Kentucky Bancshares (KTYB) 10-Q 16 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Document and Entity Information
Entity Registrant Name	KENTUCKY BANCSHARES INC /KY/
Entity Central Index Key	1,000,232
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		2,989,205
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS(una

CONSOLIDATED BALANCE SHEETS(unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and due from banks	$ 19,752	$ 16,771
Federal funds sold	3,129	398
Cash and cash equivalents	22,881	17,169
Interest bearing time deposits	4,874	1,280
Securities available for sale	238,600	246,861
Trading Assets	5,480	5,370
Mortgage loans held for sale	1,520	776
Loans	612,504	538,305
Allowance for loan losses	(6,142)	(6,012)
Net loans	606,362	532,293
Federal Home Loan Bank stock	7,034	5,981
Real estate owned, net	3,384	4,603
Bank premises and equipment, net	16,865	16,479
Interest receivable	3,888	3,299
Mortgage servicing rights	1,270	1,209
Goodwill	13,117	13,117
Other intangible assets	853	177
Other assets	7,414	6,595
Total assets	933,542	855,209
Deposits
Non-interest bearing	201,644	176,743
Time deposits, $250,000 and over	58,710	52,913
Other interest bearing	450,651	425,213
Total deposits	711,005	654,869
Repurchase agreements	19,918	12,457
Federal funds purchased	4,300
Short-term Federal Home Loan Bank advances		10,000
Long-term Federal Home Loan Bank advances	90,991	83,785
Other borrowings	5,000
Subordinated debentures	7,217	7,217
Interest payable	783	642
Other liabilities	5,739	8,297
Total liabilities	844,953	777,267
Stockholders' equity
Common stock, no par value; 10,000,000 shares authorized; 2,988,205 and 2,720,098 shares issued and outstanding on September 30, 2015 and December 31, 2014	19,584	12,662
Retained earnings	67,448	64,489
Accumulated other comprehensive income	1,557	791
Total stockholders' equity	88,589	77,942
Total liabilities and stockholders' equity	$ 933,542	$ 855,209

CONSOLIDATED BALANCE SHEETS(un3

CONSOLIDATED BALANCE SHEETS(unaudited) (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS(unaudited)
Preferred stock, shares authorized	300,000	300,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	2,988,205	2,720,098
Common stock, shares outstanding	2,988,205	2,720,098

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
INTEREST INCOME:
Loans, including fees	$ 7,094	$ 6,100	$ 19,649	$ 17,757
Securities
Taxable	755	586	2,180	1,941
Tax exempt	663	682	2,029	2,133
Trading assets	44	49	127	129
Other	85	65	222	210
Total interest income	8,641	7,482	24,207	22,170
INTEREST EXPENSE:
Deposits	520	483	1,499	1,557
Repurchase agreements and other borrowings	75	24	122	72
Federal Home Loan Bank advances	388	380	1,187	1,003
Subordinated debentures	60	57	175	172
Total interest expense	1,043	944	2,983	2,804
Net interest income	7,598	6,538	21,224	19,366
Provision for loan losses	375	300	1,025	500
Net interest income after provision	7,223	6,238	20,199	18,866
NON-INTEREST INCOME:
Service charges	1,215	1,150	3,210	3,223
Loan service fee income, net	45	29	153	63
Trust department income	252	256	788	717
Gain on sale of available for sale securities, net	159	81	410	514
Gain (loss) on trading assets	37	34	(16)	196
Gain on sale of mortgage loans	404	317	1,172	715
Brokerage income	189	132	431	422
Debit card interchange income	649	534	1,813	1,543
Bargain purchase gain	141		141
Other	(101)	(43)	780	34
Total other income	2,990	2,490	8,882	7,427
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,232	3,750	12,176	11,013
Occupancy expenses	1,101	848	2,887	2,526
Repossession expenses, net	61	140	343	163
FDIC Insurance	135	135	436	403
Legal and professional fees	267	307	790	765
Data processing	329	337	1,000	1,005
Debit card expenses	323	202	872	698
Amortization	85	30	146	104
Advertising and marketing	275	212	700	653
Taxes other than payroll, property and income	269	225	728	647
Telephone	85	80	230	256
Postage	95	79	266	236
Loan fees	67	113	264	273
Acquisition expenses	721		858
Other	524	507	1,798	1,452
Total other expenses	8,569	6,965	23,494	20,194
Income before taxes	1,644	1,763	5,587	6,099
Income taxes	103	43	409	704
Net income	1,541	1,720	5,178	5,395
Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities	1,989	99	766	5,080
Comprehensive Income	$ 3,530	$ 1,819	$ 5,944	$ 10,475
Earnings per share
Basic (in dollars per share)	$ 0.52	$ 0.63	$ 1.85	$ 1.99
Diluted (in dollars per share)	0.52	0.63	1.85	1.99
Dividends per share (in dollars per share)	$ 0.26	$ 0.25	$ 0.78	$ 0.75

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Common Stock Including Additional Paid in Capital	Preferred Stock	Retained Earnings	Accumulated Other Comprehensive Income/(Loss)	Total
Balances at Dec. 31, 2014	$ 12,662		$ 64,489	$ 791	$ 77,942
Balances (in shares) at Dec. 31, 2014	2,720,098
Increase (Decrease) in Stockholders' Equity
Assumption of Madison Financial Corporation preferred stock		$ 4,390			4,390
Assumption of Madison Financial Corporation preferred stock (in shares)		12,047
Redemption of Madison Financial Corporation preferred stock		$ (4,390)			(4,390)
Redemption of Madison Financial Corporation preferred stock (in shares)		(12,047)
Common stock issued, net of forfeitures	$ 2				2
Common stock issued, net of forfeitures (in shares)	5,719
Shares issued to acquire Madison Financial Corporation, net of issuance costs	$ 6,827				6,827
Shares issued to acquire Madison Financial Corporation, net of issuance costs (in shares)	263,361
Stock based compensation expense	$ 99				99
Common stock purchased and retired	$ (6)		(25)		(31)
Common stock purchased and retired (in shares)	(973)
Net change in unrealized gain (loss) on securities available for sale, net of tax and reclassifications				766	766
Net income			5,178		5,178
Dividends declared - $0.78 per share			(2,194)		(2,194)
Balances at Sep. 30, 2015	$ 19,584		$ 67,448	$ 1,557	$ 88,589
Balances (in shares) at Sep. 30, 2015	2,988,205

CONSOLIDATED STATEMENT OF CHAN6

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2015$ / sharesshares
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
Common stock issued, net of forfeitures - stock grants (in shares)	5,850
Common stock issued, net of forfeitures - stock gifts (in shares)	22
Stock forfeited (in shares)	153
Dividends per share (in dollars per share) | $ / shares	$ 0.78

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities
Net Income	$ 5,178	$ 5,395
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,439	1,357
Securities amortization (accretion), net	741	476
Stock based compensation expense	99	83
Provision for loan losses	1,025	500
Securities available for sale gains, net	(410)	(514)
Net change in trading assets	(110)	(5,325)
Originations of loans held for sale	(38,991)	(26,655)
Proceeds from sale of loans	39,419	26,839
Losses (gains) on sale of fixed assets	(4)
Losses (gain) on other real estate	(5)	(134)
Gain on sale of mortgage loans	(1,172)	(715)
Bargain purchase gain	(141)
Write-downs of other real estate, net	252	64
Changes in:
Interest receivable	(280)	99
Other assets	(1,379)	872
Interest payable	82	(79)
Other liabilities	(1,659)	(2,125)
Net cash from operating activities	4,084	138
Cash Flows From Investing Activities
Acquisition of Madison Financial Corporation, net	3,514
Net change in interest bearing time deposits	(615)
Purchases of securities available for sale	(20,310)	(41,495)
Proceeds from sales of securities	21,579	53,555
Proceeds from principal payments, maturities and calls of securities	34,360	11,928
Net change in loans	(585)	(44,225)
Proceeds from redemption of Federal Home Loan Bank stock		750
Purchases of bank premises and equipment	(705)	(895)
Proceeds from sale of bank premises & equipment	7
Proceeds from the sale of other real estate	4,812	1,752
Net cash from investing activities	42,057	(18,630)
Cash Flows From Financing Activities:
Net change in deposits	(39,687)	(29,082)
Net change in repurchase agreements and other borrowings	5,516	1,198
Short-term advances from Federal Home Loan Bank	130,000	175,000
Payment on short-term Federal Home Loan Bank advances	(140,000)	(150,000)
Long-term advances from Federal Home Loan Bank	14,709	27,277
Payments on long-term Federal Home Loan Bank advances	(7,503)	(9,687)
Proceeds from notes payable	5,000
Redemption of acquired preferred shares and unpaid dividends and interest	(6,066)
Issue costs paid for common shares issued	(176)
Proceeds from issuance of common stock	2
Purchase of common stock	(30)	(91)
Dividends paid	(2,194)	(2,041)
Net cash from financing activities	(40,429)	12,574
Net change in cash and cash equivalents	5,712	(5,918)
Cash and cash equivalents at beginning of period	17,169	23,160
Cash and cash equivalents at end of period	22,881	17,242
Cash paid during the year for:
Interest expense	2,842	2,883
Income taxes		1,000
Supplemental disclosures of non-cash investing activities
Real estate acquired through foreclosure	$ 3,394	$ 1,651

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial information presented as of any date other than December 31 has been prepared from the Company’s books and records without audit. The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but is not required for interim reporting purposes, has been condensed or omitted. There have been no significant changes to the Company’s accounting and reporting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such financial statements, have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation. Nature of Operations : The Bank operates under a state bank charter and provides full banking services, including trust services, to customers located in Bourbon, Clark, Elliott, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and adjoining counties in Kentucky. Management continues to consider opportunities for branch expansion and will also consider acquisition opportunities that help advance its strategic objectives. As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. On July 9, 2014, a new subsidiary of the Company was incorporated under the name KBI Insurance Company, Inc. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance. Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements. Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income. Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity. Acquisition: On July 24, 2015, the Company acquired Madison Financial Corporation (“MFC”) and its wholly-owned subsidiary, Madison Bank (“MB”). MFC was headquartered in Richmond, Kentucky with approximately $116.0 million in total assets and operated 3 financial centers. The acquisition expanded the Company’s presence into Madison County, Kentucky with minimal overlap of its existing market footprint. The total purchase price for MFC was $6.8 million net of capital stock issuance cost, consisting of the issuance of 263,361 shares of the Company’s common stock valued at $6.8 million net of capital stock issuance cost, and $3 thousand in cash for fractional shares. The acquisition was accounted for under the acquisition method of acounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while approximately $900 thousand of transaction and integration costs associated with the acquisition were expensed as incurred. Of the total purchase price, $0 was allocated to goodwill and $141 thousand was recorded for a bargain purchase gain. Goodwill: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. At a minimum, management is required to assess goodwill and other intangible assets annually for impairment. This assessment involves estimating cash flows for future periods, preparing analyses of market multiples for similar operations, and estimating the fair value of the reporting unit to which the goodwill is allocated. If these variables change negatively, the Company would be required to take a charge against earnings to write down the asset to the lower fair value. Purchased Credit Impaired Loans : As part of the Madison Financial Corporation acquisition, the Company purchased loans, some of which have shown evidence of credit deterioration since origination. These purchased credit impaired loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. Such purchased credit impaired loans are accounted for individually or aggregated into pools of loans based on common risk characteristics such as, credit score, loan type, and date of origination. The Company estimates the amount and timing of expected cash flows for each loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Adoption of New Accounting Standards In January 2014, FASB issued Accounting Standards Update 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force) . The ASU clarifies when an insubstance repossession or foreclosure occurs and a creditor is considered to have received physical possession of real estate property collateralizing a consumer mortgage loan. Specifically, the new ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. Additional disclosures are required detailing the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgages collateralized by real estate property that are in the process of foreclosure. The new guidance is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements, but will result in additional disclosures. 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, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s financial statements. However, in April 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year making the amendments effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Companies have the option to apply ASU 2014-09 as of the original effective date. In June 2014, FASB issued Accounting Standards Update 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this update require two accounting changes. First, the amendments in this update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counter-party, which will result in secured borrowing accounting for the repurchase agreement. This update also requires certain disclosures for these types of transactions. This ASU became effective for the Company on January 1, 2015. The adoption of ASU 2014-11 did not have a material impact on the Company’s financial statements.

