures [Member]
Derivative [Line Items]
Interest expense, Fair Value	(86)	(94)	(176)	(189)
Other Income [Member]
Derivative [Line Items]
Other income	$ 0	$ 0	$ 0	$ 0

XML

Derivative Instruments - Amounts and Locations of Activity Related to Back-to-Back Interest Rate Swaps within Corporation's Consolidated Balance Sheet (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
3rd Party Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Notional Amount	$ 9,391,000	$ 6,751,000
Average Maturity (in years)	9 years 3 months 18 days	9 years 4 months 24 days
Weighted Average Fixed Rate	4.31%	4.42%
Weighted Average Variable Rate, Description	1 month LIBOR + 2.25%
Weighted Average Variable Rate	2.25%	2.25%
Fair Value	$ 648,000	$ 131,000
Customer Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Notional Amount	$ (9,391,000)	$ (6,751,000)
Average Maturity (in years)	9 years 3 months 18 days	9 years 4 months 24 days
Weighted Average Fixed Rate	4.31%	4.42%
Weighted Average Variable Rate, Description	1 month LIBOR + 2.25%
Weighted Average Variable Rate	2.25%	2.25%
Fair Value	$ (648,000)	$ (131,000)