ACQUISITION OF MADISON FINANCIA

ACQUISITION OF MADISON FINANCIAL CORPORATION	9 Months Ended
	Sep. 30, 2015
ACQUISITION OF MADISON FINANCIAL CORPORATION
ACQUISITION OF MADISON FINANCIAL CORPORATION	2. ACQUISITION OF MADISON FINANCIAL CORPORATION On July 24, 2015, the Company acquired Madison Financial Corporation and its wholly-owned subsidiary, Madison Bank, both of which were headquartered in Richmond, Kentucky. As a result of the acquisition the Company expanded its presence into central Kentucky with minimal overlap of its existing market footprint and generate long-term value for the Company shareholders. Madison Bank had $116.0 million in total assets and operated three financial centers. The total purchase price for Madison Financial Corporation was $6.8 million net of capital stock issuance cost, consisting of $3 thousand cash for fractional shares and the issuance of 263,361 shares of the Company’s common stock valued at $6.8 million net of capital stock issuance cost. The acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while approximately $900 thousand of transaction and integration costs associated with the acquisition were expensed as incurred. Of the total purchase price, $0 was allocated to goodwill. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Madison Financial Corporation acquisition is allocated as follows (in thousands): Cash and cash equivalents $ Interest-bearing deposits in other financial institutions Securities available for sale Loans Federal Home Loan Bank Stock Accrued interest receivable Premises and equipment Other real estate Deferred tax assets Core deposit intangible asset Other assets Total assets acquired $ Deposits $ Other borrowings Accrued interest payable Other liabilities Total liabilities assumed $ Liquidation amount of preferred stock including unpaid dividends and interest Total identifiable net assets $ Bargain purchase gain $ ) $ The fair value of net assets acquired includes fair value adjustments to certain loan receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these loans will be collected. As such, these loan receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchase credit impaired loans, which have shown evidence of credit deterioration since origination. Loan receivables acquired that were not subject to these requirements include non-impaired loans with a fair value and gross contractual amounts receivable of $73.6 million and $74.7 million as of the date of acquisition. The company is still in process of gathering information about the day one fair value of assets acquired and liabilities assumed which are subject to change during the measurement period.

SECURITIES

SECURITIES	9 Months Ended
	Sep. 30, 2015
SECURITIES
SECURITIES	3. SECURITIES SECURITIES AVAILABLE FOR SALE Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale September 30, 2015 U.S. government agencies $ $ $ ) $ States and political subdivisions ) Mortgage-backed - residential ) Equity securities — Total $ $ $ ) $ December 31, 2014 U.S. government agencies $ $ $ ) $ States and political subdivisions ) Mortgage-backed - residential ) Equity securities — Total $ $ $ ) $ The amortized cost and fair value of securities at September 30, 2015 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately. Further discussion concerning Fair Value Measurements can be found in Note 8. Amortized Fair (in thousands) Cost Value Due in one year or less $ $ Due after one year through five years Due after five years through ten years Due after ten years Mortgage-backed - residential Equity Total $ $ Proceeds from sales of securities during the first nine months of 2015 and 2014 were $21.6 million and $53.6 million. Gross gains of $413 thousand and $914 thousand and gross losses of $3 and $400 thousand were realized on those sales, respectively. The tax provision related to these realized net gains was $139 and $175 thousand, respectively. Proceeds from sales of securities during the three months ending September 30, 2015 and September 30, 2014 were $12.5 million and $13.5 million. Gross gains of $162 thousand and $129 thousand and gross losses of $3 thousand and $48 thousand were realized on those sales, respectively. The tax provision related to these realized gains and losses was $54 thousand and $28 thousand, respectively. Securities with unrealized losses September 30, 2015 and at December 31, 2014 not recognized in income are as follows: September 30, 2015 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ ) $ $ ) $ $ ) States and municipals ) ) ) Mortgage-backed - residential ) ) ) Total temporarily impaired $ $ ) $ $ ) $ $ ) December 31, 2014 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ ) $ $ ) $ $ ) States and municipals ) ) ) Mortgage-backed - residential ) ) ) Total temporarily impaired $ $ ) $ $ ) $ $ ) The Company evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. In analyzing an issuer’s financial condition, we may consider many factors including, (1) whether the securities are issued by the federal government or its agencies, (2) whether downgrades by bond rating agencies have occurred, (3) the results of reviews of the issuer’s financial condition and near-term prospects, (4) the length of time and the extent to which the fair value has been less than cost, and (5) whether we intend to sell the investment security or more likely than not will be required to sell the investment security before its anticipated recovery. Unrealized losses on securities included in the tables above have not been recognized into income because (1) all rated securities are investment grade and are of high credit quality, (2) management does not intend to sell and it is more likely than not that management would not be required to sell the securities prior to their anticipated recovery, (3) management believes the decline in fair value is largely due to changes in interest rates and (4) management believes the declines in fair value are temporary. The Company believes the fair value is expected to recover as the securities approach maturity. TRADING ASSETS The trading assets of $5.5 million are primarily comprised of municipal securities which are held for a minimal period of time.

LOANS

LOANS	9 Months Ended
	Sep. 30, 2015
LOANS
LOANS	4. LOANS Loans at period-end are as follows: (in thousands) 9/30/15 12/31/14 Commercial $ $ Real estate construction Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer Other Total $ $ As discussed under Footnote 2 “Acquisition”, the above loan balances include loans purchased in the Madison Financial Corporation acquisition. All loan balances acquired in the Madison Financial Corporation acquisition have no allocated allowance for loan losses. The composition of loans acquired as of September 30, 2015 is as follows: 9/30/15 Commercial $ Real estate construction Real estate mortgage: 1-4 family mortgage Multi-family residential Non-farm & non-residential Agricultural Consumer Total $ Activity in the allowance for loan losses for the nine month and three month periods indicated was as follows: Nine Months Ended September 30, 2015 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential — Agricultural ) Consumer Other Unallocated — — $ $ $ $ $ Three Months Ended September 30, 2015 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — ) Non-farm & non-residential — ) Agricultural — Consumer Other Unallocated — — ) $ $ $ $ $ Purchased Credit Impaired Loans: The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows: 9/30/15 12/31/14 Commercial $ $ — Real estate mortgage: 1-4 family residential — Non-farm & non-residential — Agricultural — $ $ — There was no associated allowance for loan losses as of September 30, 2015 or December 31, 2014 for purchased credit impaired loans. The contractual value of these loans was $4.6 million at September 30, 2015. Accretable yield, or income expected to be collected, is as follows: Three months ended Nine Months Ended 9/30/15 9/30/14 9/30/15 9/30/14 Balance, beginning of period $ — $ — $ — $ — New loans purchased — — Accretion of income — — — — Balance, end of period $ $ — $ $ — Nine Months Ended September 30, 2014 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential ) Multi-family residential — Non-farm & non-residential — ) Agricultural Consumer Other Unallocated — — ) $ $ $ $ $ Three Months Ended September 30, 2014 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ — $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential ) Multi-family residential — Non-farm & non-residential — — Agricultural Consumer Other Unallocated — — ) $ $ $ $ $ The following tables present the balance in the allowance for loan losses and the recorded investment (excluding accrued interest receivable amounting to $2.6 million as of September 30, 2015 and $2.0 million at December 31, 2014) in loans by portfolio segment and based on impairment method as of September 30, 2015 and December 31, 2014: Individually Collectively Purchased As of September 30, 2015 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ $ — $ Real estate construction — — Real estate mortgage 1-4 family residential — Multi-family residential — — Non-farm & non-residential — Agricultural — Consumer — — Other — — Unallocated — — $ $ — $ Loans: Commercial $ — $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential Agricultural Consumer — — Other — — $ $ $ $ Individually Collectively As of December 31, 2014 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer — Other — Unallocated — $ $ $ Loans: Commercial $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer — Other — $ $ $ The following table presents loans individually evaluated for impairment by class of loans as of and for the nine months ended September 30, 2015 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential — Non-farm & non-residential Agricultural — With an allowance recorded: Real estate mortgage: 1-4 family residential Non-farm & non-residential Multi-family residential — — — — — Agricultural Consumer — — — — — — Other — — — — — — Total $ $ $ $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the nine months ended September 30, 2014: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential Non-farm & non-residential Agricultural With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural — — Total $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2014 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ — $ $ $ Non-farm & non-residential — — — — — Agricultural — With an allowance recorded: Real estate mortgage 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Total $ $ $ $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present loans individually evaluated for impairment by class of loans for the three months ending September 30, 2015 and September 30, 2014 Three Months Ending September 30, 2015 Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ Agricultural Non-farm & non-residential — — With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential — — — Non-farm & non-residential Agricultural Total $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. Three Months Ending September 30, 2014 Average Interest Cash Basis Recorded Income Interest Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ Non-farm & non-residential Agricultural With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential Agricultural — — Total $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present the recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans as of September 30, 2015 and December 31, 2014: Loans Past Due Over 90 Days Accruing As of September 30, 2015 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commerical $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — — Non-farm & non-residential — Agricultural Consumer — Total $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ — Loans Past Due Over 90 Days Accruing As of December 31, 2014 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ $ — $ — Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — Agricultural — Consumer — Total $ $ $ Nonaccrual loans secured by real estate make up 99.3% of the total nonaccruals at September 30, 2015. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected as scheduled in the loan agreement. Nonaccrual loans are loans for which payments in full of principal or interest is not expected or which principal or interest has been in default for a period of 90 days or more unless the asset is both well secured and in the process of collection. Other impaired loans may be loans showing signs of weakness or interruptions in cash flow, but ultimately are current or less than 90 days past due with respect to principal and interest and for which we anticipate full payment of principal and interest but not in accordance with contractual terms. Additional factors considered by management in determining impairment and non-accrual status include payment status, collateral value, availability of current financial information, and the probability of collecting all contractual principal and interest payments. The following tables present the aging of the recorded investment in past due and non-accrual loans as of September 30, 2015 and December 31, 2014 by class of loans: 30-59 60-89 Loans Past Due Total As of September 30, 2015 Days Days Over 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Still Accruing Non-accrual Non-accrual Past Due Commercial $ $ $ — $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — — — — Non-farm & non-residential — — Agricultural Consumer Other — — — — — Total $ $ $ $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ $ $ $ 30-59 60-89 Greater than Total As of December 31, 2014 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ $ — $ — $ $ $ Real estate construction — — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — — Agricultural — Consumer Other — — — — — Total $ $ $ $ $ $ Troubled Debt Restructurings: The Company has allocated $403 thousand in specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2015. The Company allocated $369 thousand for specific reserves to customers whose loan terms had been modified in troubled debt restructuring as of December 31, 2014. The Company has not committed to lend additional amounts as of September 30, 2015 and December 31, 2014 to customers with outstanding loans that are classified as troubled debt restructurings. All loans which have undergone a troubled debt restructuring modification are performing. Further, there were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the periods ending September 30, 2015 and 2014. No loans were modified as troubled debt restructurings during the nine or three months ending September 30, 2015 and 2014. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: Special Mention. Loans classified as special mention have one or more potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined and documented weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution 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 meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of September 30, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: As of September 30, 2015 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ $ $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — Non-farm & non-residential — Agricultural — Total $ $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ $ As of December 31, 2014 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ $ $ $ — Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — Agricultural — Total $ $ $ $ For consumer loans, the Company evaluates the credit quality based on the aging of the recorded investment in loans, which was previously presented. Non-performing consumer loans are loans which are greater than 90 days past due or on non-accrual status, and total $11 thousand at September 30, 2015 and $6 thousand at December 31, 2014.

REAL ESTATE OWNED

REAL ESTATE OWNED	9 Months Ended
	Sep. 30, 2015
REAL ESTATE OWNED
REAL ESTATE OWNED	5. REAL ESTATE OWNED Activity in real estate owned, net was as follows: Nine Months Ended September 30 2015 2014 (in thousands) Beginning of year $ $ Additions Acquired with Madison Financial Corporation — Sales ) ) (Additions) subtractions to valuation allowance, net ) End of period $ $ Activity in the valuation allowance was as follows: Nine Months Ended September 30 2015 2014 (in thousands) Beginning of year $ $ Write-downs of other real estate, net Reduction from sale ) ) End of period $ $ Expenses related to foreclosed assets include: Nine Months Ended September 30 2015 2014 (in thousands) Net loss (gain) on sales $ ) $ ) Write-downs of other real estate, net Operating expenses (receipts), net of rental income Repossession expenses, net For the period $ $ Three Months Ended September 30 2015 2014 (in thousands) Net loss (gain) on sales $ ) $ ) Additions (subtractions) to valuation allowance, net Operating expenses (receipts), net of rental income Repossession expenses, net For the period $ ) $

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2015
EARNINGS PER SHARE
EARNINGS PER SHARE	6. EARNINGS PER SHARE Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based compensation agreements. The factors used in the earnings per share computation follow: Nine Months Ended September 30 2015 2014 (in thousands) Basic Earnings Per Share Net Income $ $ Weighted average common shares outstanding Basic earnings per share $ $ Diluted Earnings Per Share Net Income $ $ Weighted average common shares outstanding Weighted average common and dilutive potential common shares outstanding Diluted earnings per share $ $ Three Months Ended September 30 2015 2014 (in thousands) Basic Earnings Per Share Net Income $ $ Weighted average common shares outstanding Basic earnings per share $ $ Diluted Earnings Per Share Net Income $ $ Weighted average common shares outstanding Weighted average common and dilutive potential common shares outstanding Diluted earnings per share $ $ Stock options for 2,400 shares of common stock for the nine and three months ended September 30, 2015 and 12,725 shares of common stock for the nine and three months ended September 30, 2014 were excluded from diluted earnings per share because their impact was antidilutive.

STOCK COMPENSATION

STOCK COMPENSATION	9 Months Ended
	Sep. 30, 2015
STOCK COMPENSATION
STOCK COMPENSATION	7. STOCK COMPENSATION We have four stock based compensation plans as described below. Two Stock Option Plans Under its expired 1999 Employee Stock Option Plan, the Company has granted certain officers and key employees stock option awards which vest and become fully exercisable at the end of five years and provided for issuance of up to 100,000 options. Under the expired 1993 Non-Employee Directors Stock Ownership Incentive Plan, the Company also granted certain directors stock option awards which vest and become fully exercisable immediately and provided for issuance of up to 20,000 options. For each Stock Option Plan, the exercise price of each option which has a ten year life, was equal to the market price of the Company’s our stock on the date of grant. Summary of activity in the stock option plan for the first nine months of 2015 follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding, beginning of year $ Granted — — Forfeited or expired ) Exercised — — Outstanding, end of period $ 15.5 months $ — Vested and expected to vest $ 15.5 months $ — Exercisable, end of period $ 15.5 months $ — As of September 30, 2015, there was $0 of total unrecognized compensation cost related to nonvested stock options granted under the Plan. Since both stock option plans have expired, neither plan allows for additional options to be issued. 2005 Restricted Stock Grant Plan On May 10, 2005, the Company’s stockholders approved a restricted stock grant plan. Total shares issuable under the plan are 50,000. There were 5,385 shares issued during the first nine months of 2015 and 7,475 shares issued during the first nine months of 2014. There were 153 shares forfeited during the first nine months of 2015 and 300 shares were forfeited during the first nine months of 2014. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2015 $ $ Granted Vested ) ) Forfeited ) ) Nonvested at September 30, 2015 $ $ As of September 30, 2015, there was $316,239 of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 2.9 years. As of September 30, 2015, no additional shares are available for issue under the restricted stock grant plan. 2009 Stock Award Plan On May 13, 2009, the Company’s stockholders approved a stock award plan that provides for the granting of both incentive and nonqualified stock options and other share based awards. Total shares issuable under the plan are 150,000. There were 465 shares issued during the first nine months of 2015 and none in 2014. There were no shares forfeited during the first nine months of 2015 or 2014. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2015 $ $ Granted Vested ) ) Forfeited — — — Nonvested at September 30, 2015 $ $ As of September 30, 2015, there was $22,582 of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 3.3 years. As of September 30, 2015, 148,635 shares are still available for issuance.

REPURCHASE AGREEMENTS

REPURCHASE AGREEMENTS	9 Months Ended
	Sep. 30, 2015
REPURCHASE AGREEMENTS AND OTHER BORROWINGS
REPURCHASE AGREEMENTS	8. REPURCHASE AGREEMENTS Repurchase agreements totaled $19.9 million as of September 30, 2015. Of this, $13.9 million were overnight obligations and $6.0 million had terms extending through May 2019 and a weighted average life of 2.3 years. The Company pledged agency-backed securities with a carrying amount of $20.2 million to secure repurchase agreements as of September 30, 2015.

OTHER BORROWINGS

OTHER BORROWINGS	9 Months Ended
	Sep. 30, 2015
OTHER BORROWINGS
OTHER BORROWINGS	9. OTHER BORROWINGS On July 20, 2015, the Company borrowed $5 million which was outstanding at September 30, 2015. The term loan has a fixed interest rate of 5.02%, requires quarterly principal and interest payments, matures July 20, 2025 and is collateralized by the Company’s stock. The maturity schedule for the term loan as of September 30, 2015 is as follows: Due in one year or less $ Due in one through three years Due in three through five years Due after five years $ At December 31, 2014 the Company had a $5 million revolving promissory note with a maturity date of July 26, 2015. The Company had no outstanding balances related to this promissory note at September 30, 2015 or December 31, 2014. Upon maturity, the Company renewed the revolving promissory note. The new note has similar terms as the original note and matures July 19, 2016.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2015
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	10. FAIR VALUE MEASUREMENTS ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and sets forth disclosures about fair value measurements. ASC Topic 825, “Financial Instruments” , allows entities to choose to measure certain financial assets and liabilities at fair value. The Company has not elected the fair value option for any financial assets or liabilities. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This Topic describes three levels of inputs that may be 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 Company used the following methods and significant assumptions to estimate the fair value: Investment Securities and Trading Assets : The fair values for available for sale investment securities and trading assets are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Impaired Loans : The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent third party real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Such adjustments were $14 thousand for 2015 and $387 for 2014 and resulted in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy. Other Real Estate Owned : Assets acquired through or instead of loan foreclosure and classified as other real estate owned (OREO) are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach with data from comparable properties. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments were $372 thousand as of September 30, 2015 and $25 thousand as of September 30, 2014 and resulted in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Mortgage Servicing Rights : Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Assets and Liabilities Measured on a Recurring Basis Available for sale investment securities and trading assets are the Company’s only balance sheet items that meet the disclosure requirements for instruments measured at fair value on a recurring basis. Disclosures are as follows in the tables below. Fair Value Measurements at September 30, 2015 Using (In thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ $ — $ $ — States and municipals — — Mortgage-backed - residential — — Equity securities — — Trading Assets — — Total $ $ $ $ — Fair Value Measurements at December 31, 2014 Using (In thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ $ — $ $ — States and municipals — — Mortgage-backed - residential — — Equity securities — — Trading Assets — — Total $ $ $ $ — There were no transfers between level 1 and level 2 during 2015 or 2014. Assets measured at fair value on a non-recurring basis are summarized below: Fair Value Measurements at September 30, 2015 Using: Quoted Prices In Active Other Markets for Significant Significant Identical Observable Unobservable (In thousands) Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Impaired loans: Agricultural — — Other real estate owned: Residential — — Commercial Loan servicing rights — — Fair Value Measurements at December 31, 2014 Using: Quoted Prices In Active Other Markets for Significant Significant Identical Observable Unobservable (In thousands) Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Impaired loans: Real Estate Mortgage: Multi-family residential — — Non-farm & non-residential — — Agricultural — — Other real estate owned: Residential — — Loan servicing rights — — Impaired loans , which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $169 thousand, which includes a valuation allowance of $34 thousand at September 30, 2015. During the first three months and nine months of 2015, one new loan became impaired resulting in additional loan loss provision expense of $34 thousand. The total allowance for specific impaired loans decreased $526 thousand for the nine months ending September 30, 2015 and decreased $226 thousand for the three months ending September 30, 2015. During the first nine months of 2014, six new loans became impaired resulting in an additional provision for loan losses of $265 thousand. The total allowance for specific impaired loans increased $71 thousand for the nine months ending September 30, 2014 and decreased $35 thousand for the three months ending September 30, 2014. Other real estate owned, which is measured at fair value less costs to sell, had a net carrying amount of $2.5 million, which is made up of the outstanding balance of $3.1 million, net of a valuation allowance of $641 thousand at September 30, 2015. The Company recorded $252 thousand in write-downs of other real estate owned properties for the nine months ending September 30, 2015 and $25 thousand for the three months ending September 30, 2015. The Company recorded $64 thousand in net write-downs of other real estate owned properties for the nine months and $54 thousand for the three months ending September 30, 2014. Loan servicing rights, which are carried at the lower of cost or fair value, were carried at their fair value of $261 thousand, which is made up of the outstanding balance of $297 thousand, net of a valuation allowance of $36 thousand at September 30, 2015. The Company recorded a net recovery of prior write-downs of $43 thousand for the nine months ending September 30, 2015 and a recovery of prior write-downs totaling $9 thousand for the three months ending September 30, 2015. For the first nine months of 2014, the Company recorded net write-downs of $3 thousand and a net recovery of prior write-downs totaling $9 thousand for the three months ending September 30, 2014. At December 31, 2014, loan servicing rights were carried at their fair value of $292 thousand, which is made up of the outstanding balance of $371 thousand, net of a valuation allowance of $79 thousand. 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 September 30, 2015 and December 31, 2014: Range September 30, 2015 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Agricultural 169 sales comparison adjustment for 3%-38% differences between the comparable sales Other real estate owned: Residential 893 sales comparison adjustment for 10%-28% differences between the comparable sales 611 income approach capitalization rate 8%-8% Commercial 964 sales comparison adjustment for 8%-37% differences between the comparable sales Loan Servicing Rights 261 discounted cash discount rate 12%-12% flow Range December 31, 2014 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: Multi-family residential 169 sales comparison adjustment for 10%-10% differences (10%) between the comparable sales Non-farm & non-residential 366 sales comparison adjustment for 0%-0% differences (0%) between the comparable sales Agricultural 3,729 sales comparison adjustment for 5%-53% differences (43%) between the comparable sales Other real estate owned: Residential 1,670 sales comparison adjustment for 0%-48% differences (11%) between the comparable sales income approach capitalization rate 8%-10% (9%) Loan Servicing Rights 292 discounted cash discount rate 12%-12% flow (12%) Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments, at September 30, 2015 and December 31, 2014 are as follows: September 30, 2015: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ $ $ — $ — $ Interest bearing deposits — — Securities — Trading Assets — Mortgage loans held for sale — — Loans, net — — FHLB Stock N/A N/A N/A N/A Interest receivable — Financial liabilities Deposits $ $ $ $ — $ Securities sold under agreements to repurchase and other borrowings — — Federal Funds Purchased — — FHLB advances — — Subordinated Debentures — — Interest payable — December 31, 2014: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ $ $ — $ — $ Interest bearing deposits Securities — Trading assets Mortgage loans held for sale — — Loans, net — — FHLB Stock N/A N/A N/A N/A Interest receivable — Financial liabilities Deposits $ $ $ $ — $ Securities sold under agreements to repurchase and other borrowings — — FHLB advances — — Subordinated Debentures — — Interest Payable The methods and assumptions, not previously 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. Interest Bearing Deposits – The carrying amounts of interest bearing deposits approximate fair values and are classified as Level 1. FHLB Stock - It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. Loans - Fair values of loans, excluding loans held for sale, are estimated as follows: 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 used to estimate the fair value of loans do not necessarily represent an exit price. The fair value of mortgage loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification. Deposits - The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) 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. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows 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. Securities Sold Under Agreements to Repurchase and Other Borrowings - The carrying amounts of borrowings under repurchase agreements approximate their fair values resulting in a Level 2 classification. The carrying amount of the Company’s variable rate borrowings approximate their fair values resulting in a Level 2 classification. Federal Funds Purchased - The carrying amounts of federal funds purchased approximate fair values and are classified as Level 1. FHLB Advances, Borrowings and Subordinated Debentures - The fair values of the Company’s FHLB advances 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. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. Accrued Interest Receivable/Payable - The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the related asset/liability. Off-balance Sheet Instruments - Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of off-balance sheet instruments is not material.

CHANGES IN ACCUMULATED OTHER CO

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT	9 Months Ended
	Sep. 30, 2015
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT	11. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT Changes in Accumulated Other Comprehensive Income by Component (1) (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Nine Months Ending September 30 2015 2014 Beginning Balance $ $ ) Unrealized holding gains (losses) for the period, net of tax Reclassification adjustment for: Securities gains realized in income ) ) Income taxes ) ) Securities gains realized in income, net ) ) Net current period other comprehensive income Ending balance $ $ ) (1) All amounts are net of tax. Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ending September 30 2015 2014 Beginning Balance $ ) $ ) Unrealized holding gains (losses) for the period, net of tax Reclassification adjustment for: Securities gains realized in income, net ) ) Income taxes ) ) ) ) Net current period other comprehensive income Ending balance $ $ ) (1) All amounts are net of tax. The following is significant amounts reclassified out of each component of accumulated other comprehensive Income (Loss) for the nine months ending September 30, 2015 and 2014: September 30, 2015 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax September 30, 2014 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax The following is significant amounts reclassified out of each component of accumulated other comprehensive Income (Loss) for the three months ending September 30, 2015 and 2014: September 30, 2015 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax September 30, 2014 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax

SUMMARY OF SIGNIFICANT ACCOUN19

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2015
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation.
Nature of Operations	Nature of Operations : The Bank operates under a state bank charter and provides full banking services, including trust services, to customers located in Bourbon, Clark, Elliott, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and adjoining counties in Kentucky. Management continues to consider opportunities for branch expansion and will also consider acquisition opportunities that help advance its strategic objectives. As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. On July 9, 2014, a new subsidiary of the Company was incorporated under the name KBI Insurance Company, Inc. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance.
Estimates in the Financial Statements	Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements.
Trading Assets	Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income.
Loss Contingencies	Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Reclassifications	Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity.
Acquisition	Acquisition: On July 24, 2015, the Company acquired Madison Financial Corporation (“MFC”) and its wholly-owned subsidiary, Madison Bank (“MB”). MFC was headquartered in Richmond, Kentucky with approximately $116.0 million in total assets and operated 3 financial centers. The acquisition expanded the Company’s presence into Madison County, Kentucky with minimal overlap of its existing market footprint. The total purchase price for MFC was $6.8 million net of capital stock issuance cost, consisting of the issuance of 263,361 shares of the Company’s common stock valued at $6.8 million net of capital stock issuance cost, and $3 thousand in cash for fractional shares. The acquisition was accounted for under the acquisition method of acounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while approximately $900 thousand of transaction and integration costs associated with the acquisition were expensed as incurred. Of the total purchase price, $0 was allocated to goodwill and $141 thousand was recorded for a bargain purchase gain.
Goodwill	Goodwill: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. At a minimum, management is required to assess goodwill and other intangible assets annually for impairment. This assessment involves estimating cash flows for future periods, preparing analyses of market multiples for similar operations, and estimating the fair value of the reporting unit to which the goodwill is allocated. If these variables change negatively, the Company would be required to take a charge against earnings to write down the asset to the lower fair value.
Purchased Credit Impaired Loans	Purchased Credit Impaired Loans : As part of the Madison Financial Corporation acquisition, the Company purchased loans, some of which have shown evidence of credit deterioration since origination. These purchased credit impaired loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. Such purchased credit impaired loans are accounted for individually or aggregated into pools of loans based on common risk characteristics such as, credit score, loan type, and date of origination. The Company estimates the amount and timing of expected cash flows for each loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.
Adoption of New Accounting Standards	Adoption of New Accounting Standards In January 2014, FASB issued Accounting Standards Update 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force) . The ASU clarifies when an insubstance repossession or foreclosure occurs and a creditor is considered to have received physical possession of real estate property collateralizing a consumer mortgage loan. Specifically, the new ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. Additional disclosures are required detailing the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgages collateralized by real estate property that are in the process of foreclosure. The new guidance is effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements, but will result in additional disclosures. 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, 2016. Early adoption is not permitted. Management is currently evaluating the impact of the adoption of this guidance on the Company’s financial statements. However, in April 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year making the amendments effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Companies have the option to apply ASU 2014-09 as of the original effective date. In June 2014, FASB issued Accounting Standards Update 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this update require two accounting changes. First, the amendments in this update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counter-party, which will result in secured borrowing accounting for the repurchase agreement. This update also requires certain disclosures for these types of transactions. This ASU became effective for the Company on January 1, 2015. The adoption of ASU 2014-11 did not have a material impact on the Company’s financial statements.

ACQUISITION OF MADISON FINANC20

ACQUISITION OF MADISON FINANCIAL CORPORATION (Tables)	9 Months Ended
	Sep. 30, 2015
ACQUISITION OF MADISON FINANCIAL CORPORATION
Schedule of preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed	Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Madison Financial Corporation acquisition is allocated as follows (in thousands): Cash and cash equivalents $ Interest-bearing deposits in other financial institutions Securities available for sale Loans Federal Home Loan Bank Stock Accrued interest receivable Premises and equipment Other real estate Deferred tax assets Core deposit intangible asset Other assets Total assets acquired $ Deposits $ Other borrowings Accrued interest payable Other liabilities Total liabilities assumed $ Liquidation amount of preferred stock including unpaid dividends and interest Total identifiable net assets $ Bargain purchase gain $ ) $

SECURITIES (Tables)

SECURITIES (Tables)	9 Months Ended
	Sep. 30, 2015
SECURITIES
Schedule of securities available for sale	Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale September 30, 2015 U.S. government agencies $ $ $ ) $ States and political subdivisions ) Mortgage-backed - residential ) Equity securities — Total $ $ $ ) $ December 31, 2014 U.S. government agencies $ $ $ ) $ States and political subdivisions ) Mortgage-backed - residential ) Equity securities — Total $ $ $ ) $
Schedule of amortized cost and fair value of securities by contractual maturity	Amortized Fair (in thousands) Cost Value Due in one year or less $ $ Due after one year through five years Due after five years through ten years Due after ten years Mortgage-backed - residential Equity Total $ $
Schedule of securities with unrealized losses not recognized in income	Securities with unrealized losses September 30, 2015 and at December 31, 2014 not recognized in income are as follows: September 30, 2015 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ ) $ $ ) $ $ ) States and municipals ) ) ) Mortgage-backed - residential ) ) ) Total temporarily impaired $ $ ) $ $ ) $ $ ) December 31, 2014 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ ) $ $ ) $ $ ) States and municipals ) ) ) Mortgage-backed - residential ) ) ) Total temporarily impaired $ $ ) $ $ ) $ $ )

LOANS (Tables)

LOANS (Tables)	9 Months Ended
	Sep. 30, 2015
Schedule of loans	(in thousands) 9/30/15 12/31/14 Commercial $ $ Real estate construction Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer Other Total $ $
Schedule of activity in the allowance for loan losses	Nine Months Ended September 30, 2015 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential — Agricultural ) Consumer Other Unallocated — — $ $ $ $ $ Three Months Ended September 30, 2015 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — ) Non-farm & non-residential — ) Agricultural — Consumer Other Unallocated — — ) $ $ $ $ $ Nine Months Ended September 30, 2014 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential ) Multi-family residential — Non-farm & non-residential — ) Agricultural Consumer Other Unallocated — — ) $ $ $ $ $ Three Months Ended September 30, 2014 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ $ — $ — $ $ Real estate Construction — Real estate mortgage: 1-4 family residential ) Multi-family residential — Non-farm & non-residential — — Agricultural Consumer Other Unallocated — — ) $ $ $ $ $
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method	Individually Collectively Purchased As of September 30, 2015 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ $ — $ Real estate construction — — Real estate mortgage 1-4 family residential — Multi-family residential — — Non-farm & non-residential — Agricultural — Consumer — — Other — — Unallocated — — $ $ — $ Loans: Commercial $ — $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential Agricultural Consumer — — Other — — $ $ $ $ Individually Collectively As of December 31, 2014 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer — Other — Unallocated — $ $ $ Loans: Commercial $ — $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Consumer — Other — $ $ $
Schedule of loans individually evaluated for impairment by class of loans	The following table presents loans individually evaluated for impairment by class of loans as of and for the nine months ended September 30, 2015 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential — Non-farm & non-residential Agricultural — With an allowance recorded: Real estate mortgage: 1-4 family residential Non-farm & non-residential Multi-family residential — — — — — Agricultural Consumer — — — — — — Other — — — — — — Total $ $ $ $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the nine months ended September 30, 2014: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential Non-farm & non-residential Agricultural With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural — — Total $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2014 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ — $ $ $ Non-farm & non-residential — — — — — Agricultural — With an allowance recorded: Real estate mortgage 1-4 family residential Multi-family residential Non-farm & non-residential Agricultural Total $ $ $ $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present loans individually evaluated for impairment by class of loans for the three months ending September 30, 2015 and September 30, 2014 Three Months Ending September 30, 2015 Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ Agricultural Non-farm & non-residential — — With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential — — — Non-farm & non-residential Agricultural Total $ $ $ The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. Three Months Ending September 30, 2014 Average Interest Cash Basis Recorded Income Interest Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ $ $ Non-farm & non-residential Agricultural With an allowance recorded: Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential Agricultural — — Total $ $ $
Schedule of recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans	Loans Past Due Over 90 Days Accruing As of September 30, 2015 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commerical $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — — Non-farm & non-residential — Agricultural Consumer — Total $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ — Loans Past Due Over 90 Days Accruing As of December 31, 2014 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ $ — $ — Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — Agricultural — Consumer — Total $ $ $
Schedule of aging of the recorded investment in past due and non-accrual loans	30-59 60-89 Loans Past Due Total As of September 30, 2015 Days Days Over 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Still Accruing Non-accrual Non-accrual Past Due Commercial $ $ $ — $ $ $ Real estate construction — — Real estate mortgage: 1-4 family residential Multi-family residential — — — — — Non-farm & non-residential — — Agricultural Consumer Other — — — — — Total $ $ $ $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ $ $ $ 30-59 60-89 Greater than Total As of December 31, 2014 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ $ — $ — $ $ $ Real estate construction — — — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — — Agricultural — Consumer Other — — — — — Total $ $ $ $ $ $
Schedule of risk category of loans by class of loans	As of September 30, 2015 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ $ $ $ Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — Non-farm & non-residential — Agricultural — Total $ $ $ $ Loans included in totals above acquired from Madison Financial Corporation $ $ $ $ As of December 31, 2014 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ $ $ $ — Real estate construction — Real estate mortgage: 1-4 family residential Multi-family residential — — Non-farm & non-residential — Agricultural — Total $ $ $ $
Madison Financial Corporation
Schedule of loans	9/30/15 Commercial $ Real estate construction Real estate mortgage: 1-4 family mortgage Multi-family residential Non-farm & non-residential Agricultural Consumer Total $
Schedule of carrying amount of purchased credit impaired loans	9/30/15 12/31/14 Commercial $ $ — Real estate mortgage: 1-4 family residential — Non-farm & non-residential — Agricultural — $ $ —
Schedule of accretable yield or income expected to be collected	Three months ended Nine Months Ended 9/30/15 9/30/14 9/30/15 9/30/14 Balance, beginning of period $ — $ — $ — $ — New loans purchased — — Accretion of income — — — — Balance, end of period $ $ — $ $ —

REAL ESTATE OWNED (Tables)

REAL ESTATE OWNED (Tables)	9 Months Ended
	Sep. 30, 2015
REAL ESTATE OWNED
Schedule of activity in real estate owned	Nine Months Ended September 30 2015 2014 (in thousands) Beginning of year $ $ Additions Acquired with Madison Financial Corporation — Sales ) ) (Additions) subtractions to valuation allowance, net ) End of period $ $
Schedule of activity in the valuation allowance	Nine Months Ended September 30 2015 2014 (in thousands) Beginning of year $ $ Write-downs of other real estate, net Reduction from sale ) ) End of period $ $
Schedule of expenses related to foreclosed assets	Nine Months Ended September 30 2015 2014 (in thousands) Net loss (gain) on sales $ ) $ ) Write-downs of other real estate, net Operating expenses (receipts), net of rental income Repossession expenses, net For the period $ $ Three Months Ended September 30 2015 2014 (in thousands) Net loss (gain) on sales $ ) $ ) Additions (subtractions) to valuation allowance, net Operating expenses (receipts), net of rental income Repossession expenses, net For the period $ ) $

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
EARNINGS PER SHARE
Schedule of factors used in the earnings per share computation	Nine Months Ended September 30 2015 2014 (in thousands) Basic Earnings Per Share Net Income $ $ Weighted average common shares outstanding Basic earnings per share $ $ Diluted Earnings Per Share Net Income $ $ Weighted average common shares outstanding Weighted average common and dilutive potential common shares outstanding Diluted earnings per share $ $ Three Months Ended September 30 2015 2014 (in thousands) Basic Earnings Per Share Net Income $ $ Weighted average common shares outstanding Basic earnings per share $ $ Diluted Earnings Per Share Net Income $ $ Weighted average common shares outstanding Weighted average common and dilutive potential common shares outstanding Diluted earnings per share $ $

STOCK COMPENSATION (Tables)

STOCK COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2015
Stock Based Compensation
Summary of activity for the Stock Option Plans	Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding, beginning of year $ Granted — — Forfeited or expired ) Exercised — — Outstanding, end of period $ 15.5 months $ — Vested and expected to vest $ 15.5 months $ — Exercisable, end of period $ 15.5 months $ —
2005 Restricted Stock Grant Plan
Stock Based Compensation
Summary of changes in nonvested shares of restricted stock	Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2015 $ $ Granted Vested ) ) Forfeited ) ) Nonvested at September 30, 2015 $ $
2009 Stock Award Plan
Stock Based Compensation
Summary of changes in nonvested shares of stock award plan	Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2015 $ $ Granted Vested ) ) Forfeited — — — Nonvested at September 30, 2015 $ $

OTHER BORROWINGS (Tables)

OTHER BORROWINGS (Tables)	9 Months Ended
	Sep. 30, 2015
OTHER BORROWINGS
Maturity schedule for the term loan	Due in one year or less $ Due in one through three years Due in three through five years Due after five years $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
FAIR VALUE MEASUREMENTS
Schedule of assets measured at fair value on a recurring basis	Fair Value Measurements at September 30, 2015 Using (In thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ $ — $ $ — States and municipals — — Mortgage-backed - residential — — Equity securities — — Trading Assets — — Total $ $ $ $ — Fair Value Measurements at December 31, 2014 Using (In thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ $ — $ $ — States and municipals — — Mortgage-backed - residential — — Equity securities — — Trading Assets — — Total $ $ $ $ —
Schedule of assets measured at fair value on a non-recurring basis	Fair Value Measurements at September 30, 2015 Using: Quoted Prices In Active Other Markets for Significant Significant Identical Observable Unobservable (In thousands) Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Impaired loans: Agricultural — — Other real estate owned: Residential — — Commercial Loan servicing rights — — Fair Value Measurements at December 31, 2014 Using: Quoted Prices In Active Other Markets for Significant Significant Identical Observable Unobservable (In thousands) Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Impaired loans: Real Estate Mortgage: Multi-family residential — — Non-farm & non-residential — — Agricultural — — Other real estate owned: Residential — — Loan servicing rights — —
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis	Range September 30, 2015 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Agricultural 169 sales comparison adjustment for 3%-38% differences between the comparable sales Other real estate owned: Residential 893 sales comparison adjustment for 10%-28% differences between the comparable sales 611 income approach capitalization rate 8%-8% Commercial 964 sales comparison adjustment for 8%-37% differences between the comparable sales Loan Servicing Rights 261 discounted cash discount rate 12%-12% flow Range December 31, 2014 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: Multi-family residential 169 sales comparison adjustment for 10%-10% differences (10%) between the comparable sales Non-farm & non-residential 366 sales comparison adjustment for 0%-0% differences (0%) between the comparable sales Agricultural 3,729 sales comparison adjustment for 5%-53% differences (43%) between the comparable sales Other real estate owned: Residential 1,670 sales comparison adjustment for 0%-48% differences (11%) between the comparable sales income approach capitalization rate 8%-10% (9%) Loan Servicing Rights 292 discounted cash discount rate 12%-12% flow (12%)
Schedule of carrying amounts and estimated fair values of financial instruments	September 30, 2015: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ $ $ — $ — $ Interest bearing deposits — — Securities — Trading Assets — Mortgage loans held for sale — — Loans, net — — FHLB Stock N/A N/A N/A N/A Interest receivable — Financial liabilities Deposits $ $ $ $ — $ Securities sold under agreements to repurchase and other borrowings — — Federal Funds Purchased — — FHLB advances — — Subordinated Debentures — — Interest payable — December 31, 2014: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ $ $ — $ — $ Interest bearing deposits Securities — Trading assets Mortgage loans held for sale — — Loans, net — — FHLB Stock N/A N/A N/A N/A Interest receivable — Financial liabilities Deposits $ $ $ $ — $ Securities sold under agreements to repurchase and other borrowings — — FHLB advances — — Subordinated Debentures — — Interest Payable

CHANGES IN ACCUMULATED OTHER 28

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Tables)	9 Months Ended
	Sep. 30, 2015
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
Schedule of changes in Accumulated Other Comprehensive Income (Loss) by Component	Changes in Accumulated Other Comprehensive Income by Component (1) (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Nine Months Ending September 30 2015 2014 Beginning Balance $ $ ) Unrealized holding gains (losses) for the period, net of tax Reclassification adjustment for: Securities gains realized in income ) ) Income taxes ) ) Securities gains realized in income, net ) ) Net current period other comprehensive income Ending balance $ $ ) (1) All amounts are net of tax. Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ending September 30 2015 2014 Beginning Balance $ ) $ ) Unrealized holding gains (losses) for the period, net of tax Reclassification adjustment for: Securities gains realized in income, net ) ) Income taxes ) ) ) ) Net current period other comprehensive income Ending balance $ $ ) (1) All amounts are net of tax.
Significant amounts reclassified out of each component of AOCI	The following is significant amounts reclassified out of each component of accumulated other comprehensive Income (Loss) for the nine months ending September 30, 2015 and 2014: September 30, 2015 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax September 30, 2014 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax The following is significant amounts reclassified out of each component of accumulated other comprehensive Income (Loss) for the three months ending September 30, 2015 and 2014: September 30, 2015 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax September 30, 2014 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ ) Securities gains, net Provision for income taxes ) Net of tax

SUMMARY OF SIGNIFICANT ACCOUN29

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	Jul. 24, 2015USD ($)itemshares	Sep. 30, 2015USD ($)	Sep. 30, 2015USD ($)	Dec. 31, 2014USD ($)
Goodwill		$ 13,117	$ 13,117	$ 13,117
Bargain purchase gain		$ 141	$ 141
Madison Financial Corporation
Total assets	$ 115,978
Number of financial centers operated | item	3
Total purchase price net of capital stock issuance cost	$ 6,827
Share issuance | shares	263,361
Value assigned	$ 6,800
Payment for partial shares	3
Transaction and integration costs	900
Goodwill	0
Bargain purchase gain	$ 141

ACQUISITION OF MADISON FINANC30

ACQUISITION OF MADISON FINANCIAL CORPORATION (Details) $ in Thousands	Jul. 24, 2015USD ($)itemshares	Sep. 30, 2015USD ($)	Sep. 30, 2015USD ($)	Dec. 31, 2014USD ($)
ACQUISITION
Goodwill		$ 13,117	$ 13,117	$ 13,117
Preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed
Bargain purchase gain		$ (141)	$ (141)
Madison Financial Corporation
ACQUISITION
Total assets	$ 115,978
Number of financial centers operated | item	3
Total purchase price net of capital stock issuance cost	$ 6,827
Payment for fractional shares	$ 3
Share issuance | shares	263,361
Value assigned	$ 6,800
Transaction and integration costs	900
Goodwill	0
Preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed
Cash and cash equivalents	3,517
Interest-bearing deposits in other financial institutions	2,979
Securities available for sale	27,704
Loans	77,620
Federal Home Loan Bank Stock	1,053
Accrued interest receivable	309
Premises and equipment	789
Other real estate	445
Deferred tax assets	647
Core deposit intangible asset	800
Other assets	115
Total assets acquired	115,978
Deposits	95,823
Other borrowings	6,245
Accrued interest payable	59
Other liabilities	817
Total liabilities assumed	102,944
Liquidation amount of preferred stock including unpaid dividends and interest	6,066
Total identifiable net assets	6,968
Bargain purchase gain	(141)
Total purchase price net of capital stock issuance cost	6,827
Receivables acquired
Fair value	73,600
Gross contractual amounts receivable	$ 74,700

SECURITIES (Details)

SECURITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Securities Available for Sale
Amortized Cost	$ 236,578	$ 245,662
Gross Unrealized Gains	3,210	3,528
Gross Unrealized Losses	(1,188)	(2,329)
Fair Value	238,600	246,861
U.S. government agencies
Securities Available for Sale
Amortized Cost	51,671	61,721
Gross Unrealized Gains	210	1
Gross Unrealized Losses	(185)	(1,136)
Fair Value	51,696	60,586
States and political subdivisions
Securities Available for Sale
Amortized Cost	84,914	86,322
Gross Unrealized Gains	2,414	3,234
Gross Unrealized Losses	(287)	(275)
Fair Value	87,041	89,281
Mortgage-backed - residential
Securities Available for Sale
Amortized Cost	99,625	97,349
Gross Unrealized Gains	559	267
Gross Unrealized Losses	(716)	(918)
Fair Value	99,468	96,698
Equity
Securities Available for Sale
Amortized Cost	368	270
Gross Unrealized Gains	27	26
Fair Value	$ 395	$ 296

SECURITIES (Details 2)

SECURITIES (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Amortized Cost
Due in one year or less	$ 40		$ 40
Due after one year through five years	22,352		22,352
Due after five years through ten years	64,933		64,933
Due after ten years	49,260		49,260
Securities due at a single maturity date	136,585		136,585
Total	236,578		236,578		$ 245,662
Fair Value
Due in one year or less	40		40
Due after one year through five years	22,468		22,468
Due after five years through ten years	65,724		65,724
Due after ten years	50,505		50,505
Securities due at a single maturity date	138,737		138,737
Fair Value	238,600		238,600		246,861
Proceeds from sales of securities	12,500	$ 13,500	21,600	$ 53,600
Gross gains realized on sales of securities	162	129	413	914
Gross losses realized on sales of securities	3	48	3	400
Tax provision related to realized gains	54	$ 28	139	$ 175
Mortgage-backed - residential
Amortized Cost
Mortgage-backed - residential	99,625		99,625
Total	99,625		99,625		97,349
Fair Value
Mortgage-backed - residential	99,468		99,468
Fair Value	99,468		99,468		96,698
Equity
Amortized Cost
Amortized cost of equity securities	368		368
Total	368		368		270
Fair Value
Fair Value Equity Securities	395		395
Fair Value	$ 395		$ 395		$ 296

SECURITIES (Details 3)

SECURITIES (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Securities with unrealized losses
Less than 12 Months, Fair Value	$ 55,826	$ 64,224
Less than 12 Months, Unrealized Loss	(644)	(775)
12 Months or More, Fair Value	38,916	73,551
12 Months or More, Unrealized Loss	(544)	(1,554)
Total, Fair Value	94,742	137,775
Total, Unrealized Loss	(1,188)	(2,329)
Trading Assets
Trading Assets	5,480	5,370
U.S. government agencies
Securities with unrealized losses
Less than 12 Months, Fair Value	8,815	12,528
Less than 12 Months, Unrealized Loss	(33)	(176)
12 Months or More, Fair Value	19,404	45,066
12 Months or More, Unrealized Loss	(152)	(960)
Total, Fair Value	28,219	57,594
Total, Unrealized Loss	(185)	(1,136)
States and political subdivisions
Securities with unrealized losses
Less than 12 Months, Fair Value	8,453	5,011
Less than 12 Months, Unrealized Loss	(118)	(27)
12 Months or More, Fair Value	7,166	9,738
12 Months or More, Unrealized Loss	(169)	(248)
Total, Fair Value	15,619	14,749
Total, Unrealized Loss	(287)	(275)
Trading Assets
Trading Assets	5,500
Mortgage-backed - residential
Securities with unrealized losses
Less than 12 Months, Fair Value	38,558	46,685
Less than 12 Months, Unrealized Loss	(493)	(572)
12 Months or More, Fair Value	12,346	18,747
12 Months or More, Unrealized Loss	(223)	(346)
Total, Fair Value	50,904	65,432
Total, Unrealized Loss	$ (716)	$ (918)

LOANS (Details)

LOANS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Loans
Loans	$ 612,504	$ 538,305
Commercial
Loans
Loans	51,905	47,185
Real estate construction
Loans
Loans	27,305	16,938
1-4 family residential
Loans
Loans	217,498	189,458
Multi-family residential
Loans
Loans	38,768	34,415
Non-farm & non-residential
Loans
Loans	187,033	161,822
Agricultural
Loans
Loans	70,754	71,345
Consumer
Loans
Loans	19,082	16,863
Other
Loans
Loans	159	$ 279
Madison Financial Corporation
Loans
Loans	68,205
Madison Financial Corporation | Commercial
Loans
Loans	2,073
Madison Financial Corporation | Real estate construction
Loans
Loans	5,822
Madison Financial Corporation | 1-4 family residential
Loans
Loans	20,837
Madison Financial Corporation | Multi-family residential
Loans
Loans	5,729
Madison Financial Corporation | Non-farm & non-residential
Loans
Loans	29,668
Madison Financial Corporation | Agricultural
Loans
Loans	2,793
Madison Financial Corporation | Consumer
Loans
Loans	$ 1,283

LOANS (Details 2)

LOANS (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Activity in allowance for loan losses
Beginning Balance	$ 5,950	$ 5,614	$ 6,012	$ 5,441
Charge-offs	401	395	1,570	1,038
Recoveries	218	187	675	803
Provision	375	300	1,025	500
Ending Balance	6,142	5,706	6,142	5,706
Carrying amount	3,624		3,624
Allowance for loan losses	0		0		$ 0
Contractual fair value of purchased credit impaired loans	4,600		4,600
Accretable yield, or income expected to be collected
New loans purchased	514		514
Balance, end of period	514		514
Commercial
Activity in allowance for loan losses
Beginning Balance	399	231	339	230
Charge-offs	5		30	200
Provision	31	12	116	213
Ending Balance	425	243	425	243
Carrying amount	2		2
Real estate construction
Activity in allowance for loan losses
Beginning Balance	476	359	446	358
Recoveries	4	3	6	11
Provision	18	25	46	18
Ending Balance	498	387	498	387
1-4 family residential
Activity in allowance for loan losses
Beginning Balance	1,807	2,324	1,829	2,169
Charge-offs	89	91	241	179
Recoveries	3	39	8	55
Provision	135	(254)	260	(27)
Ending Balance	1,856	2,018	1,856	2,018
Carrying amount	2,584		2,584
Multi-family residential
Activity in allowance for loan losses
Beginning Balance	442	327	495	427
Charge-offs		42	94	42
Recoveries	25		27
Provision	(27)	186	12	86
Ending Balance	440	471	440	471
Non-farm & non-residential
Activity in allowance for loan losses
Beginning Balance	1,074	734	813	564
Recoveries	8		8	367
Provision	(40)	30	221	(167)
Ending Balance	1,042	764	1,042	764
Carrying amount	1,034		1,034
Agricultural
Activity in allowance for loan losses
Beginning Balance	578	546	998	578
Charge-offs		18	242	18
Recoveries	8	2	20	27
Provision	98	160	(92)	103
Ending Balance	684	690	684	690
Carrying amount	4		4
Consumer
Activity in allowance for loan losses
Beginning Balance	534	543	520	548
Charge-offs	32	48	195	201
Recoveries	8	17	35	58
Provision	46	32	196	139
Ending Balance	556	544	556	544
Other
Activity in allowance for loan losses
Beginning Balance	55	33	32	51
Charge-offs	275	196	768	398
Recoveries	162	126	571	285
Provision	124	114	231	139
Ending Balance	66	77	66	77
Unallocated
Activity in allowance for loan losses
Beginning Balance	585	517	540	516
Provision	(10)	(5)	35	(4)
Ending Balance	575	$ 512	575	$ 512
Madison Financial Corporation
Activity in allowance for loan losses
Allowance for loan losses	$ 0		$ 0

LOANS (Details 3)

LOANS (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Loans
Accrued interest receivable	$ 2,600		$ 2,000
Allowance for Loan Losses:
Individually Evaluated for Impairment	472		998
Collectively Evaluated for Impairment	5,670		5,014
Total	6,142	$ 5,950	6,012	$ 5,706	$ 5,614	$ 5,441
Loans:
Individually Evaluated for Impairment	10,178		13,799
Collectively Evaluated for Impairment	598,702		524,506
Purchased Credit Impairment	3,624
Total	612,504		538,305
Commercial
Allowance for Loan Losses:
Collectively Evaluated for Impairment	425		339
Total	425	399	339	243	231	230
Loans:
Collectively Evaluated for Impairment	51,903		47,185
Purchased Credit Impairment	2
Total	51,905		47,185
Real estate construction
Allowance for Loan Losses:
Collectively Evaluated for Impairment	498		446
Total	498	476	446	387	359	358
Loans:
Collectively Evaluated for Impairment	27,305		16,938
Total	27,305		16,938
1-4 family residential
Allowance for Loan Losses:
Individually Evaluated for Impairment	51		56
Collectively Evaluated for Impairment	1,805		1,773
Total	1,856	1,807	1,829	2,018	2,324	2,169
Loans:
Individually Evaluated for Impairment	3,120		2,098
Collectively Evaluated for Impairment	211,794		187,360
Purchased Credit Impairment	2,584
Total	217,498		189,458
Multi-family residential
Allowance for Loan Losses:
Individually Evaluated for Impairment			94
Collectively Evaluated for Impairment	440		401
Total	440	442	495	471	327	427
Loans:
Individually Evaluated for Impairment			264
Collectively Evaluated for Impairment	38,768		34,151
Total	38,768		34,415
Non-farm & non-residential
Allowance for Loan Losses:
Individually Evaluated for Impairment	86		136
Collectively Evaluated for Impairment	956		677
Total	1,042	1,074	813	764	734	564
Loans:
Individually Evaluated for Impairment	2,796		2,958
Collectively Evaluated for Impairment	183,203		158,864
Purchased Credit Impairment	1,034
Total	187,033		161,822
Agricultural
Allowance for Loan Losses:
Individually Evaluated for Impairment	335		712
Collectively Evaluated for Impairment	349		286
Total	684	578	998	690	546	578
Loans:
Individually Evaluated for Impairment	4,262		8,479
Collectively Evaluated for Impairment	66,488		62,866
Purchased Credit Impairment	4
Total	70,754		71,345
Consumer
Allowance for Loan Losses:
Collectively Evaluated for Impairment	556		520
Total	556	534	520	544	543	548
Loans:
Collectively Evaluated for Impairment	19,082		16,863
Total	19,082		16,863
Other
Allowance for Loan Losses:
Collectively Evaluated for Impairment	66		32
Total	66	55	32	77	33	51
Loans:
Collectively Evaluated for Impairment	159		279
Total	159		279
Unallocated
Allowance for Loan Losses:
Collectively Evaluated for Impairment	575		540
Total	$ 575	$ 585	$ 540	$ 512	$ 517	$ 516

LOANS (Details 4)

LOANS (Details 4) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Unpaid Principal Balance
Total	$ 10,178		$ 10,178		$ 13,799
Recorded Investment
Total	10,178		10,178		13,799
Allowance for Loan Losses Allocated	472		472		998
Average Recorded Investment
Total	10,447	$ 17,611	10,829	$ 14,793	14,183
Interest Income Recognized
Total	68	108	226	338	308
Cash Basis Interest Recognized
Total	68	108	226	338	308
1-4 family residential
Unpaid Principal Balance
With no related allowance recorded	2,649		2,649		1,618
With an allowance recorded	471		471		480
Recorded Investment
With no related allowance recorded	2,649		2,649		1,618
With an allowance recorded	471		471		480
Allowance for Loan Losses Allocated	51		51		56
Average Recorded Investment
With no related allowance recorded	1,997	1,208	1,867	1,109	1,147
With an allowance recorded	1,225	1,572	1,512	1,442	990
Interest Income Recognized
With no related allowance recorded	28	13	90	43	25
With an allowance recorded	5	5	15	26	18
Cash Basis Interest Recognized
With no related allowance recorded	28	13	90	43	25
With an allowance recorded	5	5	15	26	18
Multi-family residential
Unpaid Principal Balance
With an allowance recorded					264
Recorded Investment
With an allowance recorded					264
Allowance for Loan Losses Allocated					94
Average Recorded Investment
With an allowance recorded		303	31	289	284
Interest Income Recognized
With an allowance recorded				5	5
Cash Basis Interest Recognized
With an allowance recorded				5	5
Non-farm & non-residential
Unpaid Principal Balance
With no related allowance recorded	273		273
With an allowance recorded	2,523		2,523		2,958
Recorded Investment
With no related allowance recorded	273		273
With an allowance recorded	2,523		2,523		2,958
Allowance for Loan Losses Allocated	86		86		136
Average Recorded Investment
With no related allowance recorded	137	980	91	653	552
With an allowance recorded	2,722	3,910	2,795	3,263	3,173
Interest Income Recognized
With no related allowance recorded		19		68
With an allowance recorded	30	34	89	100	115
Cash Basis Interest Recognized
With no related allowance recorded		19		68
With an allowance recorded	30	34	89	100	115
Agricultural
Unpaid Principal Balance
With no related allowance recorded	230		230		442
With an allowance recorded	4,032		4,032		8,037
Recorded Investment
With no related allowance recorded	230		230		442
With an allowance recorded	4,032		4,032		8,037
Allowance for Loan Losses Allocated	335		335		712
Average Recorded Investment
With no related allowance recorded	217	4,883	291	3,404	2,696
With an allowance recorded	4,149	4,755	4,242	4,633	5,341
Interest Income Recognized
With no related allowance recorded	3	37	25	96	29
With an allowance recorded	2		7		116
Cash Basis Interest Recognized
With no related allowance recorded	3	$ 37	25	$ 96	29
With an allowance recorded	$ 2		$ 7		$ 116

LOANS (Details 5)

LOANS (Details 5) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Loans
Nonaccrual	$ 2,353	$ 6,577
Loans Past Due Over 90 Days Still Accruing	96	24
Accruing Troubled Debt Restructurings	$ 6,091	6,138
Percentage of nonaccrual loans secured by real estate	99.30%
Minimum period for which principal or interest is in default for loans to be considered as nonaccrual	90 days
Maximum period past due for loans to be considered as impaired	90 days
Madison Financial Corporation
Loans
Nonaccrual	$ 929
Loans Past Due Over 90 Days Still Accruing	34
Commercial
Loans
Nonaccrual	9	25
Real estate construction
Loans
Nonaccrual	136	142
1-4 family residential
Loans
Nonaccrual	1,569	1,390
Loans Past Due Over 90 Days Still Accruing	60	23
Accruing Troubled Debt Restructurings	471	480
Multi-family residential
Loans
Nonaccrual		264
Non-farm & non-residential
Loans
Nonaccrual	477	380
Accruing Troubled Debt Restructurings	1,791	1,829
Agricultural
Loans
Nonaccrual	155	4,371
Loans Past Due Over 90 Days Still Accruing	32
Accruing Troubled Debt Restructurings	3,829	3,829
Consumer
Loans
Nonaccrual	7	5
Loans Past Due Over 90 Days Still Accruing	$ 4	$ 1

LOANS (Details 6)

LOANS (Details 6) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	$ 2,895	$ 1,827
60-89 Days Past Due	946	399
Greater than 90 Days Past Due	96	24
Non-accrual	2,353	6,577
Total Past Due and Non-accrual	6,290	8,827
Loans Not Past Due	606,214	529,478
Madison Financial Corporation
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	585
60-89 Days Past Due	100
Greater than 90 Days Past Due	34
Non-accrual	929
Total Past Due and Non-accrual	1,648
Loans Not Past Due	66,557
Commercial
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	106	92
60-89 Days Past Due	113
Non-accrual	9	25
Total Past Due and Non-accrual	228	117
Loans Not Past Due	51,677	47,068
Real estate construction
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	1,211
Non-accrual	136	142
Total Past Due and Non-accrual	1,347	142
Loans Not Past Due	25,958	16,796
1-4 family residential
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	1,248	1,531
60-89 Days Past Due	705	232
Greater than 90 Days Past Due	60	23
Non-accrual	1,569	1,390
Total Past Due and Non-accrual	3,582	3,176
Loans Not Past Due	213,916	186,282
Multi-family residential
Aging of recorded investment in past due and non-accrual loans
60-89 Days Past Due		131
Non-accrual		264
Total Past Due and Non-accrual		395
Loans Not Past Due	38,768	34,020
Non-farm & non-residential
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	110	67
Non-accrual	477	380
Total Past Due and Non-accrual	587	447
Loans Not Past Due	186,446	161,375
Agricultural
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	127	7
60-89 Days Past Due	118	11
Greater than 90 Days Past Due	32
Non-accrual	155	4,371
Total Past Due and Non-accrual	432	4,389
Loans Not Past Due	70,322	66,956
Consumer
Aging of recorded investment in past due and non-accrual loans
30-59 Days Past Due	93	130
60-89 Days Past Due	10	25
Greater than 90 Days Past Due	4	1
Non-accrual	7	5
Total Past Due and Non-accrual	114	161
Loans Not Past Due	18,968	16,702
Other
Aging of recorded investment in past due and non-accrual loans
Loans Not Past Due	$ 159	$ 279

LOANS (Details 7)

LOANS (Details 7) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015USD ($)loan	Sep. 30, 2014loan	Sep. 30, 2015USD ($)loan	Sep. 30, 2014USD ($)loan	Dec. 31, 2014USD ($)
LOANS
Reserves to customers whose loan terms have been modified in troubled debt restructurings	$ 403		$ 403		$ 369
Trouble debt restructuring defaulted on payment			$ 0	$ 0
Number of loans modified | loan	0	0	0	0

LOANS (Details 8)

LOANS (Details 8) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Credit Quality Indicators
Loans	$ 612,504	$ 538,305
Pass
Credit Quality Indicators
Loans	557,391	484,879
Special Mention
Credit Quality Indicators
Loans	24,259	20,844
Substandard
Credit Quality Indicators
Loans	11,561	15,278
Doubtful
Credit Quality Indicators
Loans	51	160
Madison Financial Corporation
Credit Quality Indicators
Loans	68,205
Madison Financial Corporation | Pass
Credit Quality Indicators
Loans	62,256
Madison Financial Corporation | Special Mention
Credit Quality Indicators
Loans	2,738
Madison Financial Corporation | Substandard
Credit Quality Indicators
Loans	3,184
Madison Financial Corporation | Doubtful
Credit Quality Indicators
Loans	27
Commercial
Credit Quality Indicators
Loans	51,905	47,185
Commercial | Pass
Credit Quality Indicators
Loans	50,335	45,602
Commercial | Special Mention
Credit Quality Indicators
Loans	1,345	1,307
Commercial | Substandard
Credit Quality Indicators
Loans	216	275
Commercial | Doubtful
Credit Quality Indicators
Loans	9
Commercial | Madison Financial Corporation
Credit Quality Indicators
Loans	2,073
Real estate construction
Credit Quality Indicators
Loans	27,305	16,938
Real estate construction | Pass
Credit Quality Indicators
Loans	25,514	15,529
Real estate construction | Special Mention
Credit Quality Indicators
Loans	1,644	1,267
Real estate construction | Substandard
Credit Quality Indicators
Loans	147	142
Real estate construction | Madison Financial Corporation
Credit Quality Indicators
Loans	5,822
1-4 family residential
Credit Quality Indicators
Loans	217,498	189,458
1-4 family residential | Pass
Credit Quality Indicators
Loans	202,240	176,791
1-4 family residential | Special Mention
Credit Quality Indicators
Loans	6,905	5,439
1-4 family residential | Substandard
Credit Quality Indicators
Loans	8,311	7,068
1-4 family residential | Doubtful
Credit Quality Indicators
Loans	42	160
1-4 family residential | Madison Financial Corporation
Credit Quality Indicators
Loans	20,837
Multi-family residential
Credit Quality Indicators
Loans	38,768	34,415
Multi-family residential | Pass
Credit Quality Indicators
Loans	38,364	33,990
Multi-family residential | Special Mention
Credit Quality Indicators
Loans	257
Multi-family residential | Substandard
Credit Quality Indicators
Loans	148	425
Multi-family residential | Madison Financial Corporation
Credit Quality Indicators
Loans	5,729
Non-farm & non-residential
Credit Quality Indicators
Loans	187,033	161,822
Non-farm & non-residential | Pass
Credit Quality Indicators
Loans	178,617	154,857
Non-farm & non-residential | Special Mention
Credit Quality Indicators
Loans	7,175	5,178
Non-farm & non-residential | Substandard
Credit Quality Indicators
Loans	1,240	1,787
Non-farm & non-residential | Madison Financial Corporation
Credit Quality Indicators
Loans	29,668
Agricultural
Credit Quality Indicators
Loans	70,754	71,345
Agricultural | Pass
Credit Quality Indicators
Loans	62,321	58,110
Agricultural | Special Mention
Credit Quality Indicators
Loans	6,933	7,653
Agricultural | Substandard
Credit Quality Indicators
Loans	1,499	5,581
Agricultural | Madison Financial Corporation
Credit Quality Indicators
Loans	2,793
Consumer
Credit Quality Indicators
Loans	19,082	16,863
Consumer | Non-performing
Credit Quality Indicators
Loans	$ 11	$ 6
Minimum period past due for loans to be considered as non-performing	90 days
Consumer | Madison Financial Corporation
Credit Quality Indicators
Loans	$ 1,283

REAL ESTATE OWNED (Details)

REAL ESTATE OWNED (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Activity in real estate owned
Beginning of year			$ 4,603	$ 3,379
Additions			3,394	1,651
Acquired with Madison Financial Corporation			445
Sales			(6,000)	(1,676)
(Additions) subtractions to valuation allowance, net	$ (25)	$ (54)	(942)	6
End of period	3,384	3,348	3,384	3,348
Activity in the valuation allowance
Beginning of year			1,583	1,524
Write-downs of other real estate, net			252	64
Reduction from sale			(1,194)	(58)
End of period	641	1,530	641	1,530
Expenses related to foreclosed assets
Net loss (gain) on sales	(64)	(64)	(5)	(134)
Additions (subtraction) to valuation allowance, net	25	54	942	(6)
Write-downs of other real estate, net			252	64
Operating expenses (receipts), net of rental income	36	86	91	99
Repossession expenses, net	61	140	343	163
End of year	$ (3)	$ 76	$ 338	$ 29

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic Earnings Per Share
Net Income	$ 1,541	$ 1,720	$ 5,178	$ 5,395
Weighted average common shares outstanding	2,941	2,708	2,774	2,708
Basic earnings per share (in dollars per share)	$ 0.52	$ 0.63	$ 1.85	$ 1.99
Diluted Earnings Per Share
Net income	$ 1,541	$ 1,720	$ 5,178	$ 5,395
Weighted average common shares outstanding	2,941	2,708	2,774	2,708
Weighted average common and dilutive potential common shares outstanding	2,941	2,708	2,774	2,708
Diluted earnings per share (in dollars per share)	$ 0.52	$ 0.63	$ 1.85	$ 1.99

EARNINGS PER SHARE (Details 2)

EARNINGS PER SHARE (Details 2) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock options
Antidilutive securities
Antidilutive shares excluded from computation of diluted earnings per share	2,400	12,725	2,400	12,725

STOCK COMPENSATION (Details)

STOCK COMPENSATION (Details) - Stock options	9 Months Ended
	Sep. 30, 2015shares
Stock Option Plans
Stock Based Compensation
Life of awards	10 years
1999 Plan
Stock Based Compensation
Vesting period	5 years
Number of shares authorized for issuance	100,000
1993 Non-Employee Directors Stock Ownership Incentive Plan
Stock Based Compensation
Number of shares authorized for issuance	20,000

STOCK COMPENSATION (Details 2)

STOCK COMPENSATION (Details 2) - Stock Option Plans $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)$ / sharesshares
Shares
Outstanding, beginning of year (in shares) | shares	12,625
Forfeited or expired (in shares) | shares	(10,225)
Outstanding, end of period (in shares) | shares	2,400
Vested and expected to vest (in shares) | shares	2,400
Exercisable, end of period (in shares) | shares	2,400
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share)	$ 30.46
Forfeited or expired (in dollars per share)	30.48
Outstanding, end of period (in dollars per share)	30.38
Vested and expected to vest (in dollars per share)	30.38
Exercisable, end of period (in dollars per share)	$ 30.38
Weighted Average Remaining Contractual Term
Outstanding, end of period	15 months 15 days
Vested and expected to vest	15 months 15 days
Exercisable, end of period	15 months 15 days
Additional disclosures
Unrecognized compensation cost related to nonvested stock options granted | $	$ 0

STOCK COMPENSATION (Details 3)

STOCK COMPENSATION (Details 3) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Shares
Forfeited (in shares)	(153)
2005 Restricted Stock Grant Plan | Restricted stock
Stock Based Compensation
Number of shares authorized for issuance	50,000
Shares available for issuance	0
Shares
Nonvested at the beginning of the period (in shares)	17,694
Granted (in shares)	5,385	7,475
Vested (in shares)	(5,175)
Forfeited (in shares)	(153)	(300)
Nonvested at the end of the period (in shares)	17,751
Weighted-Average Grant-Date Fair Value
Nonvested shares, balance at the beginning of the period (in dollars)	$ 365,586
Granted (in dollars)	147,280
Vested (in dollars)	(101,767)
Forfeited (in dollars)	(3,700)
Nonvested shares, balance at the end of the period (in dollars)	$ 407,399
Fair Value Per Share
Nonvested shares, balance at the beginning of the period (in dollars per share)	$ 20.66
Granted (in dollars per share)	27.35
Vested (in dollars per share)	19.67
Forfeited (in dollars per share)	24.18
Nonvested shares, balance at the end of the period (in dollars per share)	$ 22.95
Additional disclosures
Total unrecognized compensation cost related to nonvested shares granted	$ 316,239
Period over which cost is expected to be recognized	2 years 10 months 24 days
2009 Stock Award Plan
Stock Based Compensation
Number of shares authorized for issuance	150,000
Shares available for issuance	148,635
Shares
Nonvested at the beginning of the period (in shares)	720
Granted (in shares)	465
Vested (in shares)	(180)
Nonvested at the end of the period (in shares)	1,005
Weighted-Average Grant-Date Fair Value
Nonvested shares, balance at the beginning of the period (in dollars)	$ 16,704
Granted (in dollars)	12,718
Vested (in dollars)	(4,176)
Nonvested shares, balance at the end of the period (in dollars)	$ 25,246
Fair Value Per Share
Nonvested shares, balance at the beginning of the period (in dollars per share)	$ 23.20
Granted (in dollars per share)	27.35
Vested (in dollars per share)	23.20
Nonvested shares, balance at the end of the period (in dollars per share)	$ 25.12
Additional disclosures
Total unrecognized compensation cost related to nonvested shares granted	$ 22,582
2009 Stock Award Plan | Restricted stock
Additional disclosures
Period over which cost is expected to be recognized	3 years 3 months 18 days

REPURCHASE AGREEMENTS (Details)

REPURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
REPURCHASE AGREEMENTS
Repurchase agreements	$ 19,918	$ 12,457
Average weighted life	2 years 3 months 18 days
Carrying amount of agency-backed securities pledged to secure repurchase agreements	$ 20,200
Overnight obligations
REPURCHASE AGREEMENTS
Repurchase agreements	13,900
Terms extending through May 2019
REPURCHASE AGREEMENTS
Repurchase agreements	$ 6,000

OTHER BORROWINGS (Details)

OTHER BORROWINGS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jul. 20, 2015	Dec. 31, 2014
Maturity schedule of term loan
Total term loan maturities	$ 5,000
Term loan
OTHER BORROWINGS
Debt instrument, face amount		$ 5,000
Fixed interest rate		5.02%
Maturity schedule of term loan
Due in one year or less	407
Due in one through three years	850
Due in three through five years	940
Due after five years	2,803
Total term loan maturities	5,000
Revolving promissory note
Other debt disclosures
Maximum borrowing capacity			$ 5,000
Outstanding balance	$ 0		$ 0

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Fair value on instruments on recurring basis
Securities available for sale	$ 238,600		$ 246,861
Transfers from Level 1 to Level 2	0		0
Transfers from Level 2 to Level 1	0		0
Impaired Loans
Fair value on instruments on recurring basis
Adjustments for differences between the comparable sales and income data available	14	$ 387
Other Real Estate Owned
Fair value on instruments on recurring basis
Adjustments for differences between the comparable sales and income data available	372	$ 25
Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	238,600		246,861
Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	395		296
Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	238,205		246,565
Recurring
Fair value on instruments on recurring basis
Securities available for sale	244,080		252,231
Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	5,875		5,666
Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	238,205		246,565
U.S. government agencies
Fair value on instruments on recurring basis
Securities available for sale	51,696		60,586
U.S. government agencies | Recurring
Fair value on instruments on recurring basis
Securities available for sale	51,696		60,586
U.S. government agencies | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	51,696		60,586
States and political subdivisions
Fair value on instruments on recurring basis
Securities available for sale	87,041		89,281
States and political subdivisions | Recurring
Fair value on instruments on recurring basis
Securities available for sale	87,041		89,281
States and political subdivisions | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	87,041		89,281
Mortgage-backed - residential
Fair value on instruments on recurring basis
Securities available for sale	99,468		96,698
Mortgage-backed - residential | Recurring
Fair value on instruments on recurring basis
Securities available for sale	99,468		96,698
Mortgage-backed - residential | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	99,468		96,698
Equity
Fair value on instruments on recurring basis
Securities available for sale	395		296
Equity | Recurring
Fair value on instruments on recurring basis
Securities available for sale	395		296
Equity | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	395		296
Trading Assets | Recurring
Fair value on instruments on recurring basis
Securities available for sale	5,480		5,370
Trading Assets | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	$ 5,480		$ 5,370

FAIR VALUE MEASUREMENTS (Deta51

FAIR VALUE MEASUREMENTS (Details 2) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2015USD ($)	Jun. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2015USD ($)loan	Sep. 30, 2014USD ($)loan	Dec. 31, 2014USD ($)	Dec. 31, 2013USD ($)
Impaired Loans
Valuation allowance of impaired loans	$ 472			$ 472		$ 998
Loan loss provision expense for impaired loans				34
Other real estate owned, net:
Outstanding balance of other real estate owned	3,384		$ 3,348	3,384	$ 3,348	4,603	$ 3,379
Valuation allowance of other real estate owned	641		1,530	641	$ 1,530	1,583	$ 1,524
Loan servicing rights
Mortgage servicing rights	1,270			1,270		1,209
Non-recurring
Impaired Loans
Impaired loans, at fair value	169			169
Valuation allowance of impaired loans	34			$ 34
Number of impaired loans | loan				1	6
Impaired loans, additional provision for loan losses					$ 265
Decrease in allowance for specific impaired loans		$ (226)	35	$ (526)	71
Other real estate owned, net:
Other real estate owned	2,500			2,500
Outstanding balance of other real estate owned	3,100			3,100
Valuation allowance of other real estate owned	641			641
Write downs of other real estate owned	25		54	252	64
Loan servicing rights
Mortgage servicing rights	261			261		292
Outstanding balance of loan servicing rights	297			297		371
Valuation allowance of loan servicing rights	36			36		79
Write-downs of loan servicing rights	9		$ 9	43	$ 3
Non-recurring | Carrying Value
Loan servicing rights
Mortgage servicing rights	261			261		292
Non-recurring | Significant Unobservable Inputs (Level 3)
Loan servicing rights
Mortgage servicing rights	261			261		292
Non-recurring | Multi-family residential | Carrying Value
Impaired Loans
Impaired loans, at fair value						169
Non-recurring | Multi-family residential | Significant Unobservable Inputs (Level 3)
Impaired Loans
Impaired loans, at fair value						169
Non-recurring | Non-farm & non-residential | Carrying Value
Impaired Loans
Impaired loans, at fair value						366
Non-recurring | Non-farm & non-residential | Significant Unobservable Inputs (Level 3)
Impaired Loans
Impaired loans, at fair value						366
Non-recurring | Agricultural | Carrying Value
Impaired Loans
Impaired loans, at fair value	169			169		3,729
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3)
Impaired Loans
Impaired loans, at fair value	169			169		3,729
Non-recurring | Residential Real Estate | Carrying Value
Other real estate owned, net:
Other real estate owned	1,504			1,504		1,670
Non-recurring | Residential Real Estate | Significant Unobservable Inputs (Level 3)
Other real estate owned, net:
Other real estate owned	1,504			1,504		$ 1,670
Non-recurring | Commercial | Carrying Value
Other real estate owned, net:
Other real estate owned	964			964
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3)
Other real estate owned, net:
Other real estate owned	$ 964			$ 964

FAIR VALUE MEASUREMENTS (Deta52

FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Fair Value Measurements
Loan servicing rights	$ 1,270	$ 1,209
Non-recurring
Fair Value Measurements
Impaired loans, at fair value	169
Other real estate owned	2,500
Loan servicing rights	261	292
Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Loan servicing rights	261	292
Non-recurring | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Loan servicing rights	$ 261	$ 292
Non-recurring | Minimum | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Discount rates	12.00%	12.00%
Non-recurring | Maximum | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Discount rates	12.00%	12.00%
Non-recurring | Weighted average | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Discount rates	12.00%	12.00%
Multi-family residential | Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		$ 169
Multi-family residential | Non-recurring | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		$ 169
Multi-family residential | Non-recurring | Minimum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		10.00%
Multi-family residential | Non-recurring | Maximum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		10.00%
Multi-family residential | Non-recurring | Weighted average | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		10.00%
Non-farm & non-residential | Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		$ 366
Non-farm & non-residential | Non-recurring | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		$ 366
Non-farm & non-residential | Non-recurring | Minimum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		0.00%
Non-farm & non-residential | Non-recurring | Maximum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		0.00%
Non-farm & non-residential | Non-recurring | Weighted average | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		0.00%
Agricultural | Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value	$ 169	$ 3,729
Agricultural | Non-recurring | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		$ 3,729
Agricultural | Non-recurring | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value	$ 169
Agricultural | Non-recurring | Minimum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		5.00%
Agricultural | Non-recurring | Minimum | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	3.00%
Agricultural | Non-recurring | Maximum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		53.00%
Agricultural | Non-recurring | Maximum | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	38.00%
Agricultural | Non-recurring | Weighted average | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)		43.00%
Agricultural | Non-recurring | Weighted average | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	36.00%
Residential Real Estate | Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	$ 1,504	$ 1,670
Residential Real Estate | Non-recurring | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	893	$ 1,670
Residential Real Estate | Non-recurring | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	$ 611
Residential Real Estate | Non-recurring | Minimum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)	10.00%	0.00%
Residential Real Estate | Non-recurring | Minimum | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	8.00%	8.00%
Residential Real Estate | Non-recurring | Maximum | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)	28.00%	48.00%
Residential Real Estate | Non-recurring | Maximum | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	8.00%	10.00%
Residential Real Estate | Non-recurring | Weighted average | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales and income data available (as a percent)	19.00%	11.00%
Residential Real Estate | Non-recurring | Weighted average | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	8.00%	9.00%
Commercial | Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	$ 964
Commercial | Non-recurring | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	$ 964
Commercial | Non-recurring | Minimum | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	8.00%
Commercial | Non-recurring | Maximum | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	37.00%
Commercial | Non-recurring | Weighted average | Sales approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	22.00%

FAIR VALUE MEASUREMENTS (Deta53

FAIR VALUE MEASUREMENTS (Details 4) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial Assets
Interest bearing deposits	$ 4,874	$ 1,280
Securities	238,600	246,861
Trading Assets	5,480	5,370
Mortgage loans held for sale	1,520	776
Interest receivable	3,888	3,299
Financial liabilities
Interest payable	783	642
Quoted Prices In Active Markets for Identical Assets (Level 1)
Financial Assets
Cash and cash equivalents	22,881	17,169
Interest bearing deposits	4,874	1,280
Securities	395	296
Trading Assets	5,480	5,370
Financial liabilities
Deposits	506,917	470,912
Federal Funds Purchased	4,300
Significant Other Observable Inputs (Level 2)
Financial Assets
Securities	238,205	246,565
Mortgage loans held for sale	1,535	782
Interest receivable	1,266	1,274
Financial liabilities
Deposits	205,533	185,429
Securities sold under agreements to repurchase and other borrowings	24,960	12,620
FHLB advances	86,266	88,373
Interest payable	774	633
Significant Unobservable Inputs (Level 3)
Financial Assets
Loans, net	603,428	535,213
Interest receivable	2,622	2,025
Financial liabilities
Subordinated debentures	7,205	7,209
Interest payable	9	9
Carrying Value
Financial Assets
Cash and cash equivalents	22,881	17,169
Interest bearing deposits	4,874	1,280
Securities	238,600	246,861
Trading Assets	5,480	5,370
Mortgage loans held for sale	1,520	776
Loans, net	606,362	532,293
FHLB stock	7,034	5,981
Interest receivable	3,888	3,299
Financial liabilities
Deposits	711,005	654,869
Securities sold under agreements to repurchase and other borrowings	24,918	12,457
Federal Funds Purchased	4,300
FHLB advances	90,991	93,785
Subordinated debentures	7,217	7,217
Interest payable	783	642
Fair Value
Financial Assets
Cash and cash equivalents	22,881	17,169
Interest bearing deposits	4,874	1,280
Securities	238,600	246,861
Trading Assets	5,480	5,370
Mortgage loans held for sale	1,535	782
Loans, net	$ 603,428	535,213
FHLB stock
Interest receivable	$ 3,888	3,299
Financial liabilities
Deposits	712,450	656,341
Securities sold under agreements to repurchase and other borrowings	24,960	12,620
Federal Funds Purchased	4,300
FHLB advances	86,266	88,373
Subordinated debentures	7,205	7,209
Interest payable	$ 783	$ 642

CHANGES IN ACCUMULATED OTHER 54

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Changes in accumulated other comprehensive income (loss) by component
Beginning Balance	$ (432)	$ (145)	$ 791	$ (5,126)
Unrealized holding gains (losses) for the period, net of tax	2,094	152	1,037	5,419
Reclassification adjustment for:
Reclassification of realized amount	(159)	(81)	(410)	(514)
Income taxes	(54)	(28)	(139)	(175)
Securities gains realized in income, net	(105)	(53)	(271)	(339)
Net current period other comprehensive income	1,989	99	766	5,080
Ending Balance	$ 1,557	$ (46)	$ 1,557	$ (46)

CHANGES IN ACCUMULATED OTHER 55

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Reclassifications out of AOCI by component
Securities gains, net	$ (159)	$ (81)	$ (410)	$ (514)
Provision for income taxes	103	43	409	704
Net of tax	(1,541)	(1,720)	(5,178)	(5,395)
Unrealized Gains and Losses on Available for Sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income
Reclassifications out of AOCI by component
Securities gains, net	(159)	(81)	(410)	(514)
Provision for income taxes	54	28	139	175
Net of tax	$ (105)	$ (53)	$ (271)	$ (339)